"Comandante Cherry Garcia, presente!" and other peculiarities of the season

Submitted: Jan 29, 2016
By: 
Badlands Journal editorial board

 Coming from the left and the right, critical political thinking and action is in some cases emerging from widespread anger to dominate the debate this year, along with fabulous name-calling, character assassination and all the other elements of what the great United Mine Workers leader John L. Lewis referred to as "the paraphernalia of a political campaign."

Former US Secretary of Labor Robert Reich looks through the dust and sees a clear choice. Reporter and author Ann Jones sees how much better the Scandinavian mixed economy works than ours and wonders if there is anything but the national chauvinism of politicians like Hillary Clinton between us and a better political economic model.

In our view, so far, Bernie the New England Senator with the Brooklyn accent, alone in the field has the confidence that something like economic reform could occur and the plutocracy thrown out. It's hard to know where the political power to make those deep changes to the political economy would come from but the Sanders campaign appears to have gambled successfully on the proposition that there is mass sentiment for political economic change and the courage to do it. It remains to be seen if this movement won't go down in history as the "Double Latte with Chocolate Sprinkle Revolution."

"Comandante Cherry Garcia, presente!"

But what if reforms have to be made, must be made? What if there is a real imperative in the air?  Then, perhaps, Hillary, Trump, Jeb and Ted, Martin, John, Rick, Mario, Rand, Ben and Carly, and all the rest of the apologists for the system as it is and manipulators of it for whatever they can get may be swept away.

Or else one might be elected who rises to the occasion.

We also wonder what place populism holds in the current battle for the already-media-besoddened souls of the voting public. If mentioned, it is usually pejoratively. Yet it keeps on going on, like a slow bass line deep beneath the blare of plastic horns. Ellen Brown, for whom populism is the most important cause, provides an update.-- blj

Either you will be attracted to an authoritarian bigot who promises to make America great again by keeping out people different from you and recreating high-paying jobs in America. Someone who sounds like he won’t let anything or anybody stand in his way, and who’s so rich he can’t be bought off.

Or you’ll be attracted to a political activist who tells it like it is, who has lived by his convictions for 50 years, who won’t take a dime of money from big corporations or Wall Street or the very rich, and who is leading a grass-roots “political revolution” to regain control over our democracy and economy. In other words, you will be enticed either by a would-be dictator who promises to bring power back to the people, or by a movement leader who asks you to join together with others to bring power back to the people. --Robert Reich. Trthdig, Jan. 28. 2016

 

 

 

 

 

 

1-28-16

Truthdig

This Is the Most Pragmatic Way to Fix American Democracy

By Robert Reich

http://www.truthdig.com/report/item/this_is_the_most_pragmatic_way_to_fix_american_democracy_20160128

The Democratic contest has repeatedly been characterized as a choice between Hillary Clinton’s “pragmatism” and Bernie Sanders’s “idealism” – with the not-so-subtle message that realists choose pragmatism over idealism.

But this way of framing the choice ignores the biggest reality of all: the unprecedented, and increasing, concentration of income, wealth and power at the very top, combined with declining real incomes for most and persistent poverty for the bottom fifth.

The real choice isn’t “pragmatism” or “idealism.” It’s either allowing these trends to worsen, or reversing them. Inequality has reached levels last seen in the era of the “robber barons” in the 1890s. The only truly pragmatic way of reversing this state of affairs is through a “political revolution” that mobilizes millions of Americans.

Is such a mobilization possible? One pundit recently warned Democrats that change happens incrementally, by accepting half loaves as being better than none. That may be true, but the full loaf has to be large and bold enough in the first place to make the half loaf meaningful. And not even a half loaf is possible unless or until America wrests back power from the executives of large corporations, Wall Street bankers and billionaires who now control the bakery.<!--[if gte vml 1]>

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I’ve been in and around Washington for almost 50 years, including a stint in the cabinet, and I’ve learned that real change happens only when a substantial share of the American public is mobilized, organized, energized and determined to make it happen. That’s more the case now than ever.

The other day Bill Clinton attacked Sanders’s proposal for a single-payer health plan as unfeasible and a “recipe for gridlock.” But these days, nothing of any significance is politically feasible and every bold idea is a recipe for gridlock. This election is about changing the parameters of what’s feasible and ending the choke hold of big money on our political system. In other words, it’s about power – whether the very wealthy who now have it will keep it, or whether average Americans will get some as well.

How badly is political power concentrated in America among the very wealthy? A study published in the fall of 2014 by two of America’s most respected political scientists, Princeton professor Martin Gilens and Northwestern’s Benjamin Page, suggests it’s extremely concentrated.

Gilens and Page undertook a detailed analysis of 1,799 policy issues, seeking to determine the relative influence on them of economic elites, business groups, mass-based interest groups and average citizens. Their conclusion was dramatic: “The preferences of the average American appear to have only a minuscule, near-zero, statistically nonsignificant impact upon public policy.” Instead, Gilens and Page found that lawmakers respond almost exclusively to the moneyed interests – those with the most lobbying prowess and deepest pockets to bankroll campaigns.

I find it particularly sobering that Gilens and Page’s data came from the period 1981 to 2002. That was before the Supreme Court’s 2010 Citizens United opinion, which opened the floodgates to big money in politics, and before the explosion of Super Pacs and secretive “dark money” whose sources do not have to be disclosed by campaigns. It stands to reason that if average Americans had a “near-zero” impact on public policy then, the influence of average Americans is now zero.

Most Americans don’t need a detailed empirical study to convince them of this. They feel disenfranchised, and angry toward a political-economic system that seems rigged against them. This was confirmed for me a few months ago when I was on book tour in America’s heartland, and kept hearing from people who said they were trying to make up their minds in the upcoming election between supporting Bernie Sanders or Donald Trump.

At first I was incredulous. After all, Sanders and Trump are at opposite ends of the political spectrum. It was only after several discussions that I began to understand the connection. Most of these people said they were incensed by “crony capitalism,” by which they meant political payoffs by big corporations and Wall Street banks that result in special favors such as the Wall Street bailout of 2008.

They wanted to close tax loopholes for the rich, such as the special “carried interest” tax break for hedge-fund and private-equity partners. They wanted to reduce the market power of pharmaceutical companies and big health insurers, which they thought resulted in exorbitant prices. They were angry about trade treaties that they characterized as selling-out American workers while rewarding corporate executives and big investors.

Somewhere in all this I came to see what’s fueling the passions of voters in the 2016 election. If you happen to be one of the tens of millions of Americans who are working harder than ever but getting nowhere, and you feel the system is rigged against you and in favor of the rich and powerful, you will go in one of two directions.

Either you will be attracted to an authoritarian bigot who promises to make America great again by keeping out people different from you and recreating high-paying jobs in America. Someone who sounds like he won’t let anything or anybody stand in his way, and who’s so rich he can’t be bought off.

Or you’ll be attracted to a political activist who tells it like it is, who has lived by his convictions for 50 years, who won’t take a dime of money from big corporations or Wall Street or the very rich, and who is leading a grass-roots “political revolution” to regain control over our democracy and economy. In other words, you will be enticed either by a would-be dictator who promises to bring power back to the people, or by a movement leader who asks you to join together with others to bring power back to the people.

Of the two, I would prefer the latter. But what about the “pragmatic” Hillary Clinton? I have worked closely with her and have nothing but respect for her. In my view, she’s clearly the most qualified candidate for president of the political system we now have.

But the political system we now have is profoundly broken. Bernie Sanders is the most qualified candidate to create the political system we should have because he’s leading a political movement for change.

 

1-28-16

TomDispatch

American Democracy Down for the Count

(Or What Is It the Scandinavians Have That We Don’t?)

Ann Jones

http://www.commondreams.org/views/2016/01/28/american-democracy-down-count

Some years ago, I faced up to the futility of reporting true things about America’s disastrous wars and so I left Afghanistan for another remote mountainous country far away. It was the polar opposite of Afghanistan: a peaceful, prosperous land where nearly everybody seemed to enjoy a good life, on the job and in the family.

It’s true that they didn’t work much, not by American standards anyway. In the U.S., full-time salaried workers supposedly laboring 40 hours a week actually average 49, with almost 20% clocking more than 60. These people, on the other hand, worked only about 37 hours a week, when they weren’t away on long paid vacations. At the end of the work day, about four in the afternoon (perhaps three in the summer), they had time to enjoy a hike in the forest or a swim with the kids or a beer with friends -- which helps explain why, unlike so many Americans, they are pleased with their jobs.

Often I was invited to go along. I found it refreshing to hike and ski in a country with no land mines, and to hang out in cafés unlikely to be bombed. Gradually, I lost my warzone jitters and settled into the slow, calm, pleasantly uneventful stream of life there.

Four years on, thinking I should settle down, I returned to the United States. It felt quite a lot like stepping back into that other violent, impoverished world, where anxiety runs high and people are quarrelsome. I had, in fact, come back to the flip side of Afghanistan and Iraq: to what America’s wars have done to America. Where I live now, in the Homeland, there are not enough shelters for the homeless. Most people are either overworked or hurting for jobs; housing is overpriced; hospitals, crowded and understaffed; schools, largely segregated and not so good. Opioid or heroin overdose is a popular form of death; and men in the street threaten women wearing hijab. Did the American soldiers I covered in Afghanistan know they were fighting for this?

Ducking the Subject

One night I tuned in to the Democrats’ presidential debate to see if they had any plans to restore the America I used to know. To my amazement, I heard the name of my peaceful mountain hideaway: Norway. Bernie Sanders was denouncing America’s crooked version of “casino capitalism” that floats the already rich ever higher and flushes the working class. He said that we ought to “look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people.”

He believes, he added, in “a society where all people do well. Not just a handful of billionaires.” That certainly sounds like Norway. For ages they’ve worked at producing things for the use of everyone -- not the profit of a few -- so I was all ears, waiting for Sanders to spell it out for Americans.

But Hillary Clinton quickly countered, “We are not Denmark.” Smiling, she said, “I love Denmark,” and then delivered a patriotic punch line: “We are the United States of America.” Well, there’s no denying that. She praised capitalism and “all the small businesses that were started because we have the opportunity and the freedom in our country for people to do that and to make a good living for themselves and their families.” She didn’t seem to know that Danes, Swedes, and Norwegians do that, too, and with much higher rates of success.

The truth is that almost a quarter of American startups are not founded on brilliant new ideas, but on the desperation of men or women who can’t get a decent job. The majority of all American enterprises are solo ventures having zero payrolls, employing no one but the entrepreneur, and often quickly wasting away. Sanders said that he was all for small business, too, but that meant nothing “if all of the new income and wealth is going to the top 1 percent.” (As George Carlin said, “The reason they call it the American Dream is because you have to be asleep to believe it.”)

In that debate, no more was heard of Denmark, Sweden, or Norway. The audience was left in the dark. Later, in a speech at Georgetown University, Sanders tried to clarify his identity as a Democratic socialist. He said he’s not the kind of Socialist (with a capital S) who favors state ownership of anything like the means of production. The Norwegian government, on the other hand, owns the means of producing lots of public assets and is the major stockholder in many a vital private enterprise.

I was dumbfounded. Norway, Denmark, and Sweden practice variations of a system that works much better than ours, yet even the Democratic presidential candidates, who say they love or want to learn from those countries, don’t seem to know how they actually work.

Why We’re Not Denmark

Proof that they do work is delivered every year in data-rich evaluations by the U.N. and other international bodies. The Organization for Economic Cooperation and Development's annual report on international well-being, for example, measures 11 factors, ranging from material conditions like affordable housing and employment to quality of life matters like education, health, life expectancy, voter participation, and overall citizen satisfaction. Year after year, all the Nordic countries cluster at the top, while the United States lags far behind. In addition, Norway ranked first on the U.N. Development Program’s Human Development Index for 12 of the last 15 years, and it consistently tops international comparisons of such matters as democracy, civil and political rights, and freedom of expression and the press.

What is it, though, that makes the Scandinavians so different?  Since the Democrats can’t tell you and the Republicans wouldn’t want you to know, let me offer you a quick introduction. What Scandinavians call the Nordic Model is a smart and simple system that starts with a deep commitment to equality and democracy. That’s two concepts combined in a single goal because, as far as they are concerned, you can’t have one without the other.

Right there they part company with capitalist America, now the mostunequal of all the developed nations, and consequently a democracy no more. Political scientists say it has become an oligarchy -- a country run at the expense of its citizenry by and for the super rich. Perhaps you noticed that.

In the last century, Scandinavians, aiming for their egalitarian goal, refused to settle solely for any of the ideologies competing for power -- not capitalism or fascism, not Marxist socialism or communism. Geographically stuck between powerful nations waging hot and cold wars for such doctrines, Scandinavians set out to find a path in between. That path was contested -- by socialist-inspired workers on the one hand and capitalist owners and their elite cronies on the other -- but it led in the end to a mixed economy. Thanks largely to the solidarity and savvy of organized labor and the political parties it backed, the long struggle produced a system that makes capitalism more or less cooperative, and then redistributes equitably the wealth it helps to produce. Struggles like this took placearound the world in the twentieth century, but the Scandinavians alone managed to combine the best ideas of both camps, while chucking out the worst.

In 1936, the popular U.S. journalist Marquis Childs first described the result to Americans in the book Sweden: The Middle Way. Since then, all the Scandinavian countries and their Nordic neighbors Finland and Iceland have been improving upon that hybrid system. Today in Norway, negotiations between the Confederation of Trade Unions and the Confederation of Norwegian Enterprise determine the wages and working conditions of most capitalist enterprises, public and private, that create wealth, while high but fair progressive income taxes fund the state’s universal welfare system, benefitting everyone. In addition, those confederations work together to minimize the disparity between high-wage and lower-wage jobs. As a result, Norway ranks with Sweden, Denmark, and Finland among the most income-equal countries in the world, and its standard of living tops the charts.

So here’s the big difference: in Norway, capitalism serves the people. The government, elected by the people, sees to that.All eight of the parties that won parliamentary seats in the last national election, including the conservative Høyre party now leading the government, are committed to maintaining the welfare state. In the U.S., however, neoliberal politics put the foxes in charge of the henhouse, and capitalists have used the wealth generated by their enterprises (as well as financial and political manipulations) to capture the state and pluck the chickens. They’ve done a masterful job of chewing up organized labor. Today, only 11% of American workers belong to a union. In Norway, that number is 52%; in Denmark, 67%; in Sweden, 70%.

In the U.S., oligarchs maximize their wealth and keep it, using the “democratically elected” government to shape policies and laws favorable to the interests of their foxy class. They bamboozle the people by insisting, as Hillary Clinton did at that debate, that all of us have the “freedom” to create a business in the “free” marketplace, which implies that being hard up is our own fault.

In the Nordic countries, on the other hand, democratically elected governments give their populations freedom from the market by using capitalism as a tool to benefit everyone. That liberates their people from the tyranny of the mighty profit motive that warps so many American lives, leaving them freer to follow their own dreams -- to become poets or philosophers, bartenders or business owners, as they please.

Family Matters

Maybe our politicians don’t want to talk about the Nordic Model because it shows so clearly that capitalism can be put to work for the many, not just the few.

Consider the Norwegian welfare state. It’s universal. In other words, aid to the sick or the elderly is not charity, grudgingly donated by elites to those in need. It is the right of every individual citizen. That includes every woman, whether or not she is somebody’s wife, and every child, no matter its parentage. Treating every person as a citizen affirms the individuality of each and the equality of all. It frees every person from being legally possessed by another -- a husband, for example, or a tyrannical father. 

Which brings us to the heart of Scandinavian democracy: the equality of women and men. In the 1970s, Norwegian feminists marched into politics and picked up the pace of democratic change. Norway needed a larger labor force, and women were the answer. Housewives moved into paid work on an equal footing with men, nearly doubling the tax base. That has, in fact, meant more to Norwegian prosperity than the coincidental discovery of North Atlantic oil reserves. The Ministry of Finance recently calculated that those additional working mothers add to Norway’s net national wealth a value equivalent to the country’s “total petroleum wealth” -- currently held in the world’s largest sovereign wealth fund, worth more than $873 billion. By 1981, women were sitting in parliament, in the prime minister’s chair, and in her cabinet.

American feminists also marched for such goals in the 1970s, but the Big Boys, busy with their own White House intrigues, initiated a war on women that set the country back and still rages today in brutal attacks on women’s basic civil rights, health care, and reproductive freedom. In 1971, thanks to the hard work of organized feminists, Congress passed the bipartisanComprehensive Child Development Bill to establish a multi-billion dollar national day care system for the children of working parents. In 1972, President Richard Nixon vetoed it, and that was that. In 1972, Congress also passed a bill (first proposed in 1923) to amend the Constitution to grant equal rights of citizenship to women.  Ratified by only 35 states, three short of the required 38, that Equal Rights Amendment, or ERA, was declared dead in 1982, leaving American women in legal limbo.

In 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, obliterating six decades of federal social welfare policy “as we know it,” ending federal cash payments to the nation’s poor, and consigning millions of female heads of household and theirchildren to poverty, where many still dwell 20 years later. Today, nearly half a century after Nixon trashed national child care, even privileged women, torn between their underpaid work and theirkids, are overwhelmed.

Things happened very differently in Norway.  There, feminists and sociologists pushed hard against the biggest obstacle still standing in the path to full democracy: the nuclear family. In the 1950s, the world-famous American sociologist Talcott Parsons had pronounced that arrangement -- with hubby at work and the little wife at home -- the ideal setup in which to socialize children. But in the 1970s, the Norwegian state began to deconstruct that undemocratic ideal by taking upon itself the traditional unpaid household duties of women.  Caring for the children, the elderly, the sick, and the disabled became the basic responsibilities of the universal welfare state, freeing women in the workforce to enjoy both their jobs and their families. That’s another thing American politicians -- still, boringly, mostly odiously boastful men -- surely don’t want you to think about: that patriarchy can be demolished and everyone be the better for it.

Paradoxically, setting women free made family life more genuine. Many in Norway say it has made both men and women more themselves and more alike: more understanding and happier. It also helped kids slip from the shadow of helicopter parents. In Norway, mother and father in turn take paid parental leave from work to see a newborn through its first year or more. At age one, however, children start attending a neighborhood barnehage(kindergarten) for schooling spent largely outdoors. By the time kids enter free primary school at age six, they are remarkably self-sufficient, confident, and good-natured. They know their way around town, and if caught in a snowstorm in the forest, how to build a fire and find the makings of a meal.  (One kindergarten teacher explained, “We teach them early to use an axe so they understand it’s a tool, not a weapon.”)

To Americans, the notion of a school “taking away” your child to make her an axe wielder is monstrous.  In fact, Norwegian kids, who are well acquainted in early childhood with many different adults and children, know how to get along with grown ups and look after one another.  More to the point, though it’s hard to measure, it’s likely that Scandinavian children spend more quality time with their work-isn’t-everything parents than does a typical middle-class American child being driven by a stressed-out motherfrom music lessons to karate practice.  For all these reasons and more, the international organization Save the Children cites Norway as the best country on Earth in which to raise kids, while the U.S. finishes far down the list in 33rd place.

Don’t Take My Word For It

This little summary just scratches the surface of Scandinavia, so I urge curious readers to Google away.  But be forewarned. You’ll find much criticism of all the Nordic Model countries. The structural matters I’ve described -- of governance and family -- are not the sort of things visible to tourists or visiting journalists, so their comments are often obtuse. Take the American tourist/blogger who complained that he hadn’t been shown the “slums” of Oslo. (There are none.) Or the British journalist who wrote that Norwegian petrol is too expensive. (Though not for Norwegians, who are, in any case,leading the world in switching to electric cars.)

Neoliberal pundits, especially the Brits, are always beating up on the Scandinavians in books, magazines, newspapers, and blogs, predicting the imminent demise of their social democracies and bullying them to forsake the best political economy on the planet. Self-styled experts still in thrall to Margaret Thatcher tell Norwegians they must liberalize their economy and privatize everything short of the royal palace. Mostly, the Norwegian government does the opposite, or nothing at all, and social democracy keeps on ticking.

It’s not perfect, of course. It has always been a carefully considered work in progress. Governance by consensus takes time and effort.  You might think of it as slow democracy.  But it’s light years ahead of us.

[This is a joint TomDispatch/Nation article and appears in print in slightly shortened form in the new issue of the Nation magazine.]

© 2016 TomDispatch.com  

Ann Jones, a writer and photographer, has reported extensively from Afghanistan since 2002 and is the author of several books. Her most recent book is, They Were Soldiers: How the Wounded Return from America’s Wars— the Untold Story (2013, Dispatch Books). Her previous books include: War Is Not Over When It's Over, Kabul in Winter, Women Who Kill, and Next Time She'll Be Dead. Jones has worked with women in conflict and post-conflict zones, principally Afghanistan, and reported on their concerns. An authority on violence against women, she has served as a gender adviser to the United Nations. Her work has appeared in numerous publications, including The New York Times and The Nation. For more information, visit herwebsite.

 

1-27-16

Truthdig.com

The Populist Revolution: Bernie and Beyond

By Ellen Brown / Web of Debt

http://www.truthdig.com/report/item/the_populist_revolution_bernie_and_beyond_20160127

This piece first appeared at Web of Debt.

 

The world is undergoing a populist revival. From the revolt against austerity led by the Syriza Party in Greece and the Podemos Party in Spain, to Jeremy Corbyn’s surprise victory as Labour leader in the UK, to Donald Trump’s ascendancy in the Republican polls, to Bernie Sanders’ surprisingly strong challenge to Hillary Clinton – contenders with their fingers on the popular pulse are surging ahead of their establishment rivals.

Today’s populist revolt mimics an earlier one that reached its peak in the US in the 1890s. Then it was all about challenging Wall Street, reclaiming the government’s power to create money, curing rampant deflation with US Notes (Greenbacks) or silver coins (then considered the money of the people), nationalizing the banks, and establishing a central bank that actually responded to the will of the people.

Over a century later, Occupy Wall Street revived the populist challenge, armed this time with the Internet and mass media to spread the word. The Occupy movement shined a spotlight on the corrupt culture of greed unleashed by deregulating Wall Street, widening the yawning gap between the 1% and the 99% and destroying jobs, households and the economy.

Donald Trump’s populist campaign has not focused much on Wall Street; but Bernie Sanders’ has, in spades. Sanders has picked up the baton where Occupy left off, and the disenfranchised Millennials who composed that movement have flocked behind him.

The Failure of Regulation

Sanders’ focus on Wall Street has forced his opponent Hillary Clinton to respond to the challenge. Clinton maintains that Sanders’ proposals sound good but “will never make it in real life.” Her solution is largely to preserve the status quo while imposing more bank regulation.

That approach, however, was already tried with the Dodd-Frank Act, which has not solved the problem although it is currently the longest and most complicated bill ever passed by the US legislature. Dodd-Frank purported to eliminate bailouts, but it did this by replacing them with “bail-ins” – confiscating the funds of bank creditors, including depositors, to keep too-big-to-fail banks afloat. The costs were merely shifted from the people-as-taxpayers to the people-as-creditors.

Worse, the massive tangle of new regulations has hamstrung the smaller community banks that make the majority of loans to small and medium sized businesses, which in turn create most of the jobs. More regulation would simply force more community banks to sell out to their larger competitors, making the too-bigs even bigger.

In any case, regulatory tweaking has proved to be an inadequate response. Banks backed by an army of lobbyists simply get the laws changed, so that what was formerly criminal behavior becomes legal. (See, e.g., CitiGroup’s redrafting of the “push out” rule in December 2015 that completely vitiated the legislative intent.)

What Sanders is proposing, by contrast, is a real financial revolution, a fundamental change in the system itself. His proposals include eliminating Too Big to Fail by breaking up the biggest banks; protecting consumer deposits by reinstating the Glass-Steagall Act (separating investment from depository banking); reviving postal banks as safe depository alternatives; and reforming the Federal Reserve, enlisting it in the service of the people.

Time to Revive the Original Populist Agenda?

Sanders’ proposals are a good start. But critics counter that breaking up the biggest banks would be costly, disruptive and destabilizing; and it would not eliminate Wall Street corruption and mismanagement.

Banks today have usurped the power to create the national money supply. As the Bank of England recently acknowledged, banks create money whenever they make loans. Banks determine who gets the money and on what terms. Reducing the biggest banks to less than $50 billion in assets (the Dodd-Frank limit for “too big to fail”) would not make them more trustworthy stewards of that power and privilege.

How can banking be made to serve the needs of the people and the economy, while preserving the more functional aspects of today’s highly sophisticated global banking system? Perhaps it is time to reconsider the proposals of the early populists. The direct approach to “occupying” the banks is to simply step into their shoes and make them public utilities. Insolvent megabanks can be nationalized – as they were before 2008. (More on that shortly.)

Making banks public utilities can happen on a local level as well. States and cities can establish publicly-owned depository banks on the highly profitable and efficient model of the Bank of North Dakota. Public banks can partner with community banks to direct credit where it is needed locally; and they can reduce the costs of government by recycling bank profits for public use, eliminating outsized Wall Street fees and obviating the need for derivatives to mitigate risk.

At the federal level, not only can postal banks serve as safe depositories and affordable credit alternatives, but the central bank can provide is it just a source of interest-free credit for the nation – as was done, for example, with Canada’s central bank from 1939 to 1974. The U.S. Treasury could also reclaim the power to issue, not just pocket change, but a major portion of the money supply – as was done by the American colonists in the 18th century and by President Abraham Lincoln in the 19th century.

 

The world is undergoing a populist revival. From the revolt against austerity led by the Syriza Party in Greece and the Podemos Party in Spain, to Jeremy Corbyn’s surprise victory as Labour leader in the UK, to Donald Trump’s ascendancy in the Republican polls, to Bernie Sanders’ surprisingly strong challenge to Hillary Clinton – contenders with their fingers on the popular pulse are surging ahead of their establishment rivals.

Today’s populist revolt mimics an earlier one that reached its peak in the US in the 1890s. Then it was all about challenging Wall Street, reclaiming the government’s power to create money, curing rampant deflation with US Notes (Greenbacks) or silver coins (then considered the money of the people), nationalizing the banks, and establishing a central bank that actually responded to the will of the people.

Over a century later, Occupy Wall Street revived the populist challenge, armed this time with the Internet and mass media to spread the word. The Occupy movement shined a spotlight on the corrupt culture of greed unleashed by deregulating Wall Street, widening the yawning gap between the 1% and the 99% and destroying jobs, households and the economy.

Donald Trump’s populist campaign has not focused much on Wall Street; but Bernie Sanders’ has, in spades. Sanders has picked up the baton where Occupy left off, and the disenfranchised Millennials who composed that movement have flocked behind him.

The Failure of Regulation<!--[if gte vml 1]><![endif]--><!--[if !vml]--><!--[endif]--><!--[if gte vml 1]><![endif]--><!--[if !vml]--><!--[endif]-->

Sanders’ focus on Wall Street has forced his opponent Hillary Clinton to respond to the challenge. Clinton maintainsthat Sanders’ proposals sound good but “will never make it in real life.” Her solution is largely to preserve the status quo while imposing more bank regulation.

That approach, however, was already tried with the Dodd-Frank Act, which has not solved the problem although it is currently the longest and most complicated bill ever passed by the US legislature. Dodd-Frank purported to eliminate bailouts, but it did this by replacing them with “bail-ins” – confiscating the funds of bank creditors, including depositors, to keep too-big-to-fail banks afloat. The costs were merely shifted from the people-as-taxpayers to the people-as-creditors.

Worse, the massive tangle of new regulations has hamstrung the smaller community banks that make the majority of loans to small and medium sized businesses, which in turn create most of the jobs. More regulation would simply force more community banks to sell out to their larger competitors, making the too-bigs even bigger.

In any case, regulatory tweaking has proved to be an inadequate response. Banks backed by an army of lobbyists simply get the laws changed, so that what was formerly criminal behavior becomes legal. (See, e.g., CitiGroup’s redrafting of the “push out” rule in December 2015 that completely vitiated the legislative intent.)

What Sanders is proposing, by contrast, is a real financial revolution, a fundamental change in the system itself. His proposals include eliminating Too Big to Fail by breaking up the biggest banks; protecting consumer deposits by reinstating the Glass-Steagall Act (separating investment from depository banking); reviving postal banks as safe depository alternatives; and reforming the Federal Reserve, enlisting it in the service of the people.

Time to Revive the Original Populist Agenda?

Sanders’ proposals are a good start. But critics counter that breaking up the biggest banks would be costly, disruptive and destabilizing; and it would not eliminate Wall Street corruption and mismanagement.

Banks today have usurped the power to create the national money supply. As the Bank of England recently acknowledged, banks create money whenever they make loans. Banks determine who gets the money and on what terms. Reducing the biggest banks to less than $50 billion in assets (the Dodd-Frank limit for “too big to fail”) would not make them more trustworthy stewards of that power and privilege.

How can banking be made to serve the needs of the people and the economy, while preserving the more functional aspects of today’s highly sophisticated global banking system? Perhaps it is time to reconsider the proposals of the early populists. The direct approach to “occupying” the banks is to simply step into their shoes and make them public utilities. Insolvent megabanks can be nationalized – as they were before 2008. (More on that shortly.)

Making banks public utilities can happen on a local level as well. States and cities can establish publicly-owned depository banks on the highly profitable and efficient model of the Bank of North Dakota. Public banks can partner with community banks to direct credit where it is needed locally; and they can reduce the costs of government by recycling bank profits for public use, eliminating outsized Wall Street fees and obviating the need for derivatives to mitigate risk.

At the federal level, not only can postal banks serve as safe depositories and affordable credit alternatives, but the central bank can provide is it just a source of interest-free credit for the nation – as was done, for example, with Canada’s central bank from 1939 to 1974. The U.S. Treasury could also reclaim the power to issue, not just pocket change, but a major portion of the money supply – as was done by the American colonists in the 18th century and by President Abraham Lincoln in the 19th century.

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. Listen to “It’s Our Money with Ellen Brown” on PRN.FM.

 

 

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