Public Bank, Democratic Socialism

Public Bank, Democratic Socialism

For immediate release: July 13, 2018

Green Candidates Call for Social Ownership of Economy, Democratic Socialism

Support a Public Bank, Expanded Public Ownership of Energy, Public Housing, Single-Payer Health Care and Cooperatives

The Green Party candidates for Governor and State Comptroller called today for a variety of democratic-ownership  initiatives, including a public bank, public ownership of the energy system, public broadband utility and worker cooperatives.

Howie Hawkins, the Green gubernatorial candidate and a long-time member of the Socialist Party, noted that “socialism is back on the table for public discussion after the broad support for self-styled democratic socialists in recent elections since Bernie Sanders’ presidential run. But as a long-time democratic socialist, I believe that the agenda needs to start with social ownership and democratic control of the key sectors of our economy, combined with a much expanded public housing program and creation of a single-payer health care system.”

Dunlea said expanding public ownership of energy was critical to winning the fight against climate change. The Governor did propose allowing the NY Power Authority to build and own renewables but this was rejected by the state legislature. Public ownership and control would increase community support and speed up local siting of projects, as has been true in Germany. NY presently only gets 4% of its electricity from wind and solar.

Dunlea said he supported the state setting ambitious goals for building publicly-owned renewables and allowing 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.

Hawkins added that “Socialism would employ the economic democracy of social ownership to distribute income more equitably according to labor contribution and use economic planning to produce a decent standard of living for all on an ecologically sustainable basis. Socialism is not government ownership as opposed to private ownership. The key to socialism is democracy in both public and private enterprises. NYPA is a public enterprise, but it is not democratic. Without democracy, public ownership becomes lemon socialism, where the government subsidizes private enterprise by taking responsibility for the businesses that cannot make a profit on their own.”

“Unfair and abusive monetary and lending practices by the banking system are a major cause of economic problems. Many small business and community initiatives are unable to raise the capital needed to finance their work and/or are forced to pay usurious rates. New York should create a state-owned bank to target investment into the new technologies and businesses of a sustainable green economy. Public investment is the fastest way to jump-start private job creation,” noted Dunlea.

The state bank would be capitalized by the deposits of state tax revenues, and possibly a portion of state pension funds if agreed to by government workers.  

For nearly 100 years the state of North Dakota has operated a public bank that provides, in partnership with community banks and credit unions, low-cost financing for farms and businesses, home mortgages and student loans and public infrastructure projects. More recently, the newly elected Democratic governor of New Jersey, Phil Murphy, has voiced support for creating a public bank in his state. Residents of Los Angeles will vote on whether to create a city public bank this November.

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. The bank has been extremely profitable, providing significant revenue to the state budget.

Unlike private banks, which are legally bound to think first of the quarterly profits of their shareholders, the Bank of North Dakota is obligated to serve the community.  Like private banks, a publicly-owned bank has the ability to create money in the form of bank credit on its books, and it provides, in partnership with community banks and credit unions, low-cost financing for farms and businesses, home mortgages and student loans and public infrastructure projects.

A coalition of groups recently called for the creation of a public bank for NYC. The bank would make equitable investments that support low-income housing, union and living wage jobs for residents, democratically-controlled clean energy, public infrastructure, cooperative ownership, and small businesses, prioritizing minority and women-owned businesses and locally-based enterprises. The bank would foster community wealth-building and neighborhood-led development, including by financing cooperative and not-for-profit models that provide long-term public benefit. The bank would offer high-quality, affordable financial services to low-income, immigrant and communities of color.

In explaining his socialist agenda, Hawkins stated that  “Socialism is a new economic system, not just liberal social programs to ameliorate the problems capitalism creates. 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 competition drives a blind, relentless growth that is depleting and poisoning the ecological base of the human economy.”

“In the private sector, social ownership means worker and consumer cooperatives, worker cooperatives. In the public sector, social ownership must be democratic to be socialist. It means boards of directors elected by the public. For large scale public enterprises, democracy means a decentralized structure where the public elects local district boards, which in turn elect a statewide board to govern the enterprise,” he added.

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