The President’s State of the Union Address
January 27, 2021
9. Co-op Incentives & Innovation
I will shortly send to the Congress a bill restoring real competition to our American free enterprise capitalist economy. Competition is the primary feature that makes capitalism a good idea, because it has the effect of holding prices down to levels people can afford. My bill is designed to unleash the greatest swell of free enterprise in our nation’s history. Supply-side economics has stifled free enterprise, so we’re going to throw it out and focus on the demand-side—our long-suffering consumers—for a change.
The growth of corporations toward gigantism has stymied who knows how many millions of dynamic young American entrepreneurs who would like to start new businesses, so we’re going to change that. Just in recent years hundreds of thousands of bright entrepreneurs have invested their time, talent and money in new business startups—only to be forced out of business, or bought out, by some big corporation intent on monopolistic control of consumer markets.
No more. Our renewed, democratic, and highly competitive capitalist economy will feature four elements that are essential for free enterprise that is truly free:
First: Every natural monopoly will be placed under direct control of a government—local, state or federal, as is most appropriate in each case;
Second: Every corporation or other business entity of any nature that has grown “too big to fail” will be broken up into new, independent organizations, and they will have new names unrelated to the old name;
Exactly what is meant by the terms “natural monopoly” and “too big to fail” will soon be explicitly defined and widely publicized.
Third: Every corporation or other entity doing business in the United States, its territories and possessions will be limited to a maximum five percent of sales in the U.S. market for whatever goods and/or services it sells. If its sales exceed five percent of its market, it will be broken up into new independent organizations, each one of which controls less than five percent. Any subdivided business that again grows to exceed five percent of the market will again be subdivided;
And fourth: Every new organization that comes into being due to breakup of an over-large organization may be purchased by its employees, and operated thereafter as an employee-owned cooperative. If existing employees decline to buy and own the new organization, other purchasers may bid to take over, own and operate the new organization. Either way, the new business entity will be operated as an employee-owned cooperative, forever subject to the five percent limitation.
Under this legislation, new employee-owned co-ops will operate under federal law requiring that they compete with other businesses and co-ops in a manner fully consistent with free enterprise competition. The rules will provide for buying out stockholders who owned shares at the time of a corporation’s breakup.
The bill I send to congress will reshape and revitalize the Small Business Administration. That federal agency will be given new authority and major new resources to assist, everywhere across the nation, the thousands of new employee-owned co-ops that will soon come into being, starting as soon as possible this year.
It is axiomatic that employees who become co-owners of their own business have strong incentives to make the business succeed. Many new employee-owners, unaccustomed to being co-owners, will need expert advice on how to run their business effectively, and my administration will ensure that they get it.
If all this seems a bit new to some of you, let me assure you that it’s not. The United States has always had large numbers of employee-owned co-ops. Some of them have been enormously influential in our economy—rural electrification co-ops and the Tennessee Valley Authority being just two major examples. Co-ops are a strong component of our economy today, providing many jobs, goods and services.
A main feature of co-ops is their not-for-profit status. When profits and dividends stop leaving the business, self-interest becomes the prime motivator. All the money that used to flow out as profit and dividends can now be retained inside the co-op for higher employee salaries, deserved bonuses, and reinvestment in the co-op’s future. Employees know that the better their co-op business succeeds, the better they will be financially rewarded.
My fellow Americans, these reforms of our capitalist economy will halt the most egregious excesses of recent decades. In particular, they will halt corporate control of our political life under the Citizens United ruling. I can also happily predict a reversal of the rampantly increasing economic inequality that has been shifting our fabulous national wealth to the already-wealthy few at the expense of everybody else.
We cannot say it too often: Political democracy cannot be maintained in the presence of severe and unjust economic inequality. We should have done this turnaround years ago, long before the situation got this bad. But we can act now, and I am doing so. These several economic reforms are by far the highest priorities of my administration, but no initiative I announce today is less than important—they all serve our common good.
I have no doubt that many questions about these economic changes will arise in the days ahead. In staffing my administration I have especially looked for leaders in their fields, bipartisan experts who are familiar with our existing economy and the needed features of a reformed economy. If they don’t already have the answer to any question that could be asked, they are responsible, and well qualified, to get it.
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10. Manufacturing our own demand
Jobs not only provide our income, they also give purpose and meaning to life. While millions of new jobs will result from the initiatives I’ve discussed, jobs from another reform will restore the domestic manufacturing base we used to have. I’m talking about all those good American jobs the corporations have sent overseas since 1980.
This reform will absolutely halt our serious and longstanding international trade imbalance. Whether some American corporations profit from international trade is quite beside the point, because our immediate priority is repairing our grossly unbalanced trade with other nations. Our purpose is to serve the common good of all Americans.
What if we manufactured, right here at home in the USA, everything our people must buy for their daily household needs—like we used to? I mean ordinary daily needs like pots and pans, cars, computers and TVs, glassware, pencils and telephones. These domestic needs are easy to name, because every American household needs them. Thus the number of American jobs needed to meet those needs is easy to add up. And that number is in the millions. I’m speaking of American jobs we used to have, before they were sent abroad.
If we fill all our own needs by making all those items ourselves, we won’t need to be importing them. In other words, we can enormously boost our American jobs simply by manufacturing and supplying, right here in the USA, all the stuff that our own households demand for daily living.
We used to do that. We created all those American jobs in the first place. Why did we start importing from overseas all this stuff we’re perfectly capable of making ourselves, right here in the USA? Which is more important: good paying American jobs here at home, or big profits for a multi-national corporation engaged in international trade?
My fellow Americans, know this and don’t ever forget it: We Americans are our own best market. Our United States population is now 326 million and rising. We Americans are the third largest market in the world. We do not need to import stuff that we’re perfectly capable of making ourselves and selling to ourselves.
If we have any goods left over after we’ve met our own domestic needs, then we might sell them as overseas exports. But our national purpose is not for giant corporations to get rich selling exports around the world, any more than it’s to impoverish our American workforce by killing jobs and then importing goods we should be producing in jobs here at home. Our national purpose is to achieve the common good—what’s best for all Americans.
We weren’t always dependent on foreign manufacturers—we used to manufacture all our own needs. If you’re wondering how this bizarre situation came to be, look no further than multi-national corporations that move American jobs overseas because foreign employees can be paid a pittance per hour instead of the living wage that used to be paid to American workers. Let us note that it is the working employees who lose on both ends, here and abroad. Big profits just never seem to trickle down to the folks who do the work.
Much of our current economic problems have been caused by so-called free trade agreements. Just because they’re called “free” doesn’t mean they’re good for our economic wellbeing. Every American voter needs to be fully informed about the egregious wrongs these free trade agreements have brought upon us—undermining our laws, our national sovereignty, and our constitutional system of government.
Trade agreements allow corporations to challenge our federal, state and local laws when those laws get in the way of profits the corporation expects to make. A good example is local and state laws you enact with intent to protect the environment and wildlife, or to protect your own local businesses from unfair competition.
Trade agreements allow corporations to override these laws when they stand in the way of profits a corporation would gain from its intended activities, such as building an oil pipeline right through your community. If your laws actually stop a corporation, “private arbitration panels” allow the corporation to collect big bucks as its “compensation” for the profits it “would have made” if not blocked by the environmental laws you enacted.
Worse yet, lawsuits brought under so-called “free trade” arbitration panels aren’t even decided by our own courts. They are quietly decided, unseen and unpublicized, by private trade lawyers—often the same lawyers who helped set up the trade agreement in the first place. This whole nefarious system seriously undermines the laws we pass to protect our American workers, our environment, even the stability of our financial system.
I’m not kidding, folks, these outrages are real, and they are undermining our self rule even as they cost us beaucoup dollars for nothing. Under the NAFTA trade agreement that we ourselves put in place, these arbitration panels have imposed many millions of dollars in damages, largely out of sight from ordinary citizens. In some cases just the threat of corporate lawsuits has inhibited local and state governments from enacting needed health and safety regulations.
Like the other economic wrongs I’ve described, this one too started in the 1980s when some very conservative economists began pushing the extreme—and may I say silly—supply-side myth that believes a free market will take us to the promised land. This pseudo-religious doctrine hates all governmental regulations that get in the way of profits—never mind that most such regulations come into being because they are requested to protect the people from abuse and exploitation by big corporations.
All this reflects a relentless corporate agenda to turn back the clock to the 19th century when our state and local governments, even our federal government, were not able to protect the public from such corporate harm and abuses. Who do they think they are?
To correct these problems, I have directed all Executive Branch agencies to reassess every—and I mean every—foreign trade agreement they have anything to do with. In case you don’t keep up with the details of such interesting stuff, here is an alphabet soup sampling of our trade commitments: AFTA, CAFTA, DR-CAFTA, GAFTA, NAFTA, SAFTA, TAFTA, APTA, MEFTA, CEFTA, COMESA, SICA, SADC, MERCOSUR, TPP, GCC, FTAA, G-3, US-SAUC, EFTA-SACU, and EU-ACPS. There are many more.
Where any trade agreement is found to be encouraging or permitting transfer of our jobs from American soil to foreign nations—or is infringing on American sovereignty with lawsuits to go around our laws that stand in the way of corporate profits—that agreement will be renegotiated or summarily abrogated. We are not going to continue degrading American families’ vital income by letting giant corporations profit at the expense of meager wages abroad and forced unemployment of skilled workers here at home. There are many ways to define stupid, but some of our free trade agreements are off the chart.
I really should mention this further corrective bonus: After ensuring that our free trade agreements are truly free and fair for all of us—and after supplying our own national demand with our own manufacturing jobs—and ensuring that our imports are no greater than our exports—all this will immediately start the process of halting deficit spending, eliminating our national debt, and reducing foreign ownership of American companies. These three goals are among my highest priorities while I am privileged to serve as your president.
My fellow Americans, we do not need to spend more than we receive in taxes. We do not have to have a national debt. And any nation that wants to maintain its sovereignty had better be ensuring that its capital means of production are owned by its own citizens. These high priorities will all be directly addressed in the weeks and months ahead.
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11. International engagement
I want to emphasize that revising our trade reforms to protect our own best interest does not in any way imply a lessening of U.S. engagement with the rest of the world. The United States is not an isolationist nation, nor can it ever be. We live in an increasingly interconnected modern world—politically, economically, electronically, culturally—and it would not be possible to disengage to any substantial degree even if we wanted to.
And we don’t want to. The United States is a major player in many international issues that concern governments around the world. We have great responsibility to remain engaged with other nations, and that responsibility shall not be diminished.
In this context, the reasons why I am ordering reconsideration of our many trade agreements should not be misinterpreted. Let me be clear: we are simply going to correct two inequities in our international concerns—a trade imbalance that our government allowed corporate traders to accumulate over recent decades, and “free” trade agreements that were never truly free, much less fair for all of us, from the day they were signed.
Since I will be shortly be discussing U.S. foreign policy, I will for the moment defer other matters with which our international relations are concerned.
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…to be continued…
To enjoy details of how the new president converts these policy pronouncements into practical legislation, refer to POPULIST CORRECTIONS on this blog