NationStates

Promoting Phoenix Cooperatives

---

Category: Free Trade || Strength: Significant || Proposed by: Heidgaudr

---

The General Assembly,

WHEREAS worker cooperatives have proven to be more resilient to economic recessions compared to traditional firms;

WHEREAS it is preferable for workers to retain their jobs rather than to become unemployed during times of crisis;

WHEREAS the World Assembly is uniquely poised to assist members and facilitate mutually-beneficial economic arrangements;

HEREBY enacts as follows:

1. Defines:
   
   1. “Worker cooperative” as a business owned in part or in whole by its workers, and which meets the following criteria:
      
      1. There is a clear, achievable path for a worker to become a worker-owner;
      2. All worker-owners have only one vote per person;
      3. The majority of the Board of Directors or other governing body is elected by the worker-owners;
      4. Profits or losses are allocated to worker-owners on the basis of patronage;
      5. Worker-owners democratically make business decisions, either through direct voting or by electing managers;
   2. “Company in crisis” as a privately-owned company that is undergoing bankruptcy proceedings, experiencing massive worker layoffs, whose owner has died and no direct inheritor can be found, or other similar situations wherein the immediate future of the company is threatened;
   3. “Worker buyout” as the process of workers collectively buying a company in crisis and converting it into a worker cooperative;
   4. “Unemployment benefits” as any form of welfare for workers who have been laid off or fired by their employers;
2. Workers for a company in crisis shall receive the right of first refusal for the purpose of organizing a worker buyout;
3. When negotiating a worker buyout, both workers and owners must act in good faith in an attempt to reach a fair and equitable arrangement;
4. When organizing a worker buyout, workers shall be allowed to withdraw, as a low-interest loan, a lump sum of their potential unemployment benefits for the sole purpose of buying out the company in crisis;
5. Establishes, as a sub-committee of the WA General Accounting Office (GAO), the Economic Advisory Council (EAC) and task it with the following:
   
   1. Provide legal counsel upon request for workers attempting a worker buyout;
   2. Create in cooperation with workers a business plan for recuperating companies in crisis;
   3. Determine whether a worker cooperative that would be formed from a buyout is likely to succeed;
   4. Approve or deny loan applications for workers attempting a buyout;
6. Workers attempting a buyout shall be able to apply for a low-interest loan from the EAC, so long as they meet the following criteria:
   
   1. Have formulated a business plan in cooperation with the EAC to recuperate the business;
   2. Have a high likelihood of succeeding, as determined by the EAC; and
   3. Request no more than the total combined unemployment benefits of all the workers, or for workers in nations without unemployment benefits, twice the amount of total combined unemployment benefits workers in a similar nation would receive;
7. RECOMMENDS members further support worker cooperatives within their borders;

Magecastle Embassy Building A5 wrote:"Against. This is too burdensome on economic freedom."

~Spencer Hemming,
World Assembly Ambassador,
The Empire of The Ice States

Heidgaudr wrote:

Magecastle Embassy Building A5 wrote:"Against. This is too burdensome on economic freedom."

~Spencer Hemming,
World Assembly Ambassador,
The Empire of The Ice States

"How is this burdensome on economic freedom? If anything, it makes economies freer and more prosperous: workers gain the ability to purchase struggling businesses, owners of failing businesses now have an additional avenue of exiting without losing money, and the WA makes a small amount of money long-term through the issuance of low-interest loans. Everyone benefits."

Magecastle Embassy Building A5 wrote:

Heidgaudr wrote:"How is this burdensome on economic freedom? If anything, it makes economies freer and more prosperous: workers gain the ability to purchase struggling businesses, owners of failing businesses now have an additional avenue of exiting without losing money, and the WA makes a small amount of money long-term through the issuance of low-interest loans. Everyone benefits."

"Section 3 restricts the economic activities of both businesses and workers. This is an undue infringement upon economic freedom."

~Spencer Hemming,
World Assembly Ambassador,
The Empire of The Ice States

Heidgaudr wrote:"Section 3 is a very mild requirement, Ambassador. Surely, the many other parts of the proposal more than outweigh this small restriction, do they not?"

Magecastle Embassy Building A5 wrote:

Heidgaudr wrote:"Section 3 is a very mild requirement, Ambassador. Surely, the many other parts of the proposal more than outweigh this small restriction, do they not?"

"Economic freedom is very important, and outweighs any other effects of the proposal."

~Spencer Hemming,
World Assembly Ambassador,
The Empire of The Ice States

1. 1. Do all loans sought pursuant to Article 4 have to go through the EAC (via Articles 5d and 6), or can member states provide their own loan facilities (as Article 7 may or may not imply)?
      
      
   2. If a member state or employer offers no "unemployment benefits," EAC loans can be sought due to Article 6c. But can an Article 4 loan still be obtained outside of EAC mechanisms, or must funding from elsewhere be sought?
      
      
   3. Further to Article 6c: what is a similar nation? Who decides what a similar nation is? If Tinhampton's economy is similar to that of Heidgaudr and The Ice States and Tinhampton has no unemployment benefits, can a Tinhamptonian buyout effort cite UBs in either Heidgaudr or TIS, or will the EAC make that decision for them?
      
      
   4. Unemployment benefits are "any form of welfare for workers who have been laid off or fired by their employers." For the purposes of Articles 4 and 6c, how long must such benefits last? (Keeping in mind that many forms of unemployment benefit are time-limited, may involve work requirements, and/or pay much worse than the jobs the workers were removed from. And UBI, in nations with no direct unemployment benefit, does not count at all.)
      
      
   5. To whom must a "low-interest loan" be repaid to? And how low can low-interest be? (Keep in mind - for instance - that some member states operate under Islamic law and forbid interest on loans. The EAC, for obvious reasons, does not.)
   
   
2. Article 5b requires that EAC-co-created business plans act to "recuperate companies in crisis." What is recuperation and what does it entail?
   
   
3. If "workers for a company in crisis" cannot complete a worker buyout and exercise their "right of first refusal" - whether due to a collapse in negotiations, the buyout failing mid-takeover due to technical or other reasons, or simply refusing to buy the company out - who's next in line to complete a prospective buy-out?
   
   
4. Article 3 requires that "a fair and equitable arrangement" be sought. What kind of arrangement?
   
   
5. What happens when a new worker co-operative that is already running the company wishes to change its ownership structure?
   
   
6. And looking at the more fundamental basis for the resolution: Is it really in the interests of the WA to create a committee to basically handhold groups of workers through the process of buying out their boss, and why? You say that "worker cooperatives have proven to be more resilient to economic recessions compared to traditional firms," but by the time a recession comes and a worker buyout is proposed, the recession has probably already started.

Simone Republic wrote:Not keen on this. Principally on political grounds at a personal level as I consider myself a conservative (small "c") in terms of economic policy.

Tinhampton wrote:Do all loans sought pursuant to Article 4 have to go through the EAC (via Articles 5d and 6), or can member states provide their own loan facilities (as Article 7 may or may not imply)?

Tinhampton wrote:If a member state or employer offers no "unemployment benefits," EAC loans can be sought due to Article 6c. But can an Article 4 loan still be obtained outside of EAC mechanisms, or must funding from elsewhere be sought?

Tinhampton wrote:Further to Article 6c: what is a similar nation? Who decides what a similar nation is? If Tinhampton's economy is similar to that of Heidgaudr and The Ice States and Tinhampton has no unemployment benefits, can a Tinhamptonian buyout effort cite UBs in either Heidgaudr or TIS, or will the EAC make that decision for them?

Tinhampton wrote:Unemployment benefits are "any form of welfare for workers who have been laid off or fired by their employers." For the purposes of Articles 4 and 6c, how long must such benefits last? (Keeping in mind that many forms of unemployment benefit are time-limited, may involve work requirements, and/or pay much worse than the jobs the workers were removed from. And UBI, in nations with no direct unemployment benefit, does not count at all.)

Tinhampton wrote:To whom must a "low-interest loan" be repaid to? And how low can low-interest be? (Keep in mind - for instance - that some member states operate under Islamic law and forbid interest on loans. The EAC, for obvious reasons, does not.)

Tinhampton wrote:Article 5b requires that EAC-co-created business plans act to "recuperate companies in crisis." What is recuperation and what does it entail?

Tinhampton wrote:If "workers for a company in crisis" cannot complete a worker buyout and exercise their "right of first refusal" - whether due to a collapse in negotiations, the buyout failing mid-takeover due to technical or other reasons, or simply refusing to buy the company out - who's next in line to complete a prospective buy-out?

Tinhampton wrote:Article 3 requires that "a fair and equitable arrangement" be sought. What kind of arrangement?

Tinhampton wrote:What happens when a new worker co-operative that is already running the company wishes to change its ownership structure?

Tinhampton wrote:And looking at the more fundamental basis for the resolution: Is it really in the interests of the WA to create a committee to basically handhold groups of workers through the process of buying out their boss, and why? You say that "worker cooperatives have proven to be more resilient to economic recessions compared to traditional firms," but by the time a recession comes and a worker buyout is proposed, the recession has probably already started.

Conklandi wrote:"How would you ensure that worker cooperatives don't simply revert back into for-profit companies? It would require a lot of regulations to ensure that less senior workers aren't vulnerable to coercion."

Potted Plants United wrote:OOC: Why is there "phoenix" in the proposal name but nowhere in the text?

1. Defines:
   
   1. “Worker cooperative” as a business owned in part or in whole by its workers, and which meets the following criteria:
      
      1. There is a clear, achievable path for a worker to become a worker-owner;
      2. All worker-owners have only one vote per person;
      3. The majority of the Board of Directors or other governing body is elected by the worker-owners;
      4. Profits or losses are allocated to worker-owners on the basis of patronage;
      5. Worker-owners democratically make business decisions, either through direct voting or by electing managers;

Simone Republic wrote:I am not saying that this cannot work in some specific cases, say in the presence of appropriate bankruptcy laws. I do agree that chapter 11 results in many chapter 7 liquidations in borderline cases, especially small businesses. Some kind of programme to encourage loans to workers as a bidder for bankrupt assets might work.

Potted Plants United wrote:OOC: Why is there "phoenix" in the proposal name but nowhere in the text?

Simone Republic wrote:

Potted Plants United wrote:OOC: Why is there "phoenix" in the proposal name but nowhere in the text?

The author is describing a concept of workers taking over factories and improving it to be better than the previous owners did. So it's just a term to encompass the resolution, as far as I can interpret it. Rarely do these things happen except in less sophisticated economies. I am not saying it can't work, just that it very rarely does.

Brezzia wrote:Brezzia supports initiatives to hand over the means of production to workers. However, we express doubts about the current draft.
We believe a worker cooperative should be owned and managed only by all its worker, thus we consider necessary the deletion of some part of Art. 1a:

1. Defines:
   
   1. “Worker cooperative” as a business owned in part or in whole by its workers, and which meets the following criteria:
      
      1. There is a clear, achievable path for a worker to become a worker-owner;
      2. All worker-owners have only one vote per person;
      3. The majority of the Board of Directors or other governing body is elected by the worker-owners;
      4. Profits or losses are allocated to worker-owners on the basis of patronage;
      5. Worker-owners democratically make business decisions, either through direct voting or by electing managers;

We also ask for further explanation about Art. 1a(iv).
Our delegation also suggests these changes: making Art. 1a(v) the new Art. 1a(i) in order to highlight the importance of democracy in decision making;

Brezzia wrote:substituting "Determine" with "Evaluate" in Art. 5c and "for" with "to the EAC by" in Art. 5d in order to avoid EAC deciding about loans not demanded to EAC.