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Socialist Solutions to Pressing Problems: Health Care, Climate Change, Housing, Broadband, Credit, Inequality
by Howie Hawkins
July 13, 2018
What Is Socialism?
For the first time since the 1930s in America, socialism is back on the table for broad public discussion thanks to the significant support for self-styled democratic socialists in recent elections since Bernie Sanders' presidential run in 2016. The Democratic Socialists of America (DSA) elected 15 members to local offices in 2017, eight Democrats and seven independents in Connecticut, Iowa, Massachusetts, Michigan, Minnesota, Montana, New York, Ohio, and Virginia. In 2018 to date, seven women supported by DSA have won their Democratic primaries for congress and state houses in Omaha, Pittsburgh, Philadelphia, and New York City.
But what is notably missing in these candidates' descriptions of socialism is the distinguishing feature of the socialist tradition's program: a new democratic economic system based social ownership of the major means of production and distribution.
Sanders explicitly rejected socializing major productive assets in his campaign speech on his view of socialism . Nor have the other DSA-backed candidates described their view of socialism as anything more than a revival of New Deal liberalism. Liberal social programs to ameliorate after the fact the inequalities, market failures, and environmental damage that the capitalist economy has generated are reforms of capitalism, not a new socialist system. Liberal reforms don't solve these problems. At best, they merely mitigate them.
Capitalism exercises a dictatorship over economic resources and work itself. Capitalism constantly increases economic inequality and insecurity for the majority by the exploitation of labor that denies workers the full value of their labor. Capitalist grow-or-die competition for market share and profits drives a blind, relentless growth that is depleting and poisoning the ecological base of the human economy.
Socialism would employ the economic democracy of social ownership to distribute income more equitably according to work contributed and use economic planning to produce a decent standard of living for all on an ecologically sustainable basis.
While liberalism uses progressive tax and transfer programs to partially redistribute the inequitable distribution of income by capitalist firms, socialism distributes income equitably in the first place according to work performed. As we have seen with the rollback of New Deal and Great Society programs in the United States and of similar welfare state programs under capitalism in Western Europe, the concentration of wealth under capitalism translates into political power for the very rich and big corporations, which have used their power to cut back progressive redistributive programs in recent decades.
Socialism is not government ownership as opposed to private ownership. The key to socialism is democracy in both public and private enterprises. The New York Power Authority is a public enterprise, but it is not democratic. Without democracy, public ownership tends to become so-called "lemon socialism," which is not socialism at all, but rather state-subsidized capitalism. Lemons socialism refers to when the government subsidizes or bails out failing private enterprises, public enterprises subsidize private profits by providing goods or services to private enterprises below their real costs, and government takes responsibility only for goods and services the market cannot provide because they are not profitable, such as housing and health care for low-income people. Medicare for old people and Medicaid for indigent people are examples of lemon socialism. The public pays for the more expensive care for people who poorer and sicker, while the private insurance companies make their money off the less costly wealthier and healthier sections of the population.
Under socialism, social ownership would cover both profitable and unprofitable goods and services. With social ownership, economic planning can use economic surpluses in profitable industries to cross-subsidize unprofitable industries that nonetheless provide needed goods or services.
In the private sector, social ownership means cooperatives, both worker cooperatives, where workers share in the net income of the enterprise in proportion to their labor contributed, and consumer cooperatives, where net income is returned to its members in proportion to the purchases they made.
In the public sector, social ownership must be democratic to be socialist. It means boards of directors elected by the public for public enterprises that operate at cost for public benefit, not for the profit of private investors. For large scale public enterprises, democracy means a decentralized federal structure where the public elects local district boards, which in turn elect a statewide board to govern the statewide planning and shared assets of the enterprise.
The kinds of enterprises that should be public rather than cooperative will be in the industries that are natural monopolies, or would be more economically efficient as public enterprises. In some cases, a public option should be employed, where the public enterprise will reveal the real costs of providing the good or service because it will operate at cost and will serve as a yardstick for quality and prices that competing private enterprises will have to meet.
We envision a socialist economy in New York that combines a diversity of enterprise ownership forms: municipal and state public enterprises and cooperative, non-profit, and capitalist enterprises, particularly in the small to medium business private sector. Although we prefer non-exploitative cooperatives and nonprofits in the private sector, we respect working owners in profit-seeking private businesses that produce needed goods and services.
Public enterprise will lower the costs of living and doing business with respect to health care, housing, transit, energy, broadband, credit, and other costs of running a business and supporting its workforce. Public enterprise will thus improve the business climate for private enterprise in the state.
This improvement of the business climate will expand the range of people who can engage in the entrepreneurial spirit far beyond the 10% of the population who are now in business for themselves, particularly to the extent that cooperatives are developed where worker co-ops and consumer co-ops elect their boards of directors and share in the net profits of the business in proportion to their members' contributions of work or purchases.
The Green Party proposes an expansion of public enterprise in five key industries in New York State to deal with the some of the most pressing problems the people face: unaffordable health care; unaffordable housing; accelerating climate change; access, net neutrality, privacy, and customer service issues in broadband; excessive public and private debt owed to predominantly to the richest 1%.
The Green Party also proposes a Social Wealth Fund to reduce income inequality generated in the remaining capitalist sector. A New York State Social Wealth Fund would invest in the stocks, bonds, and real estate of capitalist enterprises and share the earnings with the people of New York through a combination of Citizen Dividends to New York residents and reduced income taxes offset by income from the Social Wealth Fund.
The New York Health Act
The inflation of health care costs has far exceeded the economy-wide inflation rate for decades. Private health insurers in New York State are seeking an average 24% premium rate hike in 2019 . The coverage provided by both private and public health insurance programs is incomplete and so expensive due to high premiums, deductibles, co-pays, and out-of-pocket payments for uncovered services that many people avoid the cost of going for treatment for injuries and illnesses. The leading cause of personal bankruptcy remains medical bills.
The New York Health Act would set up a public single-payer health plan that provides all medically necessary services to all New Yorkers with no out-of-pocket expenses. It would save the New York economy $45 million in health care costs its first year. The savings would come from the reduced administration costs of a simplified single-payer system compared to the administrative complexities of the current multi-payer system and from the curbing of monopoly profiteering by drug and medical device companies.
Health care for all would be paid for by a single public payer that is funded by payroll taxes on employers and employees that are progressively graduated by wage income. Progressive taxation of income from capital gains, dividends, and interest would also contribute, as would federal funds now received by New York for Medicare, Medicaid, Family Health Plus, and Child Health Plus. 98% of New Yorkers would pay less than they currently pay in taxes for public plans and out-of-pocket expenses for private plans.
The New York Health Act has passed the Assembly for four consecutive years and is one vote short of passage in the Senate. Passing this bill should be at the top of the state's agenda in 2019.
The New York Health Act is a social insurance program, not socialized medicine. Providers would remain a mix of public and private clinical institutions. A fully socialized system would be a health service like Costa Rica, Cuba, the United Kingdom, and some other countries have, were all clinics are public and all providers are on salary from the health service.
Socialists would argue that a public health service would better achieve quality care, cost control, and democratic accountability. A bill for a national health service was introduced to each Congress from 1977 to 2009 by Rep. Ron Dellums (D-Berkely/Oakland), a member of the Democratic Socialists of America, and later by his successor in the district, Rep. Barbara Lee. The health service would be a single public payer financed by progressive taxes to fund budgets for public and nonprofit multi-specialty facilities of salaried providers. The proponents believed the health service would be better at containing costs because it would replace the piece-rate fee-for-service system of private providers where all the incentives encourage maximizing patients and procedures for fees by profit-seeking private providers.
The Dellums/Lee bill was developed in large part by medical professionals who were active in the civil rights movement as the Medical Committee for Human Rights. The Dellums/Lee bill provided for a more democratic, accountable system than the single-payer public insurance bills do. It provided for local district health care boards elected by the public and health care workers. The district boards in turn elected state or regional boards, which in turn elected the national board, to coordinate the system democratically from the bottom up.
Given the broad support for the New York Health Act, we support is passage now as an immediate improvement. If problems develop with quality, cost, or accountability, it may be time at a later date to push for a full public health service. Public health care in the United Kingdom evolved in this manner, from a public health insurance plan for workers in 1911 to a universal national health service in 1946.
Public Energy System
Carbon budget analyses by climate scientists indicates that industrial economies like New York's need to move to 100% clean energy and net zero carbon emissions by 2030 to avert runaway global warming and climate catastrophe. Private utilities and energy producers and suppliers have completely failed to address this climate crisis. The state's current energy plan, which relies on private businesses and market regulation, doesn't even attempt to meet the clean energy goals that climate science demands.
The state recently announced that the study requested by the Green Party and others on how fast the state could move to 100% clean energy based on technology and not politics has been delayed once again and is expected to be a year late. The state has resisted repeated requests for transparency and an open public input process.
A public energy system is needed to plan a rapid transition to a climate safe energy system. A public energy system would be able to plan the investments needed to build out a clean energy infrastructure. It would reinvest earnings from fossil fuel sales into renewables during the transition instead of those earnings being used by fossil fuel companies for more fossil fuel infrastructure and extraction.
New York State already has 50 municipally-owned power systems, 8 member-owned power cooperatives, and a statewide New York Power Authority. Public power nationally delivers power at 13% lower rates than investor-owned utilities (IOUs).
A full public power system would mean incorporating these existing public power systems into NYPS restructured as a statewide federation of local public power utilities covering all localities. Model legislation for this kind of system has been around since the 1973-1974, when public officials and consumer advocates began looking for an alternative to dependence on the big oil companies for secure and affordable energy supplies. It was a mainstream discussion. Model legislation for a state-level decentralized federation of public power utilities was developed by economists Lee Webb and Jeff Faux and entered by Sen. Lee Metcalf (D-Montana) into the Congressional Record on December 18, 1974. It provided for a state fuels corporation to takeover oil and gas extraction and distribution from the private oil and gas companies as well as public power utilities to generate, transmit, and distribute electric power.
The state should democratically establish ambitious goals for building publicly-owned renewables and allow local governments to propose how many projects they could deal with. This would provide local financial investments and good paying construction and maintenance jobs in the local community - as many as 5 million statewide according to the Jacobson report. The local governments would take the lead on siting and the state on financing and regulatory approval. Either NYPA could own it or local governments can create community ownership models such as municipal power systems or worker and consumer cooperatives. Municipal systems drove the expansion of renewables in Germany.
A full public power system should still leave scope for private generators of clean energy from solar, wind, and geothermal sources with net metering to make the private generation affordable to those who build it. The state should be willing to provide the upfront capital costs for any investments in renewable energy and energy efficiency with less than a 10 year payback period. The state needs to fix the Green Jobs Green Homes program to energy retrofit hundreds of thousands of homes rather than continuing to collude with financial institutions and utility companies to impede its success.
The state should also plan to take over the transmission lines to improve efficiency and coordination and reduce costs. State officials cites their slow progress on resolving transmission issues with the private sector as an excuse for their glacial progress in developing renewables.
The state needs to halt the build out of any fossil fuel infrastructure. It is especially outrageous than Cuomo wants to invest another $88 million in state funds for more gas turbines to heat downtown Albany government buildings and has resisted efforts for a fair examinations of renewable energy alternatives starting with geothermal for heating and cooling.
The state's REV promised has promised much and delivered little, always later than predicted and seems mainly focus on increasing revenues for investor owned utilities rather than speeding up the transition to 100% clean energy.
The state's energy program must be fully committed to a Just Transition, assisting impacted workers and local communities, and remedy through sizeable public investment centuries of environmental injustice for poor communities and communities of color.
The state needs to make a $100 billion plus near term investment in mass transit, starting with the MTA.
Expand Public Housing
We are calling for a massive investment in public housing to fix the housing we have and expand the housing we need. This public housing program will address the pressing problems of creating living-wage jobs, desegregation, and clean energy as well as affordable housing.
The new public housing we propose rejects the old model of concentrating poor people and minorities in segregated, isolated large-scale projects. The new public housing should be high quality, human scale, scatter site, mixed income and powered by wind and solar electricity and heated and cooled by electric-power heat pumps instead of oil or gas boilers. They should be of such high quality that any community would welcome them as a positive asset to their community.
According a study by the State Comptroller's Office , in 2012, half of all renters in New York State were spending more than the federal affordability standard of 30% of income on rent, up from 40% of all renters in 2000. All indications are that this crisis of affordability has accelerated. Homelessness is growing. Rents are driving the working class out of Manhattan, Brooklyn, and parts of New York City and other cities in the state. The private housing market has never provided an affordable home for all.
Rent control is needed to protect renters in the short term. But rent control is not enough. If there is not a big increase in the supply of affordable rental units, rent control will only lead to increased rents in unregulated units in a sellers' market.
It is cheaper to directly build public housing than to publicly subsidize affordable units in private developments. A big expansion of public housing will lower demand and drive rents down in the private market as well.
Many Western European cities provide up to 60% of units as public housing. In Germany, for example, rents are 10-15% of income . But in the U.S., public housing accounts for less than 1%. The federal government has abandoned building public housing since the 1970s. New York State needs to step in the vacuum left by the federal government to address the crisis of affordable housing.
Mixed-income public housing, the common practice in Western Europe, will pay for itself with the higher rents from middle and upper income tenants. Mixed-income public housing will also help reduce the race and class segregation that in New York State is the highest in the nation. Among the U.S. metropolitan regions with the largest populations of people of color, New York City ranks 3rd in black/white segregation and 2nd in both Latino/white segregation and Asian/white segregation. By another index of the most black/white segregation in the 100 largest U.S. metros, New York City ranks 2nd, Buffalo 6th, Syracuse 11th, Rochester 21st, and Albany 37th. Among small city metros with a population between 100,000 and 1 million, Syracuse is the most segregated in the nation.
Segregation by class is also high and growing in New York State, which has the most income inequality of any state in the nation. The share of all income going to the top 1% in New York State has tripled since 1980 from 10% to 30% or more since 2005. The New York City metro ranks 1st in residential segregation by income in the nation.Over half of all families in the New York City metro live in predominantly low-income or upper-income neighborhoods. Upper-income families are more segregated from others than low-income families are. Income segregation among black and Latino families is now much higher than among white families, which means that low-income communities of color suffer more than ever from a double segregation by race and class.
NYCHA needs $32 billion over the next five years to fix problems with lead, mold, elevators, boilers, roofs, and other repairs. Expanding public housing will require more public investment.
Broadband costs are high and growing faster than the general inflation rate. Customer service is notoriously impersonal and difficult to navigate on the phone or online. Many inner city and rural communities in the state are still lack high-speed connectivity. Federal regulations have removed net neutrality and privacy protections in the last year.
The state has sued Spectrum-Time Warner Cable for failing to deliver promised internet speeds and reliability and has filed another suit for failing to meet the timeline benchmarks to bridge the digital divide for rural and inner city that was a condition for the Charter Communications' acquisition of Time Warner Cable. Verizon has failed to build out high-speed fiber optic networks throughout cities that gave them permission on the condition they would do the full build out.
It is time for the state to create a public broadband utility in order to provide all New Yorkers with high-speed connectivity, net neutrality, privacy protections, and better customer service. It would not replace Spectrum, Verizon, and other internet service providers. It would b a public option in broadband that sets a floor of acceptable cost, service, and reliability that private ISPs would have to meet to attract customers.
A study by Harvard University researchers published earlier this year found that community broadband networks charge substantially lower rates than their private-sector counterparts. More than 750 communities nationwide already provide public broadband. The American Civil Liberties Union recommends public broadband to secure net neutrality and privacy protections that are no longer required of private companies by federal policies.
Banking as a public utility in America predates the founding of the United States . 23-year-old Benjamin Franklin published an anonymous pamphlet proposing a government "land banks" to ensure the stability of the monetary system, which Pennsylvania assembly soon enacted. Several colonial governments legislated "emissions" of paper money. Each county was given a portion of this quantity of paper money to lend to people seeking mortgages and other loans. Government-owned "loan offices" or "land banks" in the counties then issued loans, which were designed to provide cheap credit, primarily to small farmers. Some states such as Vermont instituted public banks in the early 1800s. No private banks even existed in American until 1781. Today only North Dakota has has a state bank. Established in 2018 and has returned a profit to the state every year for 100 years.
A New York public bank would take state government funds now deposited in accounts with large commercial banks, including those based overseas, and use them to back low-interest loans for public infrastructure, private businesses, and consumers. Using fractional reserve lending, the state could create the money for these investments without going through Wall Street. It would thus save itself fees and commissions Wall Street charges, while the interest would come back to the state bank instead of a Wall Street bank or bondholders. This money creation power will help the state finance neglected infrastructure at a time when the state is running up against its constitutional debt limit .
The public bank would provide a public option, not replace all private credit institutions. The Bank of North Dakota works in partnership with community banks and credit unions to provide low-cost financing for farms and businesses, home mortgages and student loans and public infrastructure projects. North Dakota has the lowest foreclosure rate in the country, the lowest credit card default rate, and the lowest unemployment rate. It has no debt at all, and it has had no bank failures at least in the last decade.
A public bank providing low-cost loans for infrastructure projects would save taxpayers 50% on financing because the interest and principal return to the public bank, not to Wall Street, which adds on its fees as well. The public bank would also make more affordable loans to small businesses, farmers, government entities, students, consumers, and home buyers.
The state bank should also play a pivotal role in developing worker cooperatives in New York State. To begin to reverse New York's most unequal distribution of wealth and income in the nation, the public bank should have an entrepreneurial division to help plan, finance, and advise worker cooperatives in which profits are distributed more equitably according to labor contribution, not capital ownership. The model here is the bank at the center of the very successful networks of cooperatives based in the Mondragon region of Spain. The Mondragon cooperative network encompasses 102 industrial worker cooperatives and associated consumer cooperatives and charitable and beneficiary organizations. In 2016, Mondragon had $13.1 billion in revenue, $533 million in assets, and 88,000 members with jobs in the co-ops. The pay ratio in most of the Mondragon co-ops is from new workers to top management never exceeds 1 to 6, compared to 1 to 300 or more in most U.S. corporations.
When marijuana is legalized in New York, the public bank can step in to provide financial services for the new industry where other banks will not take the risk. Because marijuana remains a Schedule I drug at the federal level, banks with federal charters or access to the Federal Reserve's payment system violate the law when they process transactions with proceeds from pot sales. A New York state bank would be state chartered and independent of the Fed.
Los Angeles is holding a referendum on establishing a municipal public bank explicitly to service the newly legal marijuana industry in California. Other cities considering a municipal bank include Oakland, San Francisco, and Seattle. New Jersey Governor, Phil Murphy, was elected in 2017 with a state bank a central plank in his platform. California and Washington State are also exploring the creation of state bank.
Social Wealth Fund
Capital income is concentrating income at the top along with capital ownership in New York, making it the most unequal state in the nation by income and wealth. In 1980, the top 1% received 12% of all income in New York State. By 2014, the top 1% received 30% of all income in the state and 41% of all income in New York City.
A state-owned Social Wealth Fund would socialize productive wealth in the capitalist sector and share the returns - rent, interest, profit - across the population. The Social Wealth Fund would be professionally-managed, government-owned portfolio of stocks, bonds, and real estate.
Over time, the Social Wealth Fund would progressively transform private wealth, which is very unevenly distributed, into public wealth in which every New Yorker would own an equal share.
Each New York resident would receive one non-transferable share and receive a social dividend payment annually as long as they maintained New York residency. Alaska's Permanent Fund Corporation does this with revenues from the exploitation of their commonwealth of oil resources.
The state government would own a portion of the shares collectively on behalf of the population, with its annual share going to the public treasury and offsetting taxes on earned income from wages. Norway's Sovereign Wealth Fund does this to help fund the nation's generous social welfare programs.
The funds to make these investments would come from progressive taxes on unearned income from rents, interest, dividends, and capital gains. Such progressive taxes could include a more progressive income tax with graduated brackets for multi-millionaire incomes, the state stock transfer tax, a state land value tax, requiring corporations to pay part of their corporate income taxes as shares in their companies, the state estate tax, and a progressive state wealth tax. Another source could be turning state economic development grants to private companies into shares. If the state is going to sharfe in the risks of these investments, it should also share in the rewards like private investors do.