PBI Chair Walt McRee and PBI’s NJ State Coordinator Joan Bartl attended a victory party for NJ gubernatorial candidate Phil Murphy in Princeton, NJ last week, celebrating the beginning of a new era of mainstream acceptance of public banking in American public policy. What does it mean for the movement?
Last week’s gubernatorial primary resulted not only in the ascension of candidate Phil Murphy to the threshold of the NJ statehouse, but also the elevation of public banking into mainstream political discourse for the entire country. Since Murphy adopted public banking as a core component of his economic recovery plan a year ago, the state has been abuzz with talk about the idea of having a state-owned bank: “What’s a public bank?” “You mean he wants to give those politicians a bank?” “Makes sense – why send our money to Wall Street?” And so on.
But aside from the curious, and sometimes spurious, inquiries into public banking from all corners of state life, the very fact that an ex-Goldman Sachs executive ran away with a 2 to 1 margin of support from a major political party means that public banking itself has crossed a threshold of mainstream political adoption. Murphy didn’t hold back on the idea, founded on American soil by the colonists in the early 18th century and vigorously reestablished by democratic insistence on the Plains of the Upper Midwest two hundred years later, Phil Murphy tapped into a proven method to actually save the people’s money while enabling investment into multiple categories of public need and public interest.
Officials around the country took notice of this bold policy proposal – a departure from textbook public finance. Here was a never-before-elected candidate running a winning campaign on an idea that seemed to violate all the old-boy schools of political thought and camaraderie, the protective cloak of business-as-usual being challenged by a fresh approach to actually making a systemic change in state finance. Candidates for office as far away as CA, WA, OR and Alaska (and next door in PA) all noticed that Murphy was running a winning campaign on a distinguishing populist platform of service and self-finance. “Last year we spent $1.5 billion dollars building the infrastructure of Japan,” Murphy was fond of repeating, “We will keep that money in New Jersey and invest in ourselves!” That commonsense logic wasn’t lost on New Jersey voters, or for that matter, its media.
If Not Now, When?
As in many other states, cities and counties, New Jersey has its share of seemingly unmanageable debt overhead, and each year brings larger totals of costly financing expense as the state appears committed to the impossible strategy of borrowing its way out of debt. Last year its pension fund spent over $632 million dollars in management fees alone – a massive transferal of public dollars to private interests 63 times larger than a mere dozen years before. And that’s just the pension funds.
Phil Murphy’s personal background seems to be the bedrock from which he forcefully champions the public bank idea. While he made his own way to the realm of the financial and political elite, he carries with him the childhood experience of a familial setting of near-poverty, the kind of lessons that provide a sort of moral compass and empathy for those still trapped in a system that fosters endless financial struggle. Murphy recognized that the people’s money was not getting to the people.
But he also recognized that the people’s money was not helping core aspects of the state economy, such as small businesses, student education and environmental protection, etc. With the franchise of banking at the state’s disposal, Murphy recognized that many illusive and desired objectives could be realized if the state’s money were leveraged and deployed in a different way. The Public Banking Institute’s founder Ellen Brown realized early on that Murphy was taking this stand because he himself was a banker, and knows how banking works. This must have been the “ah-ha!” moment for Murphy – realizing that the trap of having to rely on private financing of public objectives was a one-way, downhill, dead-end street of ever-expanding debt. It was time for new thinking.
This Hopeful New Moment
Public banking protagonists around the country has been buoyed by the Murphy phenomenon. No longer outliers in discussions of public policy and electoral politics, the powerful platform of reclaiming control of public dollars is being engaged around the country in over 2 dozen legislative settings from cities to states. Major media channels are paying attention and a growing number of investigative and analytical articles are appearing about the promising prospects of a historically proven system.
Phil Murphy’s leadership on public banking has created a new front line for the public interest and the people -- and not just in New Jersey. By championing an idea whose time has come, that the people’s money should redound to the benefit of the people rather than private profiteers, Murphy has opened the prospects for creating a national network of new American institutions: banking in the public interest. What is needed now is to follow Phil Murphy’s lead into the city halls and statehouses of America with a clear public voice stating the obvious: “It’s our money. Let’s keep it at home and invest in ourselves.”