In 2009, the Democrats passed a series of insurance reforms misleadingly dubbed “healthcare reform.” Many of those reforms were valuable tweaks to our private insurance system, and while many Americans are wary about the law as a whole, when asked about the specifics, most of the specifics in the law are quite popular. But Congress didn’t reform the healthcare system in a way that would significantly “bend the cost curve,” and the new study – which uses insurance industry data that was made available to the public for the first time (other studies extrapolated from Medicare payment data) – shows that the costs of medical services continue to climb much faster than the rate at which either the economy or wages are growing.

Chapin White, a senior researcher at the Center for Studying Health System Change, told Kaiser Health News that the report shows that working people covered by their employers “are paying more and getting less” because hospitals and other medical providers “just seem to be able to raise prices faster than general inflation.”

In some areas – like ER visits, outpatient surgery and mental health services – prices have increased at five times the rate of inflation.

But the study also shows that the rate of increase in healthcare costs has slowed during the downturn compared to their staggering climbs during the decade prior. If our healthcare system were growing more efficient, that would be good news, but while there is some evidence that Obamacare is in fact beginning to reduce costs to some degree, the bigger story is that many Americans are simply foregoing services.

Because while healthcare costs – and insurance premiums – continue to climb, an ever-larger share of the burden of those costs has been shifted onto the backs of working people. A recent study found that half of those respondents who had been sick during the previous year thought that the “quality of care” they’d received was a problem, and three in four identified rising costs as a serious issue.

As economist Jared Bernstein notes, “We’ve got recession-induced falling incomes bumping into faster growing prices for health services. Add in increased cost-shifting from employers to workers and you’ve got a pretty good recipe for lower overall spending.”

Compounding the madness is a push by the right – and some on the left – to roll back those insurance reforms passed after a year of bloody political combat. Forget for a moment about the lifetime and annual caps on out-of-pocket expenses, the requirement that preventive care be covered without co-pays (which should eventually result in some cost containment), the provision allowing young adults to stay on their parents’ plans, or closing the “donut hole” that requires seniors to pay a big chunk of their prescription drug costs out-of-pocket. Just consider that 10 million low-income Americans – people largely priced out of the market at present — will be eligible for single-payer public healthcare as the threshold for Medicaid eligibility goes up by 50 percent. (According to one study, 75 percent of low-income workers lack health insurance.)

Conservatives want to do away with “Obamacare” because they’re ideologically predisposed to buy into demagoguery about “death panels,” “government take-overs” and the supposed perfidy of the public healthcare systems that produce better outcomes for less in most of the rest of the developed world.

Some progressives also want to do away with it because it’s built around an individual mandate to buy private health insurance – long the signature Republican proposal for healthcare reform. (The mandate has become almost universally unpopular, but it is linked to the highly popular requirement that insurers cover people suffering from pre-existing conditions.)

Their thinking appears to be that if we revert to the status quo ante, the system’s deep dysfunctions – with skyrocketing costs and tens of millions uninsured – will exert so much pressure on families and businesses that it will inevitably lead to an outcry for a single-payer system. But there are big problems with their logic and a much better solution, one that wouldn’t leave those who do enjoy good coverage worried about their futures: Open up Medicare for everyone who wants in. And if single-payer systems are superior, doing so should eventually lead us there.

It’s true that single-payer is the only scheme that will provide universal coverage while actually decreasing overall healthcare spending. But the reality is that a large share of the population is covered – retirees by Medicare, the very poor by Medicaid and a majority of us through our jobs — and even with rising out-of-pocket expenses, they don’t face the horrors of being uninsured. Many of those who aren’t covered – young people, the working poor, the self-employed – are infamously difficult to organize.

But say the system does eventually collapse under the weight of its own inequities. There was a 15-year period between the last attempt to reform health care under Clinton and the passage of Obamacare. If it takes another 10-15 years to get a better set of reforms, there remains a lot of room for shifting more costs onto working families, denying more people coverage and causing more Americans to suffer needlessly. It is a classic case of throwing the baby out with the bathwater – just remember those 10 million poor people who wouldn’t be covered under Medicaid, a single-payer public health program, if Obamacare were repealed.

It is also based on the ahistoric premise that once a big, new social program is enacted, that’s it – it’s locked in stone. That was hardly the case with Social Security or Medicare, both of which have been amended again and again since their original passages in 1935 and 1965, respectively.

Understanding this leads to a better approach. Instead of throwing away a decent set of insurance reforms and a new infrastructure for (almost) universal coverage, progressives should come together around a simple amendment: Open up the Medicare system to anyone – individuals and employers — who wants to buy into it. Kill the limited state-based exchanges for private insurance (or keep them) and retain the subsidies for households and small businesses that provide coverage, keep the Medicaid expansion intact, let kids stay on their parents’ plans until age 26, and maintain the caps on out-of-pocket expenses. Throw away the bathwater, but hang onto the baby.

This might fulfill the promise of the original “Hacker Plan” (PDF), with its “public option” that would pit a single-payer system against the private insurance industry in head-to-head competition. Those who believe – rightly – that a single-payer system is the only way to provide universal coverage while cutting overall health spending should have the courage of their convictions and embrace that competition. May the better system win.

It’s an approach that doesn’t alienate or frighten the millions who enjoy decent coverage from their employers. And while it might take the same 10-15 years to get to a critical mass of Americans opting into Medicare, which could later be financed entirely from tax revenues, in the interim, we’d maintain the positive insurance reforms passed in 2009.

In other words, we need to keep moving the ball forward. With Americans paying more to get less health care, the moment is ripe to open up Medicare to all comers. And talk of going backward is hard to understand.

Joshua Holland is an editor and senior writer at AlterNet. He is the author of “The 15 Biggest Lies About the Economy: And Everything Else the Right Doesn’t Want You to Know About Taxes, Jobs and Corporate America.” Drop him an email or follow him on Twitter.

U.S. district judge Shira Scheindlin granted class-action certification to a stop-and-frisk lawsuit against the city of New York, Police Commissioner Raymond Kelly, and Mayor Michael Bloomberg. The plaintiffs allege that the NYPD’s stop-and-frisk policy regularly violates the Constitution by illegally stopping and searching scores of people belonging to a particular demographic — black and Latino. Pending the city’s appeal, the class-action ruling will put stop-and-frisk on trial.

Plaintiffs in Floyd et al. vs City of New York also argue that they were stopped by police who did not have the legally necessary “reasonable suspicion” that they had committed or were going to commit a crime. What’s more, the suit alleges, police often performed frisks, but not because they saw a bulge they suspected to be a weapon, another legal requirement.

In her written decision, Scheindlin said the alleged constitutional violations result not from the actions of rogue officers, but from a policy handed down from the very top. “The stop-and-frisk program is centralized and hierarchical,” said Scheindlin. “Those stops were made pursuant to a policy that is designed, implemented and monitored by the NYPD’s administration.”

Scheindlin’s ruling cites “overwhelming evidence” — a spike in stop-and-frisks and the NYPD’s own words — indicating that at the “highest levels of the department” police are enforcing a policy that leaves behind a trail of daily injustices.

For years, Mayor Bloomberg and Police Commissioner Kelly have used distortions and misinformation to promote and justify a policy that violates the constitutional rights of those who were stopped. Now, the Scheindlin findings have exposed the NYPD game for what it is, an illegal system of quotas and racial profiling imposed on field police from the top of the NYPD.

“Suspicionless stops should never occur,” Scheindlin wrote in her decision, adding that, “Defendants’ cavalier attitude towards the prospect of a ‘widespread practice of suspicionless stops’ displays a deeply troubling apathy towards New Yorkers’ most fundamental constitutional rights.” Stop-and-frisk, which the data shows is a form of racial profiling, violates not only the Fourth Amendment — protection from unreasonable searches — but also the 14th Amendment, which includes the equal protection clause, the plaintiffs charge.

The Scheindlin decision was informative and comprehensive, including a number of important facts and observations. Here are eight important points from the decision.

1. Soaring numbers. The rate of stops has grown exponentially under the Bloomberg administration. Scheindlin’s ruling notes that police conducted 2.8 million documented stops of people between 2004 and 2009, about half of whom were frisked. In contrast, in 1998, Scheindlin explains, NYPD officers made roughly 150,000 stops per year. In 2004 alone, officers recorded more than 313,000 stops, “and since then the number has increased every year except 2007, rising to over 684,000 in 2011.” Scheindlin cites the large increase as evidence of a centralized policy change.

2. No reasonable suspicion. Reasonable suspicion that a person is involved in a crime is necessary for a legal stop. Eighty-eight percent of those stopped, however, are not charged with any crime. As Scheindlin noted, the data shows that “according to their own records and judgment, officers’ ‘suspicions’ were wrong nearly nine times out of ten.”

3. Imaginary bulges. Officers’ suspicions were similarly unsubstantiated when reportedly searching for guns. A “suspicious bulge” was cited as a reason for about 10 percent of all stops, but guns were seized in less than 1 percent. “For every 69 stops that police officers justified specifically on the basis of a suspicious bulge, they found one gun,” the decision notes.

4. Stops for no reason. The absence of a legally necessary, interpretable “suspected crime” cited on official forms grew from 1.1 percent in 2004 to 35.9 percent (more than 200,000 reported stops) in 2009. During those years, “Overall, in more than half a million documented stops — 18.4 percent of the total — officers listed no coherent suspected crime,” Scheindlin wrote, meaning they either ignored the section altogether or did not cite suspected behavior that is indeed illegal.

5. Unlawful stops. Scheindlin writes, “According to their own explanations for their actions, NYPD officers conducted at least 170,000 unlawful stops between 2004 and 2009.” Stops based on nothing more than “furtive movement” or a “high-crime area” were the justifications of at least 100,000 stops, but as Scheindlin says, are illegal due to the Fourth Amendment law protecting Americans from unreasonable search.

6. Racial profiling. The NYPD’s stop-and-frisk program targets blacks and Latinos because of their skin color. Scheindlin admitted the testimony of Columbia University professor Jeffrey Fagan, who found that police stopped blacks and Latinos far more than white residents. Isolated from other factors like crime rates and neighborhood racial composition, racial disparity from racial targeting was statistically significant, strongly underscoring that skin color is the essential factor in determining who gets stopped and throwing weight behind allegations of 14th Amendment violations. Fagan’s research also found that “the search for weapons is (a) unrelated to crime, (b) takes place primarily where weapons offenses are less frequent than other crimes, and (c) is targeted at places where the black and Hispanic populations are highest.” Cops are more likely to list no suspected crime category, or what Scheindlin called “an incoherent one,” like “furtive movements,” when stopping blacks and Latinos than when stopping whites. They also are more likely to use force against people of color.

7. NYPD illegal quotas. Scheindlin links the rising number of stops and the targeting of black and Latinos to NYPD quotas and to Commissioner Kelly’s own admission that the NYPD has a quota policy, albeit disguised. In a recent operations order, Commissioner Kelly explained departmental policy under the euphemism “performance goal.” Kelly said in the order, “Department managers can and must set performance goals,” for “the issuance of summonses, the stopping and questioning of suspicious individuals, and the arrests of criminals.”

The order also explains a weekly review during which a sergeant compares each officer’s monthly “activity” with the “daily assignment,” whereby police who “do not demonstrate activities” — or keep their numbers up — “will be evaluated accordingly and their assignments re-assessed.” In other words, there will be consequences for officers who don’t meet quotas, even though New York labor law says penalizing cops for failing to meet quotas is illegal.

Former NYPD officers turned whistleblowers Adhyl Polanco and Adrian Schoolcraft have collected evidence documenting NYPD quotas in practice. From 2008 to 2009, Polanco, from the 41st Precinct, and Schoolcraft, from the 81st, recorded roll calls revealing supervisors’ and other high-ranking officers’ enforcement of quotas. In Scheindlin’s own words, Schoolcraft’s audio files expose supervisors “repeatedly telling officers to conduct unlawful stops and arrests and explaining that the instructions for higher performance numbers are coming down the chain of command.”

Similarly, Polanco testified that “his commanding officers announced specific quotas for arrests and summons (quotas that rose dramatically between early 2008 and 2009) and for UF-250s” (a term for the forms used in stops), said Scheindlin, “and threatened overtime and undesirable assignments for those who failed to meet them.”

8. Repeat performances. According to the NYCLU, in 2011 the NYPD stopped more young, black men than live in New York; that is, some individuals are stopped and frisked repeatedly. To protect their rights, plaintiffs are seeking “systemic relief” — an end to the unconstitutional practice of stop-and-frisk.

Kristen Gwynne covers drugs at AlterNet. She graduated from New York University with a degree in journalism and psychology.

After the controversy around Florida’s “Stand Your Ground” law and the shooting of Trayvon Martin, ALEC said it was backing off such bills to focus on “business-friendly” legislation, but its business-friendly work does plenty of damage, too. ALEC pushes deregulation, union-busting, privatization, and tax loopholes for big businesses, allowing corporations like AT&T, Koch Industries, and Verizon to essentially write the laws that regulate them.

ALEC-backed telecommunications deregulation bills hit New York, New Jersey, and Connecticut recently, in a one-two-three punch combination designed as a quick knockout blow that consumers and workers would be powerless to fight. But a coalition, including the Communications Workers of America (CWA), the Working Families party, and the AARP, managed to stop the bills, which would’ve resulted in cost hikes, lost jobs, and service cut-offs for “less profitable” customers — disproportionately senior, rural, or low-income customers who use basic phone service.

“We’re up against quite literally armies of lobbyists from the phone companies,” Matt Wood, a policy expert with Free Press, told AlterNet. “That’s the thing about ALEC and their approach, they can push things in so many different states at once, if not with no coverage, certainly with less coverage on the national level.”

Deregulating and Denying Service

Telecom policy is an area in which legislators very often don’t have a lot of expertise and are vulnerable to talk of fancy new technologies — and to big money. Politicians from both parties love to boast of their investment in high-tech, after all, and so when lobbyists are telling them about their fancy new service, throwing around terms like VoIP (Voice over IP, essentially phone service over the Internet, which is what you have if you get your home phone through your cable company or Verizon FIOS), it’s easy enough to convince even those politicians who aren’t predisposed to deregulating everything in sight. Yet deregulating the fancy new technology has an impact even on those who use traditional services.

“Some company comes to you and says this is going to be great for investment. Exactly what will they be investing in?” Bob Master, political and legislative director at CWA District 1, asked. “Being deeply familiar with the industry, there’s no job-creating investment that’s happening in telecommunications. It’s all job-destroying investment. Verizon is contracting out, outsourcing our work, offshoring our work, trying to do everything wirelessly. That’s where the investment is going and no wires means no workers.”

But it’s not just jobs that the telecoms would like to eliminate — it’s service to people who don’t choose to use the fancier products or can’t afford expensive service, or maybe who live in a rural area. In Connecticut and New Jersey, the deregulation plan would have eliminated “carrier of last resort” protections, which require them to provide service to anyone who reasonably requests it in their coverage area. Matt Wood explained, “Phone companies have always had special rights and privileges granted by the state, so they’ve been expected to provide service to everybody. They have taken the true statement that ‘broadband service is different’ to extremes and said that it is so different that you shouldn’t regulate it at all.”

When it comes to VoIP, for instance, Wood pointed out that what sounds like an arcane technology is actually commonplace these days — and the claim that it’s too new to regulate actually just gives companies like AT&T and Verizon an excuse to deregulate their whole network. “That takes away a a lot of protections on services, the reliability of the network,” he said.

And Lindsay Farrell of the Connecticut Working Families Party noted, “To give [telecoms] the ability to say ‘This part of the state isn’t as profitable, we don’t want to serve them, we want to serve people here where they can afford higher rates,’ that leaves a lot of people in silence.”

As always, with ALEC, the narrative behind the push for deregulation is that competition among phone service providers will keep the industry honest and result in benefits for consumers — but like all tall tales about the invisible hand of the marketplace, this one doesn’t come true. “We also look to the results,” Wood said. “Say you do have two, three, four, six competitors, is that resulting in lower prices? No. They’re not competing on price; they compete on the device or other bells and whistles but don’t really feel the need to compete on price.”

Instead, according to a report issued by the nonpartisan think tank Demos [PDF], the bill (specifically in Connecticut, though you can see from the original model bill at ALEC Exposed that they’re all much the same) would send phone rates through the roof, as well as destroy consumer protections and transparency in the industry, preemptively deregulate VoIP as more companies are beginning to use the technology, and of course, let corporations who directly benefit from deregulation write the laws regulating them.

Yet politicians continue to push for deregulation that would hurt their own constituents. Master noted that in New York, it only took a little bit of spending to get normally progressive legislators backing the telecoms’ pet plan. “In what way would the low-income people you represent benefit from this?” he asked.

Stalling the Deregulation Agenda

“We believe that to the extent that phone companies are required by regulation to provide good service on a universal basis, it’s good for the consumer and the workers,” Master said, and so when CWA got wind of a deregulation bill in New Jersey in 2011, they moved quickly.

The bill, titled the “Market Competition and Consumer Choice Act” (you can’t make this stuff up ) swept through the state assembly in short order, passing 66-7. CWA, the AARP, and other allies put together a campaign, including a website “Don’t Hang Up on New Jersey” and calls with AARP members — they managed to generate about 20,000 phone calls in two weeks, and even New Jersey’s famously right-wing, blustering governor Chris Christie (who has a pattern of supporting ALEC’s pet causes himself) took notice. On a conference call, he told 17,000 AARP members that he had “grave concerns” about the bill. From there, they were able to change enough legislators’ minds to keep the bill from moving.

But it’s not just Republicans who like deregulation and are vulnerable to some well-placed donations. New York’s Democratic governor Andrew Cuomo, who values his reputation as a reformer, has also taken a lot of money from telecom companies over his political career. In his race for governor, Cablevision was Cuomo’s top contributor, kicking in $125,600 to his campaign, along with $38,800 from Time Warner — part of $250,516 overall from the industry.

So when VoIP deregulation made it into the governor’s budget, it shouldn’t have been that surprising. Phone companies and cable companies, who both provide broadband internet service and VoIP service, were working together, pressing for New York State to give up its right to regulate VoIP in the future.

“I think there is in the Cuomo administration an inclination to do things that they believe will help to improve the business climate,” Master said. “In this case it was pretty glaring that there’s a lack of awareness or understanding of what the impact on the consumer might be.”

Pressure from a similar coalition, including CWA and the AARP, as well as the Working Families party, got the language dropped from the budget, but not before they noticed legislators whose constituents would clearly be harmed by the policy taking the side of the big telecoms, which Master noted are very powerful in Albany. The state senate subsequently passed deregulation as stand-alone legislation, but so far it hasn’t moved in the assembly. “We’re being vigilant,” Master said.

But just when one bill dies, another appears. In the beginning of April, SB 447 appeared in Connecticut — another bit of deregulation, based on ALEC model legislation. ALEC’s co-chair in Connecticut is John Emra, Executive Director of External Affairs for AT&T’s Connecticut operations.

One of the upsides, though, to these model bills being pushed in multiple states is that organizers know what worked and who is willing to join the fight. Again, CWA, AARP, and the Working Families Party led the charge, but this time the coalition included groups like the Sierra Club, motivated by a provision in the bill that would allow cell phone towers to be placed in public parks.

Farrell noted that as they knocked on doors and made phone calls about the bill in Connecticut, they found people already wary of companies like AT&T. After Hurricane Irene and this fall’s series of storms, utility companies and phone and cable companies took several days to restore service, leading to hearings by the state legislature. Canvassers found that citizens didn’t trust utilities to take care of them, and understood the need for regulations to hold them accountable.

The ALEC connection helped in New York and Connecticut — in New York, radio advertising linked telecom deregulation to ALEC, and Farrell noticed a difference with legislators as ALEC’s activities were held up to public scrutiny. But, she said, the broad coalition that defeated the bill wasn’t solely motivated by beating ALEC. “AARP doesn’t care about the ALEC aspect,” she said. “They’re just worried about seniors who don’t use VoIP, who don’t have cell phones that they use frequently or at all, being cut off.”

The biggest lesson, perhaps, from the deregulation fights in these states is that organized people can, in fact, beat big money — that a ground campaign involving phone calls and door-to-door canvassing can actually motivate everyday people to take action on an issue that seems complex and hard to understand. Whether people had heard of ALEC and understand that there’s an institution pushing for laws that will benefit big corporations and hurt workers and consumers, or whether they were just tired of watching their phone and cable bills creep upward each month and of having to pay for services they didn’t need just to get a basic phone line, people didn’t want corporate utilities without government oversight.

Corporations can and will spend millions on lobbyists, blanketing statehouses and capitol buildings with their paid advocates, but in this case, it wasn’t enough. Farrell is awaiting information on how much was spent lobbying in Connecticut, to compare with what the coalition was able to accomplish for a fraction of the cost.

Still, ALEC and its corporate backers aren’t going to give up easily — AT&T and Verizon, Time Warner and Cablevision, and many others still want deregulation and are willing to pay for it. The bills in the three states have stalled, but the fight is on in California right now. Master noted, “These people have infinitely deep pockets and they never stop.”

Power for the People

The central idea is simple: people join together through some form of public, community or employee-owned business to meet local needs and thereby regain a measure of local economic democracy and control. Partly self-help, partly community mobilization, and partly sketches for future system-wide expansion, community wealth-building efforts can be found in virtually every region of the country. The range of efforts is vast. Community wealth-building institutions include community development corporations, community development financial institutions, social enterprises, community land trusts, employee-owned enterprises, and cooperatives. All pool capital in ways that create new jobs and anchor jobs in communities.

The efforts also define a new approach to challenging corporate power— a strategy that changes who owns, controls and benefits from the underlying economic wealth of the system. It involves not merely replacing private capital, but displacing it through developing community ownership of business. In other words, profits should flow to workers, consumers or the community—rather than outside investors. And these businesses need to succeed! Increasingly, too, ecological concerns are structured into the very core of many models.

Transformation Everywhere

Examples of the new approach are evident around the world, including worker-cooperatives in Argentina; the Grameen Bank of Bangladesh (which, with its founder, Muhammad Yunus, won the 2006 Nobel Peace Prize); and the Mondragón cooperative network in northern Spain, which employs nearly 85,000.

Non-profit social enterprise is a community wealth building strategy through which nonprofits independently secure resources to meet their missions in the absence of adequate government support. In San Francisco, a group known as REDF (formerly the Roberts Enterprise Development Fund) has helped boost the business activity of 50 social enterprises that have employed 6,500 people and earned revenues of more than $115 million. Three-fourths (77 percent) of social enterprise employees interviewed two years later were still working. Average employee wages had increased by nearly one-third (31 percent) and monthly incomes had almost doubled (90 percent). One of the enterprises in REDF’s portfolio is Buckelew Programs, a mental health agency with 220 employees that provides a continuum of services to roughly 7,000 clients each year and operates three social enterprises, including a green café and a green cleaning service, as well as a staffing service. This year, it intends to open a fourth social enterprise, a fresh-cut produce processing business.

In Grayland, Washington, Coastal Community Action—a nonprofit agency that operates a range of housing, food, healthcare, and employment programs—has built a 6 MW wind farm consisting of four wind turbines. The wind farm, which sells energy to the electrical grid, generates enough power to satisfy the energy needs of more than 1,500 households. The nonprofit estimates that its ownership of the $14-million wind turbine project generates $720,000 in unrestricted income each year, enabling it to increase service delivery options, lessen its local dependence on outside funding, and supplement the community’s ongoing projects and to meet more of the community’s needs.

In Seattle, Pioneer Human Services, founded in 1963, offers drug- and alcohol-free housing, employment, job training, counseling, and education to recovering alcoholics and drug addicts. It employs a total of 1,000 people and finances 99 percent of its $70 million budget through fees for services and earnings generated in the manufacture, distribution and sale of products. Businesses include retail cafés, sheet metal fabrication, aerospace precision machining (it’s a contractor for Boeing), wholesale food distribution, and contract packaging. Not only do these enterprises build community wealth and provide independent resources that finance social services, the businesses themselves are central to Pioneer’s mission of helping “people on the margins of society” stay out of prison and off the streets, enabling Pioneer to employ more than 700 men and women drawn from the ex-offender, homeless and drug-recovery populations it serves.

Community development corporations (CDCs), formed initially in the 1960s in a crucible of urban riots and rural neglect, now perform important community wealth-building and planning roles in cities and counties across the United States. CDCs can be found in virtually every major city. A Massachusetts study found that between 2003 and 2011, Massachusetts-based CDCs created or preserved over 9,000 homes and 14,000 jobs, while supporting more than 8,000 businesses and 160,000 families, generating nearly $2 billion of economic activity. A 2005 survey found that nationwide an estimated 4,600 CDCs help create 75,000 jobs per year.

Community development financial institutions (CDFIs), first given federal recognition in the 1990s, have the explicit aim of building wealth in low-income communities through providing financing where conventional lenders fear to tread. Even in the face of contracting conventional finance, assets in community investing institutions rose more than 60 percent–from $25.0 billion in 2007 to $41.7 billion–in 2010. In 2008 alone, credit unions financed and assisted businesses and microenterprises that created or maintained 35,624 jobs, financed the construction or renovation of 60,205 units of affordable housing, and provided 16,405 responsible mortgages to first-time and other homebuyers.

Community land trusts provide still another powerful illustration of community wealth building. Beginning in the 1960s and 1970s, pioneers like Bob Swann in western Massachusetts and Charles Sherrod in Georgia struggled against huge odds to develop modest land trusts efforts, often also involving other concerns, like respect for environmentally sound land use practices and rural community development. Today hundreds exist; in Irvine, California, the city’s strategic plan calls for 5,000 units of housing to be developed using land trust strategies.

Trusts of this kind keep the ownership of land underlying housing in non-profit or public ownership. Appreciation in land values is split via a formula between the homeowner and the trust, thereby avoiding gentrification. A study of a community land trust in Burlington, Vermont — the nation’s largest — also found that during its first two decades, 61.9 percent of residents who sold their land trust home after an average residency of six years were able to “step up” to traditional homeownership. Meanwhile the equity gain that the trust retains enables it to continue providing affordable housing to future generations. In a down market, community land trusts are even more important. Simply put, community land trusts keep people in their homes. A 2011 study found that land trust homeowners were 10 times less likely to be in foreclosure proceedings than conventional homeowners.

Employee ownership is another powerful community wealth-building strategy. The National Center on Employee Ownership (NCEO) estimates that in 2009 there were 9,800 companies owned in whole or part by workers through their pension contributions through a form of ownership known as an employee stock ownership plan or ESOP. As of 2009, there are 10.3 million employee-owners of companies own in whole or part by ESOPs, with net assets of $869 billion. In other words, the average ESOP employee-owner has an ownership stake of over $84,000. NCEO estimates that since 2009 the number of ESOPs has climbed over 10 percent to 10,900 companies.

Employee ownership also has powerful economic stabilizing effects: between 2000 and 2008, while the number of manufacturing jobs fell 29 percent in the state of Ohio, employee-owned manufacturing jobs held steady, dropping only 1 percent. Nationally, in 2010, 12.1 percent of all workers—nearly one in eight—had faced a lay-off in the previous 12 months; by contrast, only 2.6 percent of workers who were employee-owners were laid off.

Sharing the Wealth

Perhaps the most visible form of a community wealth building is the cooperative. More than 130 million Americans are currently members of a co-op or credit union. Because many Americans own shares in more than one co-op or credit union, the total number of co-op memberships in the United States exceeds 350 million. Overall, a 2009 University of Wisconsin study found that nearly 30,000 cooperatives in the U.S. account for more than $3 trillion in assets, $514 billion in total annual revenue, and provide 856,000 jobs.

Credit unions are governed by the core cooperative principle of one-member, one-vote. Importantly, they make their loans directly to their members – member-owners of credit unions can be confident that their deposits will be reemployed productively through loans that help finance local consumer purchases, create jobs and build wealth at home.

Another powerful community wealth-building mechanism is the state-owned bank. In North Dakota, a state-owned bank has operated since 1918, earning the state more than $300 million over the past decade, while helping support local banks and local community investment. Legislation exploring or creating such banks has been introduced this past year in more than a dozen states, including Arizona, California, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Montana, New Mexico, New York, Oregon, Virginia, and Washington.

As experience with the various democratized forms has become increasingly enriched over time, innovative strategies of collaboration among enterprises and/or with local governments have also begun to emerge. In California, a comprehensive, community-owned development project consciously links individual and collective wealth building in the diverse working-class Diamond neighborhood in southeast San Diego. With the support of the Jacobs Family Foundation, the community raised philanthropic and government funding to develop a commercial and cultural complex, anchored by a shopping center. A key element was the community public offering, which provided community residents and employees an exclusive opportunity to buy shares (valued at $200 and capped at $10,000) for a total 20 percent ownership stake in the project. As one community owner noted, “That we own stock, and that we have an opportunity to make a difference in what type of business goes in the community [is unbelievable]. We have some say-so in the community environment.”

The Neighborhood Unity Foundation also has a 20 percent ownership share that provides it with a sustainable source of funding for its community wealth building efforts. The Jacobs Family Foundation, which retains 60 percent ownership, intends to turn over its share to community owners by 2018. Ultimately, area residents will own 50 percent of the project and the neighborhood foundation the other 50 percent, retaining the profits generated to benefit the community rather than outside investors.

In Cleveland, Ohio, an integrated group of worker-owned companies, supported in part by the directed purchasing power of large hospitals and universities, has opened a major new vector of urban strategy. The first of Cleveland’s planned network of cooperatives opened its doors for business in September 2009. The co-op industrial scale laundry is a state-of-the-art, ecologically green, commercial facility capable of handling 10 million pounds of healthcare linen a year. Its sophisticated business plan provides all employee-owners a living wage and health benefits. If current projections are realized after seven years on the job each employee will have a $65,000 equity stake in the enterprise.

In October 2009 a second employee-owned, community-based energy company began large-scale installations of solar panels for the city’s largest nonprofit health, education and municipal buildings. (Additionally, it provides home weatherization services.) A third business scheduled to start operations this year is a year-round hydroponic food production greenhouse capable of producing three million head of lettuce and approximately 300,000 pounds of basil and other herbs a year.

More to Come

Many other enterprises are in the planning stage. Cleveland mayor Frank Jackson praised the co-ops for being “a model for how we can put our people back to work and rebuild our community.” A growing number of economic development officials, tired of chasing corporations with public subsidy dollars, like the idea of creating anchored, community-owned enterprises that won’t get up and move. Already, the Cleveland co-ops have inspired efforts in other cities to develop similar networks, including Amarillo, Texas; Atlanta, Georgia; Pittsburgh, Pennsylvania; and Washington, DC.

Community wealth-building strategies offer powerful possibilities for longer-term change. First, in most instances, the new wealth-democratizing approaches provide responses (or suggestive directions of response) to economic dislocation and social pain where traditional political approaches have failed. Second, in many instances, they involve quite unusual local alliances, frequently including small business and religious leader support. Third, often the institutional trajectories have also begun to define (and secure) new supportive measures from local, state and national policy makers, thereby also beginning to define new directions for potential ongoing and more expansive policy and political action. Finally, that they are based in local, everyday experience may also lead to changes in the foundations of political and democratic cultural development over time.

Together the above suggest a long, slow developmental arc left in the wake of the failure of conventional politics and economics. And already, a growing number of Occupy activists are looking to worker-owned cooperatives as a way to self-fund the movement, displace corporate economic space, and develop an economic base that can support alternative economic and political formations. The path to building a truly democratic economy may be long, but the growing base of community wealth building institutions provide some building blocks that, over time, suggests the quiet development, potentially, of the basis for a community-sustaining economy that serves the interest of all Americans, rather than our current system which disproportionately benefits the wealthiest at the expense of the 99 percent.

Steve Dubb is research director of the Democracy Collaborative at the University of Maryland.

Today, the massive too-big-to-fail banks are hardly doing George Bailey-style loans at all. They are not interested in community lending. They are doing their own proprietary trading—trading for their own accounts—which generally means speculating against local interests. They engage in high-frequency program trading that creams profits off the top-of-stock market trades; speculation in commodities that drives up commodity prices; leveraged buyouts with borrowed money that can result in mass layoffs and factory closures; and investment in foreign companies that compete against our local companies.

We can’t do much to stop them. They’ve got the power, especially at the federal level. But we can quietly set up an alternative model, and that’s what is happening on various local fronts.

Most visible are the Move Your Money and Occupy Wall Street movements. According to the Web site of the Move Your Money campaign, an estimated 10 million accounts have left the largest banks since 2010. Credit unions have enjoyed a surge in business as a result. The Credit Union National Association reported that in 2012, for the first time ever, credit union assets rose above $1 trillion. Credit unions are non-profit, community-minded organizations with fewer fees and less fine print than the big risk-taking banks, and their patrons are not just customers but owners, sharing partnership in a cooperative business.

Move “Our” Money: The Public Bank Movement

The Move Your Money campaign has been wildly successful in mobilizing people and raising awareness of the issues, but it has not made much of a dent in the reserves of Wall Street banks, which already had $1.6 trillion sitting in reserve accounts as a result of the Fed’s second round of quantitative easing in 2010. What might make a louder statement would be for local governments to divest their funds from Wall Street, and some local governments are now doing this. Local governments collectively have well over a trillion dollars deposited in Wall Street banks.

A major problem with the divestment process is finding local banks large enough to take the deposits. One proposed solution is for states, counties and cities to establish their own banks, capitalized with their own rainy day funds and funded with their own revenues as a deposit base.

Today only one state actually does this: North Dakota. North Dakota is also the only state to have escaped the credit crisis of 2008, sporting a sizeable budget surplus every year since. It has the lowest unemployment rate in the country, the lowest default rate on credit card debt, and no state government debt at all. The Bank of North Dakota (BND) has an excellent credit rating and returns a hefty dividend to the state every year.

The BND model hasn’t yet been duplicated in other states, but a movement is afoot. Since 2010, 18 states have introduced legislation of one sort or another for a state-owned bank.

Values-based Banking: Too Sustainable to Fail

Meanwhile, there is a strong movement at the local level for sustainable, “values-based” banking—conventional banks committed to responsible lending and service to the local community. These are George Bailey-style banks, which base their decisions first and foremost on the needs of people and the environment.

One of the leaders internationally is Triodos Bank, which has local offices in the Netherlands, Belgium, the United Kingdom, Spain, and Germany. Its Web site says that it makes socially responsible investments that are selected according to strict sustainability criteria and overseen by an international panel of “stakeholder” representatives representing various community, environmental, and worker interest groups. Investments include the financing of more than 1,000 organic and sustainable food production projects, more than 300 renewable energy projects, 33 fair trade agricultural exporters in 22 different countries, 85 microfinance institutions in 43 countries, and 398 cultural and arts projects.

Two U.S. banks exemplifying the model are One PacificCoast Bank and New Resource Bank. Operating in California, Oregon and Washington, One PacificCoast is comprised of a sustainable community development bank with around $300 million in assets and a non-profit foundation (One PacificCoast Foundation). Its commercial lending business focuses on such sectors as specialty agriculture, renewable energy, green building, and low-income housing. Foundation activities include programs to “help eliminate discrimination, encourage affordable housing, alleviate economic distress, stimulate community development and increase financial literacy.”

New Resource Bank is a California based B-corporation (“Benefit”) with $171 million in assets, which focuses its lending and banking services on local green and sustainable businesses. New Resource was recognized in 2012 as one of the “Best for the World” businesses, being in the top 10 percent of all certified B-Corporations and scoring more than 50 percent higher than 2,000 other sustainable businesses in overall positive social and environmental impact.

All this might be good for the world, but isn’t investing locally in a values-based bank riskier and less profitable than putting your money on Wall Street? Not according to a study commissioned by the Global Alliance for Banking on Values (GABV). The 2012 study compared the financial profiles between 2007 and 2010 of 17 values-based banks with 27 Globally Systemically Important Financial Institutions (GSIFIs)—basically the too-big-to-fail banks, including Bank of America, JPMorgan, Barclays, Citicorp and Deutsche Bank. According to the GABV report, values-based banks delivered higher financial returns than some of the world’s largest financial institutions, with a return on assets averaging above 0.50 percent, compared to just 0.33 percent for the GSIFIs; and returns on equity averaging 7.1 percent, compared to 6.6 percent for the GSIFIs. They appeared to be stronger financially, with both higher levels of and better quality capital; and they were twice as likely to invest their assets in loans.

CDFIs

Along with the values-based banks, community investment is undertaken in the United States by Community Development Financial Institutions (CDFIs), including community development banks, community development credit unions, community development loan funds, community development venture capital funds, and microenterprise loan funds. According to the CDFI Coalition, there are over 800 CDFIs certified by the CDFI Fund, operating in every state in the nation and the District of Columbia. In 2008 (the last year for which a report is available), CDFIs invested $5.53 billion “to create economic opportunity in the form of new jobs, affordable housing units, community facilities, and financial services for low-income citizens.”

Two of many interesting examples are the Alternatives Federal Credit Union and Boston Community Capital. Alternatives FCU, located in Ithaca, New York, is committed to community development and social change and is part of the Alternatives Group, which includes a non-profit corporation (Alternatives Community Ventures); a 40-year old trade association of community groups, cooperatives, worker-owned businesses and individuals (Alternatives Fund); and a not-for-profit organization that facilitates secondary capital investment in the credit union (Tomkins County Friends of Alternatives, Inc.). The credit union has over $70 million in assets and offers many innovative financial products, including individual development accounts—special savings accounts for low-income residents that offer matching deposits of two to one up to a certain amount—in addition to more traditional services such as loans for minority and women-owned businesses, and affordable mortgages. The credit union also offers small business development (classes, seminars, consultation, and networking programs), free tax preparation, and a student credit union.

Although its lending programs focus on lower-income borrowers, Alternatives FCU has had lower delinquency and charge-off rates than many major banks that avoid these types of customers. Boston Community Capital (BCC) is a CDFI that is not actually a bank but invests in projects that provide affordable housing and jobs in lower-income neighborhoods. BCC includes a loan fund, a venture fund, a mortgage lender, a real estate consultation organization, a solar energy fund, and a federal New Markets Tax Credit investment vehicle. Since 1985, it has invested over $700 million in local organizations and businesses. These funds have helped build or preserve more than 12,800 affordable housing units, as well as child care facilities for almost 9,000 children and healthcare facilities that reach 56,000 people. Their investments have helped renovate 850,000 square feet of commercial real estate, generate 5.9 million KW hours of solar energy capacity, and create more than 1,500 jobs.

Less Money for Banks and More for Workers: The Models of Germany and Japan

Values-based banks and CDFIs are a move in the right direction, but their market share in the U.S. remains small. To see the possibilities of a banking system with a mandate to serve the public, we need to look abroad.

Germany and Japan are export powerhouses, in second and third place globally for net exports. (The U.S. trails at 192nd.) One competitive advantage for both of these countries is that their companies have ready access to low-cost funding from cooperatively owned banks.

In Germany, about half the total assets of the banking system are in the public sector, while another substantial chunk is in cooperative savings banks. Germany’s strong public banking system includes 11 regional public banks (Landesbanken) and thousands of municipally owned savings banks (Sparkassen). After the Second World War, it was the publicly owned Landesbanks that helped family-run provincial companies get a foothold in world markets. The Landesbanks are key tools of German industrial policy, specializing in loans to the Mittelstand, the small-to-medium size businesses that drive the country’s export engine.

Because of the Landesbanks, small firms in Germany have as much access to capital as large firms. Workers in the small business sector earn the same wages as those in big corporations, have the same skills and training, and are just as productive. In January 2011, the net value of Germany’s exports over its imports was 7 percent of GDP, the highest of any nation. But it hasn’t had to outsource its labor force to get that result. The average hourly compensation (wages plus benefits) of German manufacturing workers is $48—a full 50 percent more than the $32 hourly average for their American counterparts.

In Japan, the banks are principally owned not by shareholders but by other companies in the same keiretsu or industrial group, in a circular arrangement in which the companies basically own each other. Even when there are nominal outside owners, corporations are managed so that the bulk of the wealth generated by the corporation flows either to the workers as income or to investment in the company, making the workers and the company the beneficial owners.

Since the 1980s, U.S. companies have focused on maximizing short-term profits at the expense of workers and longer-term goals. This trend stems in part from the fact that they are now funded largely by capital from shareholders who own the company and want simply to grow their returns. According to a 2005 report from the Center for European Policy Studies in Brussels, equity financing is more than twice as important in the U.S. as in Europe, accounting for 116 percent of GDP compared with 62 percent in Japan and 54 percent in the eurozone countries. In both Europe and Japan, the majority of corporate funding comes not from investors but from borrowing, either from banks or from the bond market.

Funding with low-interest loans from cooperatively owned banks leaves greater control of the company in the hands of employees who either own it or have much more say in its operation. Access to low-interest loans can also slash production costs. According to German researcher Margrit Kennedy, when interest charges are added up at every level of production, 40 percent of the cost of goods, on average, comes from interest.

Globally, the burgeoning movement for local, cooperatively owned and community-oriented banks is blazing the trail toward a new, sustainable form of banking. The results may not yet qualify as the Golden Age prophesied by Hindu cosmology, but they are a major step in that direction.

Ellen Brown is an attorney, author, and president of the Public Banking Institute. Her latest book is Web of Debt.