Gongol.com Archives: March 2022

Brian Gongol

March 30, 2022

Iowa "Nonprofit" doesn't mean someone shouldn't be paid

The cooperative institutional structure is one of the best inventions to emerge from the 1800s. As an alternative to purely public ownership of an institution, cooperatives are a more market-oriented solution to supplying goods and services that are in demand, especially when the private sector shows insufficient interest in those markets. That can often be the case when the potential market is limited in size or exists under constraints that inhibit the potential for future growth. ■ That's why they have played an outsized role in serving rural areas: Member-ownership helps people to organize their demands and address them at an economic scale that can make them worth satisfying -- even if a profit-making entity would pass on the opportunity. As more industries achieve maturity and reach the limits of their potential growth, it may well make sense for cooperatives and other mutual forms of business to do more. ■ But it's going to be hard for that to work if we don't heed the words of one of the original cooperative founders. Benjamin Franklin, who organized the Philadelphia Contributionship as a mutual insurance company, was so fond of a phrase that he put it to use on one of the country's earliest coins: "Mind Your Business". ■ Franklin wasn't shy about his attitude that good citizens would tend to their affairs: "Neglect mending a small fault, and 'twill soon be a great one", he declared; and also, "Have you somewhat to do tomorrow; do it to-day." ■ In a story shining a well-deserved spotlight on the two smallest electrical co-ops in Iowa, the Des Moines Register notes that the people operating those systems "have to find people to replace them in jobs that are more community service than paying gigs". One of them is an 87-year-old volunteer. ■ The people who do that kind of work really are the salt of the earth. They're not alone; lots of communities depend heavily on volunteers or wildly underpaid employees to keep the lights on -- literally, in the cases of electrical co-ops. But hoping that someone will do valuable or even essential work for free when it requires skill and time is an exploitative mindset. ■ If people aren't competitively compensated to do difficult, skillful, sometimes unpleasant work, then the model providing that work is fundamentally broken -- even if it's in the form of a cooperative institution. It is a magnificent thing if someone chooses to donate their time and energy to their neighbors. But depending upon someone to do it without market-clearing pay -- at the age of 27, much less 87 -- borders upon insanity. ■ A lot of people adhere to wild forms of magical thinking: Some think (contrary to evidence) that everything gets cheaper if only it is run by the government. Others think (again contrary to evidence) that the for-profit sector can provide everything, right down to police departments and roads. ■ A healthy economy in a democratically-governed society is going to include elements of public ownership, vast amounts of private ownership, and lots of forms that take a third way, like mutual or cooperative ownership structures that don't seek to generate a profit. But if that third way is to be taken seriously, it cannot depend upon the goodwill of volunteers to do the essential. Even if some exemplary individuals are willing to give their labor away for the benefit of the public, the public interest isn't really served in the long term if it declines to pay them fairly.

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