Opinions

We need a new business model for post-pandemic Alaska

We learned two important lessons from the current pandemic: Risk is not altogether avoidable, and pandemics can be opportunities for growth if you are in the right business. While some sectors including technology, essential goods and logistics are booming, travel, tourism, entertainment and health care sectors are seeing serious downtrends. This is not altogether surprising. We are also realizing what really are essential goods and services needed for a community to survive in a crisis. Nimble businesses pivot to stay relevant.

Immediate problems confronted at local community levels are unemployment, mental health and general well-being of the citizens. In theory, market indicators help self-correct economies, so we watch the stock market even as we know its limitations — high-volume trading and gaming can distort economic reality, a phenomenon we are seeing today. To a distant owner-investor of a large corporation, correction signals closing down operations and/or a short-term monetary loss. The long-lasting effect of this business decline is felt by the employees and the local economies. For local communities to rebound, the economy must turn around before unemployment benefits run out. We are learning that COVID-19 is going to outlast the unemployment benefits.

This pandemic has also brought to light the inequities inherent in our economic engine: the capital provider or shareholder primacy over the labor providers. This, in some ways is a perfect storm in waiting for correcting these inequities. Poor wages and benefits coupled with the inability to share in the profits of their labor is a lost opportunity for wealth generation to the already underserved, not to mention the structural inequalities that keep them from getting affordable housing and access to health care. This keeps the worker at the bottom of the pyramid forever. For a just transition to a prosperous economy we need to marry the need for locally produced essential goods and services to available — unemployed — workforce using a shared ownership business model.

An economy in which businesses are owned and operated by the local communities through shared ownership of employees and local investors is bound to be resilient. In this multi-stakeholder model business decisions get made locally, which is particularly important in times of crisis because of the owners’ shared responsibility to persist for the survival of the communities. This model also allows for equitable distribution of profits and fair wages and produces the long-term benefit of building community wealth. Moreover, the shared ownership model facilitates the delicate balance between social and financial sustainability, two very important variables that support the enterprise’s staying power over the long-term.

For a prosperous post-COVID-19 economy, we must support creation of businesses in Alaska to produce essential goods and services for local consumption using shared ownership business models, and mobilize local community wealth to seed investment in these businesses. While internally trained to operate and manage, the employees of shared ownership enterprises are developed to become owners of the firm over time. Shared ownership enterprises, also known as worker cooperatives, are a tried and tested model elsewhere in the country and the world. Evergreen Cooperatives of Cleveland is a good model for Alaska to emulate.

Yaso Thiru is a professor of accounting and management at Alaska Pacific University and Director of the Institute of Business and Public Policy.

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