Scott Deshefy

If Hartford Isn’t Farsighted Enough for a Public Bank, I’d like to See One in New London County

In 1935, as Mr. Micawber in David Copperfield, comedian and Dickens scholar W.C. Fields underscored financial struggle: “Annual income twenty pounds, annual expenditure nineteen pounds, happiness; annual income twenty pounds, annual expenditure twenty pounds and six, misery.” Were this Dickens’ London, many of us would be in debtors’ prisons run by CEOs and shareholders the political establishment allows to rig and parasitize our economy. And the fault is not in retirement pensions or luxuriant public services (unless trolley systems suddenly reappeared in Connecticut last night) it’s in hardwired, politically entrenched two-party myopia.

The pandemic not only exposed inherent instability of profligate consumption and service profession economies, natural selection, new variants and dull-witted aversions to vaccination suggest the crisis may linger indefinitely. As it does and Democrats and Republicans traipse out the usual smoke, mirrors and empty rhetoric to swap blame and hide duo-political overlap, the absurdity of “returning to normal” becomes apparent. We’ll need to adapt and create better economic models for the future, even if, as Governor Lamont contends, Connecticut is “better positioned” than most states. Shoring the economy long-term depends more on green, sustainable jobs, clean alternative energy and preserving habitat and wildlife than either federal pandemic relief or tractor-trailer fees. The former, not the latter, are the new normal. Using science, compassion and logic to navigate through difficult times, Lamont deserves a lot of credit for yeomen’s work. Just a few years ago, you may recall, state senators were suggesting the legislature file for bankruptcy. Still, unless or until we near 90 percent herd immunity, effectively halting the spread of contagion, Hartford’s executive branch will be preoccupied with disease control. Taxing the rich and corporations, and imposing a 0.5 percent transaction fee on Wall Street trading, however, are not unreasonable objectives. About 27 million COVID cases and 470,000 deaths have been reported to the CDC since the first case was identified in the U.S. January 20, 2020. During this tragic past year, as millions of hard-working Americans lost jobs, corporations and the wealthiest 1 percent of the population made unconscionable profits, mostly unearned, heritable wealth delivered by stock market investments. It’s also high time we adopted public banking in Connecticut, another cause championed by the Green Party, to fund major improvement projects and likewise reduce middle class taxes.

Public banking was a Founding Fathers ideal, and Andrew Jackson was one of several US presidents to combat private central reserve banks in the 19th century. A public bank is owned by the city, county or state that founded it so money it makes via loans comes back to taxpayers instead of going to private banks and investors. The biggest reason North Dakota uniquely operates in the black is public banking. The Bank of North Dakota has contributed to statewide solvency since 1919, highly effective and free of influence from legislative bodies and self-serving officials. Neither does it compete with local banks for deposits from individuals, organizations or businesses. It operates like a credit union accepting only deposits from state, regional and municipal governments.

Individual debt, despite being encouraged by consumer-driven economies, is an inflationary societal stressor. Time was, if people couldn’t afford a commodity, they either deferred purchase and saved their money or paid layaway installments while it was stored for them. Even mortgages and car loans were kept to a minimum. Now, interest on both represents significant percentages of total costs, and consumers don’t actually own the merchandise until that last nickel is paid. Condemnations of charging interest on a loan at any rate can be found in religious texts from Buddhism to Judaism, Islam to Christianity and were outlawed in ancient Greece and Rome. Usurious or predatory lending was punishable by excommunication in 1179 and later by death until the 16th century with capitalism’s advent and charging interest became common in England under Henry VIII. Restrictions on loans diminished as needs for mercenaries arose and Catholics began responding in-kind to Protestant repeals of usury laws. Now, usury is more akin to loan sharking and parsing what is morally acceptable. Aristotle called interest “the most unnatural mode of getting wealth,” and Thomas Jefferson believed “that banking institutions are more dangerous to our liberties than standing armies.” Lord Acton (1834-1902) declared the battle between “the people versus the banks” inevitable, a conflict John Maynard Keynes hoped to defer indefinitely. In “Essays in Persuasion” (1932) Keynes wrote a capitalist manifesto: “For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods a little longer.”

States and towns send billions of dollars a year to banks and investors either as tax deposits or to pay interest on bonds issued for infrastructure projects, most of which run over-budget. Just as with mortgages and car loans, private interest rates push costs far beyond initial projections. By controlling interest, public banks could easily save taxpayers 20-40% on long-term projects. Consider as well that Connecticut receives meager interest on revenue deposits (0.14 percent during Gov. Malloy’s tenure) which private banks invest as derivatives and other speculative ventures for extraordinary gain. Absent transaction fees, Connecticut and the Feds see comparatively little of that windfall. For public banks, either at state, regional or municipal levels, income from interest and other investments goes directly into the treasury, thereby reducing our taxes. If Hartford isn’t farsighted enough for a public bank, I’d like to see one in New London County. So would the Green Party.

Scott Deshefy is biologist, ecologist and two-time Green Party congressional candidate.

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