Banking on Change
Massachusetts election results have left many sanguine about the prospects of challenging the Right in the future. Turnout, turnout, turnout! That is the mantra of the victorious. To their credit, many community-based organizations made a difference by knocking on doors and by having friends call friends to get out the vote. The results have prompted some to declare that the Scott Brown effect is no more. Methinks the celebration is premature.
Several of the Right’s key ideas appear to resonate with the electorate. The most important of these is the notion that the state should promote job growth by either cutting spending or taxes according to a recent Suffolk University/Boston Globe poll. The same poll revealed that only 1 in 5 residents see increased state spending as a way to create jobs. Seemingly off the table though are other valuable ideas for achieving both job growth and other goals that the voters hold dear.
Among the most important and credible of these are the notions that employment can be increased by reducing the length of the work week and setting up a state bank to reduce banking costs and promote employment through socially and environmentally useful enterprises. Neither of these undermines capitalism—an economic system that only about half of the American public views favorably—but they do challenge the prerogatives of capitalists, a group that most people blame for the current crisis.
For the left, the failure to win the battle of ideas, by which I mean the failure to present ideas that resonate with the progressive values that most Americans share, results not only in electoral defeat or slender majorities, but also a narrow mandate for change and a highly constrained set of policy choices… No chance for out-of-the-box thinking here!
This is precisely the failure that journalist Matt Bai lamented at the height of the last presidential elections in what was arguably the most important book coming out of that cycle, The Argument: the base-building groups that re-energized the Democratic Party—from the different Open Society Institute’s beneficiaries to bloggers-on-the-bus to MoveOn.org to Howard Dean—all found new ways to connect to young people, to workers and to the related middle classes but they did not propose new ideas.
Even outside the electoral arena, progressives often rail against the banks and large corporations but demand little more than wonkish policy options that leave the power of these institutions and their governing ideas (cut taxes, cut regulations, cut benefits, etc.) in place.
A million more words may be spilled over this topic and the origins of the intellectual crisis, but this is not the space for that. This note focuses on one possible solution… a victory won by poor farmers in the Great Plains in another era: a state bank.
A state bank?
Yes, that what North Dakota uses to handle state funds and what is responsible for the stability of its financial system. It is also the only state bank in the United States. For now. Initiatives are underway in California and other major states. The idea also has some Bay State leaders intrigued. Back in February, for example, Senate President, Therese Murray (D-Plymouth) argued that Massachusetts should study the impact of a state bank. Quoting a researcher she noted, “97 percent of the money supply has been created by commercial banks by turning loans into deposits. But that credit machine has frozen up. A state bank could get it flowing again.”
Beyond the narrow the framework of increased lending, a state-chartered bank could also provide the capital needed to address ever urgent employment and environmental problems facing the state. In the original vision of the North Dakota farmers, they saw their bank as means to return farmland to those who worked the land and keep it out of speculators’ hands. In Massachusetts, it could finance cooperatives and carbon mitigation projects that allow us to “trick time” (in the words of Charlie Derber, a BC sociologist) by creating both jobs and smart—carbon reducing—growth in one move.
The financing of these types of projects addresses two of the TARP problems that frustrated most Americans: public monies going to big business and government increasing the deficit. Funding cooperatives and local initiatives increases autonomy from government while repayment by these ventures provides succeeding rounds of funding. More importantly for political purposes, these funds are not being generated by taxes but by returns on investments and loans.
The results of Therese Murray’s advocacy seem buried in the state somewhere. Earlier this month the governor seems to have missed a deadline to convene a commission to study the creation of a state bank. Tardiness, however is not the only problem confronting the study. The governor will appoint commission members from entrenched interests whose stewardship is largely responsible for the current economic situation.
The Patriot Ledger quotes Kevin Kiley, Chief Operating Officer of the Massachusetts Banking Association, to the effect that some banks “are concerned that a state-owned bank could pose a competitive challenge…”
With a new term of office, it is very likely that the governor will be inclined to have the foxes study and design the state bank hen house. This is not acceptable. Other experts are available.
For progressives, especially for those who turned out their base for the Democratic Party incumbents, the challenge is to demand that grassroots economic leaders and academics, together with leaders of state-owned banks (from North Dakota, from Canada and elsewhere), inform the Massachusetts process. Similarly, social movement leaders in the environmental and economic justice movements ought to have a voice in the process. Peace movement activists who advocate for the conversion of war-making industries also have a stake in this matter. This is an opportunity to take an old idea and give it new meaning and relevance… to take up Matt Bai’s challenge.
The stakes are much higher than the concerns of particular interests, democracy is a fundamental part of the state-bank equation. With the Supreme Court’s Citizens United decision, justifiable anger has been directed at corporations’ power to influence elections through campaign donations. This power, however, is secondary to the power of corporations and the rich to direct economic development and therewith the electoral fate of politicians: no investment, no jobs, no votes. This is the undemocratic power wielded by the captains of finance and industry.
If we stand for democracy, if we want good jobs that enable everyone to contribute to society, jobs that create the things we need, then a state bank may be a game-changing idea.
Suren Moodliar is a coordinator of Mass. Global Action and a member of the encuentro 5 collective. He thanks Eli Beckerman of the Mass. Coalition for Healthy Communities for references to the Massachusetts’ legislative initiatives on a state bank.