The current Capitalist dominated system is dysfunctional both from an equity/fairness and economic and natural resource sustainability perspective.
The dominant paradigm in Capitalist financial business operations uses something called the discount rate which assumes that money will be worth less (eventually worthless) in the future, thus creating a necessity to extract profits exceeding a "hurdle" rate leading to unfair and unwise exploitation of workers, borrowers, and natural resources, and to rampant inflation.
The use of credit is not a good business or personal practice. In business, it should be discouraged because creditors have first claims on net revenues and hold liens on real property and capital assets. For "consumers", the use of credit is unwise because the system is set up to extract profits from interest thus assuring that when consumers use credit that they are losing money relative to inflation. Certainly the current foreclosure crisis in the USA is ample evidence of the inflation and the unfairness and unhealthiness of the mortgage lien process.
Credit Unions and Mutual Insurance companies are in theory attempts to institute non-profit economic democracies for their respective industries. However, because of the need to compete for customers, both of these relatively progressive financial service organization types are forced to play the same game that is basically destructive to individuals, families, communities, and the natural environment. Ideally, credit should only be used as a last resort, much more preferably not at all. We should replace all aspects of the extant financial system with an Equity Union. In some ways, a mutual insurance company is similar to an equity union. However, because such companies are required to realize profits in order to compete for "policy holders" (really investors), the companies that comprise the portfolios of the mutual insurance firms cannot be not-for-profit, can not be mutual organizations themselves.
In a not-for profit Equity Union financial services system based on principles of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional, and worldwide planning there would certainly be an important role for financial service workers.
A major impediment to such an Equity Union would be the competitive advantage of the current financial sector and the fear of the friction of change to those individuals and organizations. Dealing with this sector of "the" economy, it would be more feasible with regards to Capitalist resistance and more humane, to orderly and peacefully transition to an Equity Union, coordinated with ecologically sound economic planning.
I am writing and talking about transitioning slowly, methodically, and with the minimum amount of friction and hardship from a dysfunctional financial system, based on self-interest, to one designed to benefit everybuddy.
At risk of understatement, it will take a huge amount of work to educate folks to the need and benefits of such change and to communicate the basic Plan. Transition Planning will also be a very difficult process, but I see no alternative to the current, impending and worsening global economic, political, social, and natural environmental collapse.
The Peoples’ Equity Union concept is designed to be a grass roots, popular choice "movement". I am organizing with individuals, workers, and shopkeepers in my neighborhood, adjoining neighborhoods, and through the inter-net to whomever I can attract an interest in the concept.
The focus is primarily local, yet regional, and global at the same time. It is my dream, not a hope yet, to encourage a critical mass of people to organize locally around a unifying mission, unifying principles, unifying strategies, and unifying tactics in order to minimize the amount of administration at the regional and wide cooperative populations.
The theory is that neighborhood locales, the neighborhood community/worker hybrid association will have maximum autonomy and will be guided only, in their inter-community and inter-economic sector relationships by regional Planning Boards and a Global Policy Committee.
We must replace the current equity trading systems, corporate conglomerate corporations, insurance companies, and usurious banking systems of the Capitalist status quo with a worldwide Peoples’ Equity Union with branches in every community/neighborhood.
The goal is to be a true economic democracy: of, for, and by the people.
HOUSING AND PROPERTY OWNERSHIP
Concurrent with financial systems reform, where equity sharing and not-for-profit equity collaboration would replace the current financial paradigm of for-profit equity investing, equity trading, and usurious credit arrangements, we need to evolve to a different system with respect to residential and other real property occupation arrangements.
In lieu of rent or leases, people should be allowed to acquire equity in their abodes and business properties. For example, in the case of an apartment, if one paid $500 per month to a property management firm, let’s say $50 per month would go to property maintenance, and another $40 to administration fees, insurance, etc. This would leave the resident with $410 of accumulated equity added to their account each month. If we had a large cooperative housing organization (preferably world-wide, and preferably the only form of property ownership) then when someone had to move or wanted to move, they could take their equity with them to the new property.
With regards to mortgages, they are horribly usurious and should be banned. The scenario related above would also replace the current system of financing "home ownership loans".
A huge problem that we are facing now is the terrible inflation in the market values of real property (and capital assets, for that matter). If we pooled our equity, pooled our assets, and collectively wrote off our liabilities, then we could significantly write down the market values of real and capital assets.
More on Equity Union(s)
In a not-for profit Equity Union financial services system based on principles
of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional planning would serve the needs of the people.
In local and inter-community equity unions, equity sharing would be the modus operandi. People with funds being held in equity unions would have the option of sharing in primarily worker owned community betterment projects based on the principles of quality of life, equity (which means ownership, and also means equality), humanity, and sustainability (which means there will be an economy and natural resources for the youth and the children, and for generations to come).
If the inflation spiral can be removed (and the cost of real and capital assets brought back to earth), then indigent and poor workers could hope to increase their equity holdings and quality of life assets and equity investors could hope to get their money back. Some endeavors, beyond poor workers enrichment, would be not-for-profit. That is, profits made beyond a pre-determined return to the poor workers, would be re-invested in more such worker/community betterment hybrid businesses (preferably cooperatives).
Equity investments in community businesses could not be sold to others, but could be bought back at par value (the price of the share of the stock when it was invested). Such would be discouraged, and disallowed if it was a qualified low-income/low wealth equity investor, who may, or may not if they were allowed to collect (limited) personal dividends.
Equity Union branches in low income/low wealth neighborhoods would be allowed to set up a non-profit organizations to receive donations to an equity fund for their neighborhoods, to be kept in a local Equity Union and the funds allocated (equity grants) by a Board committed to community betterment and the likely success of the endeavor(s).
Equity Union – An Example
(rest of letter deleted)
[By the way, I presently have more income than is best for my
lifestyle, and now have recently gotten my hands on some extra money.
I'm not used to this situation. Do you have any suggestions about
where to 'invest' for the greater good, keeping in mind that my main
concerns remain first 'global heating', and then generally shorter
paths to possible eutopias vs. possible extreme dystopias?]
(rest of letter deleted)
I, too, have some discretionary funds that I would like to put into trust
for public service and altruistic endeavors. Perhaps, you and I (and others if we can find them) should investigate creating a local Peoples’ Equity fund. My idea on that is to see if we can open a group trust account in a Credit Union, where each trustee would have an individual account, yet allocations to community betterment projects could be done collectively, with each individual signing off on the amount that they want to dedicate to the project.
The idea would be that we would "invest" in community betterment projects with the care that we would expect to only get the par value of our "investment" back or we could choose to make individual and/or collective tax-deductible or maybe tax credit eligible contributions to "qualified" non-profit community betterment organizations (CBOs)
CBOs could be not-for-profit, non-profit or both.
The equity union(s) are not to replace credit unions, but to work in concert with them.
The role of the Equity Union is to alter the allocation purposes, priorities, and practices of the Investment "Class" (i.e. the owners of Banks and Corporations and Traders on Wall Street and similar venues).
Among the purposes of an equity union is to evolve us away from an investor "class", non-workers who live off capital gains and dividends. Rational and purposeful (for meeting community needs and reasonable wants) Equity participation, sharing, and granting would replace speculative equity investing, equity trading, and lending (usurious by definition and certainly in practice).
While credit unions primarily make mortgage loans, car loans, consumer loans, and in some special cases loans to small businesses, an equity union (with an account in a community development credit union) would specifically be dedicated to making equity grants, equity participation, and equity sharing allocations to community betterment organizations (CBOs).
When a financial organization makes a loan, it has first claim on net revenues. In other words, before a workers’ cooperative or a traditional sole proprietorship, partnership, or corporation can pay themselves, they must first pay back the interest (and eventually principal) on the loan.
In an equity union participation (as differentiated from an outright grant), any dividends to the equity union participants would be paid back subsidiary to the interests of the worker owners or community/worker owners of the CBO firm. The arrangement would be negotiable. If the negotiation calls for no dividends, whatsoever, then that would be called equity sharing.
Equity shares/participations in a CBO could not be traded and could only be bought back by the members of the Equity Union at par value. In other words, no capital gains would be allowed.