COMMONOMICS
Growing Our Common Wealth™
by Commonomics Media Team on September 15th, 2016

​Commonomics USA supports proposal to create public bank in New Jersey modeled after Bank of North Dakota
 
Last week, New Jersey Democratic Gubernatorial candidate Phil Murphy proposed establishing a public bank, owned by the taxpayers and citizens of the state, promising "far-reaching positive impacts on countless businesses and communities" in the state.
 
Mr. Murphy is right: The best available evidence indicates that a state-owned bank, if run correctly and transparently, can indeed be a cornerstone of New Jersey's economic recovery.
 
The Bank of North Dakota saved jobs and cities during the 2008 financial meltdown. The Bank saved ordinary people's homes from being foreclosed upon, and family businesses from being shuttered. Like BND, a Bank of New Jersey will support infrastructure projects across the state.
 
In North Dakota, BND doesn't compete with community banks and credit unions. It supports them. That is why North Dakota has more local independent financial institutions per capita than any other state. Further, with BND's help, North Dakota community banks do six times more lending to local businesses than do banks elsewhere, including in New Jersey.
 
In fact, New Jersey and other states will realize five distinct economic advantages in choosing a North Dakota-style public banking model:
 
1. Public banks can save state and local governments significant amounts in interest payments and fees.
 
Like other states, New Jersey has lost hundreds of millions of dollars in interest and fees paid to Wall Street banks and financial firms to handle public money, from pensions to other deposits, and to borrow on credit. As Saqib Bhatti of the Roosevelt Institute has written, "[e]very dollar that banks collect in fees from state and local governments and pension funds is a dollar not going toward essential neighborhood services." This loss of state and municipal money is one of the largest financial scandals in American history; cities and states have paid Wall Street hundreds of billions of dollars, with governments having to cut vital services, and cities sometimes falling into bankruptcy. Public banks can do what private financial firms do, can do it better, and without the hefty interest and fees.
 
2. State and local governments have a fiduciary duty to manage money safely and effectively: to minimize risk exposure, ensure liquidity, and optimize earnings.
 
Wall Street banks have a notorious record of losing and gambling away public funds. Public banking means better, cheaper, and more transparent government. Studies have demonstrated that low-interest public loans produce more and better policy outcomes for less money than loans from private banks.
 
3. A public bank can help New Jersey, and other states vulnerable to natural disasters, respond quickly and build preventive infrastructure to mitigate harm from such events.
 
Just as the Bank of North Dakota responded to flooding and fires in Grand Forks in the 1990s, setting up cheap credit lines for North Dakota's Emergency Management, National Guard, its University and the City of Grand Forks, a Bank of New Jersey could have offered such credit in the wake of Hurricane Sandy. Flooded-out homeowners with mortgages held by the Bank of North Dakota and students with student loans held by the same received six month payment moratoriums. Moreover, a public bank can lend at extremely low credit to build shoreline protection infrastructure for the inevitable hurricanes to come.
 
4. A public bank can help state and local governments lead the transition to clean, non-carbon energy in production, transportation, and consumption.
 
As the most densely populated state in the nation, and a state with dormant transit lines and other green infrastructure waiting to be built or retrofitted, New Jersey can create model clean transportation and public facilities, with low-interest financing by a state-owned bank using money the state already has.
 
5. Just as the Bank of North Dakota helps generate and keep money in North Dakota, a Bank of New Jersey, and other public banks, will keep state and local money where it belongs.
 
Advocates and allies around the country repeatedly tell us that their states’ banking practices remove money from their coffers and their state economies, paying far-away shareholders and aloof national and multinational financiers. Public banks lend from their states and pay money back into their state treasuries, while assisting community banks in their mission to facilitate local economic development. This is particularly important in times of Wall Street bank credit contractions, such as in the 2008-2009 Great Recession. The counter-cyclical nature of public banking address systemic risk: public banks lend at low interest rates (and keep down credit default rates) precisely when private banks will not lend at all.
 
Naysayers will attack Mr. Murphy's proposal. Big banks and well-heeled equity funds will hate it, as they have elsewhere. They will make generic arguments against government involvement in banking, ignoring not only the uniqueness of public banks, but the numerous ways the government underpins the banking and financial services market with taxpayer subsidies (TARP), low cost public tax revenues deposits, and, with only a few exceptions, the exclusive license given to banks to use bank credit however they wish.
 
Opponents will claim that Wall Street banks can generate better returns on state money, ignoring the high costs incurred in interest, fees, and banking crises that have bled America's city and state budgets dry. Their arguments will assume that shareholder returns are more important than social benefits. They will rail against "political interference" with banking without accounting for the vast covert interference Wall Street imposes on federal, state, and local governments.
 
Above all, the naysayers will ignore or obscure the success story of the Bank of North Dakota, whose financial strength not only predates that state's oil boom (showing year-after-year profits since the early 1970s), but will, if managed correctly, ultimately help North Dakota's transition to a post-carbon economy.
 
We hope New Jersey public officials and public interest advocates will keep their eye on the ball and not be deterred. A state-owned Bank of New Jersey is a cause worth fighting for--one of New Jersey's most urgent economic and financial priorities.
 
It’s time to create financial institutions accountable to the public. We applaud gubernatorial candidate Phil Murphy for giving New Jersey public banking the spotlight it deserves.
 
Commonomics USA is an educational advocacy organization supporting pragmatic economic justice initiatives and a Commons-based economy. Our Public Banking Policy Project provides legal, policy, and economic information to advocates of public banking. Visit our web site at commonomicsusa.org.

by Ira Dember on June 28th, 2016

Senator Elizabeth Warren (D-MA) and Representative Darrell Issa (R-CA) each addressed the all-day conference on postal banking, hosted by The Pew Charitable Trusts in Washington, DC on July 16, 2014.
 
At the conference, Rep. Issa noted that he and Sen. Warren are “bookends” on issues like postal banking, that is, they take sharply contrasting points of view.
 
The following quotes are taken from the respective talks of Rep. Issa and Sen. Warren at the July 2014 conference — juxtaposed here with issues raised and supporting facts.


ROUND 1: Are US Postal Service facilities capable of providing basic financial services as proposed by the USPS Inspector General?
 
REP. ISSA: ". . .in many, many cases the exact neighborhoods we're talking about do not have the postal facilities that would match the actual needs: a place that dispenses money and has sit-down locations for the discussions of a payday loan equivalent or a longer term need or for that matter just general banking needs."

SEN. WARREN: “S&L Financial, a research firm, reports that banks are. . .reducing the number of branches they operate in areas where the median [income] is under $50,000. . . 
 
      “Nearly 60 percent of Post Office branches are in banking deserts. They are in zipcodes where there are either one or no bank branches. This means that the Postal Service already has the strong brick-and-mortar presence in low-income and rural communities that traditional banks are leaving behind.
 
      “. . .it’s not often in life when you see such a perfect match: there is a big need — 68 million Americans, who don’t have access to traditional banking — and a Post Office that has plenty of additional capacity. The two can be put together, bring down costs [and] bring more families into the financial mainstream. . .”
 
FACTS: Existing USPS postal counters and personnel routinely handle significant cash transactions and related services including domestic money orders of up to $1,000, and government check cashing. Also routine are more complex transactions such as international money orders and international electronic cash transfers.

The US Postal Service’s Office of Inspector General, Sen. Elizabeth Warren, the US Council of Mayors and other leaders support the idea of the USPS offering other basic financial services, primarily to low-income people. No mention of “longer term need” or “general banking needs.”
 
In a space of less than 100 square feet, the “Money Center” in a west Houston Walmart offers bill pay, money orders, reloadable cash cards, government and payroll check cashing and other financial services such as Walmart-to-Walmart cash transfers.
 
Many banks also occupy small spaces. For example, a full service Houston bank branch in a Kroger store occupies 240 square feet. That includes the back office, vault, and customer standing and seating areas.
 
Nearly 20,000 small storefronts, mostly in low-income neighborhoods, are occupied by payday lenders and other financial predators. 


ROUND 2:  Have financial services played a significant role in US postal history?
 
REP. ISSA: ". . .is banking a major part of [USPS] history at any point? Beyond, if you will, the money order portion that was slow, laborious, but did occur? And the answer is no."
 
SEN. WARREN: “Even our own Post Office — and I am old enough to remember this — offered basic savings accounts as late as the 1960s. And they helped bring hundreds of thousands of recent immigrants into the financial system.”
 
FACTS: The US Post Office first offered money orders in 1864 to fill an urgent need: Union soldiers sought to send money home without putting cash in the mail. Thus 2014 marks the 150th anniversary of US postal money orders — still a mainstay of post office operations and one of the most significant innovations in US financial history.
 
Even with the rise of electronic transfers, the US Postal Service issued nearly 95 million money orders in 2013, about four for every ten US adults — at a profit. The US in 1911 launched the Postal Savings System, enabling people to have a savings account at their neighborhood post office — just as most developed (and many underdeveloped) nations do today.
 
At its peak in 1947, 10% of American households had a postal savings account. Adjusting for inflation and population growth, the Postal Savings System had today’s equivalent of nearly $80 billion in savings — and held these deposits in local community financial institutions, which the USPS could also do today. Postal savings were especially popular in immigrant communities, where participation was very high. However, the savings system dwindled when Congress refused to let the Post Office continue offering competitive interest rates. Lawmakers struck the final blow in 1966, terminating America’s “public option” for savings.
 
From the Civil War to the 1960s, post office financial services played substantial roles in the lives of ordinary Americans and their immigrant forebears — and still do.


ROUND 3:  Will postal banking require taxpayer subsidies?
 
 REP. ISSA: "I believe [Elizabeth Warren] want[s] a highly subsidized, government-fed way to provide. . .financial services to the underserved."
 
SEN. WARREN:  “[Basic financial services] could be offered that are safer. . .at a lower cost. And they could generate some revenue. . .and help [financially] stabilize the Post Office.”
 
FACTS: US Postal Service operating overhead, including personnel, is fully paid for by existing services at a net operating profit. The incremental cost of the proposed financial services would be far less than if starting from scratch, as predatory payday lenders must do with their own storefront infrastructure.
 
For these and other reasons, the USPS could offer proposed financial services at substantially lower pricing, without subsidy.
 
The Office of Inspector General of the US Postal Service performed an analysis of proposed services, costs and pricing. In its January 2014 report, the OIG concluded that, based on the evidence at hand, the proposed financial services would generate a net profit for the Postal Service.
 

ROUND 4: Will postal banking generate big profits on the backs of low-income people?
 
REP. ISSA:  ". . .quite frankly, it is disingenuous to believe that the [market] specifics of the underserved community are highly profitable."
 
SEN. WARREN: “[Financial service] storefronts. . .all across the country [are]  raking in billions of dollars in profits. . . 
 
“We must also consider the question of how to balance generating revenue for the Postal Service against providing affordable [financial] products to the under-banked and unbanked. History shows that without careful safeguards, institutions that start out with the goal of increasing access to financial services can lose sight of that goal, if their attention turns to maximizing profits.”
 
FACTS: Payday lending and other financial services targeting the poor are highly profitable for Wall Street-backed storefront chains. Yet these companies each bear the cost of their own pervasive brick-and-mortar presence in low-income communities across America — a presence the USPS already has, and which is already self-supporting.
 
The Inspector General’s January 2014 report indicates that the USPS could provide payday loans at less than one-tenth the average price currently charged by predatory lenders — and do so at a profit. This finding reflects both post office cost-efficiency and obscene overcharging by payday lenders.
 
Nowhere does any proponent claim postal banking will be “highly” profitable. However, demand for payday loans and other financial services is so high, even a modest profit would contribute substantially to the Postal Service’s profitable bottom line, thanks to high volume.
 
The OIG report offers this price comparison: a typical $375 short term loan from a payday predator costs an average of $520 in exorbitant fees and interest. The USPS could charge just $48 for the same loan — at a profit.
 
To produce this report, the OIG “contracted with Decision/Analysis Partners, who assembled a team of experts including: Hans Boon, a world-renowned expert on postal operations and financial inclusion strategies who has helped implement postal financial services in various countries, formerly with ING and the Netherlands Postbank; Jean Philippe Ducasse, an expert on postal strategies, formerly with the European Commission, La Poste, and the Universal Postal Union (UPU); James Pérez Foster, a former VP with Merrill Lynch and Morgan Stanley Smith Barney, who has recent experience as an expert on banking services for underserved communities; and Ana Harvey, the former head of the Small Business Administration’s Office of Women’s Business Ownership.”
 

ROUND 5: Is the US Postal Service financially unsustainable, losing billions of dollars?
 
REP. ISSA: "But today they [the USPS] are losing in the range of $8 billion a [year]. They are losing it in the old-fashioned "railroad retirement" sort of way: they are defaulting on payments for their future retirement and health benefits".
 
SEN. WARREN: “. . .the Postal Services reported losses of about $5 billion during its most recent fiscal year. But all of those losses and more, were the result of a bizarre requirement that Congress and the Bush administration imposed on the Postal Service in 2006. They suddenly required the Postal Service to pre-fund health benefit payments for retirees for the next 75 years — and to satisfy that requirement in the next 10 years.
 
 “. . .in the first quarter of 2014 alone, the Postal Service would have made more than $750 million in profit, if not for the pre-funding requirement.
 
 “The Postal Service has actually adapted quite well to the changes brought about by the Internet age. Its financial woes. . .are simply the creation of a Congress and an administration that wanted to see the Postal Service weakened and cut back.
 
FACTS: Rep. Issa himself championed federal legislation requiring the USPS to pre-fund pension obligations 75 years into the future — covering postal workers who have not yet even been born. No other business or government organization, anywhere on earth, has ever been forced to bear such an extreme mandate. It artificially imposes a $5.5 billion annual cost burden on the Postal Service.
 
 Further, the USPS Office of Inspector General has found — and publicly reported — that up to 2011 the Postal Service overpaid its pension obligations by a total of $13 billion. However, Congress refuses to credit these overpayments to the USPS.
 
 For several years, the USPS did lose money on its operations. This is common among businesses when technologies such as the Internet disrupt markets. That’s what happened to the Postal Service: its profitable first-class mail service declined as email and the Web soared to prominence.
 
 Like any robust business, the USPS made adjustments and continues to do so. As a result, in fiscal 2013 it generated a $600 million net profit on operations. The only “loss” exists in Congress’ artificial 75-year pension pre-funding requirement.


ROUND 6: Are high-cost payday lenders highly regulated?
 
REP. ISSA: ". . .these [payday lenders] are often vilified, regulated at every stage and are further regulated by the Dodd-Franks. So we have highly regulated entities. . ."
 
“Maybe they are not doing a good enough job. Maybe in fact we need more government oversight on them. Maybe.”
 
SEN. WARREN: “Twenty-eight percent of all households, 68 million people, rely on non-bank financial services like check-cashing or payday lending; and the cost of these services is extraordinary. In 2012, the average annual income for these families was about $25,300, and they spent an average of $2,400 on interest and fees for non-bank financial services.
 
“Think about that: that is just under ten percent of their annual income, or about the same amount that they spent on food. When more than a quarter of this country is spending about the same amount on basic financial services as they are spending on food, we have a market failure.”
 
FACTS: These “highly regulated entities” charge exorbitant fees and usurious interest amounting to a predatory 391% effective APR, according to nonpartisan independent studies. The predators’ main targets: low-income working families, and retirees struggling to survive on Social Security.
 
In an April 2014 report, the US Department of Defense admitted that despite a Congressional mandate, the DoD has been losing its own battle against payday lenders and other financial predators that rip off military personnel and their families.
 
In June 2014, the US Conference of Mayors adopted resolutions in support of postal banking to provide a low-cost “public option” for financial services, countering the out-of-control entities described as “highly regulated”. 


ROUND 7: Is the US Postal Service slow, irresponsible and inflexible?
 
REP. ISSA: "I've overseen the Postal Service as both the minority and the majority now for a decade. And what I've discovered is, they are slow, irresponsible, highly unionized, reasonably good at what their core function is, but very resistant to any change, any flexibility.
 
SEN. WARREN: “[T]he postal system has done [this] for America for over two centuries: and that is to adapt to changing times. . .
 
“Postal Service employees could certainly manage the [proposed postal banking] transactions. In fact, Postal Service employees are already providing relatively complicated financial services like international remittances. . . with a little training, they could cash a check or open a basic savings account.”
 
FACTS:  While Rep. Issa led Congress to impose impossibly large, artificial financial burdens on the Postal Service, he simultaneously worked to ensure that the USPS could not do what major businesses do in tough times: innovate by diversifying into new lines of business, or amplify existing lines.
 
For example, when Hewlett-Packard saw its PC business stagnate, it doubled down on enterprise IT to achieve renewed success. When Apple’s flagship Macintosh computer lost market share, experts predicted the company’s demise. But Apple remade itself first with the iPod and, later, the iPhone, iPad and other innovations such as iTunes and the App Store. Apple is now the world’s most valuable company, worth over a half trillion dollars.
 
And the US Postal Service? A law enacted by Congress in 2006 prohibits the USPS from trying new lines of business. This legislation was driven by the same Rep. Issa who today charges that the Postal Service is “resistant to any change.”
 
Despite overwhelming odds — including Rep. Issa’s straitjacket legislation, 75-year pension requirement and refusal to recognize the Postal Service’s $13 billion pension overpayment — the USPS and its highly unionized workforce have wrestled this enormous enterprise back into the black, generating a net operating profit of $600 million in fiscal 2013 (averaging $150 million per quarter) and, in the first half of fiscal 2014 alone, over $1 billion net operating profit.
 
While Rep. Issa “discovered” that postal workers are “slow, irresponsible”, USPS senior management led by Postmaster General Patrick Donahoe has been closing mail processing facilities, thereby degrading core services. Donahoe-led management has publicly proposed further service degradation, such as ending Saturday delivery, door-to-door delivery, and a full day delay in mail delivery time.
 
Postal workers have protested these plans. Thus it appears that “highly unionized” postal workers are striving to defend the USPS’s respected brand and service reputation, while USPS senior management attempts to diminish them.
 
The Postal Service under Postmaster General Donahoe appears to focus almost exclusively on cutting costs by degrading service and selling off postal facilities. By contrast, National Association of Letter Carriers president Fred Rolando proposes that the Postal Service bring back postal savings accounts — and use resulting billions in deposits to help fund a national infrastructure bank.
 
At the post office, then, it seems as if innovation is flowing up from the bottom, not downward from the top. 


ROUND 8:  Do postal unions obstruct progress?
 
REP. ISSA: “They are an organization that at present, you cannot fire, you cannot reduce in force, you cannot lay off, you cannot force them to retire."
 
SEN. WARREN: (At the Pew Trusts conference, Sen. Warren focused on issues and opportunities around postal banking only.)
 
FACTS: Despite a no-layoff contract provision, the US Postal Service shed 110,000 jobs between 2007 and 2012 through attrition, buyouts and threatened transfers. Thus while some workers may not be laid off, the Postal Service does have ways to induce or “force them to retire.”
 
Further, postal unions have demonstrated extraordinary flexibility, for example agreeing that new hires will not covered by no-layoff provisions. Meanwhile, Postal Service senior management aims to shed tens of thousands of additional union jobs, replacing many with non-union workers.
 
Postal unions are united in support for postal banking. USPS Office of Inspector General’s findings indicate that postal banking would financially stabilize the Postal Service with additional revenues and a renewed source of profitability. These changes could in turn help preclude postal service cuts, layoffs, and selling off post office properties. 


ROUND 9: Should the Postal Service cut the most jobs in hard hit, low-income communities?
 
REP. ISSA: “[The USPS] has a labor force that. . .needs to be rightsized and reduced, and many of the reductions have to occur in the very communities that in fact Elizabeth Warren says are underserved."
 
SEN. WARREN: “I bristle at the notion that [banks] can be closing branches in zipcodes where median income is under $50,000, while they’re opening branches in zipcodes where median income is over $100,000. And then [they] opposed the Post Office offering the basic services that they refused to offer.
 
“But it also potentially — potentially — is a win-win for the small banks and for the credit unions. This is an opportunity to partner up, an opportunity for the community bank that’s in the next zipcode over, to work with the Post Office to help them get the business model in place, to help train the employees so they can provide these basic services; and help bring more people — eventually — into traditional banking.”
 
FACTS: More than 90% of bank branch closings in the last 5-6 years have been in low-income zip codes. In 2012 alone, banks shuttered well over 2,000 branches. As a result, 59% of post offices are located in “bank deserts” — zip codes having no bank branches or just one. By definition, these communities are underserved — not because “Elizabeth Warren says” they are underserved.
 
USPS Inspector General David Williams, the US Conference of Mayors and other leaders, along with Sen. Warren, propose that post offices provide basic financial services at low cost, especially in these underserved communities.
 
A nonpartisan independent study reveals that payday lenders and other financial predators cluster most strongly in neighborhoods abandoned by banks.
 
Cutting postal workers in low-income neighborhoods could stop the Postal Service from redeploying experienced workers to provide urgently needed financial services profitably at low cost — helping both the Postal Service and affected families to financially stabilize themselves at no cost to taxpayers. 
 
The job cuts demanded by Rep. Issa would disproportionately hurt people living in low-income neighborhoods: minorities, women (including millions of single working mothers), retirees on Social Security, veterans, and immigrants.
 
The USPS Inspector General’s report states: ". . .there could be a role for the Postal Service to play in helping banks and other institutions to comply with regulations. For example, the Postal Service might explore whether banks that partner with it could earn credit toward fulfilling their requirements under the 1977 Community Reinvestment Act to meet the credit needs of the communities where they operate. This might be especially helpful for community or local institutions that have fewer resources to dedicate to ensuring compliance with new and changing regulations."


ROUND 10: Could the Postal Service use its existing strengths to do postal banking?
  
REP. ISSA: ". . .you would be building almost from scratch. You would be building new facilities — or at least repurposing or moving. . .to a new facility."
 
SEN. WARREN: “[O]nce the debate starts with how to shut down the Post Office — which is the view of some people — then they don’t want to hear that there’s a solution, there are ways to bring more revenue into the Post Office, to use the space more efficiently. . .
 
“This is just an opportunity for the Post Office to use its space and to use its employees more efficiently, to bring needed services to more Americans. . .  Why would anyone object . .?
     
FACTS: Many post offices could readily provide space for basic financial services. As noted, Walmart offers its “Money Center” services in less than 100 square feet. Chartered financial institutions offer full banking services in as little as 240 square feet. Payday lenders and other financial predators infesting low-income neighborhoods operate thousands of small storefronts.
 
Conventional retail businesses periodically rebuild their interiors, so remodeling some post office interiors would not be an insurmountable task. Postal workers could readily do the types of jobs performed by low-level clerks in thousands of payday lender storefronts and check cashing stores.
 
However, Rep. Issa insists that without “building new facilities” or “moving. . .to a new facility” the USPS would be incapable of managing reloadable money cards, cashing checks (as it already does for government checks), providing small payday loans (as predators do in minutes from tiny offices at stand-up customer windows) and handling postal savings accounts (as post offices did for more than a half century).
 

BONUS ROUND: How do you feel about the Post Office?
 
REP. ISSA: “I love the institution of the Post Office.”
 
SEN. WARREN: “The Post Office has been here since colonial times. It’s a part of who we are, part of how we run this country, an essential government service. Why would anyone object to making that service more efficient, using the spaces more effectively, and helping bring service to more Americans?
 
“[T]he Postal Service. . .has the infrastructure, it has the experience, and it has the trustworthy reputation needed to address this problem.”
 
FACTS: Rep. Issa was largely responsible for imposing the notorious and unprecedented 75-year pension pre-funding burden on the US Postal Service; straightjacketing the USPS by prohibiting innovation in new services (as any business would innovate under similar circumstances), and leading the drive to sell off post offices nationwide.
 
Sen. Warren was among the first national leaders to endorse the idea of giving both low-income families and the USPS new opportunities via postal banking, which would help financially stabilize millions of families and the Postal Service itself. 

by Commonomics Media Team on March 31st, 2016

​Materializing Empathy: Cooperative Law and Economics

April 16, 2016
10AM Pacific
1PM Eastern



Commonomics USA and the Materialized Empathy project are pleased to present this webinar by Ma'ikwe Ludwig and Matt Stannard. 

The webinar includes a special presentation by Tawana Petty, Detroit-based poet, author, organizer, and board member of Boggs Center to Nurture Community Leadership, past recipient of the Spirit of Detroit Award, Woman of Substance Award, Women Creating Caring Communities Award, and was recognized as one of Who’s Who in Black Detroit

The webinar will take place Saturday April 16, 2016, at 10AM Pacific/1PM Eastern time. If you can't attend the webinar live, your registration (see below) will get you a permanent link to the archived presentation.

Themes

The real answer to the economic insecurity, environmental degradation, and political brutality of our time is building communities and networks of sustainable, cooperative economic justice. Many groups are doing that right now. How can we make that easier for everyone? 

Commonomics USA will discuss the Materialized Empathy project's three-point policy agenda: 

1. Making cooperative and sustainable living easier through legal and policy reform 

2, Democratizing our financial systems 

3. Providing immediate relief from economic insecurity (with emphasis on empathetic policymaking for a post-carbon transition)



Your Hosts

Ma'ikwe Ludwig is executive director at the Center for Sustainable and Cooperative Culture, on the board of directors of the Fellowship for Intentional Community, the sustainable communities director of Commonomics USA's Materialized Empathy project, and a leading authority on community responses to climate change. 

Matt Stannard is policy director for Commonomics USA and a longtime economic justice advocate, on the board of directors of the Public Banking Institute, and has provided economic and legal advocacy support for victims of violence and economic insecurity in the U.S. and abroad. 


How to Attend

Cost of the webinar is $10 per connection (unlimited attendees per connection). Please invite people to watch with you. 

Please register by emailing matt@commonomicsusa.org and pay by making a one-time donation of $10 to Commonomics USA at http://commonomicsusa.org/membership.htm
We will then send you the electronic invitation to the presentation. 

by Commonomics Media Team on March 4th, 2016

On March 4, 2016, Commonomics USA's Policy Director, Matt Stannard, hosted a beginners' discussion on Basic Income. You can watch it on YouTube here

Here are the notes Matt used in the presentation, along with a few articles listed at the bottom for further reading (though not even close to a comprehensive list of articles). 


 



INTRODUCTION
 
The question of how communities produce and distribute material well-being is a deeply intimate question. Our economy is our shared materiality. It influences our personal relationships, our self-care, our social care.
 
There are tendencies in our economy that are in tension: On the one hand, we extract and exploit--from the earth and from each other. On the other hand, we cooperate. We're capable of acts and projects of collective greatness.
 
But too many of our laws favor the extraction and exploitation tendency over the cooperative.
 
The solutions to that imbalance are not necessarily "left" or "right" solutions. They do tend to be local solutions, but there are a couple of issues that need to be resolved at a larger level, and we believe the question of universal income is a national issue--if not a global issue. The reason, as a few of my esteemed colleagues at Commonomics USA have reminded me, is that implementing basic support in one community, or state, would likely cause regional imbalances and disruptive migration to places where support was available. Not always--but something as significant as the implementation of basic support income would surely have a significant effect on migration.
 
I think that while we can debate about what it looks like, how universal it should actually be, and where it comes from, I believe basic income is an important consideration because it would reflect an acknowledgement of our shared materiality.
 
For decades now, well-funded think tanks of individualism have been telling us we don't really share this planet, and that our fates are really not bound together materially. Of course, we disagree with that and we believe science, economics, philosophy and religion are all pushing us strongly in the opposite direction.
 
The disproportionate effect of global climate change and our invariably inequitable responses to it also raise questions of social support, and dividends, which of course is the key proposal of the Citizens' Climate Lobby. A carbon fee and dividend is a cousin of the basic income proposal. I think that synthesis is worth paying attention to, and I'd love for those movements to dialogue and converge.
 
I will inevitably leave some things out of this presentation. 
 
 
WHAT?
 
There is Unconditional Basic Income (or Universal Basic Income): All residents (under some proposals only citizens) receive an unconditional sum of money from public institutions.
 
There is Social Dividend: Everyone receives a regular payout from a profitable activity the government facilitates and/or benefits from. Alaska does this. A carbon fee and dividend system would do this.
 
There is Guaranteed Minimum Income: Means-tested regular financial support.
 
There is a Negative Income Tax: a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.
                --Milton Friedman’s famous negative income tax. Under that proposal, people with no earned income would receive a refundable tax credit, or “negative tax,” sufficient to live on. As their income rose, the amount of the credit would fall by some set percentage of earned income. Once the credit fell to zero, they would start paying pay income tax on any additional earnings.
 
There are Dedicated Citizen Accounts, starting savings accounts when you're born and giving them to you when you reach legal age.
 
The argument for a basic income over a guaranteed minimum income is: The lack of means test or similar administration would allow for some saving on social welfare which could be put towards the grant.
 
In 2016 Switzerland will hold a referendum on a proposal to provide every citizen with an unconditional grant of 2,500 Swiss francs a month (about $2,800).
 

WHY?
 
Health of all kinds: The most sweeping, and often least discussed benefit is the value generated through improved individual, environmental, and community health. Poverty makes us sick, decreases productivity and creativity, makes us die sooner, etc. The other day I wrote something that resonated with a lot of people when I posted it. It was:
 
"If you're poor, you die earlier, live an exponentially more stressful life, spend more money on everyday necessities, often have untreated mental illness, are more likely to be abused by a partner, are less likely to be able to escape that abusive partner, face public service discrimination, lack access to cheap financial services, are forced to eat really unhealthy food rather than not eat at all, can't survive a $500 emergency, probably will die before you retire, are surrounded by toxins and pollutants, lack access to basic legal services and thus more likely to get hurt by courts, cops, landlords and bosses, and can't afford to engage in the very political process that makes it easier for all that horrible shit to happen to you."
 
The reversal of those facts wouldn't just be MORAL goods, but would also be material, economic, health, quality of life goods. It would make society more "competitive" in the good ways.
 
But this doesn't lead automatically to UBI. It may be possible to eliminate poverty without it. As we continue the discussion, listen for the ways in which the universality of basic income may or may not be necessary to solve the particular problems it purports to solve.
 
But also, listen for the ways in which the FAILURE to make basic income universal undermines its effectiveness--including in the area most often argued against public wealth distribution, which is incentives.
 
But the reason we need to include those health and Q of L indicators is that conventional economists tend to individualize the value of income distribution. The social benefits or deficits of income CAN be measured. All measurement is arbitrary and incomplete by nature, but nevertheless articulates something.
 
The Progressive, Social Democratic and Socialist Case:
I'm not going to spend a lot of time on this. Thomas Paine favored basic income--capital grants at the age of majority
Why? He had very solid philosophical reasons for doing so. They had to do with the social nature of wealth and the commons. He wrote:
"Poverty . . . is a thing created by that which is called civilized life. It exists not in the natural state. On the other hand, the natural state is without those advantages which flow from agriculture, arts, science and manufactures."
"It is a position not to be controverted that the earth, in its natural, cultivated state was, and ever would have continued to be, the common property of the human race."
 
Of course, many would rightly object to conceiving the commons of the earth as everyone's PROPERTY, and a better conception is to simply say that the commons is the source of all our "providence" or sustanance, and wealth, and that we are part of that system--the natural part of it, and the parts we build out of it. That reconception doesn't change Paine's point--it may even strengthen it.
 
Feminist economist Ailsa McKay argued for a basic income as "a tool for promoting gender-neutral social citizenship rights."
 
 
The Conservative Case:
As Noah Gordon pointed out two years ago, smart conservatives already favor efficiency and decentralization of benefits rather than their outright elimination, even if for some, the former is a stalking horse for the latter. But if we take them at their word, Noah Gordon says this:
 
"Florida Senator Marco Rubio’s plan would move most of America’s existing welfare funding into a single “flex-fund” to be disbursed to the states. Wisconsin Representative Paul Ryan, partly inspired by the “universal credit” reforms of Britain’s Conservative government, proposes allowing states to combine different forms of federal anti-poverty funding—food stamps, housing assistance, and more—into a single funding stream." 
"Friederich Hayek endorsed it. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.” In 1967, Martin Luther King Jr. said, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income."
"in a 2006 book, conservative intellectual Charles Murray proposed eliminating all welfare transfer programs, including Social Security and Medicare, and substituting an annual $10,000 cash grant to everyone 21 years and older."
 
Of course such plans would decrease bureaucracy and the expense of means-testing, behavioral enforcement, etc.
 
As one comment on an article said: "For libertarians, it may be a wedge to hammer home a a more free and competitive market in the future."
 
 
The Case According to Technology:
In the Financial Times in February 2014, Martin Wolf has contemplated a guaranteed income’s ability to help society adjust to the disappearance of low-skill, low-wage jobs.
 
According to Nathan Schneider at Vice: "The idea of basic income has been appearing among the tech-bro elite a lot lately. Mega-investor and Netscape creator Marc Andreessen recently told New York magazine that he considers it "a very interesting idea," and Sam Altman of the boutique incubator Y Combinator calls its implementation an "obvious conclusion." Albert Wenger, a New York–based venture capitalist at Union Square Ventures, has been blogging about basic income since 2013. He's worried about the clever apps his company is funding, which do things like teach languages and hail cars, displacing jobs with every download.
"We are at the beginning of the time where machines will do a lot of the things humans have traditionally done," Wenger told me in October. "How do you avoid a massive bifurcation of society into those who have wealth and those who don't?"
 
 
The Case Against Work:
Our work norms are held up as natural, normal, the norm, heaven-sent, sensible, universal and ahistorical. We are expected to work. But as automation suggests, as the evolution of work hours and battles over work hours suggest, work is not a fixed and uncontested concept.
 
Given the coming impacts of climate change, the need to shift the way we operate major industrial and economic sectors, the possibility of a shift to local production, on top of automation, which can be scaled and localized as well, a 40 to 30 or even 20 hour work week is feasible.

This also interacts in interesting ways with the incentives debate. A materially EMPATHETIC approach to policy would probably re-frame incentives as a focal point of discussion. Saying that "aid decreases incentives" is not a morally neutral statement.
 
The extraction-and-exploitation economy will want to find ways to keep people working even beyond the social utility of it, of course, because that produces surplus value and profit.
Basic income serves as a normative and material check on that: It means people don't have to stay in work situations they don't want, and it sends a message that working is not a prerequisite virtue for moral consideration.
 
 
The "It's Better than the Status Quo" Case:
Existing support policies in the United States don't work. Ed Dolan, citing research from, among others, my buddy Elaine Maag, concludes:
"In short, the existing income support system of the United States seems to combine some of the worst features of the stylized alternatives that we illustrated earlier. They are not fully effective; despite their considerable cost, they leave some 16 percent of the population below the official poverty threshold. They are not tightly targeted. In an effort to maintain work incentives, many of them provide benefits to households well above the poverty level. Nonetheless, because of the additive nature of benefit reduction rates for multiple programs, many households, especially those just above and below the poverty level, face cliffs and high effective marginal tax rates that undermine incentives to work. Finally, the complexity of many programs, each run by its own bureaucracy, results in very high administrative expense."
 
 
WHY NOT?
 
Affordability: Ed Dolan estimates that "Providing a grant to each individual that was sufficient to bring a family of three above our assumed $20,000 poverty line would require payments or tax credits totaling roughly 10 percent of GDP."

But it would likely replace existing programs, and as we will discuss in a few minutes, it could be facilitated through quantitative easing or other monetary policy that would be creative rather than redistributive. Also, there are some tax-based ways of providing it.
 
Incentives: People need the threat of economic insecurity to work hard (because that's the only logical form of the incentives argument at this level--people will still be rewarded for harder work)

But Ed Dolan writes:
"[Basic Income] would provide substantial work incentives. Because there is no reduction of benefits as earned income rises, it would avoid the problems of cliffs and high effective marginal tax rates for low-income households and second earners. (For readers familiar with the economic terms, a UBI would have an “income effect” on labor supply but no “substitution effect,” unlike current income support programs, which typically have both.)"
 
Redistribution is immoral or undesirable
 
No political will: But that is changing
 
Inflation: Not really how inflation works, and pulling people away from the kind of economic insecurity that makes them not spend any money will not be inflationary--or at least not hyperinflationary. I would refer everyone to Ellen Brown on these questions, and to the debate that's occurring over in Britain as the impending future Labour government of Jeremy Corbyn considers "quantitative easing for the people."
 
Remember, finally, that most of the arguments against UBI are arguments against most other types of support.
 
 
 HOW?
 
Taxation: Limited by political will, but is the basis for experiments in various countries.
 
Land Value Tax: Potentially huge. The key is the political plan to get there, which may or may not encounter a special quality of resistance from the elites, since the Georgists are right about the way land ownership locks value and growth into the hands of very few.
 
Democratization of money: use of the creation process of money and value in the service of basic income distribution
 
Community Implementation: I said at the beginning of this discussion that many people argue basic income must be universal because of migration. There are nevertheless many reasons to believe that in INTENTIONAL COMMUNITIES, some of which already share income, a basic income schema could be developed, and because intentional communities have the right to approve membership, migration might not be a problem, or integration could be managed. An intentional community could "quantitatively ease" its members through its internal currency, although it would need to do so judiciously. An intentional community could make people pay in and distribute out. An intentional community could implement a "basic material shares" program that was goods-and-services rather than income based, even utilizing time banking and other barter systems that could really only work locally. If you are interested in that conversation, we'd want to schedule something new, with my colleagues Ma'ikwe and Chong Kee involved as well.
 
Further Reading:

A Brief History of Basic Income Ideas, on the basicincome-europe.org web site

Ed Dolan's three part series in 2014 at EconoMonitor, his blog

Nathan Schneider's Why the Tech Elite Is Getting Behind Universal Basic Income at Vice just over a year ago

Noah Gordon, The Conservative Case for Basic Income in the Atlantic in 2014
 


by Matt Stannard on February 29th, 2016

​Worried about Trump and right-wing extremism in general? You should be. But however you choose to fight it nationally, the true answer to the fascist worldview is cooperative, sustainable economies and community solidarity.

If I were giving this essay as a sermon at a Unitarian Universalist fellowship, the accompanying children’s story at the beginning of the service would be about fighting back against bullies in a world where everyone feels afraid and insecure, and learning that standing up together not only pushes back the bullies, but eliminates bullying. What does economic justice have to do with bullying, you ask?  

Violence

We seek what bell hooks calls “the fierce willingness to repudiate domination in a holistic manner.”
 
For a year and a half I aided victims of domestic violence in the courtroom asking for injunctions against their abusers and in the “system” asking for resources to gain independence. For the last several months watching Donald Trump and his new loyalist Chris Christie, I’ve noted the spot-on similarity of verbal outbursts of both men and the behavior and abuse patterns of respondents in domestic violence injunction hearings. “Sit down and shut up.” “Are you stupid?” “Beat him up.” “Bomb the shit out of them.” Vulgar sexist jokes. Narcissistic and disproportionate self-justification. Those are words victims, in their petitions, report hearing.
 
Statistically, the incidents and impacts of domestic abuse cluster most heavily in poverty. I just read another article explaining that link, this one by Helen Nianias at Broadly, a Vice channel. There cannot be too many of these articles written or read. The thesis is that lack of access to material security like rental property worsens domestic abuse, traps victims with their abusers, and exacerbates all interpersonal violence.
 
And I submit, in all seriousness, that the way domestic violence victims interact with their abusers and our economic system tells us a lot about the real context of Donald Trump’s incipient fascism, and why economic injustice is unjust. For millions, American life and politics are an intersection of trauma, material insecurity, and dependence on abusive systems and people. So now we have public behavior from leading political figures –one who may become president— that would be dispositive in a domestic violence injunction hearing.

We Are Material 

Well, we certainly have some things to deal with now, don’t we? And unfortunately, we don’t make our history any way we please. The other night I picked up my old copy of Marx’s The Poverty of Philosophy, an essay written in response to a certain strain of utopian socialism, but which also contains spot-on criticism of mainstream economics. Grace Lee Boggs, the revolutionary of Detroit who died last year at age 100, read Marx as she read Jesus: urging us, on multiple levels, to shed our fetishization of wealth, seeing a relationship between that fetishization and systems of brutality. My takeaway from The Poverty of Philosophy is that human relationships don’t occur between abstract political subjects, but between human beings immersed in their material conditions. This isn’t hard determinism. It’s simply a humbling reminder that matter exists, we are in it, and we are often overwhelmed by it.
 
Professional economists tend not to live in or understand that overwhelm.The divisions Marx makes in The Poverty of Philosophy between these mainstream theorists very much resembles the respective economic approaches of the 2016 Republican field, Hillary Clinton’s neoliberal centrism, and Bernie Sanders’s strong redistributivism and old labor politics. Marx writes of the fatalistic conservative economists who see poverty as “the pang which accompanies every childbirth, in nature as in industry” – essentially the economic philosophy of the Republicans, enforced through a combination of now-undead trickle-down economics and apocalyptic Christian exaltation of suffering. He writes of the humanitarians, seeking to ease the pain and conflicts of inequality by calling for concessions and cooperation on both sides—a charitable but fair description of the Clintonian, DNC-guided corporate welfare state. He writes of the philanthropic economists—“den[ying] the necessity of antagonism,” and wishing to turn us all “into bourgeoisie” with no such class conflict at all—a possibility envisioned by Sanders and numerous (but by no means all) “new economy” proponents. A large section of what is now considered left-of-center economic thought now posits that wealth can be used for good, and that we can create structures within the market economy that eliminate involuntary poverty. Almost all of these approaches assume at least a certain amount of good will (or at least cooperation) from the world’s most powerful economic interests. That such good will might be replaced by violent repression (as historically valid as that concern is) does not occur to most humanitarian or philanthropic policy advocates. They should think about it now.
 
Marx doesn’t stop there, but I will. We don’t need to be “Marxists” to beat back fascism, or build economically just institutions. Sanders’s philanthropic capitalism is not impossible. Nor, even, is Clinton’s capitalism-with-a-human-face (I’m going to ask some tough question about how to achieve sustainability and justice under it, but I’ll listen to the answers). Fighting for those visions is not dishonorable, insincere, or even foolish. Nor are those people foolish who say those fights don’t go far enough and risk too much compromise—those socialists and Greens who raise their heads in interest at the Clinton-Sanders debate, while forging ahead building what they see as a necessary, new politics and economics.
 
But in what comes from the right, we face a categorical antagonist to any humanistic political economy at all. It is material power reasserting itself as unmoored irrationalism, brutality, and actual interpersonal abuse as politics. How can we adequately respond to that if we have different views of the ultimate good?
 
Well, we can. 

Close Enough

What is it, anyway?  I’ve read several articles and analyses about fascism over the last twenty years, and several articles and short social media posts recently about whether Trump(ism) is (a) fascist/ism. Perhaps I should be more meticulous, perhaps the characterization is hyperbolic or violates one or another scholars’ demarcations, but such hair-splitting is a luxury for those who have time, and I think we don’t have much. What is happening on the right side of American politics is close enough for me. Jim Wolfrey’s decade-old review of Michael Mann’s Fascists and Robert Paxton’s The Anatomy of Fascism lists what I see as dispositive: simultaneous anger at, and alliances with, economic elites; bedazzlement of power; incapability of conventional political structures to deliver stable social goods; the shifting of “social frustration onto the symbols of nationalism and violence”; a space for racism and sexism through a methodology of interpersonal violence. Such tendencies are fueled by anti-rationalism. There is no need for internal consistency, so Christianity compliments rather than critiques calls for hate. Whatever ideological tools at hand will do. Does it provide visceral satisfaction? Make you feel like it’s okay to feel anger and hate and belonging and pride? It’ll do. And I don’t care what you call it. Our inability to resolve our deepest insecurities, tied together on a beam of economic and social inequality and an extractive, exploitative model of collective life, summons it into being. 

Fighting by Building

Whether the Democrats’ hybrid humanitarian-philanthropic capitalism triumphs over the Republican’s hybrid thugfascist Christian politics of antiempathy is certainly  the defining question of the 2016 presidential election for many. But my concern is how proponents of economic justice and materialized empathy move forward regardless of that outcome. By all means, we should still be active in influencing that outcome, in whatever way our own consciences dictate. But what we actually need to do to create a world where narcissistic billionaires can’t threaten to pull us into their pathetic universes is much more focused and direct. There is a rapidly growing movement for actual economic justice—not mere redistribution, certainly not austerity, but materialized empathy: institutions, laws, and practices that hardwire economic justice, from sustainable and democratic financial practices to provide a material basis for fairness—a basis which, when missing, disempowers us socially and personally, as the sad facts about poor victims of domestic violence illustrates.
 
And so, when the Berkeley City Council this month joined other cities around the country increasing support for worker-owned cooperatives—tax and land-use incentives, educational programs, devoting city procurement to cooperative businesses, and discounting its bids to make cooperatives more viable in the bidding process—the city not only helped build a sustainable, prosperous, and cooperative economy. In building and incentivizing local economic cooperation, Berkeley also fought fascism.
 
Materialized Empathy, the Commonomics USA project I direct, assists local leaders and grassroots organizations in building economies of solidarity and security. Many other valuable organizations are engaged in similar efforts. Each local structure we help build makes us stronger opponents of hate and extremism. Commonomics USA also educates Americans about basic income (I’m hosting a live chat about it on March 4) and postal banking, national programs made necessary by the real state of the economy, a perspective miles outside of the Republicans’ ballpark.
 
Local activism overcomes internal splits too. Tired of your friends in the Sanders and Clinton camps yelling at each other on Facebook? Invite them all to demand public banks in their cities or to shape municipal ordinances supporting community agriculture. Suspicious of the white privilege of many progressives? Study the work of African-American and Latina/o-run cooperative economy projects and intentional communities around the country—and stand in solidarity with them. None of our political standpoints are complete, and none alone can fight the monsters American excess has created. Everyone has a candidate and everyone’s got blueprints. What we need is love—not just in our hearts, but in our policies and—especially—in our economies. That’s how we fight fascism.

In Case I Missed Anything

There is a chance I’ve left something out of this analysis and call to action. If so, unless it says we should be mean to each other, not live sustainably, or not create economically just institutions, it's compatible with what I’ve been trying, however imperfectly, to say. Join us. 
  
Matt Stannard is policy director at Commonomics USA and director of the Materialized Empathy project. He provides research and communications assistance to the Public Banking Institute, speaks and writes on economic justice, and is the author of Love and Production and The American Commons, both of which will be published in 2016