In a new issue of the Principle 6 Newsletter, republished below, Mike Mercer challenges credit unions to embrace what makes them uniquely cooperative, arguing that “we could be entering a time when being unapologetically ‘cooperative’ will resonate well with most Americans.” Set against the backdrop of a soaring stock market and stubborn unemployment, income and wealth anxieties are playing out, “setting up a titanic political struggle between capital and labor,” the former president and CEO of Georgia Credit Union Affiliates and 2020 inductee to the Cooperative Hall of Fame writes.
“To be sure, credit unions will have to innovate to enhance their value proposition, especially around the digital channels. But, it’s time to lean into the cooperative business model… [and] extend differentiation to a place where the competition can’t (or won’t) go,” he adds.
Read the full issue of Principle 6 Newsletter below. And while you’re thinking about “cooperation among cooperatives,” take a moment to consider how you and your cooperative practice this principle. NCBA CLUSA is on a mission to document Principle 6 collaborations across the country so we can identify trends, document best practices and share this knowledge with you—our fellow cooperators!
Principle 6 Newsletter – The Time of the Cooperative
Issue 5 – September 16, 2020
Nearly 80 percent of Americans say they live from paycheck to paycheck. Economic inequality is metastasizing in America. Many people are rallying around universal basic income, or UBI, as part of the answer to these challenges. This concept—which takes many forms but generally means the government gives citizens money—has leapt from a fringe abstraction to a mainstream proposal with real political viability, although there are significant questions about whether and how it could work. – Yuan & Kitchener, The Masthead (The Atlantic), 8-15-18
Right now, corporations run two sets of books, in a sense. One uses the traditional financial measuring sticks required by investors—i.e., owners. The second uses the neotraditional KPIs that quantify the customer—repeat visits, customer acquisition costs, click-through rates, mileage points, scrolling behavior metrics, net promoter scores, even emotional micro-expression readings. – Bronson, AttentionSpan Media, 8-13-19
It’s only a slight logical leap to imagine an economic model evolving that blends the customer and the owner into a single set of books. A 3-dimensional P/L. Where the customer and the owner are on a single spectrum, with many who are both. Now, imagine for a moment that Amazon took some chunk of their equity—not all of it—and set it aside for customers, pro-rated by what each family spends on the site. – Bronson, AttentionSpan Media, 8-13-19
The Business Roundtable made headlines last month when it issued a statement redefining the purpose of a corporation to embrace so-called “stakeholder capitalism.” Whereas the group had previously supported the traditional view that corporations exist principally to serve their shareholders, the new statement outlines a modern standard for corporate responsibility that focuses on delivering value to all stakeholders—customers, employees, suppliers, communities and shareholders. – Fredrickson & Byron, PA, 9-23-19
In his book, Capital in the Twenty-First Century, Thomas Piketty goes to great lengths to illustrate the relative composition of income from labor and income from earnings on capital. By either measure, the concentration of income and wealth in the U.S. are significant and growing. The top 10% of wage/salary earners account for about 45% of total earnings. The top 10% also account for 75% of the nation’s wealth… the top 1% own more than 30%. The bottom 50% of the population, by contrast, account for less than 5% of total wealth. These levels of concentration were lower following the destruction of capital during the two world wars, but have been climbing since.
For several decades, the real purchasing power of most Americans has been stagnant. Income and wealth disparities have become a growing issue in public policy debate. Now, the juxtaposition of a soaring stock market and tens of millions without a job are setting up a titanic political struggle between capital and labor. Likely, this will find its way into deliberations about tax policies. But some are suggesting structural types of ‘fairness’ solutions. Universal Basic Income, Universal Basic Equity, Public Equity Dividends and (most recently) Cory Booker’s Baby Bonds are among the disparity reduction proposals being put forward. Meanwhile, corporate chieftains are proclaiming allegiance to the disingenuous concept of “stakeholder capitalism.”
IT’S A GREAT TIME TO BE A COOPERATIVE!
Credit unions and other co-ops are wired up to elevate the well-being of those being served beyond what the for-profits are willing or capable of doing. Consumers don’t trust big business or big government. As income/wealth anxieties play out, credit unions should be doing all they can to accentuate their cooperativeness. To be sure, credit unions will have to innovate to enhance their value proposition, especially around the digital channels. But, it’s time to lean into the cooperative business model… extend differentiation to a place where the competition can’t (or won’t) go.
It has occasionally been said that cooperation among co-ops is not natural behavior. Notwithstanding, cooperation happens a lot in the credit union world…because cooperation generates real benefits. And, because leaders like yourselves encourage and enable cooperation. But, competing (or doing it my way) is often more dominant in the DNA. Cowboys, beauty pageants, high-school football and Darwin (ie: individualism and winner-take-all contests) are culturally influential in the gene pool of U.S. credit union leaders.
Proclaiming “cooperative” is often regarded as being too much work at the street level. Easier to be “better banking” or “banking you can trust”… than “not a bank” or “different than a bank.” Explaining the credit union structure is too difficult and consumers don’t really care, the thinking goes. But times are changing. When outsiders are proposing co-op like structures and practices, it sounds like an opportunity for credit unions to strut the co-op regalia. For that to happen, CEOs will need to believe in the strategic differentiation power of the cooperative business model. More than a few already do!
As for the Rochdale cooperative purists… they’ll need to accept that co-op structural modernization could be a necessary path into the future (for capital acquisition, innovation, for-profit subsidiary ownership, etc.). Cooperation and credit unionism will take on new forms and features in the years ahead. But we could be entering a time when being unapologetically “cooperative” will resonate well with most Americans.
“It was the time of the preacher, in the year of ‘01…” – Willie Nelson
“It is the time of the cooperative…” – present day Thought Framers (like us)
Jim, write some music for our song!
Back in two weeks,