Building Local Power

By Institute for Local Self-RelianceSociety & Culture News News Commentary

Building Local Power episodes

December 29, 2016 The Year in Building Local Power (Episode 8)
In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews a roundtable of ILSR staff members. Participants are: Olivia LaVecchia of the Community-Scaled Economies initiative, Karlee Weinmann of the Energy Democracy initiative, and Nick Stumo-Langer, ILSR's Communication Manager.… Read More
34 min
December 15, 2016 Composting Cultivates Economic Development (Episode 7)
In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews Linda Bilsens, Project Manager of ILSR's Neighborhood Soil Rebuilders Program. … Read More
17 min
December 01, 2016 Amazon’s Growing Stranglehold (Episode 6)
Welcome to episode six of the Building Local Power podcast.
In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews Stacy Mitchell (no relation) ILSR Co-Director and Senior Researcher for the Community-Scaled Economies initiative about their latest report: Amazon’s Stranglehold: How the Company’s Tightening Grip is Stifling Competition, Eroding Jobs, and Threatening Communities. Mitchell details the main points from the recent report including the startling fact that nearly $1 of every $2 spent online are spent on Amazon.
Chris and Stacy discuss how Amazon’s impact is not only being felt by other online retailers, but it’s growing stranglehold over manufacturing, shipping and receiving, and online retail platform is harming workers, local communities, and the general health of our country’s economy. Read the report here:
New Report: How Amazon’s Tightening Grip on the Economy Is Stifling Competition, Eroding Jobs, and Threatening Communities
It has become the gatekeeper to online commerce,” says Mitchell of Amazon’s overwhelming online market dominance. “All these other business all have to play by Amazon’s rules, they all have to be dictated to by Amazon.
Related Resource
Here’s an image from the report, detailing Amazon’s growing monolithic presence:
For more information on the issues that Stacy and Chris discussed, read the Amazon report here. You can follow the work of our Community-Scaled Economy initiative by following Olivia LaVecchia and Stacy Mitchell.
Transcript
Stacy Mitchell:
It has become the gatekeeper to online commerce and so all these other businesses all have to play by Amazon’s rules. They all now have to be dictated to by Amazon.

Chris Mitchell:
Stacy, welcome to Building Local Power.

Stacy Mitchell:
It’s great to be here. Thanks, Chris.

Chris Mitchell:
I’ve been really, really, really excited to talk with you about Amazon in this report. It builds on what Olivia and I had spoken about in what I think was the first episode of Building Local Power. It’s right before Black Friday which is to say it’s right before Thanksgiving, the best holiday. As you can tell from my voice, I’m very enthusiastic.

Stacy Mitchell:
That’s great. We are too. We’re eager to release this big piece of research.

Chris Mitchell:
Yeah, we’re going to talk about Amazon today and particularly about your program’s reaction to Amazon and trying to get people to wrestle with what Amazon is. Stacy, remind us who you are.

Stacy Mitchell:
Well, I’m Stacy Mitchell and I direct the community scaled economy initiative at ILSR.

Chris Mitchell:
I’m Chris Mitchell, the second Mitchell at ILSR, the Institute for Local Self-Reliance. With no relation. We don’t have any family overlap from what we can tell although we both shop at the Redding Outlet Stores in our youth in Pennsylvania which was a pretty odd coincidence.

Stacy Mitchell:
That’s right.

Chris Mitchell:
I run the community broadband networks program here. I’ve been the host so far on this Building Local Power where we focus on local businesses, local approaches to making sure that we have political and economic power at home. Stacy, one other thing I wanted to mention, you wrote Big Box Window, a book that at this point is totally irrelevant, right?

Stacy Mitchell:
Well, I wouldn’t go that far. But Big Box Window really charge the rise of big retailers and retailers as the power players in our economy. Amazon is a new iteration of that and in many ways, much more alarming, I would argue, iteration of that. It’s an extension of Walmart. Big Box Window is the foundation for what we’re now talking about in some ways.

Chris Mitchell:
We’re going to be talking about this report on Amazon that you’ve just released, just releasing two days ago from [inaudible 02:22] podcast there so people can go to ILSR.org to read. One of the things that first hit me was half of all Americans are members of Amazon’s Prime program. I’m curious, if you can just start off by discussing some of the things that really hit you when you were researching Amazon as to why it’s so important to talk about Amazon in the modern economy.

Stacy Mitchell:
One of the statistics that I find just stunning is that now more than half of everyone who’s looking to buy something online, they don’t go to a search engine, they just start their shopping right on Amazon. 55% of all people looking to buy something online start at Amazon. That’s up from a third just three years ago. There’s this way in which online shopping has become Amazon. One of the consequences of that is that lots of other companies, anybody who wants to sell something online, other retailers, manufacturers, they now face this really difficult decision. They can either continue to hang their shingle out on the web themselves where there’s less and less traffic or they can decide to become third party sellers on Amazon’s marketplace and thus become dependent on one of their biggest competitors.

Chris Mitchell:
One of the things that I learned over the years is that, from you, is that Amazon’s actually growing faster than eCommerce is growing. It’s outstanding.

Stacy Mitchell:
It is. I mean, eCommerce is growing just enormously every year, huge double digit increases. Amazon is growing even faster. That pie is getting bigger and bigger and then Amazon’s piece of it is getting bigger and bigger. According to our calculation, Amazon is now capturing one out of every $2 that Americans spend online. We project that within five years, online shopping will account for a fifth of all consumer retail spending and that two-thirds of those dollars will be flowing through Amazon. Amazon is now the biggest seller of toys and books and by next year will be the biggest seller of apparel and consumer electronics, anywhere, online and off.

It’s making huge investments into groceries. It’s got delivery trucks on the road now. It’s talking about building 2,000 pickup points, like stores/pickup points across the country. I mean, this is a company that has enormous ambitions. We’re just talking about the retail part of Amazon. Amazon is so much more even than just a big retailer.

Chris Mitchell:
Right. I actually think that we may have to just focus on the retail for this conversation to avoid it being a two-hour affair. I highly encourage people that are intrigued by that to go and pick up the report and to check it out. One of the things that I found interesting is just not just Amazon’s scale but that you talk with small business owners all the time. You do a survey and you found that they perceive Amazon as being the number one threat to their business in many cases.

Stacy Mitchell:
By far. This Amazon is a much bigger deal, a bigger threat in their eyes than anything else, than Walmart, than not being able to get a loan to grow, that the cost of healthcare, difficulty finding employees. I mean, anything you can name that is a small business issue, Amazon is a significantly higher threat in their mind according to our annual survey.

Chris Mitchell:
Why should we care? What if a lot of those businesses just they fail? Amazon wins. We all like shopping in Amazon. Why is that a problem for our communities if we prefer to get our things from Amazon rather than the guy down the street or the woman down the street?

Stacy Mitchell:
There are a number of reasons. One of the reasons that we should be concerned about that is competition. Our economy works well when it’s competitive and when we have a marketplace that is diverse, that is there are lots of different kinds of businesses out there competing for our dollars. That’s important to us as consumers in a couple of ways. One, it’s the key to keeping low prices. It’s the key of innovations. The retail sector in particular, independent retailers play this really important function within their industries. I interviewed for this report quite a few manufacturers. What they will tell you is that even though independent retailers are relatively small share of the market, they’re absolutely indispensable because they are critical to the launch of new products, that they are the ones who create the kind of diversity.

If you’ve got an innovative new product, it is most likely going to find its way into the marketplace through, initially through an independent business then go on to be sold by other retailers. Just to give you an example of that, in the book business, the chances that someone is going to discover a new book that they’d like to read, that they’re three times more likely to do that on a bookstore than they are shopping on Amazon, that diversity of products that in true way for new creators. A lot of that comes through independent businesses and through having this sort of diverse array of outlets. Manufacturers are extremely worried. They will tell you off the record, of all of this collapsing into one single platform. The choices that we see, that we encounter as consumers, being entirely driven by the choices that Amazon makes about what to to show us. That’s one really big concern.

Chris Mitchell:
One of the things that you also wrote that I just wanted to capture here, and I’ll give you a second to finish off your thought, was we’re much more than consumers, we’re people that need to earn a living, who want to have meaningful jobs, care about freedom to build a business. We’re neighbors, we’re citizens, we’re entrepreneurs, we’re producers, taxpayers and residents with needs and wants from an economy that go beyond the one click check out. I wanted to just add that in and then please finish your thought.

Stacy Mitchell:
Absolutely. That’s exactly what I was going to turn to next. We tend to think about the economy in terms of our role as consumers but we are all these other things. What Amazon’s consolidation of the economy is doing is that it’s cutting off opportunities. It has become much harder now to start a business. We’re creating far fewer new businesses than we were 10 years ago, than we were 20 years ago. Entrepreneurship is at this really all time low. That’s very concerning because it means there are fewer opportunities or us as individuals to be entrepreneurs and to make a living. But the other thing is that Amazon is dramatically reshaping the labor market. It’s pushing more and more people, both out of work and into temporary positions. It’s driving more and more of its business using on-demand, Uber-like labor where people work for a few hours and are paid a piece rate to deliver Amazon packages.

When you look at the future of the economy in Amazon’s vision, it’s an economy that doesn’t offer at lot of opportunities for people and that most of those opportunities are extremely low paid. This is a company that’s really a central protagonist in driving inequality and in shrinking the middle class.

Chris Mitchell:
Can you tell us why should, from a perspective of Building Local Power, why should we be concerned at the demise of the independent businesses in our communities? What I’m trying to get at is that I think local business leaders are often leaders in the community.

Stacy Mitchell:
That’s absolutely right. Commerce has always been attached to place. Businesses have always been where people are. Amazon’s severing that relationship. When we begin to think about what that means, when we have growing numbers of vacant storefronts in our communities, when we’re losing all of those jobs and those business owners that are often very active in local affairs and really anchor an important part of community, we’re losing that to a company that isn’t supplying those jobs in a lot of our community that isn’t present at all and that of course is not owned locally. None of those decisions are made in terms of the needs of the community.

There’s just a wealth of research and I think we all know in our own lives that local businesses, they sustain the social networks. You’re very likely to run into someone you know when you’re out running errands, have a sort of happenstance interaction with your neighbors. A lot of how we experience the places that we live is through our errands, is through the businesses that line our streets. We have a lot at stake in terms of how we experience community but also that sense as you put it of community power, of really having an ownership and having a community that’s able to look after its own needs to a degree and to set its own future. I’ve been thinking a lot about Amazon, Amazon’s rise, just reflecting on the history that a lot of communities have been experiencing in terms of the lost of manufacturing and in the lost of small businesses, replaced by Walmart, and now even the Walmart shops are going away. This is sort of another way of that kind of lost of community control. That’s, I think, very alarming.

Chris Mitchell:
One of the things you said toward the beginning is that local businesses would face this choice of putting their own website, they’re doing their own eCommerce or doing it through Amazon. Why is it a problem if they decide to be a seller on the Amazon marketplace rather than doing it themselves?

Stacy Mitchell:
The reason it’s a problem is that they are now dependent on their biggest competitor. Amazon runs this big third party marketplace. Most shoppers wouldn’t realize but half of all sales on Amazon come from their third party sellers. Amazon charges those sellers a pretty significant fee for that. They basically have sort of a tax on all of this commerce that’s going on. But they’d also take a lot more from sellers even than just that fee. One of the things that they do is they watch what sellers do and they learn from them, they learn so if you’re an independent retailer and you have a lot of knowledge about a particular product area and you start selling on Amazon, Amazon is going to be watching your inventory. They’re going to see what sells and then they’re going to bring the most profitable of what you’re selling into their own inventory. They’re going to use all your data and knowledge and they’re going to turn around and use it against you.

They can also change their rules at anytime. Amazon is just notorious for changing its rules, just dismissing a seller, cutting you off. You’ve got people out there who built businesses selling on Amazon who one day wake up and find that Amazon has closed their account and that they no longer have a livelihood. This is just the idea of being that dependent on your biggest competitors, just incredibly dangerous and precarious position to be in.

Chris Mitchell:
One of the reactions that I get from people when I start talking about why I don’t support Amazon, why I try to do everything I can to not support them in terms of buying from them or watching their programming or doing whatever is that I’m being unreasonable and that Amazon has just won on a neutral field. But you talk about all the taxpayer subsidies that Amazon has received and all the ways in which Amazon gets subsidies that from local governments or from states that they would never dream of giving to local independent retailers that are already competing. Can you tell us some more about that?

Stacy Mitchell:
Absolutely. Amazon built its business from the very beginning back in 1995 on being sales taxed, exempt from having to collect sales tax. Every other brick and mortar retailer out there has to collect sales tax. Amazon for many years did not and even to this day, still does not collect sales tax in 16 states. There’s a lot of research that that actually drives Amazon’s sales, that that’s a significant competitive advantage that it has over other retailers. As Amazon in the last few years has expanded its network of warehouses so they’ve moved to the strategy where they want to do same day delivery in all the big cities. They’ve been building warehouses everywhere and that’s meant that they’ve had to give up the sales tax advantage in a lot of states.

But what they have done is that they’ve now turned around and they’ve gone to local and state governments and said, “Give us a subsidy to build these warehouses.” We went and looked and found that over the last 10 years, Amazon has built over 77 big warehouses and it has received major public subsidies on over half of those warehouses. Altogether, we counted almost a billion dollars in local and state public monies going to Amazon to support its expansion. This is a company that just relies heavily on government handouts.

Chris Mitchell:
I want to just give you a second because we’re running out of time that you make a point, Amazon isn’t like the future which is how I think a lot of people imagine Amazon but it’s the past. You referenced railroad barons. How is Amazon the past?

Stacy Mitchell:
When you strip away all of the modern vernier of Amazon, the digital trappings of Amazon, when you just look past that, what this company really is and what it’s all about, it really reminds me a lot of the late 19th century, it reminds me of these Robber barons who owned railroads, Cornelius Vanderbilt and those guys back then, what they did is they gained control of those railroads and then they used their control of railroad to dictate to other businesses and to actually block their competitors from getting to market. They had competitors in other industries that they controlled and they’d say, “Sorry, you can’t ride on my rails. Or if you want to ride on my rails, it’s going to cost you an enormous sum of money.” Amazon is effectively doing that online. It has become the gatekeeper to online commerce.

All these other businesses, small manufacturers, big manufacturers, other retailers, they now all have to play by Amazon’s rules, they all now have to be dictated to by Amazon. It has the ability to just basically levy this tax on all of their business. That’s one way. I think the other way in which Amazon really struck us when we were writing this report is being so much more like the past is when you look at its labor model. It’s got all of these precarious temporary worker staffing its warehouses, doing its deliveries, all of these people who are now working for piece rate, like the old sweat shops of yore when people sewed clothing and they got paid a tiny piece rate for every piece that they [inaudible 17:29].

Amazon is increasingly moving to that with its package delivery, tiny piece rate for delivering the package and other work that it has going in its warehouse. When we think about this company and we really look at what it is, it is much more reminiscent of a past that I don’t want to go back and that I don’t think is good for the economy. I think we can also draw on that period because Americans really rose up against that consolidation of power back then and they passed anti-trust laws, they passed labor laws. It’s to that history that we really need to look as we wrestle with how to deal with this new form of concentrated power.

Chris Mitchell:
Well, I hope that people, if they weren’t convinced halfway through the show are now convinced that they need to read this report, there’s so much in it. But I do want to ask you for another reading recommendation that you would have for people, whether it’s a book or an article or something else. What’s some other piece that you’d want to recommend people check out?

Stacy Mitchell:
Something that I just read that I thought was very insightful is an article that’s in one of the recent issues of the Atlantic. It’s called How Post-Watergate Liberals Killed Their Populist Soul. It’s by Matt Stoller. It’s a really interesting look at how we moved away from anti-trust and anti-monopoly beginning in the 1970’s and 1980’s. A lot of good insights on what I think is where we sort of went wrong as a country and stopped being concerned about concentrated power, not only because of the effects on the economy but also the way concentrated power is undermines democracy and undermines our government. I just thought it was a very interesting read. I highly recommend it.

Chris Mitchell:
Yes. Let me just pile onto that because I also really enjoyed that. I think it’s really appropriate in this time when I think a lot of people are just thinking, “I hate Republicans. I hate Democrats.” It’s a real reminder of nuanced these things are and is not one party’s fault, that we need to look deeper. Something Olivia had said was that she’s just been enjoying his writing in general. I think you said his name was Matt Stoller, right?

Stacy Mitchell:
Yes, he’s terrific.

Chris Mitchell:
He’s been doing good work. I encourage people to check that out. Thank you so much, Stacy. This has been just a wonderful conversation.

Stacy Mitchell:
Thank you, Chris.

Lisa Gonzalez:
That was Stacy Mitchell, director of the community scaled economy initiative and co-direct of the Institute for Local Self-Reliance, talking with Chris Mitchell about her initiative’s recent report, Amazon’s Stranglehold, how the company’s tightening grip is stiffing competition, eroding jobs and threatening communities. That was episode number six of our Building Local Power podcast. Learn more about the community scaled economy initiative and their amazing research at ILSR.org or you can also download the report. Subscribe to this podcast and all of the podcast in the ILSR family on iTunes, Stitcher or wherever else you get your podcasts. Never miss out on our original research by also subscribing to our monthly newsletter at ILSR.org. Thanks to this [inaudible 20:31] music, license through creative commons, the song is Funk Interlude. I’m Lisa Gonzalez from the Institute for Local Self-Reliance. Thanks again for listening to the Building Local Power podcast. Catch you next time.

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.
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21 min
November 17, 2016 Broadband Boosted at the Ballot, An Election Wrap-Up (Episode 5)
In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews Lisa Gonzalez, Senior Researcher for the Community Broadband Networks initiative about the recent election and what it means for municipal broadband networks across the nation. In this podcast, Gonzalez delves into the election results coming out of Colorado regarding the two dozen communities who voted to reclaim their broadband connectivity future. 26 additional Colorado cities and counties opted out of a restrictive, cable monopoly-supported state law, passed in 2005, that prevents these entities from providing service or partnering with the private sector.… Read More
29 min
November 03, 2016 Powering a Political Revolution, North Dakota’s Non-Partisan League (Episode 4)
Welcome to the fourth episode of the Building Local Power podcast.
In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews David Morris, the co-founder of the Institute for Local Self-Reliance and the director of the Public Good initiative about the history behind North Dakota’s Non-Partisan League. In this podcast, Morris goes into detail on the League’s political influence and how their policies set North Dakota on a trajectory of local ownership and a tradition of fighting concentrated economic power. He also notes that North Dakotans are still fending off challenges from major banks and pharmaceutical chains, and that the tradition of local ownership is strong throughout the state.
“This is an example of effective organizing that had an impact,” says Morris. “There are much more examples of that than there are top-down, ‘somebody created a great idea somewhere in Congress or the White House’ and they implemented it. It’s almost always pressure from the grassroots level that moves us forward.”
For more information on the issues that David and Chris discussed, read his piece on the Non-Partisan League: How to Make a Political Revolution, and our report on North Dakota’s independent pharmacy law: North Dakota’s Pharmacy Ownership Law Leads to Better Pharmacy Care.
If you missed the first couple episodes of our podcast you can find those conversations with Olivia LaVecchia here, Neil Seldman here, and John Farrell here. Also to see all of our episodes make sure to bookmark our Building Local Power Podcast Homepage.
Transcript
David Morris:
This was an investment that they were making. It wasn’t a contribution to the betterment of the world. This was a personal investment.

Chris Mitchell:
What are you going to have for lunch?

David Morris:
I don’t know what I’m going to have for lunch. Probably a caesar salad, but I may splurge and have a hamburger, I have to ponder that.

Chris Mitchell:
Today, I’m excited to be talking to David Morris, the co-founder of the Institute for Local Self-Reliance. The guy who makes us all honest, in the office, otherwise I would be totally dishonest without your presence, I have to admit. Welcome to Building Local Power.

David Morris:
Thank you, Chris, and thanks for the introduction.

Chris Mitchell:
No problem. I just wanted to say that for people who are not familiar with the Institute for Local Self-Reliance, it’s almost forty-three years, now. You’re a co-founder of it. I’m Chris Mitchell, I run the internet related work for the Institute. When I started here almost ten years ago, I didn’t really have a sense of what it would be like to work in an environment like this, but I am very impressed with how seriously you take empirical research, and the truth over just ideology. It’s something that I’ve been inspired by.

David Morris:
Thank you. I believe in evidence based ideology.

Chris Mitchell:
Right. Today, we’re going to talk, it’s election season. We’re going to talk today about this populist uprising in North Dakota, and the reason that I find it very interesting is not just that it’s led to almost a hundred years of change, and set the tone for North Dakota, but that people don’t really know about it. Stacy Mitchell, one of our colleagues, incredible mind, here, she believes that the reason people aren’t familiar with it is that liberals don’t want to talk about North Dakota, and that conservatives don’t like the reforms, because they involve the government doing good things. That’s why we’re going to talk about it. What is your interest in talking about this? How would you describe it?

David Morris:
My interest is that it came out of a certain period of American history, which in some ways is being repeated, in some ways it’s not, because it was a hundred and twenty years ago, but nevertheless, it was a time where people were not only concerned about inequality, but were tackling it, people were very concerned of big corporations. People were very concerned about how big corporations in cities were dominating farmers. There were depressions every ten years in the United States, and there were movements, there was the populous movement, which was also a party, there was the peoples party, there were the progressives, and what they were trying to do was to make structural reform. That’s the context, if you will, out of which the North Dakota political revolution happened.

Chris Mitchell:
I just think it’s worth noting for people who haven’t studied the history, this wasn’t just sort of a secular thing, this was the first time we had corporations on the scale that they were, and I think, right now, we probably have corporations on a scale that we have not seen, the power of a single corporation to enact its will is not unparalleled, perhaps, but it’s near the peak, it seems like. Then, and now.

David Morris:
That’s exactly right. In the late nineteen century is when your little businesses became industries, your industries became large manufacturing firms, and you large manufacturing firms consolidated into what they call trusts, what a interesting word, so now when we want to break them up we have to call ourselves, antitrust, I ask you, but in the late nineteen century you literally had industries where you had one dominant firm in each industry, and you had state legislatures, which were controlled by the corporations. It was similar to now. Those corporations were smaller in size, certainly, than those in 2016, but their power was probably even greater.

Chris Mitchell:
Although, as you say that, I have to immediately think you have oil, and then a few decades later you have standard oil controlling all of it. Right? I mean, oil wasn’t out of the ground, hydrocarbon oil, not whale oil, and eventually any standard oil takes over everything. Now, we have the internet, Facebook, and Google kind of have taken over everything. I think as we talk about what happened in North Dakota, it’s important to recognize that some of the things we just take for granted, the power of Google, and Facebook, I think are very analogous to what we saw with, what people are reacting to there.

David Morris:
I think that, that’s very true. In North Dakota, the farmers, we’re talking about primarily an agricultural state then, and now, but then it was about 90%, agriculture, and the farmers knew that they were a colony of Minneapolis, which is where we’re conducting this interview. Their railroads were controlled by Hill, who was based in Saint Paul, and he …

Chris Mitchell:
There’s a wonderful house you can tour there, still.

David Morris:
Yes. A wonderful house. A house where it’s lit by both gas, and electricity, he wasn’t exactly sure what the future was going to bring, and he had his own power plant.

Chris Mitchell:
He was diversified. Let’s dig into North Dakota. In North Dakota you are wrestling with these issues, where do you want to start with, what they did?

David Morris:
The initial thing that they did is they came together, the farmers, and they said, “We want to cooperatively owned, what they call a terminal elevator, which is essentially a mill, and a storage facility, and we would drop off you grain, and cooperatives were a big deal in the late nineteen century in rural areas, so they wanted that. In 1913, in North Dakota, they adopted initiative systems, which meant basically if you got enough signatures on a petition you could put something on the ballot, and you could essentially pass a statute.

In this case, they did in 1913, 1914, actually they passed an initiative that said we want a grain elevator, but the legislature had to then make that law, their initiative process was enabling, but not determinants, if you will. The next January, January of 1915 the legislature reported back that it would be catastrophe if they did such a thing, that it shouldn’t be done, and it wouldn’t be done. Two months later, two former socialist party candidates decided that they would create a new party. It would be called the nonpartisan league, that is it would not be a political party that had a label, that ran it’s own candidates on the line on the ballot.

What it would do is it would endorse anyone who endorsed their program. Their program would be very concrete and very specific. One other factor, that is important, here is that in 1905, North Dakota adopted an open primary system. Now, the progressive league had essentially introduced primaries around the country as a way to avoid the backroom deals of political parties. It was a fresh air time to enable democracy, North Dakota went one step further and said there would be an open primary, which essentially meant that anybody could vote in any primary. You didn’t have to be a democrat to vote in the democratic primary, and so forth.

The nonpartisan league took advantage of that, and essentially it established it’s first convention in March of 2016, it endorsed candidates who would support their program, and their program was very concrete. It wasn’t a 2016 program, which essentially said, “We will help the small businesses, and we will help the poor, and we will help the this,” very concrete. It said, “We’re going to have a state owned flour mill. We are going to have state owned bank. We are going to have a state owned insurance company.” There were about five or six specific planks, that was March of 2016.

Chris Mitchell:
Yeah. Let’s just pause for a second. They wanted all this stuff to be state owned, because they didn’t want it to be controlled out of Minneapolis?

David Morris:
That’s right. They wanted to be able to control it themselves, and they felt that the state would be an enabling mechanism for this. Now, we should understand that they weren’t talking about state monopolies, they were talking about if you want to use 2016 jargon, they were talking about public options.

Chris Mitchell:
Mm-hmm (affirmative).

David Morris:
In other words, they wanted a state bank, but that didn’t mean that all the banks were going to be eliminated in North Dakota, in fact, when they did get a state bank, it was an enabling bank, it didn’t provide direct loans, it was a partnership bank with the existing small banks in Minnesota. Same thing with the flour mill, not the only one that exists in North Dakota, but they wanted an option, and an option, which would be either owned directly by them, as cooperatives or that would be owned indirectly by them, by the state.

Chris Mitchell:
I think it’s worth noting. That this public option it’s not just like, and then you have a state owned bank, I think it impacts the entire ecosystem, where then all of the entities that are playing there have to offer better products, better services for the most part.

David Morris:
Absolutely. I mean, what you do is, it’s not so much that you engender competition into the marketplace as that you engender effective, genuine competition. This is competition by an institution that is owned directly or indirectly by the citizens, and by the customers. This is an institution that’s nonprofit, it’s not profit oriented, this is an institution that has a social mission, but it also has to compete with the private marketplace, if you will. It goes both ways in terms of competition. It’s a very, very effective tool in American history, but North Dakota took that tool, and made it the central part of it’s economy.

In March of 1916, the nonpartisan league had, actually, it’s second political convention, it endorsed candidates that embraced it’s program. In June of 2016, they ran in the republican primary and took over, essentially the republican party, which then, as now, has a lock on North Dakota, it is a republican state, the nonpartisan league in November of 1916, literally took over the state, in terms of all state elections. They did not take over the senate, but they took over the house. They then, tried to pass a legislative program, and what they found was what they needed a constitution amendment that would allow the state to participate in business. In other words, they had to, if you want to use 2016 language, again, is that they wanted permission to go socialists.

Chris Mitchell:
Sure.

David Morris:
They had the votes to do that in the house, but not in the senate, and the next election they won the senate, as well. Winning the senate, as well, they got the Constitutional Amendment passed by initiative that allow the state to participate in business. With that, sort of opening the dam, they got a grain elevator, they got a bank, they actually put ten initiatives on the ballot, all ten won. Now, you have a completely different structure to the economy of North Dakota.

Chris Mitchell:
Can I ask, and I just have to wonder, what was the rest of the republican party thinking around the country as the republican party in North Dakota is enacting these changes?

David Morris:
I don’t know what they were thinking, but we need to remember that this was a moment that the populous movement got the income tax passed, the supreme court declared it unconstitutional, this was a moment where people were busy amending the US Constitution, so they could allow that to happen. People were getting direct election of US senators, at this point, by an amendment to the Constitution, there were antitrust legislation that was passed, there was a lot of things going on.

Chris Mitchell:
Okay.

David Morris:
I don’t think, necessarily that the republican party viewed this in the same way as they would, there was no social media at that time. This was not a moment where I think that they saw this as a political earthquake, however, within North Dakota, they did see it as a political earthquake, and there was a push back, and what they did, among other things, the nonpartisan league was to make it easier to get initiatives on the ballot. To make those initiatives be stronger in terms of their implementation and then they also passed a law that said that initiatives could recall elected officials. They were the first in the country to do such a thing.

Chris Mitchell:
I’m sensing that this might be an agent of their demise.

David Morris:
It was the agent of their destruction, actually, because there was an opposition, and it was an opposition that arouse for a number of different reasons that we can talk about, if you are interested, but within two years, 1921, that opposition essentially recalled every official that the nonpartisan league had elected on a statewide basis.

Chris Mitchell:
Why had the popular tides swung against them?

David Morris:
One of the things was that they overreached in the sense that they were elected on specific program, and they were beginning to do things that were beyond that program. The second thing is that the price of wheat dropped by 70%, after World War I ended, by 1921, by 70%, so there was a significant dissatisfaction as tends to happen when economies collapse. The third is that when the war ended this thing called the Russian revolution occurred, and therefore the anti Bolshevik, you were communist, and so forth, in fact, the leader of the, the founder of the nonpartisan league, a man named Townley, was actually arrested indited, and tried in Minnesota for preaching sedition, essentially. It was a state anti sedition act, and so the combination of those three things essentially did them in.

What was interesting was that, so the opposition took over, and the opposition put, I cannot remember, I believe it was ten items on the ballot for initiatives to essentially overturn, get rid of the bank, I mean so it was essentially to completely strip, and lost every one of them. Not by much, it was close, two thousand vote shift, and the bank of North Dakota would have disappeared, would have been stillborn, essentially. It was still in the process of being created.

The point is that the nonpartisan league had done enough good basic organizing, and educating, and doing in terms of enacting, that people, although the didn’t like them personally, for a number of different reasons, they didn’t want that program, that structure to go away. That’s really the most important point, if you will, of the nonpartisan league, because that’s the spirit, the value system, in fact, that continued, that endured. The political structure was gone by 1921, it was essentially gone, the party continued for about ten more years with the movement, the formal movement continued for about ten more years. The sentiment continued, so in 1933, they passed a Constitutional Amendment that prohibited corporations from owning land.

Then in 1963, they passed a law, I’m not sure it was a Constitutional Amendment, it might have been, that said that the pharmacies had to be owned by a registered pharmacist, in other words there couldn’t be chain pharmacies. They put that in, and a number of other things that they passed, and now if we want to go fast forward to the current time, there’s been a push back of all of those, and in fact there have been three. First there was two legislative efforts to overturn the pharmacy provision, by Walmart, and Walgreen’s, and the Institute for Local Self-Reliance was involved in that at the legislative level in providing the data that convinced the legislature to not to approve those. Then, Walmart spent nine million dollars to get it on the ballot, and lost by two to one on the ballot, and that was in 2014. Then, last year, there was a major effort to overturn that 1933 prohibition on corporations owning farm land, and that lost, significantly. We still have that value system from a hundred years ago.

Chris Mitchell:
I think it’s worth making sure people are aware that the resources we put together on the pharmacies, for instance, is all available on our website. I hope people check it out, because for me it’s very fascinating to see that any thought you might have that Walgreen’s, and Walmart bringing economies of scale would lower drug prices, rather than having independently owned pharmacies is not true, and it’s not born out by the data.

David Morris:
No. It’s not born out by the data, in fact, we did a study, which we submitted to the legislature that compared North Dakota, and South Dakota in terms of pharmacies and found out that North Dakota has many more pharmacies in rural areas. We did a study and compared prices, actually, between the Walmart’s and the family owned pharmacies in North Dakota, and found that they were lower in price. That on any measure that you would use to compare pharmacies, they came out better, and there are of course more pharmacies per capita in North Dakota than there are in South Dakota. It really has been a very, very compelling, they couldn’t get it through the legislature, they lost overwhelming there, and that’s where essentially the peoples representatives are, then they lost on the ballot. The people like it, and it really is a good structure. Similarly, we’ve done studies of the impact of the Bank of North Dakota.

Chris Mitchell:
This is what I’m really interested in. If the bank had been cancelled out, way back when, how would North Dakota be different?

David Morris:
When the bank first set up, when it first opened its doors in 1921, the interest rates that were charged to farmers on farm loans, dropped by one-third, it had an immediate impact. Also, the bank of North Dakota in 1930s was not interested in taking over peoples farm land. There were foreclosures because there were private mortgages, but essentially the state was not interested in doing that. If you fast forward to 2016, the Bank of North Dakota, which let’s call it, it is a socialist institution, has enabled the capitalist system to be much more healthy in that the banks sent in North Dakota, and there are more banks in North Dakota, than there are in any other part of the country, and they are family owned banks, 83% of the deposits are in essentially community banks, and they have a return on their assets, which is almost twice that, 50% more than in the big banks.

By any measure it has enabled a very healthy economy, significant majority of student loans are given through the bank, and the small business loans are primarily given through the bank. If you look nationwide, and the Institute for Local Self-Reliance has all that data on our website, as well. If you look nationwide, you find that the small business loans are coming from small banks, they’re not coming from big banks, the student loans are coming from small banks, they’re not coming from big banks. What big banks do is to provide the loans that would allow AT&T to decide that it wants to take over Time Warner, and they get involved in international trading, and they picked around the derivatives in the like, but if your small banks that actually do what people thought banks were supposed to do all along.

Chris Mitchell:
Right. Here, we talk often on my internet program related stuff, about US Internet, here in Minneapolis, financed by local banks to get back to North Dakota and to put a bow around it. I think, also North Dakota did better in the housing crisis, and the most recent recession of 2007 through, however long you want to date it. Is that right?

David Morris:
That’s right. The Bank of North Dakota has generated, I think, in the last 20 years or less than that a billion dollars in quote profits, which half of it went into the state. In 2007, 2008, North Dakota suffered much less than the rest of the country. Now, there’s a kicker, here, in that with fracking there’s an enormous amount of oil that was discovered in North Dakota, so you have to uncouple that from a nonpartisan league. From the Bank of North Dakota, they have a surplus in their budget, and certainly what has happened in the last six or seven years is essentially more to the fact that they have this enormous revenue coming from oil. However, that is temporary, and already the oil prices have been reduced, there’s less drilling, there’s less pumping than there has been before North Dakota now, I believe, this year, has a deficit and they’re having to deal with the fact that they didn’t plan very well. It’s the nonpartisan league was not in control in North Dakota when the oil came in, let’s just say that.

Chris Mitchell:
I think as we wrap this up, I think, lessons for today are important, and one of them that I takeaway is this idea of talking to people on concrete issues, rather than abstract notions of capitalism, socialism, or this, or that, it’s kind of like, here’s a solution, it’s a policy solution, it’s a state bank, and here’s what it’s going to do for you, and you said concrete maybe five times in talking about the nonpartisan league. Do you think that the lessons from the nonpartisan league can help us to organize today in a time where we’re perceived to be more partisan than ever?

David Morris:
Yes. I think, absolutely. I mean one thing that the nonpartisan league did was require membership dues that were very stiff. They were very stiff. They were about two percent of peoples income.

Chris Mitchell:
Wow.

David Morris:
These were poor farmers, really. Right? Yet, by 1915, very early on forty thousand out of six hundred thousand people in the state were members, so that’s how they got their revenue, and how did they get that revenue? By going to the farmers and looking them in the eye, and saying, “This is an investment, because this is what we’re going to do. We’re going to get you a state owned grain mill, grain and flour mill. As a result you are not going to be having your grain degraded, because it’s owned by a Minneapolis firm. You do not have to pay the truck, the railroad fees to get it to Minneapolis to be turned into flour.” Farmers are smart, they can do that, but on a back of an envelope, they can figure out, so this was an investment that they were making, it wasn’t a contribution to the betterment of the world, this was a personal investment.

I think that people can in fact do that, now, in terms of being very concrete. There is some things that we couldn’t do that about, but I think that if we could colorless on sort of half a dozen very concrete institutions, if you will, or laws, or statutes, or policies that we would embrace, we could then go out and we could sell those very specifically, and I think that, that’s important. The other thing that is important is for us to understand how important primaries are. The Tea Party discovered how important primaries were and they took over the republican party not through the open primary process, they literally went into the republican party and took it over at the primary level. We tend to wait until the general election, but because we wait until the general election, we don’t, sometimes we don’t have a choice that we would like to have, and we never really have a choice about specific planks of a program.

Chris Mitchell:
Thank you, so much, for coming in, and talking about this. I feel like this isn’t one of those issues that could disappear from history. I hope that we can make sure that, that doesn’t happen, because you might think state bank, some of these issues are kind of yesterday’s issue, but this is the effective organizing that makes a difference. These are the minor changes that can make a difference in a state decade in, decade out. It seems to me.

David Morris:
Yes. Absolutely. I mean, this is an example of effective organizing that had an impact. There are many examples in American history of effective organizing that had an impact. In fact, there are much more examples of that than there topped down, somebody created a great idea, somewhere in congress, or the white house, and they implemented it. It’s almost always pressure from the grassroots level, that moves us forward.

Chris Mitchell:
We’ll be talking about more of those in the future, as we continue to build local power. Thank you.

David Morris:
Thank you, Chris.

Lisa Gonzalez :
That was David Morris, co-founder of the Institute for Local Self-Reliance, and the man behind the public good initiative. He was visiting with Chris Mitchell for episode number four of our Building Local Power Podcast. Learn more about the nonpartisan league on archive.ilsr.org, by reading David’s article titled, How to Make a Political Revolution. You can also download the 2014 report on North Dakota’s pharmacy ownership law at archive.ilsr.org. Subscribe to this podcast, and all the podcasts in the ilsr podcast family on iTunes, Stitcher, or wherever else you get you podcasts, never miss out on our original research by also subscribing to our monthly newsletter at archive.ilsr.org. Thanks to Dysfunction Al, for the music, license through Creative Comments. The song is Funk Interlude. I’m Lisa Gonzalez, from the Institute for Local Self-Reliance. Thanks, again, for listening to the Building Local Power Podcast.

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.
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Building Local Power brings you thought-provoking stories and new ideas for breaking the hold of corporate monopolies and expanding the power of communities to chart their own futures. We deliver insights from trailblazing lawmakers, scholars, business leaders, and advocates. Plus, conversations with in-house experts at the Institute for Local Self-Reliance help reveal the patterns and policies that shape our economy and communities. These stories and conversations help map solutions that distribute power to everyday people.