Should American Progressives Be Calling for a “Public Option” in Banking?

November 30, 2011  |   Economics & Trade Politics and Policy Progressive Political Commentary

Should American Progressives Be Calling for a “Public Option” in Banking?

Proposals for a public banking option are almost unheard of in the U.S., where free-market orthodoxy has, throughout most of our history, held sway over collective approaches to the provision of public and private goods and services. Nonetheless, the concept deserves serious consideration based on the evidence in at least a couple of areas. First, there is the striking success of this model in other advanced and advancing economies for providing and directing lower-cost, long-term capital essential for growth. And second, while better financial sector regulation, oversight, and enforcement might mitigate the worst excesses of an opaque multinational private banking system, it remains doubtful that the resources of regulators can ever match those of the private banking system to circumvent regulations and evade the consequences of wrongdoing. It is now widely understood that the private global banking and financial system has failed to serve the “real” economy, or what we often call, “Main Street.” This is not just the case in the U.S. Europe’s problems, while largely due to an ill-designed monetary union and the high sovereign debt of certain member countries, has been exacerbated by the same short-term-profit-driven, casino approach that has characterized the U.S. financial sector. Perhaps the time has come to consider another model, one that treats banking and finance more like a public utility. A public bank would not have to be beholden to shareholders demanding a 20% annual return. It could circumvent incentives that induce management to take extraordinary risks (cognizant that in the worst-case

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Why the NAFTA-style Free Trade Agreement Will Fail to Benefit Colombia

October 21, 2011  |   Economics & Trade

Why the NAFTA-style Free Trade Agreement Will Fail to Benefit Colombia

Despite evidence of limited economic welfare benefits and significant social costs, Latin American countries have been signing and ratifying trade treaties with the United States since the early 1990s.  This week, the long-stalled treaties with Colombia and Panama were ratified by the U.S. congress and signed by the President.  Like other trade treaties, these were based on the same template that has been the basis for U.S. trade policy since NAFTA. In the case of the Colombia Free Trade Agreement (Colombia FTA), promises from the government of President Juan Manuel Santos to better protect trade unionists pressured enough reluctant Democrats to vote in favor of the agreement.  Over 4,000 trade unionists have been murdered in Colombia in the past 20 years, mostly by right-wing paramilitaries with links to the government, making Colombia the most dangerous country in the world to support collective bargaining rights. Colombian labor union leaders have rejected government claims that human rights and trade unionist protection has improved, denigrating symbolic gestures aimed at securing U.S. ratification of the  agreement, which they rightly claim will help multinational companies over Colombian workers. In addition to doubts that the Colombian government will live up to its promises vis-à-vis the trade unionists, the gains from trade that Colombia can expect once the agreement is in force are ambiguous at best.  When the gains to some sectors (e.g. cut flowers, leather goods, seafood, textiles, certain services) are measured against the losses to other sectors (e.g. rice, corn, poultry, communications technology),  along with fiscal

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Conceptual Frameworks, Language, and Messaging: Why Conservatives have dominated American public discourse, politics, and policy for a generation

October 21, 2011  |   Progressive Political Commentary

Conceptual Frameworks, Language, and Messaging: Why Conservatives have dominated American public discourse, politics, and policy for a generation

The anger on the Tea Party right, and the frustration on the left that has energized the "Occupy” movement in cities across America, spring from similar, mostly economic, dissatisfactions. The difference is that those on the rightght have been co-opted to a set of beliefs that are actually in opposition to their own economic interests. Those involved in the “Occupy” movement, and others on the left are quite clear about where their interests lie, despite concerns by media pundits that the participants in the “Occupy” movement thus far lack a clear set of policy demands. Voters from the right vote their aspirations, rather than their reality, while the policies they support make it less likely that they (or their children) will ever achieve the economic security and self reliance to which they aspire. Led to believe that they could succeed if only government would get out of the way, they believe in “personal freedom,” but lack an understanding of the nature of freedom as defined by our Constitution.  They advocate an ideology of “personal responsibility,” rejecting the mutual responsibility required for social and national cohesion and willfully ignorant of the benefits they enjoy thanks to a social contract embodied by our government. The right demands lower taxes and ever smaller, ever more impotent government, focused narrowly on national security, administration of a harsh conception of justice (largely punishment, meted out by a for-profit prison industry), and promotion of the orderly but “unfettered” conduct of business.  Despite incongruity with a small-government

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Republicans Scuttle Fed Nominee: More of the same electoral politics that put workers last

August 8, 2010  |   Politics and Policy

There are three vacancies on the Federal Reserve Board of Governors.  That’s a big deal – maybe the biggest deal for economic recovery you’ve heard almost nothing about in the mainstream press. The economy has been growing for most of the past year, but data from the second quarter of 2010 are showing new signs of a slowdown. Unemployment hasn’t come down, and may be showing signs of inching up again. All this is great news for Republicans heading into the fall elections. Their biggest fear is that voters might see signs of recovery and jobs growth, and scuttle Republican chances for big gains in November.  But how do Fed nominees play into the Republican equation for electoral victory?  The Fed is the only body that can now take serious action to boost the economy.  Thanks to Republican obstructionism, and misplaced hysteria over the short-term budget deficit (the solution is putting people back to work, paying taxes and growing the economy), nothing more will come out of Congress this year. So what better for Republicans than to ensure continued gridlock at the Fed, guaranteeing continued high unemployment at least until after the November elections? Obama has nominated three highly qualified candidates to fill vacancies on the Fed Board of Governors: Janet Yellen, president of the Federal Reserve Bank of San Francisco has been nominated as vice chair; Sarah Raskin is currently the Maryland commissioner of financial regulation; and Peter Diamond is a Massachusetts Institute of Technology economics professor (an former

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