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How to Liberate America from Wall Street Rule
How is it that our nation is awash in money, but too broke to provide jobs and services?
The dominant story of the current political debate is that the government is broke. We can’t afford to pay for public services, put people to work, or service the public debt. Yet as a nation, we are awash in money. A defective system of money, banking, and finance just puts it in the wrong places.
(Image by Beverly & Pack)
Raising taxes on the rich and implementing financial reforms are essential elements of the solution to our seemingly intractable fiscal and economic crisis. Yet proposals currently on the table fall far short of the need.
A newly released report of the New Economy Working Group, coordinated by the Institute for Policy Studies in Washington, DC, goes beyond the current debate to call for a deep restructuring of the institutions to which we as a society give the power to create and allocate money. How to Liberate America from Wall Street Rule spells out the steps required to rebuild a system of community-based and accountable institutions devoted to financing productive activities that create good jobs for Americans and generate real community wealth.
Over the past 30 years, virtually all the benefit of U.S. economic growth has gone to the richest 1 percent of Americans. Effective tax rates for the very rich are at historic lows and many of the most profitable corporations pay no taxes at all.
Despite the financial crash of 2008, the financial assets of America’s billionaires and the idle cash of the most profitable corporations are now at historic highs. Their biggest challenge is figuring out where to park all their cash.
Unfortunately, most of those who hold the cash and the corporations they control have lost interest in long-term investments that build and expand strong enterprises. The substantial majority of trades in financial markets are made by high-speed computers in securities held for fractions of a second. Business pundits still refer to this trading as investment. It bears no resemblance, however, to the investment required to put people to work rebuilding a strong America.
Corporations are using their stores of cash primarily to buy back their own stock, acquire control of other companies, invest in off-shoring yet more American jobs, and pay generous dividends to shareholders and outsized bonuses to management.
It was not always so. In response to the Great Depression, our country enacted financial reforms that put in place a system of money, banking, and investment based on community banks, mutual savings and loans, and credit unions. These institutions provided financial services to local Main Street economies that employed Americans to produce and trade real goods and services in response to community needs and opportunities.
This system, which Wall Street interests dismiss as quaint and antiquated, financed the U.S. victory in World War II, the creation of a strong American middle class, an unprecedented period of economic stability and prosperity, and the investments that made America the world’s undisputed industrial and technological leader.
In the 1970’s Wall Street interests began pushing a deregulation agenda that led to a transfer of financial power from Main Street to Wall Street. Wall Street’s mega-banks lost interest in real investment and developed a new business model. They now specialize in charging excessive fees and usurious interest rates, providing leverage to speculators, speculating for their own accounts, luring the unwary into mortgages they cannot afford, bundling junk mortgages to sell them as triple-A securities, betting against the clients to whom they sell the overrated securities, extracting subsidies and bailouts from government, laundering money from drug and arms traders, and offshoring their profits to avoid taxes.
The consequences include the erosion of the middle class, an extreme concentration of wealth and power, a costly financial collapse, persistent high unemployment, housing foreclosures, collapsing environmental systems, the hollowing out of U.S. industrial, technological, and research capacity, huge public and international trade deficits, and the corruption of our political institutions.
Wall Street profited at every step and declared its experiment with deregulation and tax cuts for the wealthy a great success. It now argues for extending the same measures even further.
How to Liberate America from Wall Street Rule spells out details of a six-part policy agenda to rebuild a sensible system of community-based and accountable financial services institutions.
- Break up the mega-banks and implement tax and regulatory policies that favor community financial institutions, with a preference for those organized as cooperatives or as for-profits owned by nonprofit foundations.
- Establish state-owned partnership banks in each of the 50 states, patterned after the Bank of North Dakota. These would serve as depositories for state financial assets to use in partnership with community financial institutions to fund local farms and businesses.
- Restructure the Federal Reserve to function under strict standards of transparency and public scrutiny, with General Accounting Office audits and Congressional oversight.
- Direct all new money created by the Federal Reserve to a Federal Recovery and Reconstruction Bank rather than the current practice of directing it as a subsidy to Wall Street banks. The FRRB would have a mandate to fund essential green infrastructure projects as designated by Congress.
- Rewrite international trade and investment rules to support national ownership, economic self-reliance, and economic self-determination.
- Implement appropriate regulatory and fiscal measures to secure the integrity of financial markets and the money/banking system.
How to Liberate America from Wall Street Rule is the product of extended discussions among representatives of a diverse group of organizations committed to deepening and reframing the conversation on financial reform to focus attention on the serious financial system restructuring required to build a strong new American economy adequate to the social and environmental challenges of the 21st century. It may be freely shared, reproduced and distributed with appropriate citations.
Read the report: How to Liberate America from Wall Street Rule
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82 Comments so far
Show AllGreat ideas - several of these have been floated previously. It would be easier to implement them once the current crop of perpetrators are hunted down, tried, convicted, and locked up - using the same Federal minimum sentence guidelines currently imposed on "common" criminals who don't have the resources for long court battles. Of course, with most of the Bush administration US Attorneys still on the job, nothing like will ever happen. The current administration, and those to follow, have no incentive to make such changes.
With a goal of being the first politician in history to have a billion dollar war chest for his 2012 campaign (the kind of money that only Wall Street can provide), Obama has a mega incentive to continue to shower Wall Street with ever expanding corporate welfare and deregulation/decriminalization.
I've been thinking about that billion bucks Obama plans to spend.
What if he is defeated?
Might that event -however unlikely- discredit the Biggest Spender Wins mentality a bit?
hey, Matti!
the false Biggest Spender Wins mentality is a problem, but will fall if we discredit the larger false mentality: Voting Matters...
this one is tough, as Americans base their society on voting...
if voting is fake, then so is their society...
hmmm...
If we could just figure out how to get rid of Wall Street's two subsidiaries... the Democratic Party and the Republican Party, the ever expanding control of government by Wall Street could start being reversed.
I don't think we have to get rid of the two corporate political parties. Right wing greedy bastards have their right to be heard. The problem now is that these are the only 'viable' political parties and so many people think our only choice is to figure out which one is the less bad---we know they are both bad. We need to break the two party strangle hold on our electoral system so that we have more than two choices.
This article said that the rich have so much money they just more off shore, buy up other competing businesses and give them selves big salaries and bonuses---but not mentioned is their other use of their great wealth. They give 'donations' to our elected officials to buy their souls and any ethics or morals they may have had in order to buy the government.
Suggestions were made on how to control the Federal Reserve system but the one thing that must be done is to REPEAL THE FEDERAL RESERVE ACT OF 1913. Our Constitution states that the monetary system of our nation must be under the control of the Congress---not a cabal of private for profit banksters.
ray, according to Frank Zappa, politics is the entertainment branch of industry. How do we rid ourselves of these smiling puppets? I'd suggest starting with crushing the media sources that cast the lies into the civic pond.
If a politician told a lie in the woods
and no one was there to hear it .....
Great idea but impossible to implement under our current plutocracy. Because almost every single politician in D.C. (...and at the State level!) are bought and paid for by the same institutions you wish to regulate, the possibility of implementing this are about the same as getting Congress to approve replacing the U.S. Constitution with Karl Marx's Communist Manifesto.
Never, never will happen. A fairy tale. How do you liberate America from Wall Street greed? You cannot legislate morals!
“The consequences include the erosion of the middle class, an extreme concentration of wealth and power, a costly financial collapse, persistent high unemployment, housing foreclosures, collapsing environmental systems, the hollowing out of U.S. industrial, technological, and research capacity, huge public and international trade deficits, and the corruption of our political institutions.”
These are the direct consequenses of Capitalism. You listed six rules to liberate us from Wall Street. One rule would do – change to Socialism. Allow the workers to own the means of production. They can be the stockholders – at least we will know that they’re not just sitting on their asses collecting dividend checks like these offensive oligarchs.
Capitalism has the same effect that gambling addicts experience. Making money out of money gives them such a thrill and attitude of superiority. And we allow that attitude because we admire Capitalism. Why? It’s usuary, it’s extractive, it’s rapacious, and it’s exploitative. Unless very, very heavily regulated Capitalism has no redeaming qualities.
The American value is supposed to be that the harder you worked the more you were rewarded. That doesn’t happen under Capitalism. Instead, your hard work translates into more profit for the “investors” that essentially own the workers. Labor law today still refers to “the Master-Servant Relationship” in employment.
We need to eliminate the Federal Reserve altogether and go back to the Treasury/U.S. Mint printing our money without having to pay the banksters a fee for the privilege of using our own money. Capitalism is a racket. One where the deck will always be stacked against the worker.
If we had Socialism instead of Capitalism the more than 42,000 factories that were shipped overseas would not have happened. Worker/owners would not have allowed their plants to shut down. When there are only a few “investors”, then they are the ones who call all the shots. They get to decide where they want to spend their money, without regard for the needs of society. Their need is only to create profit. How immoral is that?
So how many of you Liberals/Progressives still like to call yourself a Capitalist? If you care about society you can’t be both.
Socialism is the only way to leverage our government away from the yolk of Capitalism.
Right on, PEA
Worker control socialism is the only way out. Even if we enacted the capitalist reforms of the New Deal, or those that Korten is now advocating, history shows that if you leave corporations in the hands of the capitalists, they will claw their way back and overthrow the reforms. It's only a matter of time.
One very good sign is that the steel workers' union has made an agreement with the Mondragon workers' co-ops of Spain to try to promote co-ops in the US. If unions advocate worker ownership and control, that will be a good start on the road to socialism.
Right on, PEA
Worker control socialism is the only way out. Even if we enacted the capitalist reforms of the New Deal, or those that Korten is now advocating, history shows that if you leave corporations in the hands of the capitalists, they will claw their way back and overthrow the reforms. It's only a matter of time.
One very good sign is that the steel workers' union has made an agreement with the Mondragon workers' co-ops of Spain to try to promote co-ops in the US. If unions advocate worker ownership and control, that will be a good start on the road to socialism.
Very true, we cannot legislate morals. But we can legislate _behavior_, and that's all that's required.
The scum can be as greedy and anti-social as they like -- as long as they keep their pathology to themselves.
Mr. Korten at least provides viable ideas. Unfortunately, since Wall Street owns D.C., none of it can happen without a massive uprising. But the American sheeple seem resigned to their lot, so long as they can eat cheap corporate food, drink corporate beer, and cheer on the troops, as they grow in size in proportion to the expansion of the empire.
I would add part one to Mr. Kortens' policies.
One that every single person can accomplish all by themselves:
1. Begin to see that the people who are at the apex of our corrupt systems are criminals intent upon a) starting wars that kill innocent people, b) stealing the resources and wealth of the common person and c) destroying our environment on Earth and thus destroying the ability for humanity to survive.
Only by first correctly seeing who we are dealing with will people mentally get themselves in the "place they need to be".
When one crosses this bridge, one begins to become immune to the propaganda that pervades our society and can see that all the words and discussions and theatrics are nothing more than smoke, so that our leaders can continue to a) kill innocent people b) steal people's resources and c) destroy our planet for their short-term gains.
So true. Even in this article you see part of the solution as "tax the rich". Wrong wording, wrong mindset. "Make those who have benefitted the most from the others hard work pay their fair share".
You got it. They are lying, thieving, planet destroying murderers.
I agree, polycarpe!
We must realize the evil which persists in our present institutions and refuse, at least in our minds, to be a part of it.
Let's see...
Team A: global media baron who allows staff to hack dead kids phones to make money to further his political agenda.
Team B: A bunch of armchair wonks writing policy papers and agendas.
Who do you think will win?
Tax the rich? That's funny. We forget that the rich have names and they all work in Washington. Asking them to tax themselves is ridiculous. We have the power as people to tax the rich without any legislation. No weapons or protests are needed.
Simply, we stop paying them, the bank , the credit cards, the upside down mortgages. Stop buying from polluters, polluters are always rich. Quit buying globally, global is a word brought to you buy the super rich like World Bank and The WTO. Start buying locally, pay cash, trade services, grow your own food, walk or ride a bike, re-use, share, live simply. These are all ways to tax the rich, we simply need more people to act and cause real change.
Nothing will change unless we drive a wooden stake through the heart of corporate "personhood" without benefit of clergy. We should also amputate the hand of those elected officials taking corporate bribes.
"... and pay generous dividends to shareholders"
Often even that slightly more democratic result is false. If you follow the earnings vs. dividends of a company like Exxon, you see that much higher earnings usually result in only modest increases or no increases in dividends. Executive pay is another matter ...
Good plan. What's the plan to implement it? That's the problem. Obama is losing us Social Security and will wreck what ever is left of the pathetic Democratic party. Who else can get into office with all the money in campaigns? This plan does not mention Citizens United which needs to be overturned. Until we have enough power to implement any of this is just a useless intellectual exercise.
To say "Obama is losing us Social Security" implies that he is looking the other way and somehow failing to react as others destroy Social Security.
The reality is that no politician has ever been more proactive than Obama in systematically destroying Social Security.
Good ideas, but until you get rid of the private money in our elections, NONE of this is even possible. Without clean and fair elections, nothing else CAN change. A system of publicly financed elections, with REAL penalties for those who break those laws is absolutely necessary before anything else has a shot at all.
It's that "loony left" again. Here I was athinking that Brit Neil Kinnock and at least Tony Blair got rid of all them even in that "terrible UK" or British state and now this. What are "good puritan, green back dollar worshipping Amurkan people" going to do? What "is the answer"? Michelle Bachman says "she's on the job." She'd better not say that in London nor Glasgow or some might have themselves a reall good laugh. Those "terrible Brits" just have "no respect for Amurkan institutions."
"Good plan", "viable ideas", these are comments on David Korten's article. No they are not. Korten's ideas bad ideas. They are bad ideas because they won't work. Korten is a liberal - when liberalism is dead. He's also a capitalist (look at his MBA). He wants to reform a system that won't allow reform. His prescriptions represent a fantasy. Don't buy into them.
Korten is to capitalism as John Nichols is to the Democratic Party. They both want to bring us back into the fold of ruling class control. In this sense his ideas are destructive as they keep from us taking the action we need to and therefore prolong the suffering of the most vulnerable among us.
People like David Korten keep us in the "hopey-changey" mindset when what we need is "I ain't gonna take it anymore" militancy.
Liberalism as we tend to think of it, and the strong middle class only existed from the end of WWII to the early 1970's or about 30 years.* Then the business class began its full frontal attack on working people that continues to this day. Its most important feature was not liberal leaders, but an organized and powerful working class and many massive grass-roots social movements. None of which we have currently.
New massive and powerful grass roots movements - independent of the duopoly - are what we need to build now. And this new mass movement needs to be looking beyond the life-sucking, species killing, unsustainable continuous growth forever nature of capitalism.
* The last president to actually enact liberal policies was NIXON!
RE: That movement, however, will not be started, entertained, debated, described, or the idea disseminated on any currently Main Stream Blogtopian blogs.
Progressive, liberal or "Main Stream" media organizations (they're all mainstream from a radical POV) will not originate or propagate the solutions we need because the solutions we need are radical or revolutionary ones. That's axiomatic.
It should be clear that you should look to radical (anti-capitalist) organizations for that. Join one now. You'll learn a lot from contact with other radicals. You can and should continue to debate progressives and work to shift their view to a more radical one, but do so as part of the growing strength of a radical network.
Nice couple of posts, Tom. Korten understands some of our major problems as a society, but his solutions are too academic, too new-agey, and too pacifist to work in the real world of dominantly oppressive, greedy, and destructive systems of steeply hierarchical power.
You're right on to advise getting out of the establishment box of liberalism, and instead physically engage in more radical groups in one's own community. To achieve long-term success in transforming our institutions and culture from its current devolutionary state to one that fully embraces social and economic justice and ecological sustainability, we must still figure out a way to organize and harness the people power from all of these "disparate radical groups", and work to unleash it as a force for solidarity and resistance in order to make effective demands to the established order. Without sufficient numbers acting in concert and with courage and discipline we have no possibility of success. And I'm afraid the consequences for failure could be catastrophic in the coming decades. Any thoughts or ideas on the point I'm making?
Nope, I am pretty much in agreement.
In solidarity,
That is absolutely true: Neither of the 2 parties offer hope.
The time for the progressive party is now with Sanders, Feingold and Kucinich (if the treats given to him on Airforce one don;t scare him anymore)
I've never understood what people see in Feingold. As far as I know, he's never _done_ anything useful.
Tom, maciek, cdresearch -- terrific posts! I admire folks who can still express themselves in hopeful ways and provide possibilities. I'm afraid I have lost that ability. I think we have to prepare ourselves for a society in complete collapse. It will not be pretty.
Having said that, there are a couple of other "solutions" that come to mind. First, somehow, someway get people to understand our money system, which is the greatest scam in human history. Second, support occupation of foreclosed homes -- wherever and whenever it happens. Third,support worker take-over of abandoned companies (a perfect example would have been at the GM factory in Janesville in my home state, Wisconsin).
Not gonna happen, but one can dream. Thanks again for your posts.
What an inspiring essay. Korten is on the right track of what is do-able under present circumstances. We can advance further from there (where he takes us). These ideas are getting stronger & stronger with each wave of repetition of them (like stroking a nail across a magnet). That is a VERY important process. Also as these ideas grow stronger, the "friedman-esque" ideas of the corporate/financier crime syndicate grows less convincing & weaker. Financial breakbown of their syndicate is very near.What we'll find out is that only the LEADERSHIP of the parties is captured. They won't be able to maintain "rank and file" amongst their members, even federally, let alone state and locally; too many of them are actually FROM the people, and THEY are starting to get bold enough to question the wisdom of the idiots at the top.
P.S. It might be the greater part of wisdom to allow (as Sun Tzu would say ) an "escape" for the enemy, so he can think to "live to fight another day"; thus the reform method of "saving capitalism from itself".
We need to liberate ourselves from more than Wall Street - please see:
Subhankar Banerjee:
“Another Kind of Fukushima?” asks Whistleblower Robert Gilkeson
Manysummits
=======
Korten at least shows us the "if only" path to a viable US/world. Yet, we should take polycarpe's teaching moment to heart: Until enough of us do, and teach others to do, and until enough of us start actually getting a THIRD PARTY going, Korten's agenda will remain "if only," as most other commenters realize and proclaim.
Polycarpe and many of us know--the THUGS have got us locked down in multiple dimensions. Will things get bad enough soon enough that enough people will energize a third party challenge? We have the leadership. We don't seem to have the PEOPLE able to say to themselves, "Yes, polycarpe is right, we are ruled by soulless thugs," and to act in the light of this truth.
Good ideas but the system is rigged. We're already under corporate control. Corporations along with their major shareholders and executives own the media and buy the politicians. And thanks to the Supreme Court they are now legally entitled to buy elections. How do you propose to implement your ideas?
Your thinking is correct here. The problem is that his list of "solutions" are merely "reforms" within a system that is unsustainable. As you rightly noted, all of our major institutions are corrupt. So no, David Korten has no "workable" plan to implement the ideas that he proposes, and even if he did they are not strong enough to right a sinking ship. We are the proverbial "boiling frog". We don't have as much time as we think to save a ship the size of the earth. We need to get going now on a radical shift from the status quo. Incremental policy changes within a corrupt body politic has no prayer of succeeding. The ordinary citizenry must organize en mass over the coming several years or things could very well begin to spiral dramatically out of control.
THE LOBBYIST REFORM ACT is overdue:
It would state that the number of lobbyist is limited to at most 100 (1 /senator or so)
That lobbyist shall represent ONLY the People of the United States
. Other intereests (Business, religious , foreign govts and entities) shall be not be able to hire lobbyist under US law.
Violations shall be felonies incurring at least 10 years in jail for the lobbyist and the elected official.
Assuming that more than 100 interests can be found in the people's interests, the lobbyists shall be randomly drawn every 5 years. No lobbyist shall hold office more than 10 years.
All gifts to elected officails directly or to their campaign not coming from the people and exceeding $5 shall be a felony with a minimum of 19 years in jail (A remedy to the recent supreme court decision...).
Rules for a 100% publicly funded elections shall be enacted
my jobless, childless, spinsterish & otherwise screwed friends from Spain, still say that Capitalism is the answer because Socialism stifles job creation, given that the entrepreneurs do not want to hire people who cannot be fired easily, so the rich do not want to risk their capital (they'd rather invest in a sweat shop in Honduras); I say: if you outsource jobs, your corporation has to be taxed as if it were a foreign corporation. The alternative to that solution, that the GOPies hate, is to adopt/adapt the German model of TREUHAND, whereby all business and economic decisions, whether hiring or outsourcing etc, are decided by a threesome —labor, government and the private sector— and must benefit all three or, if they are by force painful decisions, they hurt all three almost equally.
The Obama Basher are so anal. They cling so strongly to their negative solutions like Old Rumpled Ralph and just can't stop living in denial of politically reality.
The Democratic Party is theirs for the taking but they would rather just whine about how stupid everyone else and the how imperfect the darn system is.
We could have avoided Junior's wars, and ruinous taxbreaks altogether but the greatest morons of all supported Rumpled Ralph and handed off job to George W.
Now the country is in a pickle. The uber-right has siezed the Rupublican Party and the uber-left has abandoned the Democrats.
Meanwhile, Obama is doing a great deal to work the system as well as can be expected. Maybe the current struggle will not extent the debt limit. The country will be screwed for sure. The ideas are out there for necessary reform, that can lead to a future the country deserves. But the CD Obama Bashers only serve the Tea Party. They are too lazy to get out of their own depression to help. The have all the information but just can't get their heads out of their own behinds. That is because they are so anal. However, therapy and drugs are available!
Project much?
All I can say is that you have no idea what you're talking about.
I, too, would like to believe that the current dire state of affairs could be turned around by legislation using the avenues at hand. But as so many comments here make clear: How realistic is this? We are going to have to stand up and fight. OR: Are we going to continue to be the consumer pigs they turned us into, content to sit on the couch and stuff our faces with gmo-food and other killer products manufactured by them to destroy our health (after they've destroyed our livelihood) and let them then tell us "NO HEALTH CARE FOR YOU, PIGGY! And let's hope you die sooner rather than later because there's not going to be any social security package either."
The writing is on the wall: There's no one in Washington who represents us. But as many, many, many have said: We are far more numerous. Take to the streets! Follow the lead of Wisconsin. Link up with others and demonstrate. They will only begin to listen when they are truly scared. So are we going to call their bluff or are we going to continue to sit on the couch?
Susan gets it!
susan,yea susan,finally someone who gets the last 30yrs of ALL TALK(OH POOR ME,WHAT ARE WE GOING TO DO) NO ACTION, crowd that dominates socalled progressive comments,Iis the main reason this insane gov/wallstreet crazies have f'd up everything!!!!!LETS GET THE GUTS TO GET OFF OUR ASSES BY THE MILLION&TAKE THIS INSANE SYSTEM DOWN FOR GOOD!!!!! HOKAHEY/IT IS A GOOD TIME TO LIVE
Reasonable and likely popular proposals.
They could be implemented quickly and bring in real results quickly.
Likely to make the Party who champions them as perma-popular as the New Deal made the DPA.
Perfect for a Progressive challenge to Obama in the Blue Primaries (nominee elections).
Even if just to demonstrate some hard facts about the Blue Party once and for all. ;)
-matti.
Anyone who disagrees with the GOP is seen as a traitor or the commie word liberal. They are becoming as intransigent as the Taliban
Each day the great American middle class gets poorer. When the middle class goes the US as we know it goes.
The talk about enacting controls is absurd. Congress is owned by the big banks and the other big campaign contributors. It will never pass any meaningful controls until something is done to put the focus of Congress back on the people. The only way to do this is by a Constitutional amendment that places a reasonable limit on the size campaign donations can be, and that allows such donations to be made by only registered voters (no corporate donors, no union donors, no pac donors, and no foreign donors).
An amendment of this ;nature will force congress to consider the well being of the people since that will be where the campaign money comes from.
Change will happen, but not via the political process as we have known it.That process is ossified to the maximum by layer upon layer of corruption.
Wall Street and its servants in our capital will decompose of their own doing and the rest of the country will slowly separate itself from both and learn that life continues without Congress and its Wall Street masters.