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Is the NW a breeding ground for a new kind of capitalism?

We're the birthplace of the $15 minimum wage and middle-out economics. Is there something in the water?
Seattle entrepreneur and venture capitalist Nick Hanauer.

Seattle entrepreneur and venture capitalist Nick Hanauer. Photo: Nick-Hanauer.com

Chris Devore, tech entrepreneur and investor.

Chris Devore, tech entrepreneur and investor. Credit: Xconomy.com

First Sea-Tac and now Seattle have instituted $15 minimum wages. Seattle's biggest philanthropic muscle, The Bill and Melinda Gates Foundation, was born out of the riches of one of the most competitive companies in tech and, from Starbucks to REI to Costco, our city is peppered with corporations committed to community engagement, worker benefits and member ownership. On the smaller scale, socially conscious companies and start-ups, like code.org, are popping up more and more frequently. Even President Barack Obama centered his last campaign around middle-out economics, an antidote to trickle-down economics that has significant roots in Seattle.

It's no surprise there’s talk of a distinct form of capitalism taking root here in Seattle – Cascadian capitalism, people are calling it.

Its definition is still very much in the making, but one of the most useful definitions floating around comes from Chris DeVore, a Seattle native and founder of venture capital firm Founders’ Co-op, who wrote in a post on his blog in December that “Seattle is emerging as a global leader in fusing the growth-oriented culture of techno-capitalism with a deep and broad commitment to social justice and social mobility.”

A central voice in the conversation, DeVore is the first to admit that his homegrown status might skew his perspective about the city. After years in Silicon Valley, DeVore made a “value decision” to come back to Seattle: “For me, that is the counterpoint that informs all of this.”

“Every day I meet more people in Seattle who add weight to my belief that there is some seriously divergent economic thinking going on up here,” DeVore wrote, “And that we should actually be leaning into it.”

Optimistic, but rational

DeVore is no Pollyanna. The head of one of the Northwest's most successful venture capital outfits, DeVore is skeptical of the idea that private companies should be civic actors. 

“Entrepreneurs more generally – they see where the world is going and they want to get there first…" he said. "They’ll work on social justice issues when it aligns with their interests.”

Which is precisely where DeVore and one of Seattle’s most infamous capitalists, Nick Hanauer, would agree. After making a name (and a whole lot of money) for himself as one of Amazon’s first investors, Hanauer went on to become an outspoken advocate of middle-out economics, the idea that prosperity in capitalist economies does not trickle down from the top, but is always built from the middle out

Like DeVore, Hanauer is very much of the “capitalists will be capitalists” school of thought. He is concerned what’s best for business — not fairness. And in his view, an inclusive economy, with a burgeoning middle class, will make for the best businesses, which will give way to the most competitive capitalist economy possible.

The regional success of middle-out economics (think $15 minimum wage) then is interesting because it provides a more concrete example of Cascadian capitalism — something other than a list of companies who give their money to good causes. Something like a movement.

Hanauer and Liu drew the link directly when they raved about Seattle’s Cascadian capitalist identity in a March Stranger article: “No city can match our combination of economic dynamism and civic engagement. While we have plenty of successful capitalists in Seattle, this isn’t a town…that worships the super-wealthy and believes in trickle-down economics. People here recognize…that we’re connected in an ecosystem…This ‘Cascadian’ form of capitalism works – for everyone, not just for capitalists.”

Economic pipe dreams?

Which sure sounds nice, but it remains hard to say whether Cascadian capitalism is a movement that is in fact happening. Is it just a conversation between a few powerful Seattle leaders? A rhetorical ploy that conveniently plays off the Progressive-Northwest identity to mobilize support for the middle-out cause? Just a nice idea?

When I asked Paul Guppy, Vice President for Research of the Washington Policy Center, about Cascadian capitalism, he hadn’t heard the term before – but he liked the idea.


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Comments:

Posted Mon, Jun 16, 4:32 p.m. Inappropriate

REI is not a corporation, at least in the conventional sense of the word.
Like Group Health, and PCC, its a co-op.
Its owned by its members, and there is no stock.

Lumping it in with Starbucks or Costco is somewhat misleading, as it is not in business to make a profit.

Ries

Posted Mon, Jun 16, 6:01 p.m. Inappropriate

Non-profits are still incorporated. REI is a non-profit, cooperative corporation, so its business objective is to serve its members. You can see its incorporation information on the Secretary of State website:

http://www.sos.wa.gov/corps/search_detail.aspx?ubi=578027004

skylar

Posted Tue, Jun 17, 10:16 a.m. Inappropriate

In addition, it may not have profit-making as its primary goal, but every organization that doesn't want to depend entirely on the kindness of others looks to make some sort of profit, if only to keep itself afloat and/or able to grow.

Posted Tue, Jun 17, 6:33 p.m. Inappropriate

Apropos Group Health, though it remains officially a cooperative, nearly all the old socialist spirit that back in the '70s prompted me to become a permanent voting member of the co-op has been extinguished.

Meanwhile the greed of its MBA-brandishing, Ayn-Rand-minded management is methodically revising Group Health's policies to make it indistinguishable from any for-profit insurance company, and it is apparently up-scaling (gentrifying) its customer base accordingly.

Given the moral imbecility at the core of the MBA ethos, such focus on managerial profiteering is now as likely to occur in allegedly “non-profit” contexts as it is in conventional capitalism.

Thus to boost revenues Group Health has done what only a few years ago would have been unthinkable. It has suppressed its members' reproductive and end-of-life rights by subcontracting with the viciously theocratic Franciscan (Roman Catholic) Health System for lowest-bid hospital care.

While the Franciscan arrangement is objectionable for many reasons, its significance here is its proof that boosting revenues, which is essential to boost managerial compensation packages, has taken precedence over patients' physical and emotional wellbeing.

Predictably, as if to declare its new pro-managerial orientation, a recent Group Health document, “Patient Financial Responsibility ('Rev. Date 2014112'),” omits the term “cooperative” entirely and describes the organization as “your insurance company.”

Posted Mon, Jun 16, 6:50 p.m. Inappropriate

I'd hoped for something more substantive when I clicked on this article. Like perhaps linking the "new kind of capitalism" to what Jeremy Rifkin calls "The Collaborative Commons." He spoke at Town Hall on April 7 and his notion that capitalism is being eclipsed by companies that are part of the sharing economy, www.airbnb.com, Uber X, Kickstarter and other crowd-sourcing efforts, makes a lot of sense to me. That these concerns do well in Seattle reflects the kind of "Cascadian Capitalism" Harloe mentions, but capitalists are capitalists, eh? Sure, folks can make $15 an hour, but when houses are $300,000, or the alternative is an apodment, it's still unsustainable for increasing numbers of fellow citizens and especially those who don't roll with the corporate way of being in the world where human feelings are a liability.

Splabman

Posted Tue, Jun 17, 4:16 p.m. Inappropriate

Even camouflaged by euphemisms and lies, the core value of capitalism is infinite greed elevated to maximum virtue. Capitalism is therefore the morally imbecilic rejection of every humanitarian precept our species ever put forth -- human history's closest approximation to absolute evil.

Posted Wed, Jun 18, 12:02 p.m. Inappropriate

An "absolute evil" that has done more to raise the standard of living of more people in the world than all the governments and religions combined. If that's evil, it sure beats virtue.

dbreneman

Posted Mon, Jun 23, 10:58 p.m. Inappropriate

Capitalism rules in every country in the world that is not an absolute dictatorship. For instance, Brazil is both a capitalistic society and an example of a horribly high percentage of abject poverty. The rise in "standard of living" anywhere that it is allowed has nothing to do with capitalism; it's a result of scientific advancements.

sarah90

Posted Wed, Jun 18, 2:09 a.m. Inappropriate

Civilized debate? Or is the adversarial nature of name calling and demonizing the instant response to an interesting notion.
None of the labels suggested in the article are evil implying some kind of good elsewhere. None of the corporations involved or their creators and current managements are evil incarnate, nor are NGOs, Foundations, or individual philanthropists their haloed opposites.
The article, written by a recent graduate reflects what is too often lost in senior journalists who suffer from our experience: an intellectual curiosity without the baggage of cynicism. The article asks an interesting question: Does Seattle and the NW represent a different enough model of capitalism that it deserves its own label? Worth examining before leaping to the attack.

pherford

Posted Wed, Jun 18, noon Inappropriate

"The regional success of middle-out economics (think $15 minimum wage) then is interesting because it provides a more concrete example of Cascadian capitalism — something other than a list of companies who give their money to good causes. Something like a movement."


The $15 minimum wage was not initiated voluntarily. It was forced on businesses by Seattle's government. Now it's up to the businesses to decide whether to raise prices, lay off employees, shut down, or move out of town. That's hardly what I would call either "a movement" or "capitalism." In fact, there is already a name for an economic system in which private parties own businesses, but arbitrary rules and regulations are foisted on them by an all-powerful but feckless government, ostensibly for the greater common good.


Fascism.

dbreneman

Posted Wed, Jun 18, 10:05 p.m. Inappropriate

I’m pretty certain that the $15 minimum wage was achieved through democracy; you know voting by the people. People rallied; protested, and voted against poverty wages and the $15 minimum wage prevailed, and coincidentally may be considered a Labor Movement. Keep in mind that raising prices, layoffs, shutting down, or moving are not the only options changing the business model is also a viable option. A prime example of being able to reasonably compensate employees is Dicks Drive in, I suggest you look at their compensation package while considering that the market in which they operate is extremely competitive. As for me, I am all for higher wages if it eliminates taxpayers from subsidizing corporations and small businesses wages in the form of low income housing and food stamps. Privatizing profits and subsidizing wages is completely immoral and should be punished by law.

ColinS

Posted Wed, Jun 18, 11:49 p.m. Inappropriate

No Colin, we did not vote.

Higher wages will not have the result you wish for.

Posted Thu, Jun 19, 6:25 p.m. Inappropriate

Seattle city council members are not elected officials, since when Common1sense? Because they indeed are elected by voters, and the way a democracy works is that you vote for officials that best align with your individual ideas/opinions. The elected officials then make decisions on the voter’s behalf (this is basic information that is taught in elementary school). In regards to higher wages, Washington State already has the highest state minimum wage; but why is Washington State and Seattle specifically faring better than Arkansas, Indiana, Iowa, Kansas, Kentucky, Mississippi, Oklahoma, and Wyoming which have the lowest minimum wage? Why do countries with higher minimum wages have a more robust middle class? And where did you buy your crystal ball that tells the future common1sense? I would like to buy one as well.

ColinS

Posted Thu, Jun 19, 10:31 p.m. Inappropriate

Two points Colin.

1. You said 'voting by the people' not 'voting by the city council'.

2. Not many of us feel that the Seattle city council votes they way their constituents want them to vote. These people do not align with the people who voted for them, and voters have noticed.

The rest of your points don't even make sense. What is your point when you state that the minimum wage in Washington State & Seattle specifically is the highest state minimum wage and ask why we fare better than other states which have the lowest minimum wage? Is that supposed to be a pro-argument for a $15 higher wage?

Nonsense.

Keep in mind, Seattle employers will have a great time hiring a higher quality minimum wage person when they start paying $15 per hour - people who live outside Seattle will come flocking in, and replace the former minimum wage people, who will suffer greatly.

This $15 per hour idea isn't as fun or easy as you'd like to think. People will get hurt.

Posted Mon, Jun 23, 11:05 p.m. Inappropriate

People will indeed get hurt, because they won't actually receive that $15/hr until long after the cost of living has outstripped that suppose raise. "Seattle" employers (like the franchise association which represents McDonald's, etc.) made certain of that, and they will hire who they hire now, including people from outside of Seattle who can't afford to live in Seattle. Unless you want to sponsor a law that people who work in Seattle must LIVE in Seattle, that will continue, and it has absolutely nothing to do with this issue. And such a law would catch the Eastside billionaires whose work addresses are Seattle, so you'd get nowhere with such legislation.

sarah90

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