May 8, 2015.

Michael Gerson’s column on the poverty and disorder Baltimore is a snapshot of the limits of our analysis when we don’t take financial oligarchy into account.

Gerson’s attempt to explain the disorder and violence in Baltimore begins promisingly enough, as he acknowledges that Baltimore neighborhoods feel under occupation by police and that poverty is the result of many forces beyond the control of average citizens. But besides quickly slipping into tired old “culture of poverty” and family breakdown arguments (which in my opinion get the causal arrow pretty much backward, or close to it), in the end Gerson becomes one more privileged writer who can construct an entire piece on Baltimore and not mention the role of Wall Street and big private banks in the impoverishment of that city. Such an approach takes the underfunding of community resources, the inability of small businesses to obtain loans, and the housing crisis as givens–because, as he admits at the end of the column, the solutions proposed by mainstream politicians are inadequate. We invite Gerson to take a look at grass roots movements gaining momentum all over the country for community-run finance. Someone may also want to send him a copy of Ellen Brown’s The Public Bank Solution. Economic ruin is a byproduct of financial oligarchy, not moral failure. Gerson briefly gets that, then quickly pulls back from it, possibly more frustrating than him not getting it at all.

Nomi Prins’s column on the Clintons’ banking connections is a snapshot of where our current political system is. The piece contains disheartening facts: that “[w]inning the White House in 2016 will cost somewhere between $1 billion and $3 billion”; the role of big finance in backing candidates, the revolving door between public service and board seats or CEOships of companies like Goldman Sachs, the desire of nearly all elected officials in Washington to deregulate the financial sector. And, the conclusion that “the idea that a critical distance can be maintained between the White House and Wall Street is naïve given the multiple channels of money and favors that flow between the two.” Which makes me think that the biggest fear of big Wall Street bankers is that new economic policies will create a world where nobody needs them anymore.

Philadelphia candidate Anthony William’s mayoral interest in public banking is a snapshot of how good ideas can gain momentum in local races. Michael Tanenbaum of Philly Voice gets it: This is about the need to create “a lender that serves the public at reliable, often below market rates.” If Williams gets elected, expect a major offensive to discredit public banks. More about that below.

But in the meantime, Stacy Mitchell’s Yes! magazine report on community banks and the promise of public banking is a snapshot of how good ideas can deal with systemic problems. “In 1995, megabanks—giant banks with more than $100 billion in assets (in 2010 dollars)—controlled 17 percent of all banking assets,” . By 2005, their share had reached 41 percent. Today, it is a staggering 59 percent.” Since it’s big banks, not community banks, that cause devastating economic crises, this is important. Community banks fail because of inappropriately applied regulations, economies of scale, and laws incentivizing big banks to engage in risky speculation, all hurt community banks. And, as we’ve repeatedly pointed out at PBI, community banks are the lifeblood of small businesses and people-centered investment. Community banks are pretty safe in North Dakota, where the public BND has their backs:

We know from FDIC data in 2009 that North Dakota had almost 16 banks per 100,000 people, the most in the country. A more important figure, however, is community banks’ loan averages per capita, which was $12,000 in North Dakota, compared to only $3,000 nationally. Number of overall loans is also a significant figure, because having more banks doesn’t necessarily mean providing more loans, particularly when it’s difficult for small businesses to get them. During the last decade, banks in North Dakota with less than $1 billion in assets have averaged a stunning 434 percent more small business lending  than the national average. Short–term projections show North Dakota will suffer significantly less decline than the national average. According to the Minneapolis Federal Reserve, North Dakota may lose two banks to consolidation in 2015, but the nation as a whole will lose 317 such banks, an average of 6.34 per state. The pressure on community banks is tough right now, and North Dakota banks won’t emerge completely unscathed, but its rate of loss in 2015 will be less than a third of the national average.

Finally, the recent desperate pushback by the Cato Institute is a snapshot of what will happen as we get closer to the vision of publicly-owned finance. Our risk-averse elected officials will be bombarded with bad arguments, designed to overwhelm rather than enlighten. The momentum of the public banking movement in Colorado and elsewhere sparked a kind of curious, hasty response from Cato’s point man on banking, Mark Calabria. As we pointed out at the time, the OpEds he composed cited research about banks in developing countries and/or banks with some level of government shareholding, from which he tried to demonstrate that a BND-style bank would fail. The century-long success of the BND made it difficult for Calabria to find actual examples to support his conclusions.

But the more important points here are: (1) When overwhelmed with data that is tagged as “arguments against a policy,” elected officials will often simply circle back to the status quo. It’s just easier. Thus, (2) the movement for economic democracy needs to be a mass movement, something larger than tiny gatherings of people sharing some ideas and suggesting some model ordinances. If ten thousand people showed up in Springfield, Illinois, demanding passage of HB 107, that would be an appropriate answer to the helicoptered-in visits by a few suits from Wells Fargo and the Cato Institute.

What picture will you add to this montage?