Strictly Business: Building a new box gives choice
Sunday, April 15, 2012
In November, I was vacationing in New York when a large group of Occupy Wall Street protestors set out to block traffic on the Brooklyn Bridge. Fresh off a visit to the nearby Sept. 11 Memorial, we took in the political theater of demonstrators and police jousting for control of Lower Manhattan’s most-famous artery.
The demonstrators temporarily cut off bridge traffic, then the crowd dissipated with a quickness that can only happen in subway-rich Manhattan.
By this time, Occupy Wall Street had been pounding away at the nation’s financial institutions for two months and spawned sympathetic like-minded groups in cities across the country, including Vancouver. It also had been the inspiration for an Internet-driven Bank Transfer Day, which urged people to move money from banks to credit unions. Many responded; in Washington, credit unions picked up 104,000 new members in 2011, with much of that growth in the year’s fourth quarter.
Usually, leaving one company means choosing another that might not be much different. What’s striking about the public backlash against banking institutions is that, with credit unions, consumers had a distinctly different alternative. Credit unions don’t have customers; they have members who, whether they know it or not, have management control. They can help choose a board of directors or run for the board themselves.
Although their institutional history dates to mid-19th century England, credit unions really took root in the U.S. when Congress passed the Federal Credit Union act in 1934, in the depths of the Great Depression.
Bankers are perpetually rankled by a government regulatory structure that favors credit unions with lower taxes, and there are ongoing battles as credit unions seek to expand into services now offered only by banks.
But consumers who fairly or unfairly blame banks of every stripe for contributing to their struggles in the Great Recession have benefited from competition from this institutional parallel universe. For those eager to think outside the box, credit unions offered an entirely new box.
American history is filled with examples of similar parallel institutions that have risen in response to political, social and economic movements. Many hospitals were launched by religious groups and remain nonprofit to this day. The Kaiser health system, founded by industrialist Henry Kaiser for benefit of his far-flung workers, also remains nonprofit.
In the retail world, REI looks like many other stores but is a co-op that provides a rebate in its profitable years.
Co-operatively owned health food stores have not flourished on a large scale, although the Vancouver Food Cooperative, owned by its members, continues to grow.
In the technology world, Mozilla, with its Firefox Web browser, operates as a nonprofit group and competes directly against business powerhouse Microsoft.
Speaking of technology, the Internet offers infinite possibilities to create new boxes for organizing and funding business models outside the traditional mold. Perhaps, some institution born today will create a new box to be tapped in a future time of public discontent.