Public banking is not an end in itself. Some supporters see it as an engine of traditional economic growth. The Bank of North Dakota, for example, facilitated infrastructure development for that state's oil boom. Not everyone loves oil economies, but BND was there when the state needed to accommodate rapid development of transportation and build a full-service economy for the impending activity to follow. In this way, a public bank can serve a very traditional economic purpose.
Other supporters, including a few who've published valuable articles early this year, see public banks as engines of a new kind of economy--and as tools for the transition from the old economy to the new. Because big, private banks are beholden to shareholders and tied to traditional notions of "profit," those banks may not see the long-term potential of projects like renewable energy, worker-owned cooperatives, clean/green mass transit, or other projects that aim for long-term sustainability (although these projects do facilitate long-term sustainable growth and are economically smarter than the systems they replace).
On March 17, longtime public banking proponent Gar Alperovitz published "Inequality’s Dead End — And the Possibility of a New, Long-Term Direction," arguing for the possibility that "we can no longer assume that the [economic distribution] pendulum will swing back to traditional liberalism (and its traditional institutional power base)..." A combination of enforced scarcity, the buying-off of the mainstream political sphere by corporate elites, and the stubborn entrenchment of wealth to the top one percent of Americans, has made it unlikely that current wealth will find its way into a redistributive schematic benefitting the majority of the people. Thus, Alperovitz reports, many groups are seeking to "develop something new on the ground," to create new structures of wealth-generation and sustinance that will bypass traditional wealth-holders.
Alperovitz gives several examples, including one of my favorite subjects, worker-owned cooperatives...
One particularly impressive effort involves the Evergreen Cooperatives — a complex of linked cooperative businesses owned by workers from the surrounding low-income communities and established to create green jobs (and democratized ownership) by capturing procurement dollars from the “anchor institutions” as they make their supply chains more sustainable.
Alperovitz's vision also includes citizens empowering their municipal governments to take or retain control of resources in resistance to privatization efforts. He gives the example of Boulder, Colorado's efforts to keep public control of its energy resources:
One early inspiring example can be found in Boulder, Colorado. Here, in a process stretching back over a decade, residents and council members began to understand that an effective and speedy transition to renewable energy was unlikely so long as a corporate conglomerate, Xcel Energy, continued to run the local electric utility with 60 percent of the city’s energy coming from coal. When the company’s 20-year franchise came up for renewal in 2011, activists put municipalization — in which the city would form its own publicly owned utility— on the ballot. Despite Xcel outspending municipalization supporters by more than 10 to one (more than $1 million in total), the measure passed. As we might expect, corporate power doesn’t go quietly when you try to displace it, and Xcel attempted to undo the municipalization push at the polls in 2013. Again, the corporation far outspent local activists. But, in a striking display of enthusiasm for making the energy sector public, city residents voted overwhelmingly in favor of continuing the municipalization, winning by a more than two to one margin — 68.6 percent to 31.3 percent.
For Alperovitz, the engine of keeping state and city deposits away from big Wall Street banks is public banking:
Public banking campaigns in several areas seek to make sure that state and city deposits are deployed not to pad the margins of Wall Street managers but rather to benefit local communities. Santa Fe Mayor Javier Gonzales, for instance, recently announced that the city was studying the creation of a public bank, noting that its existing provider of financial services, Wells Fargo, “take[s] city revenues, taxpayer dollars and [uses] those dollars as part of a loan portfolio for folks outside of Santa Fe and New Mexico.” In late January 2014, the Santa Fe City Council approved a$50,000 contract with a local firm to investigate setting up such a bank. Early in 2014, residents in more than 20 Vermont town meetings voted in favor of a proposal to turn the Vermont Economic Development Authority into a state bank. Ultimately, the effort accepted a compromise in the state legislature, with the authorization of up to 10 percent of state cash balance (currently totaling around $350 million) being made available for investment in local enterprise — more or less fulfilling what would have been one of a state bank’s most important functions. The state of North Dakota, of course, has operated a highly successful publicly owned bank for almost a century.
Alperovitz's discussion of Boulder brings to mind Caitlin Rockett's article in Boulder Weekly on the interaction between Colorado's public banking movement and the promise of both personal and municipal embrace of renewables--as well as the potential for public banks to finance sustainable food policy:
public banking could simply provide a better option for individuals and businesses that want to get loans to install solar systems . . . Unlike the solar industry, small farmers struggle more to secure financing to purchase land or equipment because of the extremely low average pay for a U.S. farm worker . . . In terms of the surplus of farmers without land or access to land, public banking could go a long way to address the obvious dilemma for farmers not only in Colorado or Boulder, but throughout the nation.
For Sarah Nipper, in her recent Portland Tribune article "Economics of happiness: what localization means for the bottom line," the creation of local banks "reinforce[s] local communities while simultaneously lessening dependence on the global system." Nipper interviewed Ellen Brown to develop her analysis of how to locally-finance sustainable community development.
In terms of economic infrastructure, liberalizing investment funds and creating local banks are means to reinforce local communities while simultaneously lessening dependence on the global system. Liberalizing investment funds is something Oregon has already taken the first step to do. Oregon-based businesses can now raise as much as $250,000 through local crowd-funding and Oregonians can invest up to $2,500 per company. Michael Shuman, director of research and economic development at the Business Alliance for Local Living Economies, sees these maneuvers by states as the beginning of a revolution, and is optimistic about what’s to come. According to Shuman, if the U.S. had as many local investment funds per capita as Nova Scotia, which made the decision in 1998 to allow the province to create their own investment funds, the U.S. would have 21,000. Additionally, implementing local banks would afford communities “a huge capital base and a huge deposit base, that [cities could] then leverage into more loans,” says Ellen Brown, founder of the Public Banking Institute, who also argues that local banks can actually be less susceptible to the risky web that is regularly spun from the FDIC.
These are conversations about creating a new commons, and although the models discussed are economically viable, their values are informed by the desire to create a new kind of economy. Alperovitz's emphasis on inequality is part of an emerging theme of many leading scholars and social activists. David Graeber, author of Debt: The First 5,000 Years and The Utopia of Rules, has described the human cost of the surrender of the lifeworld to the needs of big capital:
If someone had designed a work regime perfectly suited to maintaining the power of finance capital, it’s hard to see how they could have done a better job. Real, productive workers are relentlessly squeezed and exploited. The remainder are divided between a terrorised stratum of the – universally reviled – unemployed and a larger stratum who are basically paid to do nothing, in positions designed to make them identify with the perspectives and sensibilities of the ruling class (managers, administrators, etc) – and particularly its financial avatars – but, at the same time, foster a simmering resentment against anyone whose work has clear and undeniable social value.
Much of Graeber's recent work has been deeply personal, describing the bureaucracy of for-profit health care in the context of his mother's fatal illness, as well as this passage, a fitting description of our disappointment with where we've ended up--a place where economic concentration and oligarchy have killed our dreams. “Speaking as someone who was eight years old at the time of the Apollo moon landing," he responded in a March 2015 interview, "I have clear memories of calculating that I would be 39 years of age in the magic year 2000, and wondering what the world around me would be like. Did I honestly expect I would be living in a world of such wonders? Of course. Do I feel cheated now? Absolutely.”
Insofar as new economic forms can restore some of these lost promises, public banks can power up the forms, using investment and credit as the fuel and engine oil of new economic machinery, a process Ellen Brown thoughtfully articulates toward the end of The Public Bank Solution:
Education, research and development can result in more efficient use of what we have. With proper funding, a whole range of natural energy alternatives could be developed . . . Many a budding artist, writer or inventor could develop his or her potential, aided by a bit of subsistence level funding to cover the bills. As with the G.I. Bill, investment in this sort of human potential could generate multiple returns, not just economically but in terms of enriching the quality of life of the people.