The privatization of Japan's postal bank and the simultaneous calls for re-creating a public postal banking system in the USA, have thrust postal banking back into the public banking discussion. And with the ink barely dry on the Trans Pacific Partnership, the charge that the trade agreement threatens public banking seems to have gained a specific example in the context of postal banks, but cross-applicable to banking services in general.
Max Ehrenfreund for the Washington Post lays the story out thoroughly--an important treatment given the recent release of the full text of the TPP. The Obama "administration has negotiated limits on what post offices can do in the financial space . . . " in the TPP. The issue concerns insurance offered by postal banks. Banks offer insurance, although this has never been a key component of the U.S. narrative on postal banking. In this case the administration "seeks to curtail what global insurance companies describe as the unfair advantages granted to post offices by governments worldwide."
Japan Post "offers insurance products and other financial services to consumers," important given the country's aging population (the U.S. also has an aging population, many of whom lack banking services and fall victim to predatory lending). Japan Post Insurance earned about $50 billion in premiums in 2014. The language of TPP advocates, the language of the private finance and insurance industry, calls the advantage enjoyed by the public entity an anti-competitive "special privilege." Japan is already set to comply with the demand that it allow private insurers to sell products alongside postal insurance, and with the same regulations.
That this is occurring in the larger context of the overall privatization of Japan Post means that defenders of a public postal bank in that country, whoever they were, lost that battle before the TPP negotiations were complete. Japan Post is not the United States Postal Service, and I imagine the USPS would probably not push the envelope on insurance products the way Japan Post apparently has. The real issue is that privatization of public services so often increases cost. Interviewed in the Washington Post article, Mehrsa Baradaran specifies that this specifically applies to postal insurance: "more expensive for the consumer, and possibly not as good of a product. You don't underprice insurance by being the disrupter who offers it cheap and fast."
While not essentially the fault of TPP pressures, the social forces at work are the same, and financial interests will probably make the same arguments about any U.S. postal banking implementation as the Obama administration, presumably acting as the advocate for those private interests, did with Japan Post. In a press release to the Institute for Public Accuracy, Katherine Johnson, policy impact coordinator with the American Friends Service Committee, says of the TPP that it "puts corporations firmly in the driver's seat shaping health, environmental and economic policies around the globe . . . The TPP’s investor-state dispute settlement (ISDS) provisions would enable investors from any of the TPP countries to challenge environmental and public health laws, regulations and court decisions in international tribunals that circumvent the U.S. and any other country’s judicial system."
The Obama administration seems to feel the same way about access to financial services as it feels about health insurance--that private is better than public and that Congress and the Executive can force private corporations to bend to their will under the mere threat of bringing public options to the table. But if critics of the TPP are right, such public options won't even be a deterrent anymore, because investors can seek to severely curtail those options, even when made by Congress and upheld by the judiciary. But there is currently a structural crisis in poor people's access to financial services, and it's taking a huge toll on the most vulnerable people in America.
As Baradaran points out in a posted excerpt from her new book How the Other Half Banks, this cannot be a question of whether the government should get involved in banking, since there is already an "entanglement" between the state and banking such that the government bails out the banks. This, she reasons, "must surely mean that banks should not exclude a significant portion of the public from the bounty of government support. This is not just a banking market problem but a threat to our society's democratic principles." "The existing post office framework represents the most promising path toward effectuating such a public option," Baradaran adds. Such a policy would fulfill rights and ameliorate disenfranchisement. The poor who lack banking services spend $89 billion a year on often exploitative alternatives.
There will be legal battles against applications of the TPP's ISDS provisions, irrespective (and because) of participating nations' insistence on making key decisions in secret. So what do we have to leverage against interpretations of trade agreements that can override domestic policies? One tool in the box is international human rights law, which may carry both rhetorical and legal weight in the individual battles to come as people oppose ISDS applications. Banking and post are both things that ought to be declared public services, but post offices are much more universal--51 countries "use postal banking as their primary method of financial inclusion" and "only 6% of postal carriers worldwide do not offer banking services," according to Baradaran. That means about a billion people utilize postal banks.
Creating strong national mandates for public banking would be a good thing--which is one reason why COMERS v. Bank of Canada is an important case. Much of international human rights law is self-executing. The Universal Declaration of Human Rights recognizes economic rights "in accordance with the organization and resources of each state" and "through national effort and international cooperation," which, while perhaps an exotic application, suggests that we should interpret the language of documents like trade agreements in a way that does not undermine equal access to public services, guaranteed in Article 21 of the Declaration.
The International Covenant on Economic, Social, and Cultural Rights, which the U.S. has signed but not ratified, makes some of these rights more specific--social security, social insurance, continuous improvement of living conditions as expanding on adequate standard of living, and the right to "enjoy the benefits of scientific progress and its applications," not merely as a private intellectual right but as a public right. The United States' reticence to sign onto these rights may give way to the rising consciousness manifest in political figures like Bernie Sanders, Elizabeth Warren, and Kshama Sawant, and the growing demand for alternatives to the radical privatization and ill-treatment of the poor over the last thirty five years. Ratification of instruments of economic rights as a weapon against opaque trade agreements would be an interesting tactic indeed.
Share this blog post with your friends!