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Nature Redistributes Resources

Can our economic model work more like nature, regenerating the systems that power its growth?

In southern New England where I live, mature hardwood forests are made up predominantly of oak, maple, white pine, hemlock, and birch trees. The oak tree, king of the forest, sends its roots as much as fifteen to twenty feet down and brings up water that it shares with other plants in the forest. With its magnificent canopy, the oak intercepts sunlight and produces carbon to feed soil microbiology.

Deborah Frieze on Investment Strategies to Close the Wealth Divide.   Watch the Full Program

The oak tree, says rancher Sallie Calhoun, “isn’t out for itself; it’s out for the forest.” The oak tree doesn’t go, “Mine, mine, mine!” when it pulls up water or distributes it only to its favorite plants, Sallie explains. It releases water into the ecosystem, allowing a plurality of species to thrive, exchange nutrients and protect one another from pathogens. It has access to resources that most of the plants in the forest don’t, and its job is to anchor and feed the rest of the forest. 

Sallie Calhoun

Sallie Calhoun

Imagine a world in which big banks, global corporations, and the wealthiest one percent functioned like oak trees, serving as an integral part of the community, redistributing financial capital to support productive capacity throughout the entire economy.

Ah, well. 

Most of us know that’s not how our current system works. If we didn’t know that before COVID-19, we sure do now. The rapid infusion of government stimulus money into our economy could have created an opportunity to rebalance the system’s resilience by ensuring all parts of the economy gained equitable access. Unfortunately, once again, big corporations and banks have claimed the lion’s share of stimulus money (see the Billionaires Bonanza report on pandemic profiteering) while small businesses closed down, millions of workers lost their jobs and communities of color inequitably bore the brunt of our collective hardship.

This strategy is antithetical to natural principles. In nature, resources often flow to where they’re needed most. An oak tree that has hoarded its resources would soon find itself standing on bare ground and would not survive. Like every other species on the planet, our ability to survive and thrive is rooted in interdependence. As the saying goes, we all do better when we all do better.

Imagine a world in which big banks, global corporations, and the wealthiest one percent functioned like oak trees, serving as an integral part of the community, redistributing financial capital to support productive capacity throughout the entire economy.

So what might it look like for us to operate human organizations in alignment with the principle that nature redistributes resources? 

Here’s one example where we would find ourselves making radically different choices. Compensation ratios can be used to compare the salaries of the highest and lowest paid workers or highest paid men to highest paid women. In the United States, CEO pay averages 320-to-1 over typical workers. (The highest recorded CEO pay ratio is 6,565-to-1.) Back in 1965, that ratio was only 20-to-1 and even as recently as 1989, was 58-to-1—evidence that today’s extreme wealth concentration in the U.S. is a somewhat recent phenomenon. Coupled with the lack of diversity in the C-suite, excessive CEO pay contributes to the growing racial and gender wealth gap we see around the world. 

Landscape from above

What if instead of benchmarking CEO pay to the Market (see my column, Just Ask Nature), we benchmarked compensation ratios rooted in interdependence? One simple practice that could begin to reverse that trend would be to increase wages for workers above a living wage and restore compensation ratios to at least 1980s levels. Even so, that would be insufficient for the typical American worker, who, according to a Stanford University study, believes CEOs should be paid no more than 6 times the average worker’s salary. 

We reward organizations that pay their workers a living wage and achieve a low compensation ratio of 5:1 with a decrease in the interest rate on their loans. When their compensation ratio drifts above 15:1, we increase their interest rate.

At the Boston Impact Initiative, we share that belief, so we reward organizations that pay their workers a living wage and achieve a low compensation ratio of 5:1 with a decrease in the interest rate on their loans. When their compensation ratio drifts above 15:1, we increase their interest rate. This incentive structure is one that we create in partnership with the impact entrepreneurs we invest in. These entrepreneurs care as much as we do about the well-being of all the people they depend on to create their goods and services. They are not seeking to extract wealth from their workers, and we are not seeking to extract wealth from our investments. Together, we are aiming to create the conditions for a regenerative economy to emerge that acknowledges our interdependence. 

Together, we are aiming to create the conditions for a regenerative economy to emerge that acknowledges our interdependence.

Compensation ratio is a simple but profoundly revealing indicator of the underlying principles from which we’re operating. Today’s dominant economic and social systems value the few at the expense of the many. When impact investors and entrepreneurs align together around natural principles, we can play a catalytic role in shifting our economic system to one that values all of us equally. 

Tree roots intertwined

Deborah Frieze is founder and president of the Boston Impact Initiative, an impact investing fund dedicated to closing the racial wealth divide in Eastern Massachusetts. She is co-author with Margaret Wheatley of Walk Out Walk On, an award-winning book about building healthy and resilient communities.

This article was produced in collaboration with the Magazine's Content Partners.

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