Programmers and Cheese-makers, Unite!
Martin Bartels
12 May 2021
New powerful platforms
In recent years, we have seen the astounding rise of companies that, with the help of sophisticated Internet-based platforms, make it easy for their customers to avail themselves of valuable resources, usually at lower prices. Globally standardised apps allow people to access chauffeur services or holiday accommodation, for example.
While they do not own the resources, the platform operators are very efficient intermediaries. There is increasing criticism from the owners of the resources to be mediated because they feel disadvantaged in the distribution of economic yields. There is a view that the management of the platforms, and in particular the shareholders, not only have the longer leverage due to their technical control of the allocation, but also make an excessive use of it in their favour. The grievance is "exaggerated extraction."
The accusation may lead courts and legislators to intervene to shift the power structure of the operating companies in favour of the resource owners. In such cases, the owners may be guaranteed a minimum of benefits.
The platforms may perceive themselves as global and thus not national. In fact, however, the resources which they allocate are always national. Nation states undeniably have the right to define standards for their territory.
Extraction
The question of the adequacy of extraction by shareholders is as old as the first incorporated company. The Dutch East India Company (“Vereenigde Oostindische Compagnie”), founded in 1602, was the first company to limit the personal liability of its shareholders to the nominal value of their shares and to focus the interest of the shareholders solely on extraction. The shareholders made their revenue through transactions with the shares and through the distribution of profits.
https://dutchreview.com/culture/history/voc-dutch-east-india-company-explained/
https://www.businessinsider.com/rise-and-fall-of-united-east-india-2013-11?r=DE&IR=T
It is in the nature of the corporation, even today and regardless of its unfortunate beginnings as vehicles for colonialism, that shareholders are keen on extracting profits without having to be interested in how these are generated. We can call failures and abuses of the model "accidents" or give preference to Peter Schumpeter's notion of occasional "creative destruction". Nonetheless, there can be no doubt about the model's historical success. Over the centuries the concept has evolved in the finer details, stimulated national economies and promoted technical progress. This aspect is not the subject of this article, so we will not delve into it.
A modern attempt to replace the extraction model: “ownership economy”
In order to get straight to the core of the question, we will now skip the classical economic debates on the topic of "extraction" and turn our attention to the issues triggered by the platforms which were mentioned at the beginning of this article.
On 14 July 2020 (French Revolution Day!) Jesse Walden published a passionate article on what he labelled the “ownership economy”
https://variant.fund/the-ownership-economy-crypto-and-consumer-software/ .
Taking the crypto space’s success story as a point of departure, he argues that in the programming sector there is not always a need for shareholders interested only in extraction. Rather, the programmers who create economic value could secure the economic advantage for themselves without having to share it with outsiders. He describes examples of platforms through which programmers, independent of their locations, serve their clients directly and put themselves in a more advantageous position through their shared independence.
SingularityHub staff together issued an impassioned call to break free from shareholder chains and instead build cooperative structures that give profits only to operators.
https://singularityhub.com/2020/11/12/can-the-ownership-economy-fix-internet-platforms/
David Richins argues particularly enthusiastically that with the "ownership economy" a new model is now available that stands between the two irreconcilable systems of capitalism and socialism and avoids their disadvantages: "Something new and different is born.”
https://www.youtube.com/channel/UC0gAiB_tl9I9WNwb1iKq2nw
The ideal habitat for this new model that the masterminds unanimously recognise is the blockchain, whose structure is considered ideal for the operation of egalitarian networks.
https://www.forbes.com/sites/mattspoke/2020/10/27/blockchains-and-the-ownership-economy/
There is a growing consensus that mature electronic platforms are now the means to connect service providers in such a way that they can successfully distribute high-quality services together and without external shareholders.
Back to planet earth
There are no reasonable arguments against the substance of the "ownership economy" approach. However it serves the good cause to bring the feelings of enthusiasm from the stratosphere back to the ground. In fact, the range in which this logic can claim validity is much larger than the authors cited expect:
Modern alignment of human resources
Much of the “ownership economy” logic is to be seen against the background of constantly improving global infrastructure for fast communication and an economic model that includes and rewards talents in certain modern work processes regardless of their location and solely with regard to the value of their contributions. Particularly the software industry’s Open Source movement makes valuable contributions regardless of the geography and origin of those involved. This also serves the recognised goals of diversity in the talent pools and integration of emerging market economies without forcing specialists to emigrate.
Economic necessities with mainly positive side effects, not idealistic objectives, are at work here.
The "ownership economy" is the continuation of a successful model
In the 19th century, when poor farmers had no capital to buy powerful agricultural machinery, they set up cooperatives with their savings. These then bought, maintained and used the expensive equipment together. In big cities, when low-income citizens could not afford to pay the rent, they set up housing cooperatives. These constructed and managed buildings that created affordable housing. In view of rising rents, membership in a housing cooperative is still an essential pillar for many people to secure their economic existence.
Individuals like
Friedrich Wilhelm Raiffeisen
https://www.youtube.com/watch?v=SwIfwgLFouU
https://www.iru.de/about-iru/,
Robert Owen
José María Arizmendiarrieta
https://www.youtube.com/watch?v=QPhk-ljfpdI
https://www.youtube.com/watch?v=zO9GicoqCTM
the Friendly Societies movement
https://omelas.co.uk/2019/08/16/the-forgotten-history-of-friendly-societies/
and the National Cooperative Business Association
stand at the beginning of economic models based on common ownership without external shareholders. A very large number of interconnected cooperatives are guided by this model and have become a powerful and valuable part of many economies. They are serious competitors of private enterprises and public institutions. One of their strengths lies in the loyalty of their members, who are co-owners.
Cooperatives do not refuse to make profits. They differ from charities, which do not pursue profit as a goal at all. Cooperatives do not know the pressure to pay dividends to external shareholders. Since the shareholders of the cooperatives are themselves, in whole or in part, the often numerous users or beneficiaries, they easily become rooted in society.
Cooperatives have conquered substantial market shares in many sectors: agriculture, housing, financial services, purchase and sale of e.g. shoes, electronics, foodstuffs, forestry and healthcare.
https://ec.europa.eu/growth/sectors/social-economy/cooperatives_en
Mondragón is the biggest cooperative group of the world
https://www.nytimes.com/2020/12/29/business/cooperatives-basque-spain-economy.html
https://www.youtube.com/watch?v=L9sV6peQgUk
On average, cooperatives are more stable in crisis situations than companies. The reason for their resilience may be that most cooperatives were created in response to emergencies. The defence mode is an essential part of their DNA.
As early as the 19th century, many nation states began to additionally stabilise cooperatives beyond their articles of association through statutory foundations. They continue to adapt this legislation to new requirements.
Close ranks
The study of the historical causes and the resulting ethical foundations of successful cooperatives is undoubtedly exciting. However the representatives of the "ownership economy" approach are concerned with concrete results. They will know that success is contagious. So the best approach to get their ideas on the road to success quickly and without unpleasant surprises is to take a pragmatic approach by talking to firmly established and dynamically growing cooperatives. These are open by nature.
Two questions seem particularly relevant:
• How can a cooperative expand quickly and sustainably where the market is mature and very competitive?
• How and in which areas can the new electronic platforms achieve the most valuable effects?
The proposal could be to talk to cooperatives that have managed to build up strong positions in very demanding markets. Additionally, cooperatives that, like the representatives of the "ownership economy", have potential to increasingly achieve their success with modern electronic means, should be of particular interest:
(i) Italian cheesemakers
Italy is a country with zero tolerance for bad or mediocre food. So this is a hugely challenging market for suppliers.
https://www.bbc.co.uk/reel/video/p09cstbb/the-surprising-link-between-food-sin-and-the-oral-phase
One of the globally highly valued top products is Parmesan cheese, “Parmigiano Reggiano”. This product is the result of centuries of accumulated expertise and continuous ambition to deliver best quality.
https://www.parmigianoreggiano.com/
85% of the Parmigiano factories are cooperatives co-owned by the dairy farmers who provide the milk
http://www.bbc.com/travel/story/20190127-italys-practically-perfect-food
https://caseificiofiordilatte.it/cheese-factory/
https://poggiolicoopcasearia.it/en/our-story/
https://www.youtube.com/watch?v=oj2wrNnhMpc
and are fighting to secure their prosperity with the best technical equipment and methods.
The farmers’ cooperatives are also innovative in terms of financing, because they use the cheese as collateral for bank loans already during the slow maturation process.
https://www.reuters.com/article/us-italy-bonds-parmesan-idUSKCN0VB1OQ
The wealth of experience in conquering and defending mature markets will be impressive.
(ii) Hamburg taxi drivers
It is a mistake to believe that classic regulated taxi companies are moribund. In Hamburg, a traditional taxi company, a cooperative, has positioned itself in such a way that the new chauffeur services find it difficult to compete, despite lower prices.
https://www.taxi211211.de/en/home.htm
"Hansa-Taxi" used to be and still is the market leader in Hamburg. The company is faring well even under the conditions of the COVID pandemic. The recipe for success is a well-developed combination of classic and new success factors:
• The customer orders a ride either via a now popular app or by phone. There is no compulsion to use the electronic route, so customers with more traditional preferences feel no hurdles.
• The response is pleasantly personal for registered customers and always extremely polite.
• The company only uses only modern and well-maintained cars.
• It immediately addresses special needs (e.g. child seats).
• Special services (e.g. pick-up from the airport, tourist guides) complete the offer.
• The drivers have undergone special training so that the passenger feels as if (s)he is being accompanied by a first-class butler in terms of courtesy and assistance.
The cleverly designed combination of modern technology with the traditional personal needs of customers has an inclusive effect simply because it appeals to more people. No customer senses an attempt to force them to use electronics, not even a nudge, but everyone has the opportunity. Hamburgers honour the freedom to choose and consciously pay a higher price to the cooperative than they would for the use of the new chauffeur services.
It is likely that the renunciation of pushing the customer down a particular use case scenario alone is a key to customer satisfaction and thus to market success. Forcing the customer to use a service a particular way is not free of coercive elements. It is better to do without it.
The Hamburg cooperative will have a few more recipes for success that are valuable for the masterminds of the "ownership economy".
Further expansion
It is probably fair to say that the evolving model of the "ownership economy" fits harmoniously into the cooperative movement, adding the use of location-independent electronic platforms for the coordination of high-value human resources as an additional building block.
Advanced blockchain technology is already being used where cooperatives started, namely in the distribution of usage rights for agricultural machinery.
In which areas can the next successes be achieved using the absence of extraction by external shareholders?
In addition to programming, obvious areas are those in which high-quality online services are already beginning to develop and can be expected to grow qualitatively: Education, media, medical counselling. The prognosis for finding further areas of application is promising. And creativity, just like electronics, needs no borders.
We know for sure that cooperatives are more resilient than corporations and have the ability to enrich the market with high quality services and goods, the quality of which they continue to perfect. This leads to the next question, which we cannot answer here:
How "agile" are they in the modern sense of the word?
The stumbling block
The issue of immigration is stirring up emotions all over Europe, but in order to consider the appropriate rational response, we need to first distinguish between the different forms of migrations. In fact, only one of the four categories of immigration distinguished below is to be classified as a challenge:
- Migration of High-Net-Worth Individuals (HNWI)
Let's start with the probably smallest group of migrants, which is also the least debated: very wealthy people who are able to move from one country to another with ease. Members of this group seldom encounter rejection and in some cases are actively sought after by countries.
HNWI can weigh up their motives and choose their targets according to their criteria. These include, for example,
- security for personal life and wealth
- personal freedom
- quality of life
- quality of the healthcare system
- landscape or climatic preferences
- tax rates
- family ties
- cultural affinity
- language
- quality of schools and universities.
Protection of wealth is frequently a major motivation for migration among the super wealthy and countries with low or no income tax are popular in this regard. On the other hand, while certain countries encourage HNWI to migrate to them, the benefits are not always as great as they might expect, especially when the migrant’s assets do not always accompany them to the country they are settling in. Furthermore, with laws that say an individual faces taxation if they spend more than 182 days in a country, those wishing to avoid this, simply rotate through different countries each year thus avoiding paying any income tax at all.
The number of migrants from this group is increasing, and the countries concerned are well known.
This group of migrants does not pose major challenges to European states.
2. Migration within the European Union: everyone with an EU passport
Article 45 of the Treaty on the Functioning of the European Union and Regulation (EU) No 492/2011 on freedom of movement for workers within the Union guarantee the freedom of every EU citizen to take up a job in any other state of the Union and to settle there with their family. This freedom of choice is a cornerstone of the European Union. It has led to significant migratory movements, which, due to the enlargement of the Union into Central Europe, have been accelerating gradually since the 1990s. In most cases, families put down roots in their new place of residence and do not move back to their countries of origin, although they maintain ties there.
The disadvantage of this migration is that citizens whose education took place at the expense of their home states now move to member states with higher wage levels and better career prospects, in effect creating what is known as an internal ‘brain drain’ scenario, where talented workers move out of the country of origin, depleting the national workforce. The receiving states thus strengthen their national economies at almost zero cost to them and at the expense of domestic countries responsible for their education and socialization.
These implications were clear from the outset, but the net benefits from a large economic area with free movement of people, capital and goods outweigh the drawbacks. Free movement has had a predominantly positive impact on the prosperity of citizens. Changing this structure and enacting new restrictions on internal migration would have a negative impact on the powerful new industrial structures that have emerged over the years.
Traditionalists should be very careful when they argue against free migration within the Union as there is a long-standing practice of it within the continent. The last two centuries have seen massive migrations within the area that now makes up the European Union: the countries of origin were mainly Italy, Poland and Greece. These movements are themselves a valuable component of European identity and increased wealth.
3. Migration from outside the European Union: skilled labour
While the world population is still increasing, a simultaneous decline in birth rates has been evident worldwide for many years. The trend is more pronounced in Europe, where population numbers are increasingly moving towards shrinkage.
European economies today face an irreversibly negative trend with an average in the area of 1.5 births by women combined with an increasing shortage of skilled labour. The labour bottleneck is particularly severe in the areas of construction, healthcare, science, information and communications technology, engineering and mathematics. For Europe, the scarcity of skilled human resources reduces the economic strength of a continent that has few natural resources and is compelled to rely on competitive industries to prevent its decline.
Clearly it is not possible to fill the gaps in the labour market out of the continent's existing population. This would not change even if Europeans could be persuaded to sharply increase the current birth rate. In that unlikely case it would take at least two decades for a generation to become visible in the labour market.
Many industrial processes and services can be designed through additional automation in such a way that even fewer human resources are needed than now. This may mitigate the bottleneck somewhat, but would not eliminate it.
If there is no quick turnaround, Europe’s economies will inevitably enter a shrinking process.
The only possible countermeasure is to enter the global competition and attract talent for the known gaps in the labour market. This has been crystal clear for a long time, but fear of traditionalist and conservative voters’ sensitivities has led to most governments to only address the issue in the abstract and try to cook the necessary debates on a low flame. Slogans like "We are not a country of immigration" earn significantly more public applause in Europe than "We urgently need lots of immigrants". Yet everyone knows from their own experience that when a tooth hurts, it is better to go straight to the dentist. Postponing the treatment makes the pain worse.
Nevertheless, increasingly fierce competition at the international level has developed to bring as much talent as possible into the countries. In the process, even industrialised countries are taking skilled workers and students away from each other. The expression "skills wars are the new trade wars" is not an exaggeration.
The fight for human talents is not much different from the struggle for other scarce resources such as raw materials or technical components. The difference is that the competition for material things is rarely a source of cultural friction. Imported goods and commodities don’t arouse sensitivities among traditionalist voters. When it comes to human migration however, public decision makers tend to tread more cautiously and thus do not give the issue the visibility which corresponds to its actual relevance.
The Europeans are now operating a "Blue Card" system, which allows people from outside the Union to take jobs offered to them and apply for nationality after five years. This is a relatively arduous path for applicants. The “Blue Card” approach is less attractive than the more successful American "Green Card" system in which holders are granted permanent residency from the outset, and after five years they can apply for US citizenship.
Under the present circumstances the winners in the competition for talent are likely to be those countries that have a tradition of continuous immigration, have a long history of selective immigration and have the lowest bureaucratic barriers for immigrants who fit into their labour markets. These would be, for example, Canada, the USA and Australia.
4. Migration from outside the European Union: refugees, skilled or unskilled
The right to be granted asylum is not only enshrined in national constitutions and laws, it is also based on:
- Article 7 of the International Covenant on Civil and Political Rights of the United Nations
- the 1951 Refugee Convention
- the 1967 UN Protocol relating to the Status of Refugees
- Article 18 of the Charter of Fundamental Rights of the European Union
- the European Convention on Human Rights (ECHR)
The right to asylum protects people irrespective of their origin who are exposed to political, racial or religious persecution in their home country. These rules, born out of painful historical experiences that includes the societies of Europe itself, are more than set in stone. All European national states are firmly bound by them. Debates about their abolition are as pointless as those about the abolition of gravity. Yet they are common.
The legal criteria do not extend to refugees who seek to migrate to another country for economic or climatic reasons and who are therefore unlikely to be regarded as refugees from a legal perspective. In order not to be classified unfavourably, refugees may exaggerate or embellish stories of persecution in their country of origin. It is difficult for the authorities of the receiving countries to properly verify the truth of such statements.
The examination procedures are complicated and take a long time. Even if an application is rejected, expulsion to the country of origin tends to be the exception. Suffice it to say that the length of procedures creates new social realities as applicants more or less take root, children are born and are shaped by the national school system.
Growing influx of refugees
The number of refugees is considerable and on average it has been increasing strongly over the years. According to Eurostat's findings, the number of asylum seekers in the Union in 2022 was 881,220 persons, up by 64% compared with 2021. Once individuals have been recognised as eligible for asylum, a second wave of immigration begins when family members are allowed to join them.
Some member states of the Union pursue a restrictive policy by enforcing the legal requirements very strictly or selectively, or even by infringing them. This leads to greater refugee flows to those countries that comply more closely with the rules.
As the authorities of the countries with the highest numbers of refugees become increasingly overloaded with examination procedures, processing times are getting longer. The accommodation of asylum seekers in camps is pushing municipal administrations to the limits of their capacity.
Xenophobic currents in the public debate are gaining support. Surprisingly, part of the growing opposition consists of former refugees and their descendants born or raised in the country who have obtained citizenship and successfully achieved social status in their new homeland.
Counterproductive impulses
When frightened or even traumatised people from a different cultural background enter a European country for the first time, their first impressions have a powerful influence on how they think and feel. In the case of many refugees, their first experiences are often crowded refugee camps, questioning, long waiting times, further questioning, etc. Bureaucracy weighs them down, and there is no end in sight.
While they are in limbo for a long time, the idea that dealing with bureaucracy is the way to a better life is imprinted in the immigrants' minds. This puts people on the wrong mental tracks and impairs their chances to settle in an industrial society. While they may become adept at filling out forms, they are missing essential cultural impulses and opportunities to learn and improve on valuable skillsets for an industrial economy.
The material interests of the immigration countries
If the member states want to maintain their prosperity, a proper discussion on immigration would mean that all four categories need to be considered.
The first two categories (HNWIs and citizens of other EU countries) do not pose major problems.
The third category ("Blue Card programme") is presently far too small. So a more thorough approach is needed.
This thorough approach could involve giving priority to pre-skilled immigrants from outside the European Union. Labour offices and companies know exactly which human resources are needed. This can be done with low bureaucratic barriers, high-quality language courses to introduce immigrants to the national mentality, help in finding accommodation and schools for children, advice on access to banks and tax advisors, and perhaps even tax holidays for a few years. The threshold before obtaining citizenship should be low for people who prove to be valuable contributors. Employers can be involved in the process of accelerating integration as they themselves have a legitimate interest of their own and will be supportive.
The approach to dealing with the fourth category (asylum seekers) can be to abandon the illusory goal of carefully assessing at the outset whether an asylum seeker has a legal right to stay. Any person whose identity has been verified, who has not already applied for asylum in another member state of the Union and against whom there are no security concerns, should immediately be offered a language course and a first job determined by the labour authorities. This is inconvenient for the applicants, but it provides them with a primary orientation and momentum. It is also more beneficial to their human dignity than the endless dependency on bureaucratic processes. If they prove themselves within a year, for example, they should be given a residence permit and the right to choose a job. This would also give a chance to people who would not be entitled to asylum but who fit into the labour market.
Formal procedures for asylum applications would be resumed only for applicants who cannot be integrated into the country's labour market. Applicants who do not meet the criteria for asylum should be included. Delinquent applicants should be excluded.
For the labour market, the reason for entering the country is not relevant. What counts is a committed and reliable workforce. So the primary responsibility here should lie with labour ministries and administration, while the overburdened immigration authorities are given some air to breathe.
War-disabled, traumatised and seriously ill people should continue to be given special protection and attention. Unfortunately, their number is not small.
Canada, a country with not quite 39 million inhabitants, is an example of a country that derives and updates its demographic needs very accurately from the labour market. There are numerous national and regional programmes that make it easy for needed immigrants to quickly gain a foothold in the country. And the country additionally uses the pool of asylum seekers to enrich the labour market.
“ . . . the Government of Canada is maintaining its target of 485,000 permanent residents for 2024 and completing the final step to reach 500,000 in 2025. Starting in 2026, the government will stabilize permanent resident levels at 500,000, allowing time for successful integration, while continuing to augment Canada’s labour market.”
Conclusion
The demographic gap in European countries is a well-documented fact. The EU's population is ageing and shrinking, and there are not enough people to replace the working population.
This demographic contraction will lead to a decline in economic performance and prosperity. The only way to avoid this is through well-managed immigration.
Traditionalists and xenophobes are against immigration, but they have no realistic solutions to the demographic gap. If we give in to them, we will condemn our economies to decline.
To develop a successful immigration programme, we should look to countries with a long history of immigration . These countries have shown that it is possible to manage immigration in a way that benefits both the host country and the immigrants.
Authorship disclosure:
Fully human generated