Why public banking is a step in revolutionizing our economy

I first became aware of the potential of public banking – or the management of taxpayers’ money by publicly controlled financial institutions rather than private banks – in the spring of 2019 in my city councilor‘s office. A group of us had passed through City Hall to speak to each member of the council about the benefits of starting a Philadelphia Public Bank. The employee we talked to was new to the idea and became more and more interested. “The councilor would really like this idea,” he said. “It’s good for the common people. That’s good for the city’s budget. I’ll talk to her about it. I think she’ll want to support it. ”At that moment, the concept of public banking, which I found compelling and which had been informally propagated for years, became not just another good idea, but an achievable goal.

It was a mystery to know how to best organize yourself on economic issues. When we have identified our economic system – and the financial system in particular – as the root of so many of our problems, what do we do next? The transformation of the economy is too great to simply set up campaigns and the number of people who can be mobilized for purely ideological reasons is small. While Occupy Wall Street was a great national lesson on wealth inequality, including a critical understanding of the importance of democracy, it did not provide enough focus or program to keep people moving.

With an open eye for the possibilities, I took the opportunity to attend the inaugural conference of the national public banking movement, which conveniently took place in Philadelphia in 2012. The idea that our public funds were kept under public control and used for the public good, rather than depositing it in private banks for private use, was imperative. The reality that we have our own public banking model – in the 100 year old North Dakota state bank – was down to earth. We were all blown away by a 12-year-old from Canada who shared the story of his country: How the establishment of a national bank in the 1930s enabled them to build vital social, health and economic infrastructure; how political change in the early 1970s shifted control of that wealth to the private sector; and how billions of dollars that might otherwise have been used for the public good have since been siphoned off to private banks.

This is the situation we are facing in the United States. At present, private banks create all the money in circulation – with the exception of the notes and coins issued by the Treasury – by granting loans. The Federal Reserve is a network of private banks with a special relationship with the Treasury Department. Interest on our growing public deficit is paid to banks that hold treasury bills. When banks become “too big to fail”, it is our taxpayers’ money that will save them. It is clear that we need to address money control to solve a wide variety of social, equity and climate problems. But where can we get the lever from in order to carry out such a massive transformation?

The distinction between revolutionary and reformist reforms can help us with this. Revolution could be understood as transforming our monetary system from a privately managed monetary system to a democratically managed public utility company. Visionary federal law has been proposed to this end, but the framework is too abstract to garner public support. We can’t get from here to there without taking a few steps.

There are many things that we can do to make our current economic system more bearable and fairer within the framework of the current system: raise the minimum wage, reject predatory loans, strengthen social security. These “reformist reforms” are all important and absolutely worthwhile. And every reform that builds solidarity and dynamism at the grassroots level helps create the conditions for demanding more. But in and of themselves they do not question the power dynamics built into a system that privileges the accumulation of private wealth at the expense of all other life on the planet.

“Revolutionary reform” is like a wedge in the power status quo, and I see this role in public banking campaigns. They offer a tangible local hook around which to organize, while at the same time calling into question the basic problem of power and control. They make people ponder the big questions: Why should our tax dollars be held by private banks to be invested in their own interests when we have urgent needs at home? Why should half the cost of long-term government loans be used to repay interest to private bondholders? Why do we not have control over our common wealth? A public banking campaign doesn’t go all the way. It does not directly challenge the rights of private banks to own essentially our nation’s money supply. But it’s a clear step in that direction and one that normal people can look forward to.

The potential of public banking as a popular topic became apparent in Los Angeles in 2018. This story began with an earlier activist campaign that led the city to abandon fossil fuels. Voters agreed to the measure, but the city noted that all banks big enough to manage their money were involved in fossil fuel investments. There was nowhere they could take the money. The city council president decided this summer to hold a referendum on the fall vote to set up a public bank. With only a few months to organize, the divestment group turned to a broad campaign in support of the referendum. They conducted an outreach and social media flash and received support from hundreds of civic, workers and other community groups. Measure B received over 44% of the vote, with 430,488 Angelenos voting yes for a public bank. That wasn’t enough to win, but it was an amazing feat of a volunteer-led grassroots campaign with minimal funding – and laid the groundwork for a series of advances in establishing a structure to create public banks across California.

When I joined the Philadelphia Public Banking Coalition and started talking to people all over town about the potential of a public bank, I had the same experience that people came right away. They just never thought there was an alternative. We hosted a briefing with the Philadelphia Urban Coalition, a group of mostly black church leaders who went strong with the message that it is just not right for big banks to use our public funds to maximize their profits when the need is big Lack of financial resources is not covered in the city.

Several of us went to our local farmers market on a number of Saturdays over the next summer to collect petitions for a public bank. Not only did all the interviewees understand the logic of the concept straight away, but were also grateful to know about the campaign and were happy to support it. Later, when we reached out to local community organizations to offer briefings, the concept always made intuitive sense.

Fortunately, our coalition not only got involved in community outreach, but also worked in the town hall. From the beginning we had a strong ally in Councilor Derek Green and have worked closely with him over the years. One of our members, who used to work as legal counsel for the city council, actually drafted the law that Green introduced with a veto-safe majority in January 2021 – the result of a vigorous lobbying campaign on our part. Since then we have continued our dual strategy of gathering more support from the community and working with the legal and finance departments at town hall to clarify the details. We are working particularly hard to build a democratic governance structure to ensure that the bank is not only isolated from political influence, but also rooted in the communities it is intended to serve.

The public banking movement across the country has been booming since 2019, and it continues to grow. The question now is not whether another US bank will join the Bank of North Dakota, but when. Philadelphia is backed by the California Bay Area and Los Angeles in a race to create our first municipal public bank. After years of dreaming and hard work, the goal of getting laws in place by the end of 2021 seems like a real possibility.

Of course, that’s not the end of the story. A reform, revolutionary or not, is still a reform. But it is more than just improving the living conditions of those who are suffering from our current deeply unjust and unjust economic system. It is an opening wedge, a beginning of a transfer from private to public control of our financial system, a shift in history about who rightfully owns and controls our common assets.

This article originally appeared in Use nonviolence. It was easily edited for YES INDEED! magazine.