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Robert Kiyosaki, the best-selling author of the 1997 book "Rich Dad, Poor Dad," sounded the alarm about hyperinflation on a recent podcast with guest Andy Schectman. He stated the U.S. dollar would be devalued to the point it would no longer be the world reserve currency. “So, there’s gonna be quadrillions of dollars coming back, and the ramifications of that are possibly … hyperinflation,” he stated, “And this thing [U.S. dollar] goes to trash. This becomes toilet paper. This little dollar here. Because there’s so much of it out there.” Of course, Kiyosaki is no stranger to doom and gloom predictions. While he did release a popular book 25 years ago, he has since adopted a very negative view of the American economy and continues to predict its downfall. And while the economy is in a challenging position with high interest rates and inflation, like most Kiyosaki predictions, they have not come to fruition.

The term "fiscal aspects" is not defined anywhere in the Swiss order. Other passages, however, shed light [**30] on the Swiss court's intent. On page one of the (29-page) order, the Swiss court observed that Zurich authorities had opened two cases against Cuevas, one "because of financing illegal activities in narcotics trading," a second "for collection of wrongfully obtained capital gains."

The second prosecution, relating to taxes, provides the most obvious referent for the term "fiscal aspects." Such a construction of "fiscal aspects" (relating to taxes or financial penalties) is supported by the following central, but ambiguous passage of the extradition order:

But it is nonsense to find talismanic significance in the idea of taking money from the public as a whole. See Michelman, supra note 11, at 146-49 (arguing that within the liberal tradition Scalia's concession that general redistribution is permissible commits him to principles that justify affirmative welfare rights). Progressive taxes take money from some, high income earners, and transfer it through public assistance to others, low or no income earners. Indeed, the very definition of redistribution is to take from some to give to others. Taxes may be a good mechanism for redistribution because legislators may encounter difficulty in singling out one group for adverse, perhaps unfair, treatment. Justice Scalia is unconvincing, however, in his effort to demonstrate that the entire class of landlords is less likely to be unfairly singled out than, for example, the class of high income earners. See Note, Taking a Step Back: A Reconsideration of the Takings Test of Nollan v. California Coastal Commission, 102 HARV. L. REV. 448, 464 (1988) (challenging the claim that tax policy is more democratic than regulatory policy). In short, once redistribution becomes a permissible goal of government, the standard for unfair redistribution cannot be derived from mere allegations that the purpose of a statute is redistributional. See generally Rose, Mahon Reconstructed: Why the Takings Issue is Still a Muddle, 57 S. CAL. L. REV. 561 (1984) (characterizing the ambivalence of takings clause jurisprudence toward redistribution as the inevitable result of the tension within the American tradition between property as wealth and property as virtue).

I like that explanation and I use that in my class as a justification for what sometimes we call income redistribution. And basically the idea is this, can take something away from, I’m going to keep picking on tim cook today, i can take 100 away from tim cook and he doesn't hardly even notice and i can give it to somebody who's a starving student and they are just thrilled to have that extra hundred dollars and so Tim cook's not any sadder and the other person is much happier and collectively in society then we are happier overall. So and i think it's a good i think it's a good i think it's reasonable it certainly has limits but it's a reasonable way to think about the world. So you said you use that to explain income redistribution what's the difference what's the connection between income redistribution and progressivity? Well one connection is this so what you were talking about was just one side of the equation which is the government taking the income. The other side of the equation is…you have to you have to make the evil voice taking the income yeah okay so the government's gonna take your income and by the way um it took my income uh well i filed my taxes jeff was saying he filed his on saturday night i'm doing them saturday filed them today like half an hour ago okay so i i'm almost worse than you i started on saturday night i could not bear to finish i finished on sunday night fearing that something would come up that i would have to resolve on monday it turned out it was fine so i did file on late sunday night electronically. So the the government took all my money but they're not going to just take that money and burn it they're going to take that money and do something with it including possibly directly giving it to someone who doesn't have very much money and so that's where the redistribution part of it comes in. The government doesn't literally take only take from rich people they give, sometimes, to poor people. I would say they're pretty i mean as long as when you said it literally you said as long as they don't burn it as long as they don't burn it and as long as they're not taking rich people to just like shuffle things around and give back to rich people then they're the same thing, progressive, yeah.

Fiscal redistribution is defined as the reduction in income inequality, brought about by government via taxes and transfers. Their findings indicate that only in countries characterized as young democracies do elections exert a positive impact on fiscal redistribution. Moreover, their work suggests that the effect of elections is strongest in young democracies characterized by relatively higher political instability. Further details can be found at: Kammas P. and V. Sarantides (2015). Fiscal redistribution around elections when democracy is not “the only game in town” SERPS 2015019.

1 The Theory of Fiscal Redistribution: Key Analytical Insights

In this Handbook, “fiscal redistribution” refers to the process by which the state collects revenues from individuals and households (primarily through taxes) and spends these revenues on benefits (for example, cash transfers, price subsidies, and in-kind benefits such as education and health) intended for specific individuals and households. In so doing, the state changes the postfiscal income distribution and poverty rates that would have prevailed in the absence of fiscal policy. Because of behavioral responses and general equilibrium effects, fiscal policy can also change the prefiscal income distribution and poverty rates. While at this point the CEQ Assessments do not estimate the counterfactual prefiscal income with these second-round effects in place, it is important to note that the analytical insights presented here and in chapters 2 (Enami, Lustig, and Aranda), 3 (Enami), 4 (Higgins and Lustig), and 5 (Enami) apply to fiscally included income redistribution regardless of the method used to estimate its extent. That is, regardless of whether fiscal redistribution is calculated using run-of-the-mill fiscal incidence analysis, microsimulation methods, or partial or general equilibrium modeling, the theoretical results discussed below and in the next four chapters apply.

The third central concept is (income) redistribution. As Tullock argues, ‘‘redistribution is probably the most important function of most modern governments’’ (Tullock, 2013, p. 1). However, the level of redistribution and its cross-sectional variation cannot be modeled using only purely economic explanations, such as the level of inequality in a given society (see McCarty & Pontusson, 2009). Therefore, I focus on the question of how political processes and institutions, such as autocratic ruling strategies and the degree of incumbent party institutionalization, determine the level of redistribution and inequality. In this dissertation, redistribution is broadly defined as the transfer of resources from one person or group to another person or group (see also Albertus, 2015; Boadway & Keen, 2000; Solt, 2020; Tullock, 2013). More precisely, income or fiscal redistribution is defined as the transfer of resources via taxes and fiscal transfer policies from one person or group to another. By contrast, land redistribution —a second influential type of redistribution (Albertus, 2015) —is defined as land reform measures that lead to a reallocation of land properties from landed elites to the landed poor.10 In addition, income redistribution is also often conceptualized as the transfer of resources to the poor.

The present redistributive policy focus is on a particular type of government redistribution that may be called direct fiscal redistribution to the poor (hereafter DFRP). Fiscal redistribution refers here to redistribution of money and in-kind income among strata of households by means of both government spending and taxing (i.e., fiscal) activities. For example, increased generosity in public assistance payment levels and reliance upon progressive income as opposed to regressive sales taxes can provide positive fiscal redistribution. Direct fiscal redistribution refers to that part of such redistribution that can be accounted for in terms of government's relatively direct and immediate give-and-take of expenditures and taxes to and from income strata of households. Current evidence suggests that such redistribution is considerable in advanced capitalist political democracies, especially vis-à-vis the poor (e.g., Reynolds and Smolensky, 1977; Hicks and Swank, 1984b). During the 1970s DFRP apparently augmented the "pre-fisc" income share of poor households in the U.S. by over 100 percent (see Reynolds and Smolensky, 1977: 74 on the U.S.; and Hicks and Swank, 1984b on advanced capitalism).

Fiscal progressivity is affected by both the progressivity of taxes (lower λT) and transfers (higher λM). Fiscal redistribution requires that transfers are more progressive than taxes, i.e. the social cost of transfers needs to be less than the social benefit of transfers. Figure 4 shows the variation in tax and transfer progressivity across countries. While, on average, taxes reduce fiscal redistribution by around 56 percent (the ratio of the social cost of taxes, λT, to the social cost of transfers, λM), there is very little systematic relationship between the two. In some countries, such as Ireland and Belgium, high transfer progressivity is reinforced by high tax progressivity. In others, such as Hungary and Poland, low transfer progressivity is reinforced by low tax progressivity. In the Netherlands and Belgium, high transfer progressivity is offset by low tax progressivity, whereas in Portugal and Cyprus low transfer progressivity is offset by high tax progressivity.

As Australian economist, Peter Cooper, points out: In the present economic system, real resources are mobilized only on the say-so of the issuers or possessors of money, and only on their terms. No production, even for profit based on the exploitation of labor, takes place until finance is secured. It makes a great difference whether money is made available on our terms, by a democratically accountable currency-issuing government, or on the basis of private interests motivated narrowly by profit, facilitated by an unaccountable government. This highlights the need for fighting for a public banking and credit system, as a necessary part of a more accountable political regime. The fiat currency could and should be issued by a public authority as debt-free money. The current system of having money created by private banks as interest-bearing debt is unnecessary and dangerous. Even the industrialists and economists of the classical, “heroic” period of capitalism, the producers of things for profit (“Look at all the new, cheap and useful goods we have produced for you!”) thought that the proper role of banking and credit was to be a kind of service sector to the productive enterprises of the economy. Every society has understood the danger when that relationship is reversed. Because money is so important—the necessary conduit of value—in capitalist society, the tendency for it to become the focus of a primary profit-making activity is strong. The path to severe and inevitable crisis is paved when, instead of finance acting in the service of productivity, productive enterprises become pawns in financial enrichment schemes. This is the domination of financial capital over productive capital that classical capitalism shunned for the parasitism that it is, and that Lenin analyzed as the “highest [and “imperialist”] stage of capitalism.” It’s what contributed to our last financial crisis (as Michael Hudson has shown so persuasively), and its persistence makes inevitable the next one. Without careful management of debt and interest, and strict constraints on financial speculation and on financial institutions dominating the economy, the tendency toward the hegemony of finance capital becomes an irresistible force. Everything in our history and experience screams the need for public, debt-free money creation, and MMT makes the logic of it clear.

A city can’t consider itself prosperous when its poorest residents are unable to even afford the basics of housing, food and childcare. And no one should consider the economic recovery from the coronavirus pandemic a success until the gains in employment, income and social mobility are evenly distributed. By far, communities of color have suffered the most during this ongoing pandemic. Black workers are overrepresented in jobs that have been deemed essential during this crisis, yet they are among the hardest hit. The loss of life and the loss of jobs have completely upended neighborhoods that were already struggling to make ends meet, especially in expensive cities like New York, Los Angeles and San Francisco. Congress has offered some direct cash relief in the form of one-time payments and supplemental unemployment benefits during this crisis. They now seem poised to give more thanks to President Joe Biden, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi. While this is a good start, we need cash relief on a consistent basis for far more Americans. That’s why, in my bid to become New York’s next mayor, implementing the largest basic income program in the country and establishing a public bank – the People’s Bank – are among my top policy priorities. We need policies that will lead to a fair and robust recovery. Our initial basic income proposal is a $1 billion initiative that would give up to $5,000 annually, paid out every month, to the 500,000 poorest New Yorkers. As the city’s tax base recovers and as we secure private philanthropic commitments, those payouts will grow. This investment will help thousands of New Yorkers avoid situations that cost the city dearly in both human and economic terms. Fortunately, several other municipalities have already begun trial programs to understand the benefits of providing a basic income to its residents. For instance, Stockton, California recently completed a program that provided 125 residents with $500 a month for two years while another program of participating Black mothers in Jackson, Mississippi received $1,000 a month for one year. A report of the latter found that among the successes, the number of mothers that completed their GED jumped from 63% to 85%. andrew yang Andrew Yang announces candidacy for New York mayor with surprising endorsement Cash relief has taken off as a core way of combating poverty because the idea is as simple as it is effective. Giving people money leads to better outcomes for individuals and their families. According to the Stanford Basic Income Lab, which looked at different basic universal income programs globally, “Findings are generally positive that UBI-type programs alleviate poverty and improve health and education outcomes.” It also found that the “effects on labor market participation are minimal,” meaning people continued to work and not rely solely on the cash payments. Of course, a basic income program isn’t sufficient on its own. As mayor, I also plan to establish a People’s Bank in New York City that will help small businesses access affordable loans and New Yorkers access bank accounts. The bank would initially launch with a $100 million loan and will partner with local Community Development Financial Institutions (CDFIs), which focus on loans to low-income communities. I made a pledge to help 15,000 small businesses open in New York City, and we won’t achieve that unless we create an investment system that isn’t purely driven by profit and supports businesses that make New York such a dynamic economy. The bank will also help New Yorkers open accounts throughout the city. Right now, over 11% of households in New York have no bank account. The lack of bank accounts means the most vulnerable New Yorkers – including undocumented immigrants and individuals with experience in the criminal justice system – are forced to turn to check cashing and other alternative financial services, like payday lending, which often charge high interest rates and have unfair terms of repayment, that leave them in a growing and unending cycle of debt. Households that rely on such services can pay over $600 a year just to cash checks. That’s not a sustainable foundation for a broad-based recovery. Still, a public bank shouldn’t be the only place vulnerable New Yorkers can gain access to a legitimate bank account or financial services. That’s why US Representative Ritchie Torres of the Bronx and I recently called for financial institutions to stop denying immigrants and other vulnerable populations the opportunity to sign up for their offerings. 11 November 2020, Berlin: Empty tables and chairs stand in front of a restaurant on the street "Unter den Linden". Federal and state governments have decided on a partial lockdown for the month of November. Photo: Paul Zinken/dpa (Photo by Paul Zinken/picture alliance via Getty Images) Job guarantees and free money: 'Utopian' ideas tested in Europe as the pandemic gives governments a new role Taken together, I believe a basic income program and a public bank are essential ingredients for New York and other cities to recover quickly and equitably. But cities cannot be solely responsible for pursuing an anti-poverty agenda. During a time of severe budget restraints, we need the federal government to be a partner as well. Most importantly, President Biden and Vice President Kamala Harris must continue pursuing a rapid acceleration of vaccine distribution so that New York and other cities can ramp up inoculations, especially in communities of color. Any recovery hinges on near-universal inoculations. And of course, we also need Congress to pass President Biden’s $1.9 trillion American Rescue Plan to help struggling Americans, businesses and state and municipal budgets. I have no doubt New York and other cities will continue to be the bedrock of America’s economy. That means the mayors of our country’s urban areas have to set the tone for what our economic priorities will be. Cash relief and establishing a public bank are a great place to start.

The first radical option is to introduce sovereign money and a social dividend (Huber 2017). We must recall that allowing banks to create the vast majority of new money as debt is not a natural phenomenon, but a historical creation born of class and power relations that date back to the creation of the Bank of England (Di Muzio and Robbins 2016, p. 38ff). As a historical creation, this means we can create a new institution that serves the public better than current arrangements, while there are various proposals of how to organize sovereign money; at its base, it denies the power of commercial banks to create new money through legislation and empowers a quasi-independent public bank to issue new money as interest free credit to governments, businesses and individuals. Such a public body would still have to monitor for inflationary tendencies through a consumer price index, but would have a number of benefits for alleviating the worse scourges of poverty and inequality and may even promote worthwhile social and environmental goals. First, sovereign money would mean that governments do not have to borrow to spend on meaningful public projects that would be proposed during the election cycle. This would mean an end to deficits, the national debt and the bond market. Political parties vying for power will have to convince the democratic public of their spending priorities and, once elected, the quasi-independent public bank can issue interest-free credit to the treasury based on the government’s political mandate and budget. This has the further benefit of lessening taxes on everybody, leaving more income and wealth in the pockets of the people. Taxes can still be used to incentivize beneficial economic activities (e.g., renewable energy, sustainable agriculture, public transport) and disincentivize those activities deemed socially harmful (e.g., smoking, sugary meals, excessive fossil fuel use). Thus, taxation would be used as a social policy tool, not as a primary revenue generator. Second, national priorities should be set for how the quasi-independent public bank should issue credit to private businesses. This can include environmental and social goals such as the promotion of renewable energy, the production of sustainable and durable goods, increased regional resilience through the promotion of sustainable farming and agriculture, the creation of more public space for leisure and the provision of affordable public housing, to name just a few worthwhile goals. One chief benefit of business not going into debt is that the cost of interest will not be pushed on to consumers in the price of goods and services, thus reducing rather than inflating prices. Either way, crediting businesses should pass some sort of democratically decided test based on the relative merits of the projects for the public and future generations. Third, if we keep the capitalist accounting system of cost-plus-profit, we know that there will not be enough purchasing power in the economy to meet the outstanding prices of goods and services on the market. To overcome this structural gap, the quasi-independent public bank should issue a social dividend to all citizens of a certain democratically decided age.9 The monetary value of this credit should be tied to the productivity of the economy and will mean that citizens will not have to take on debt or save for the future to realize a reasonable standard of living. People can and will still work for an income and be able to save money, but the social dividend will likely mean that they will work at more meaningful jobs and can have more leisure time. Moreover, less work might help alleviate environmental stress and will drastically lessen economic inequality and eliminate poverty. Indeed, at a democratically decided age, individuals will be permitted to legally retire should they wish and receive a state credit that keeps them at a respectable standard of living.

Imagine harnessing our deposits to create the money we need to finally address inequality, disinvestment, and institutional racism across our city and state, all without sacrificing returns. How? A public bank is owned and operated by a state or local government, and works for local stakeholders. They can coordinate with state and local governments to finance things like affordable housing and public options for broadband and childcare. Most importantly, a public bank can help reverse the racial wealth gap by lending to Black and Brown families in search of inexpensive capital available mostly to white people. Banks are a critical part of a predatory and extractive eco-system that crushes workers and communities, and this must change now. When an individual deposits their paycheck into a checking or savings account, the bank keeps a fraction of the deposit in reserves and lends the rest out. This process repeats over and over, creating “new money” in the economy. The bank uses government deposits in the same way, but on a larger scale. Where these loans get made should be a matter of public concern. Instead of financing small businesses in Bronzeville or Albany Park, for example, billions of dollars in deposits have been used to finance private prisons, immigrant detention centers, oil pipelines, and private equity. Instead of lending to local stakeholders, banks are prioritizing the needs of distant shareholders. The same is true for our pension funds where Wall Street banks siphon off billions in management fees while simultaneously working to defund government through tax avoidance. Banks are a critical part of a predatory and extractive eco-system that crushes workers and communities, and this must change now. As the economic toll of the pandemic surfaced, Congress took action and passed the Coronavirus Aid, Relief and Economic Security Act, allocating hundreds of billions in loans to small businesses through the Paycheck Protection Program. Banks had the job of distributing the dollars to mom and pops across the country. Instead, the primary beneficiaries were big businesses and even enterprises connected to members of Congress. Investigative journalists found that big banks prioritized their biggest and most profitable customers for PPP loans, generating billions in origination fees. Overall, 82% of the $170 billion tax provision included in the CARES Act will benefit individuals making more than $1 million per year. Meanwhile, most small businesses owned by Black and Brown people were left out to dry. Many went out of business. Which bank did the best job in steering PPP money to small businesses? The nation’s first and only public bank: the Bank of North Dakota. Banks create money by using deposits to create new loans, and the loans create new deposits, and the cycle continues. The loans take form in mortgages, commercial paper, and government financing. The decision to extend or deny credit is an act of public policy. Credit flows impact tax revenues, population shifts, and even the climate. And so we ask: Does it make sense to privatize so much public policymaking power to private banks? Critics of public banking point to the Community Reinvestment Act, low-income housing tax credits, bank philanthropy, and opportunity zones as the most appropriate channels to invest in communities. The problem with these market-based tools is that they give banks the decision-making power on what and where to invest. Most banks do the bare minimum and often their investments or philanthropy are dwarfed by their business practices. For example, a recent WBEZ and City Bureau analysis found that between 2012 and 2018, banks lent out $57 billion for home purchases. Sixty-eight percent of the mortgages were in majority-white communities, while majority-Black communities got just 8% and majority-Latinx communities got just 8.7%. In other words, Black depositors financed the purchases of white homebuyers, an outflow of capital that can be likened to financing the racial wealth gap. We have plenty of hard work ahead of us to reverse the racial wealth gap in the post-pandemic economy. Here are some ideas that are financeable through public banking: ‘Baby’ bonds: The state and city can create investment accounts for newborns and let compound interest do the rest. This nest egg would be made available to the child at age 18 that can be used to attend post-secondary training, start a business, or buy a home. While there are federal baby bond proposals, Springfield and Chicago can seed accounts locally by in-sourcing state and city investment portfolios (including pensions) to public banks, saving hundreds of millions in fees. Just the savings in fees can finance a baby bond program that creates a real nest egg that can help close the racial wealth gap. Affordable mortgages: Banks have access to the Federal Reserve, opening up access to the same cheap money big banks can utilize. This access can help a public bank lend to prospective Black and Brown homeowners with non-predatory rates. Access to capital: Just 1% of American venture capital-backed founders are Black. This is racist, and our state and cities are losing out on new job creation and economic output. Public banks can ensure startup, growth, and acquisition capital is available to entrepreneurs in Black and Latinx communities. Worker cooperatives: There are thousands of light industrial and manufacturing firms owned by soon-to-be retiring baby boomers. Public banks can make acquisition capital available to worker cooperatives to purchase these businesses. Cannabis and reparative policies: The Illinois recreational cannabis industry is projected to grow into a $2 billion industry. A public bank can provide cannabis business revenue safe harbor while using the deposits to advance reparative investments in communities harmed by the war on drugs. These are just a few proposals to help drive a racially just economy post-COVID-19. Most importantly, each one of these ideas solves social problems and creates returns for local stakeholders. By using public money to create money locally, public banks can reverse decades of racist disinvestment. America is at an inflection point. We cannot return to the pre-COVID-19 economy. That economy — despite booming corporate profits and soaring stock prices — was using its invisible hand to choke the life out of Black and Brown communities. We don’t need more studies, investigative reports, or protests to know that private banks will not change. Public banks are not uncommon. Nearly 40% of banks globally are publicly owned. Germany and Japan use their public banks to finance transformative infrastructure. In the United States, Sen. Bernie Sanders and Sen. Elizabeth Warren support them. Last year, Gov. Phil Murphy of New Jersey issued an executive order to create a public bank implementation board and California Gov. Gavin Newsom signed a bill authorizing cities and counties to charter public banks. Too many people and communities have been victims of bank excess and extraction. Banking is a utility and must be treated as such. “Public problems require public solutions,” Felicia Wong of the think tank the Roosevelt Institute recently wrote. We cannot agree more. Illinois legislators can pass a bill allowing counties and cities to establish public banks, and Chicago can ask voters to amend the city’s charter to launch a public bank via referendum. Now is the time to establish public banks, and we don’t have a moment to waste.

Recently, more cities are looking at the creation of public banks as a potential solution. In 2019, the state of California passed legislation that would allow up to 10 cities or counties to create public banks. This legislation has moved several cities like Long Beach, San Francisco, and others to look at the possibilities. This momentum builds off the state-owned Bank of North Dakota (BND) – currently the only public bank operating in the US. BND prioritizes public access over profit and offers fair banking services to North Dakotans when private banks can’t or won’t. It does this through a partnership with other financial institutions and serving as the backstop for those loans that private banks don’t feel they can offer. In addition to supporting public banks, cities can play a key role connecting more BIPoC, and low-income residents, to financial services through established financial institutions that prioritize safe, affordable, and wealth-building financial products and services. Community Development Financial Institutions (CDFI) and credit unions are among them. How to do this? City leaders can connect with these institutions and incentivize them to operate in their community’s bank deserts. More than 80 communities around the country have established Bank On programs that connect residents to affordable options in participating financial institutions that offer safe accounts that meet a set of national criteria. Cities can also raise the profile of these consumer-focused financial institutions by sharing information about the products that they offer or leveraging their municipal loan fund to partner with a local CDFI to help their funds reach more local business owners. Cities can also support efforts to help preserve the legacy of Black banks and help improve economic conditions in communities they serve. It is important for local leaders to be aware of their city’s financial partners and what they do. Cities can conduct an impact analysis to determine how current financial services affect residents and how such services can improve the lives of BIPOC and low-income people, and as a result – the overall financial health of their municipality. A few questions to consider: How many business loans have financial institutions issued in your jurisdiction? What is the overall amount, and what is the mean loan size? What percentage of the financial institution’s lending is going to businesses of color within your jurisdiction (i.e. SBA 7(a), etc.)? Does the financial institution operate branches or ATMs within your jurisdiction and if so where are they located? For those operating ATMs what are their fees for non-customers? How recently did the financial institution complete an examination of their small-business lending practices to minority and businesses of color and what is their plan to address any obstacles found? What partnerships do they have with CDFIs operating within your jurisdiction? Do they offer a Bank On approved product that your residents can access? How many people within your community have this product? What Community Reinvestment Act (CRA) activities have they done within your jurisdiction and at what amounts? What is the ethnic and racial composition of their staff operating within your jurisdiction? What is the ethnic and racial composition of their senior leadership? Once you have the collective information you can then see how or if there is an opportunity to leverage your municipal financial activities in a way to build a stronger community for all of your residents. Now more than ever, city leaders have an opportunity to alleviate unfair and unjust economic conditions that have resulted from years of institutional and structural racism, and an opportunity to build wealth in Black, Indigenous, and Communities of Color. A city’s financial security depends on the financial security of all its residents – through partnerships with community-oriented financial institutions and innovative strategies such as public banking – equitable financial inclusion can become a reality.

The MMT economists are chomping at the bit to prove them wrong, and they are joined by advocates of the public banking movement, led by Ellen Brown, author of Web of Debt. The state bank of North Dakota offers a model , since 1916, of how banks can serve the public interest through times of economic boom and bust. Their well documented success is now being studied for potential replication in a number of cities and states, including California. State Bank of North Dakota "Values based banking" If a state bank can work alongside private sector banks, imagine how much greater the impact might be if the Federal government, the sovereign issuer of currency, could begin to increase public investments in developing renewable energy, infrastructure improvements, and employment programs? These investments would be similar to recent stimulus packages proposed under President Obama during the Great Recession, but they could be implemented on a much larger scale and could be publicly financed without creating funds from debt to be paid back with interest. Franklin Roosevelt’s New Deal offers a somewhat similar model, in that the Federal Reserve was used to create low interest loans for small farmers and business owners during the Great Depression. Many MMT economists offer what they call a Jobs Guarantee (JG) program designed to address the problem of poverty directly and, indirectly, the extremes of income inequality that we are now experiencing in the US and around the world. The JG program offered by MMT economists differs from most Federal programs that are provided by government agencies and usually focus on job training. modern_money_Job_Guarantee MMT style JG proposals are funded Federally but offered locally through the nonprofit sector. The economy is divided into the private sector, public or government agency sector, and the nonprofit sector. By design, the JG proposals kick in only when the private and public sectors are not able to provide jobs for those who are willing and able to work. Nonprofit organizations are focused on community based needs and have the capacity to hire but lack the funds to do so. When the unemployment rate (including those who are underemployed and have given up their job search) rises above a certain level (4% is typical) then Federal funds are made available to nonprofits on an application basis. When private sector employment expands businesses can hire from the public and nonprofit labor markets. The nonprofit sector is not small or negligible in relation to the overall economy. Roughly 1.6 million nonprofits account for 11.4 million jobs, 10.3 percent of all private sector employment, and contribute about $880 billion dollars to the economy, or about 5.5% of G.D.P. Building the capacity of these organizations to innovate, develop social enterprises, and increase services where needs are critical is a strategy that is attractive across the political and ideological spectrum. Note that the JG program funds are used to employ individuals, not train them in the hope that private sector companies will hire them after a new skill is learned. Inspired by the work of Hyman Minsky, who argued, during Lyndon Johnson’s Great Society programs, that providing a job with a living wage, regardless of skill level, will address head on all the problems associated with poverty: crime, housing, diet-related health problems, drug and alcohol addictions, divorce rates, abortions, school dropout rates, etc. Surprisingly, net cost projections for JG programs, even when based upon hourly wages of $15, $18, and $21, are in the modest range of $7-800 billion dollars. While costing about the same as a government economic stimulus program, significant cost reductions can be anticipated as poverty rates decline. There will be less need for public sector social welfare programs that address the symptoms of poverty: crime, housing, health, etc. MMT economists and their fiscal policies, even more so when combined with public banking alternatives, offer the potential to address all aspects of the progressive agenda – poverty, rebuilding of our transportation infrastructure, transitioning to 100% clean energy, investing in neighborhoods that have been neglected for decades, cleaning up brown field sites, transforming our industrial food system and implementing agro-ecological practices that support carbon sequestration and policies designed to revitalize local, organic, farms serving local cities and towns.

An existing movement for environmental justice and a just transition from fossil fuels also prioritizes community control over the economic transition that must occur. Though not the only current on the larger left that needs to be addressed, it is notable that the Green New Deal (GND) program that the Justice Democrats and New Consensus have developed alongside Congressperson Alexandria Ocasio-Cortez prioritizes not only a jobs guarantee and expansion of worker rights and infrastructure jobs but also references indigenous sovereignty, builds power in excluded and front-line communities, and secures workers’ rights. This program builds in significant part on the work of the Green Party for a transformed financial and central banking sector. These demands emerge from a long theoretical and practical campaign against racial and social exclusion and the devastation and redlining of frontline communities. Those fights were in part against the legacy of the first New Deal that protected relatively well-off farmers and property owners while red-lining African-Americans, concentrating mining and polluting facilities, and placing people in areas vulnerable to rising tides and floods. The movements culminated in the New Left and Civil Rights’ movement for a federal job guarantee in the late 1960s and 1970s that has been reborn through the work of Economists Darrick Hamilton and Sandy Darity. Economists Pavlina Tcherneva, Stephanie Kelton, and Robert Hockett, who are associated with Modern Monetary Theory, are also among those who have provided a theoretical foundation for a reappraisal of monetary policy and expanded spending on programs such as a jobs guarantee and GND. A comparable movement for economic justice that includes advocates such as Kali Akuno from Cooperation Jackson has pledged meanwhile to ensure that community control of resources and economic democracy as well as an economic transition led by those who will be most affected by climate change and industrial transformation. They call on the left to redress the role of public institutions like the Bank of North Dakota in the displacement of people of color—ironically most vulnerable to climate change—to serve the purposes of extraction and dispossession by expropriation and speculation. For that reason, we have to build institutions that are democratic and as creative as the capitalist institutions that we have to challenge. Visions for Socialist Climate Finance and Development The fight over the Dakota Access Pipeline fed new life into an ongoing modern movement for divestment and new forms of public and private finance. From Seattle to New York City to Ireland, cities and other institutions have slowly responded to movements for pension divestment and new banking institutions by beginning to divest—in the face of opposition from conservatives and some unions—from equities invested in those companies and considering forms of public banking. But a move away from private investment only marks the beginning of a long inquiry into how a new economy should function. In an environment of growing austerity, monopoly capital, and continuing social exclusion, it is worth considering a range of public and social ownership vehicles. We should also consider how to avoid the disaster—the utter inadequacy and political unsustainability—of elite visions of carbon taxes that offer no benefits for working people in places as different as Australia and France. A network of institutions each solve distinct problems and appeal to different constituencies on the left but together articulate an ecosystem of institutions that could resolve problems of government finance and social investment necessary to combat twin crises of climate change and financialization. Pension Divestment and Reinvestment A simple strategy for ending reliance on fossil fuel energy has been divestment of pension assets and banking assets of cities, states, and universities and their reinvestment in green energy and infrastructure. This campaign, which is part moral and part designed to signal that future dirty energy investments will not be viable, has been adopted by environmental non-profits such as the 350.org non-profit associated with founder Bill McKibben. Today, some $8 trillion in equity investments have been divested from pension funds, banks, and entire nations’ investments. There has been significant debate about the efficacy of the campaign on equity prices given the incredible value of the assets at issue and the possibility that other investors will simply purchase the investments. Some advocates argue that there is a “carbon bubble” driven by declining prices for renewable energy and public opposition that will result in “stranded assets.” Others argue that the attention brought to the systemic entanglements is worth evaluating. The arguments about declining prices have not convinced, for instance, the New York State Comptroller or unions in New York or in California whose members’ retirement would be affected—likely with higher returns—by divestment. But falling asset prices and demand shifts are so dramatic that the prudent course of action is to begin now. New York City, for one, has moved to reinvest $4 billion of its pension fund divestment in funding clean energy investments that include windmills in the Rockaways, off the coast. A more radical solution along the lines of the Swedish Meidner Plan and contemporary state ownership from France to Brazil would involve state ownership of equities through pension funds or other ownership vehicles. Communitarian groups and formations have called for reinvestment of assets in not just dirty energy companies but the prison and military industries that will be directed by workers and communities in excluded and front-line communities such as those vulnerable to climate change. Public Banking Institutions There are growing campaigns for what has gained growing support: public banking on the municipal and state level. A resolution in favor of municipal public banking was referred to National Political Committee the at the 2017 DSA Convention and Chapters including Seattle, Los Angeles, San Francisco, and New York have joined campaigns. Though these have not yet been successful and the Los Angeles Campaign was defeated in a 2018 municipal referendum, interest continues growing. In California, Michigan, New Hampshire, Washington and New Jersey. Chicago, and San Francisco the public bank model has become popular for what it might foster in infrastructure and technological development, social spending, an alternative to diminishing tax returns, and even the growth of the marijuana industry. The evidence and studies suggest just how effective these public banks have been on the municipal and state level in achieving goals that are not possible through market funding or structures. The Bank of North Dakota presents one model of how a municipal or state public bank could be funded and governed but there are several visions for providing investment and commercial banking. But a system of local development banks in Germany and China have helped fund green energy and infrastructure. If supported through pension investments, tax receipts, and other existing resources, they may be able to fund social welfare expansion through worker and community cooperatives. The need to maintain solvency through loans with limited credit risk and adequate returns as well as bonds may require their core function to be the extension of consumer and commercial loans alongside the development of large-scale state enterprises and funding research and development. Just as important is that the governance of the system not mimic existing state institutions with a high degree of autonomy or corporatization, such as the Federal Reserve and Regional Banks. If public banks are governed by local community boards or elected boards, perhaps with subsidiary organization on the city, county, or even neighborhood level, it would be more likely to avoid problems with pollution, extraction, and environmental racism. In partnership with local institutions such as schools, government agencies, and worker and community cooperatives, public banks can even help sustain a decommodified local economy that features local and worker control of key institutions alongside government institutions. This model is often referred to as the Cleveland or Preston Model for governance of public institutions.

What will that entail? Federal job guarantee. What will that entail? A right to health insurance. What will that entail? A right to the finance. We need to think about public banking, where people who are low-income are not at the whim of a finance system but have access to an adequate account, have access to some liquidity so that when there’s a short-term fall in their ability to pay their bills, they can get credit at reasonable terms. Have access to credit more generally so that they can purchase an asset that will appreciate over their lives. This is the society that I think would be a more perfect evolution in American history. And then I’ll say this and then I’ll stop for a while, I know I’m rambling on: We need to be race-conscious when we do this. We need to ensure that in this iteration of an economic Bill of Rights, in this iteration that’s reacting to corporate power that has gone out of control, similar to how the Gilded Age, we had a consolidation of corporate power that nearly collapsed the American economy, and in response we had the New Deal, we need to make sure in this iteration of a New Deal, in this iteration of an economic bill of rights, that we are intentionally racially inclusive.

Within a more stable financial framework, the state can manage credit in a variety of ways. Direct credit controls became unfashionable in the era of ‘efficient markets’. Yet incentives (e.g. placing government deposits) and disincentives (e.g. portfolio restrictions) can be effective in steering credit to the most productive investment opportunities. Governments can achieve this even more directly by setting up their own development banks, and by engaging central banks, which have more space than is sometimes envisaged, to resume their traditional role of creating and guiding credit to the areas of the economy where it is needed most. Central banks should fully support green bond issuing and green finance by public banks and governments, including by acting as buyer of last resort. Doing so will mean facing up to the “tragedy of the horizon”, realigning the narrow and short-term focus of much monetary and financial policymaking (and modelling) with the long-term adaptation and mitigation challenges linked to climate change. The recent establishment of the Network for Greening the Financial System shows that some central bankers are starting to respond to the risks of climate change, with some members already offering loans at below market rates to financial institutions to support green lending. Reforms must have a global dimension The IMF should be tasked with reducing speculative financial flows and augmenting stable capital flows in support of productive, low-carbon investments, including through the monitoring and elimination of illicit financial flows. Policy coordination will also be essential to resolve trade-offs between growth targets, financial stability and environment protection, and to prevent national policy actions that could trigger a regulatory race to the bottom. For many developing economies, the pressures from servicing their external debts limits their mobilising resources for productive investment; and when environmental disaster strikes – as it did recently in Southeast Africa – any hope of meeting the Sustainable Development Goals by 2030 is extinguished. A multilateral mechanism for restructuring sovereign debt is therefore integral to meeting the investment demands of a Global Green New Deal. Development banks across the world, at the national and global levels, will need to work together to help countries identify and finance low-carbon, high-productivity activities and design appropriate industrial policies, to scale up their resources in sustainable infrastructure, and to support a just transition for workers and communities. The required capital injection for these banks could come from recovered illicit financial flows, including a clampdown on tax avoidance by transnational corporations and high-wealth individuals. Seventy-five years ago at Bretton Woods, bold thinking animated the discussions around establishing a multilateral system that would extend the new deal to the international economy. This is needed again now to combine the desire of prosperity for all with a determined commitment to heal the planet.

In terms of finance, we need the huge fiscal powers of the state — powers demonstrated by successive unprecedented governmental responses to the 2008 financial crisis and COVID-19 — to be focused on the green transition. This time around we cannot just inject the system with liquidity; finance must be directed towards creating a sustainable economy — changing old industries such as steel and cement, and investing in green technologies and renewable energy. This must occur through an aligned set of policies and a range of mechanisms including innovation agencies, procurement and patient long-term finance provided through public development banks. Ambitious policies need to be structured to ‘crowd in’ private investors, with conditionalities attached to ensure the result is truly inclusive and sustainable. A new social contract is required. Specifically, green conditionalities need to be built into public–private partnerships, public procurement contracts and bailout deals. A good example of the state taking the initiative and leading the green economy agenda is Germany’s state-owned development bank, KfW, which offers loans to the steel industry that include conditions to reduce carbon content and emissions. The French and Dutch governments’ COVID-19 bailouts for their national airline carriers, Air France and KLM, were made conditional on planes reducing emissions per passenger and cutting domestic flights in favour of rail travel — by 40% in France. But such one-off deals need to be rolled out across multiple markets — they should be normalized in both good times and bad. New metrics that measure commitments to decarbonization need to be internalized into markets so that investors and regulators can mandate companies to report the price of carbon they assume in their strategic planning. Shareholder value just doesn’t cut it anymore. The Green New Deal needs to radically transform capitalism — if it is to be saved from itself, and us from it. The only way to do this is through reorienting the economy around mission thinking. This means redesigning financial systems, public–private partnerships and public policy to align with the Sustainable Development Goals. Only then will we build a more innovative, sustainable and resilient economy, capable of meeting the climate challenge, rather than reacting to one crisis after another.

The world has a handful of years to act on the climate emergency. The UK is keen to be seen as a leader on the global stage, but is way off pace at home. The UK government is committed to delivering ​‘net zero’ emissions by 2050, but Labour and the Green Party have already pledged to bring this date forward to 2030. A programme like the Green New Deal is essential to marry radical climate action with social justice and the rebalancing of the economy. When wars need to be fought, or banks bailed out, governments do not hesitate to find the money. The government’s total annual spending is around 38% of GDP per year. Spending on the climate emergency each year only needs to increase to 2% of GDP in the short term, ramping up to 5% to deliver change at pace. Former Chancellor Philip Hammond attempted to criticise the new ​‘net zero by 2050’ target by saying that it would cost ​“more than £1 trillion”. This was a one-sided estimate that ignored the multitude of jobs, innovation and resilience it would unlock – and which in any event represents only 1.5% of GDP over that period. Governments can borrow very cheaply; the money they have available to spend can be increased by the things they spend money on, through higher tax receipts; and they can if needed rely on central banks for help. Provided their spending supports productive investment – the cornerstone of the Green New Deal – any arguments against borrowing are based on political ideology rather than economic fact. This pamphlet sets out five of the ways we should fund the Green New Deal: Public borrowing Multipliers: valuing future benefits Taxing those most responsible Re-directing dirty subsidies Transforming the Bank of England PUBLIC INVESTMENT DRIVING PRIVATE FINANCE The Green New Deal must be led by democratic choices. This requires greater state involvement and a much bigger role for direct government investment. That certainly does not mean that there is no role for the private sector in delivering the Green New Deal – far from it. The Green New Deal’s headline ambitions and determination to guide innovation and investment towards a clean and fair economy will help provide the certainty to private investors that they have been lacking after many years of half-hearted government climate policy.