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Public Banks: helping workers by helping people

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Assets will be even more dangerously concentrated in a banking system that already fails in its basic function: the efficient distribution of capital and credit into the productive economy.

Through the 1980s the finance industry accounted for no more than 16 percent of U.S. domestic profits. By 2008 that figure had more than doubled to 40 percent. Financial "products" which create few jobs are crowding out the investment in providing goods and services, which does create jobs.

A network of American pubic banks will dramatically alter the banking landscape. As public banks are established, all the tax revenues and assets of the chartering government can be deposited in its bank, instead of on Wall Street.

And as credit creation is decentralized and economic development is locally funded and locally directed, as prosperity is once again broadly shared, so too will be political power.

Main Street or Wall Street. That's the choice.

This is a task vital to our democracy, and a historic opportunity for unions to bring to the battle something unions still have plenty of -- money.

It is in the pension funds.

For example, examining the public employee pension funds described in the Consolidated Annual Financial Report (CAFR) of the Commonwealth of Pennsylvania, and reviewing other published analyses, we discover that while these pension funds need returns of above 8 percent to keep abreast of future liabilities, they are earning only about 4 percent, or less.

And at a substantial cost paid in fees to advisors and fund managers.

Not only that, but a significant portion of these pension funds, collected from the paychecks of union members, is not invested in Pennsylvania, and not even in the United States. That is indicated in a footnote to the CAFR that describes how the funds manage the risk of investments in more than 30 foreign currencies!

No doubt, a thorough examination of pension funds across the United States would uncover many other examples of how contributions from the paychecks of union members to their pension funds are being exported, along with their jobs.

The public Bank of North Dakota is consistently returning 17 percent to 25 percent on equity. This suggests that as public banks are created, a union equity position, supported by some percentage of the pension funds would be a prudent and profitable investment.

But more importantly, if unions are seen to drive a broad, economic recovery through their investment in pubic banks, unions will make a lot of new friends.

This is what AFL CIO President, Richard Trumka's grandfather was telling him, those many years ago: "If you want to help workers, you first need to help people."

This is the kind of new thinking for the labor movement outlined in Sarah Jaffe's article on AlterNet, "Six Ways to Juice Up the Labor Movement."

In this collection of essays, Stephen Lerner, architect of the Justice for Janitors Campaign wrote:  "We need bargaining not to just be about workers, but what's good for the community, so that we're bargaining for broader issues, especially in the public sector. So that it's not bargaining for the few, it's bargaining for the many."

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Author of the forthcoming novel "Pursuits of Happiness," a director of the Public Banking Institute and chairman of the Pennsylvania Project. Mike is an international transportation and logisics executive with broad experience in U.S. government and (more...)

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Union pension funds need to be invested in the U.S... by Mike Krauss on Friday, Jan 11, 2013 at 1:41:15 PM
Public banks and unions... by Mike Krauss on Friday, Jan 11, 2013 at 4:20:29 PM
Banking systems like that in North Dakota is the e... by Steven G. Erickson on Saturday, Jan 12, 2013 at 12:09:39 PM
However, at this point the idea is being used as a... by Paul Repstock on Saturday, Jan 12, 2013 at 12:37:18 PM
Local governments (counties and cities) have the c... by Mike Krauss on Saturday, Jan 12, 2013 at 1:09:06 PM
Just do not naively assume that it will be a smoot... by Paul Repstock on Saturday, Jan 12, 2013 at 1:27:03 PM
Public banks at the state, county or municipal le... by Michael Dewey on Saturday, Jan 12, 2013 at 1:02:47 PM
Have felt for years Unions Pensions could fund, my... by Michael Dewey on Saturday, Jan 12, 2013 at 1:12:30 PM
Little progress has been made to make the changes ... by E. J. N. on Saturday, Jan 12, 2013 at 2:45:39 PM
Exactly, pubic banks are a necessary and counter c... by Mike Krauss on Saturday, Jan 12, 2013 at 4:09:33 PM
what is there that keeps the big bankers from simp... by zon moy on Saturday, Jan 12, 2013 at 4:00:19 PM
A public bank takes no private funds. It is govern... by Mike Krauss on Saturday, Jan 12, 2013 at 4:07:17 PM
Some civil servants are great people. But, account... by Paul Repstock on Saturday, Jan 12, 2013 at 5:30:55 PM
part of the government, who holds them accountable... by zon moy on Saturday, Jan 12, 2013 at 6:22:52 PM
China still makes a show of accountability. Once i... by Paul Repstock on Saturday, Jan 12, 2013 at 6:38:52 PM
We will see a great improvement with nation-wide p... by Tom LaMar on Saturday, Jan 12, 2013 at 9:06:33 PM
But!!! It is not in the government's aim to reduce... by Paul Repstock on Saturday, Jan 12, 2013 at 9:39:01 PM
Right. First step, jail the banksters. Then, take ... by Mike Krauss on Saturday, Jan 12, 2013 at 10:34:44 PM
From the Public Banking Institute: Public Banking ... by Deborah Dills on Saturday, Jan 12, 2013 at 10:21:35 PM
 Mike Krauss The Pennsylvania Project In... by Jim Miller on Wednesday, Jan 16, 2013 at 9:55:11 PM