diff --git a/JoshHeaps.Net/Content/Socialism/open-problems.md b/JoshHeaps.Net/Content/Socialism/open-problems.md index dcf1ced..e6feadd 100644 --- a/JoshHeaps.Net/Content/Socialism/open-problems.md +++ b/JoshHeaps.Net/Content/Socialism/open-problems.md @@ -17,7 +17,7 @@ An honest list of what the model hasn't solved yet, most dangerous first. 4. **Is the lock too rigid?** A co-op that should be sold (a better operator exists, the members want out) can only go to another co-op. If the co-op sector is small, that buyer pool is tiny, and viable firms may be liquidated instead of rescued. The federation as buyer of last resort is a partial answer. Critics on the right add a sharper version: a lock that outlasts a repaid loan by generations is a permanent restriction on selling property, bought with one loan, and it binds members who never agreed to it. The lock is now built to hold in layers, including an independent lock share and rules against selling the business piece by piece ([The Lock](the-lock.md#how-the-lock-is-made-to-hold)). Its biggest legal gap is bankruptcy: federal bankruptcy law generally overrides limits on selling a bankrupt company's property, so the lock only holds in bankruptcy if Congress amends that law. [When a Locked Co-op Goes Bankrupt](bankruptcy.md) drafts that amendment. It's modeled on how bankruptcy law already treats charities. Only co-ops can buy a failed co-op whole, its workers can keep it running and bid with the wages they're owed, and creditors who never chose to lend are paid the lock's cost from the federation fund. It still needs Congress, a later Congress can repeal it, and while the co-op sector is small, some viable businesses will be broken up for lack of a co-op buyer. Italy offers a softer model: a co-op there can convert into an ordinary company, but its accumulated reserves go to the co-op development fund, not to the members ([Has This Been Tried?](precedents.md#italys-co-op-funds-coopfond-and-the-marcora-law)). That would keep the part of the lock that stops members cashing out what earlier generations built, and drop the part that stops a firm from ever changing hands. -5. **Scale.** *(Partly answered.)* Even a total success at pilot scale leaves most workers in conventional firms. The labor-market effect needs a sector large enough to move wages, and nobody knows how long growth to that size takes, if it happens at all. That's the price of not forcing it. [After a Pass: How Big, How Fast](scale.md) works through the numbers: even growing at twice the recent pace every year, co-ops would take about 19 years to reach 1% of today's private jobs. Growth after a pass comes in capped stages sized to demand the reviewers certify, and the labor-market effect gets its own test, by lottery, in local markets where co-ops could become a large share of one kind of work. Still open: the closest evidence cuts both ways (big retailers paying more didn't lift other employers' pay; hospitals hiring nurses did), the local test can only find fairly large effects, and co-ops may never become a big enough share anywhere to find out. +5. **Scale.** *(Partly answered.)* Even a total success at pilot scale leaves most workers in conventional firms. The labor-market effect needs a sector large enough to move wages, and nobody knows how long growth to that size takes, if it happens at all. That's the price of not forcing it. [After a Pass: How Big, How Fast](scale.md) works through the numbers: even growing at twice the recent pace every year, co-ops would take about 19 years to reach 1% of today's private jobs. Growth after a pass comes in capped stages sized to demand the reviewers certify, and the labor-market effect gets its own test, by lottery, in local markets where co-ops could become a large share of one kind of work. Still open: the closest evidence cuts both ways (big retailers paying more didn't lift other employers' pay; hospitals hiring nurses did), and co-ops may never become a big enough share anywhere to find out. A first-draft power calculation from public pay records ([The numbers, in a first draft](scale.md#the-numbers-in-a-first-draft)) says the local test could only see an effect of about 5% of pay, bigger than the union evidence suggests a 10% co-op share could produce. So on public numbers the test fails its own rule and wouldn't run. Unless better records change that, the labor-market effect may stay untested. 6. **Political durability.** *(Partly answered.)* Gradual construction invites gradual repeal. [Making It Last](durability.md) builds the bank to survive a hostile government: the lending standards and the test are fixed in law, board vacancies can't freeze lending, the verdict says "not tested" rather than "failed" if the bank turns away applicants who meet its own standards (every rejection is re-scored, the line is more than 1 in 10 clear passes turned away, and the result has to be one those applicants could have changed; see [the line](durability.md#when-rejections-mean-not-tested)), and repeal can't unlock the co-ops. Still open: after the Supreme Court's 2026 ruling any president can replace the bank's board; money not yet lent can be taken back in a budget bill; the lock's bankruptcy protection depends on a federal law that can be repealed; and at pilot scale the sector has no real constituency. The 1-in-10 line is a judgment call with no benchmark behind it. The bank's law lets applicants and borrowers sue to enforce its deadlines and signed loans ([Who can go to court](durability.md#who-can-go-to-court)), but that's untested, lawsuits are slow, and if the Justice Department won't defend the law itself, the people left to defend it may not be allowed to. The Constitution probably requires that the board have the last word on each loan, so the board can overrule its staff, only in writing, by named vote and in public ([Who has the last word](durability.md#who-has-the-last-word)). Whether the credit officers can keep protection from being fired after *Slaughter* is unsettled, and a president who empties the board hands its power to the Treasury Secretary. diff --git a/JoshHeaps.Net/Content/Socialism/scale.md b/JoshHeaps.Net/Content/Socialism/scale.md index 2a2b615..c277d02 100644 --- a/JoshHeaps.Net/Content/Socialism/scale.md +++ b/JoshHeaps.Net/Content/Socialism/scale.md @@ -71,8 +71,8 @@ The same idea can test co-ops. ### Where - **A few kinds of work** where the pilot showed co-ops can compete. At least one should be work where employers really set pay. In home care, for example, pay depends heavily on what Medicaid reimburses, so employers may not be free to respond. Where that's true, changes in reimbursement are measured and controlled for. -- **Local labor markets drawn by lottery,** from a pool whose rules are written into the charter: labor markets defined by commuting patterns, a set size range small enough that co-ops could plausibly become a large share of the work, and local governments that opt in. The draw is public, and its random seed is published in advance. Members of Congress can't add or remove places. -- **Different levels of help, not just yes or no,** as in the French experiment: some markets get none, some get a moderate level, and some get a high level of outreach and [help before the first loan](before-launch.md), including outreach to owners who might sell to their workers ([When an Owner Wants to Sell to the Workers](buyouts.md)). Each chosen market gets a minimum outreach budget, so a hostile administration can't quietly starve it. +- **Local labor markets drawn by lottery,** from a pool whose rules are written into the charter: labor markets defined by commuting patterns, with 2,000 to 4,000 private-sector jobs in the chosen kind of work (big enough to measure, small enough that co-ops could plausibly hold a real share), and local governments that opt in. A market counts as opted in only if the governments covering most of its workers do. The draw is public and made within states, so markets are compared with others under the same state minimum wage and Medicaid rates. Markets that border a high-help market are left out of the comparison, because workers and employers cross those lines. Its random seed is published in advance. Members of Congress can't add or remove places. +- **Help or none.** Half the markets get a high level of outreach and [help before the first loan](before-launch.md), including outreach to owners who might sell to their workers ([When an Owner Wants to Sell to the Workers](buyouts.md)). The other half get none. The French experiment used several levels, but a middle level would cost a third of the budget and, with this few markets, add almost nothing to what the test can detect. The help runs for five years. The charter sets a minimum budget, so a hostile administration can't quietly starve it: $300 a year for each job in the chosen kind of work in the market, in today's dollars, rising with inflation. That's my first guess, sized in [the numbers below](#the-numbers-in-a-first-draft). It's paid from its own appropriation, not from loan money, and counted in the bank's published cost per co-op job. ### What doesn't change @@ -80,7 +80,7 @@ The same idea can test co-ops. ### What gets measured -- **What happens to co-ops.** Their share of the work in each market, with a minimum share filed in advance that counts as "reached." +- **What happens to co-ops.** Their share of the work in each market, with a minimum share filed in advance that counts as "reached." New co-ops and buyouts of existing firms are counted separately. A buyout changes who owns a job but adds no new demand for workers, and the evidence above suggests new demand is what moves other employers' pay. Co-ops that move in from outside the market don't count. - **What happens to conventional employers** in the same kind of work: pay, turnover, hours, and working conditions where records exist, like injuries. - **Who gains.** Results by gender, race and ethnicity, and co-op membership compared with the local workforce. Most home care and cleaning workers are women, many of them Black, Latina or immigrant workers, and the union evidence found much smaller gains for women. - **Whether co-ops actually let people in.** Co-op job openings, how long it takes new hires to become members, and the share of work done by non-members. A large co-op sector that doesn't hire is no outside option for anyone. @@ -90,7 +90,20 @@ The same idea can test co-ops. ### Filed in advance -The markets, the kinds of work, the measures, the analysis and a power calculation are filed before the draw. The power calculation states the smallest effect the test could detect. The goal is on the order of 100 markets. If the smallest detectable effect is bigger than any effect that's plausible, the test isn't run, because an expensive test that can't find anything isn't worth running. +The markets, the kinds of work, the measures, the analysis and a power calculation are filed before the draw. The power calculation states the smallest effect the test could detect. If that's bigger than any effect that's plausible, the test isn't run, because an expensive test that can't find anything isn't worth running. + +### The numbers, in a first draft + +These are my own rough figures, from public data. The filed version is redone by the independent team with the detailed records. On these figures, **the test fails its own rule.** + +- **How noisy pay is.** I took the Bureau of Labor Statistics' county pay records for home health care, services for elderly and disabled people, and commercial cleaning ([BLS county data, 2014–2024](https://www.bls.gov/cew/downloadable-data-files.htm)). In counties with 2,000 to 10,000 private-sector jobs in the work, average weekly pay rose by quite different amounts over five years, both from 2014 to 2019 and from 2019 to 2024. Comparing counties in the same state, the typical spread (the standard deviation) was about 8% to 11%. Past growth didn't predict future growth. Weekly pay mixes hourly pay with hours worked and with who's employed, so the Census records, which can follow the same workers over time, could be less noisy. I haven't been able to check that. +- **The smallest effect the test could find.** With a 9% spread and 100 markets, 50 with help and 50 without, the test would reliably detect a difference of about 5% in pay at employers other than co-ops. "Reliably" means an 80% chance of finding an effect that size, with a 5% chance of a false alarm. There may not be 100 markets to draw from. I count only about 100 counties of the right size in each kind of work, in states with at least two, before any opt out. +- **What's plausible.** The only guide is the union evidence above: men's pay about 6% higher where unions were about 15 points more common, or about 0.4% for each point. Women's gain was about $900 a year against men's $3,200, and most home care workers are women. It came from comparing places, not from an experiment, and a co-op's pull may not grow point by point the way this assumes. At a 10% co-op share, the men's figure suggests an effect of about 4%, and the women's about 1%. +- **So the rule says no, for now.** Both of those are below 5%. The filed rule compares the smallest detectable effect with the union figure, weighted by how many men and women do the chosen work. On public numbers it fails for every kind of work I checked, and fails badly for home care. The test only runs if the independent team, using the detailed records, shows it passes. If it never passes, the local test isn't run, and the page says what that means: the labor-market effect stays untested. A smaller effect, like the union one for women, is probably too small for any affordable local test to see. +- **What counts as "reached."** If the test does run, help markets must average at least 10% of the hours in the chosen work done by workers at new co-ops, measured in year five by the independent team from wage records. That's ambitious. The pilot's own help is judged against about 32 extra co-ops from about 250 founding groups ([Help Before the First Loan](before-launch.md#the-cost-ceiling)), roughly one in eight. At that rate, 10% of a 2,000-job market, about seven co-ops of 30, would take something like 55 founding groups in one place. So the test also runs only if the pilot's results make that reachable. +- **A checkpoint, so the money isn't wasted.** If help markets average under 4% at the end of year three, the help stops and the result is "not tested." The same team audits whether the help was actually delivered. If it wasn't, the result says so, and it's reported as a broken promise, not as co-ops failing. Pay in the markets is still tracked for the full five years. +- **What it costs.** In a 2,000-job market, seven extra co-ops at the pre-launch help's own limit of $400,000 each cost about $2.8 million, or $280 a job a year over five years. Hence $300 a job. With 50 help markets averaging 3,000 jobs, that's about $225 million over five years. None of it is lending. Loans still go through the bank's normal rules. +- **One main measure.** The main result is filed in advance: the pay of workers who stay in their jobs at employers other than co-ops, in one kind of work. Everything else, including other kinds of work, groups of workers, new hires' pay and the share of workers below a low-pay line, is reported with a correction for testing many things at once. Employers that set pay across many markets, like home care chains, are reported separately, since they could carry any response into the markets without help. **This test decides nothing by itself.** It isn't part of the pass-or-fail rule, which stays about whether co-ops can compete. Its results are published for voters and Congress to weigh. If co-ops never reach the filed share in the chosen markets, the result is "not tested." If they do and conventional employers don't change, the result is "no effect," and it's reported that way. @@ -98,7 +111,7 @@ The markets, the kinds of work, the measures, the analysis and a power calculati - **Nationally, it's slow.** Even a clear pass likely means decades before co-ops are common enough to change most workers' options. Nothing here speeds that up. Other policies, like sector-wide wage boards and support for unions, aim at the same goal faster. This model doesn't replace them. - **The effect is unproven.** The closest evidence cuts both ways: big retailers paying more didn't lift others' pay, and hospitals hiring nurses did. Co-ops might differ from both, because they offer ownership and a vote, not just pay. That's what the local test is for. -- **The local test may be too small.** Even with about 100 markets, only a fairly large effect will show up. Co-ops may never reach the filed share anywhere. And the union evidence behind the scale estimate comes from comparing places, not from an experiment. +- **The local test may never run.** On public numbers, even 100 markets could only see an effect of about 5% of pay, bigger than the union evidence suggests co-ops could produce at a tenth of the work. A smaller effect, like the union one for women, would go unseen. Co-ops may never reach the filed share anywhere, and there may not be 100 markets of the right size whose local governments opt in. If the test can't pass its own rule, the honest result is that the labor-market effect stays untested. And the union evidence behind the scale estimate comes from comparing places, not from an experiment. - **Concentrating help will be called unfair.** Conventional employers in the chosen markets will say the government is helping their competitors. The honest answer is that lending terms don't change, the help is time-limited and published, local governments opt in, and it's the only way to learn whether the effect is real. It won't stop the attack. - **Growth can outrun judgment.** Audited demand, capped stages and published results are the defenses. None of them is airtight. - **Success builds a lobby.** If the sector grows, its members will defend the bank, as the electric co-ops defended theirs. That's why growth depends on the published results and a vote each time, not on how many friends the bank has. diff --git a/JoshHeaps.Net/Content/Socialism/the-test.md b/JoshHeaps.Net/Content/Socialism/the-test.md index e684acc..9c8f95b 100644 --- a/JoshHeaps.Net/Content/Socialism/the-test.md +++ b/JoshHeaps.Net/Content/Socialism/the-test.md @@ -15,4 +15,4 @@ The bank is an experiment, so it runs like one. [The Pilot, in Numbers](pilot-spec.md) spells all of this out: the exact measures, the comparison group, the pass and fail thresholds, and an emergency stop. -**What the test can prove, and what it can't.** At pilot scale, this tests *business viability*: can co-ops compete, survive, and repay market-rate debt? It does **not** test the labor-market effect, meaning the idea that as co-ops grow, conventional firms have to treat workers better or lose them. That effect is real in principle, but it needs a co-op sector big enough to move wages at the margin. Mondragon employs tens of thousands of people and hasn't reshaped Spanish employment practice. The labor-market effect is the long-run payoff of success, not something the pilot can claim. [After a Pass: How Big, How Fast](scale.md) works through how big the sector would need to get, and how the effect could be tested in a few local markets once it grows. +**What the test can prove, and what it can't.** At pilot scale, this tests *business viability*: can co-ops compete, survive, and repay market-rate debt? It does **not** test the labor-market effect, meaning the idea that as co-ops grow, conventional firms have to treat workers better or lose them. That effect is real in principle, but it needs a co-op sector big enough to move wages at the margin. Mondragon employs tens of thousands of people and hasn't reshaped Spanish employment practice. The labor-market effect is the long-run payoff of success, not something the pilot can claim. [After a Pass: How Big, How Fast](scale.md) works through how big the sector would need to get, and how the effect could be tested in local markets once it grows. On public numbers, that local test could only see a large effect, so it may never run.