Failure is usually an orphan. From my son Sam’s schoolyard to boardrooms and politicians explaining disappearing weapons of mass destruction, fingers nervously point in other directions. But on questions of jobs and the economy, George W. Bush and his administration are determined to press ahead with monetary, fiscal, and employment policies that have failed spectacularly and show no signs of recovery. The wisdom of this persistence in failure I leave to the president’s handlers. But the problem requires much more than clever spin.
It’s really time to do something different. It’s time to take $100 billion dollars each year – less than five percent of our tax dollars – and invest in US jobs and communities. It’s time for National Trust investment in prosperity, jobs, and sustainability. A National Trust would invest in businesses, our communities, the high technology industries of the information age; in short, in what we need.
What will it be? Squander yet another $100 billion on war in Iraq, or invest those billions in world-class new industries such as wind generator companies to help free us from the oil curse, and make the US the world renewable resource leader?
What will it be: Run our existing industries into the ground, or invest in the paper mills of Coos county in New Hampshire so they meet the highest environmental and production standards? We have to choose. And a National Trust gives us a real choice.
Slashing taxes on the rich, throwing money at Halliburton and the Pentagon, cutting interest rates to 40-year lows, letting a mighty river of red ink flow has buoyed corporate profits. But new jobs and good jobs haven’t surfaced. States and cities are in fiscal crisis, floating bond issues and raising taxes, and, despite a weakened dollar, we’re running up a half-trillion-dollar-a-year trade deficit. Too big to fail, the Bush boys hope, we’re now dependent on the kindness of the Japanese and other strangers to keep buying our not-so-good paper that pays piddling interest rates.
Three million jobs disappeared after W strode onto the scene from his ranch in Crawford to save us from the moral excesses of the Clinton years. Too many of the existing new jobs are in the low-wage service industries or temporary. As of April, payrolls were down $1.6 million from their pre-recession peak, and were up only 31,000 since the recovery began in November 2001, according to the Economic Policy Institute. While profits have recovered from the Bush recession, employment has not. And economists are suggesting that the strangely jobless recovery reflects structural economic changes, meaning it won’t get better unless we do something about it.
During the reign of this self-described conservative, the US budget has gone from projected trillion-dollar surpluses to a half-a-trillion-dollar deficit. And deficits are forecast as far as the eye can see. Income tax rates have been slashed for the rich, and on stock dividends. Business has been given special depreciation credits for new investment. The estate tax on the wealthy has been rolled back.
In sum, the Bush administration has practiced a right-wing Keynesianism, using fiscal and monetary policy to inflate the money supply, to give investors and the rich every opportunity to invest, and consumers every opportunity to spend. The result has been much debt and few jobs. Left to its own devices, the market and the US economy are finding an equilibrium where new, well-paying jobs are scarce, and the future of the middle class is endangered.
The National Trust represents an ongoing way to invest prudently in employment stimulation, US business, and communities. Instead of huge, scatter-shot tax expenditures that have weakened rather than strengthened our economic prospects, the National Trust would make wise investments. The job creation benefits of $10 billion invested in new home construction are far greater than $10 billion spent on research and development for the next Pentagon weapons boondoggle.
Organization
The National Trust Fund system will function as a national development banking system, not as an instrument of central economic planning and control. The National Trust will be based on five regional and democratically controlled development banks.
The Trust would be coordinated by a National Trust Fund Board, with members from regional boards and chaired by a presidential appointee. Five regionally-based banks, with investment and development divisions, would be run by democratically-elected regional boards. These investment banks would be mandated to make prudent local investments to build the Fund, and be responsive to regional, national, and international developments. Dividing the banks into investment and development divisions separates their investment and advocacy roles, encouraging both and hindering neither. As groups from the World Bank to the Atomic Energy Commission have demonstrated, it’s very hard to be both regulator and promoter.
The investment division would focus on the financial health of the fund, in accordance with laws and board policies. The development division would be involved with socio-economic development planning, training, and technical assistance for borrowers and communities. Both would be governed by common guidelines and standards, but their decisions would be independent of each other and subject to transparency, right-to-know, democratic oversight and regular audit, and ombudsperson review. The banks’ ownership percentage in investments including those in publicly held corporations would be limited.
Investment System
The National Trust system is meant to operate as a democratically controlled social investment system, not as a social welfare system to make transfer payments, or to make loans that aren’t repaid, or investments with no expectation of return. Certainly, social welfare and transfer payments are necessary government expenditures. But the National Trust would be designed to support those expenditures while at the same time creatively and prudently helping to minimize them. Much of what would become the enormous portfolio of the National Trust would, by necessity, be made in conventional debt instruments, commercial paper, equities, real estate (including mortgages and securitized commercial mortgage backed securities), and investments undertaken with particular attention to sustainability.
Through the power of compound interest, we will build a multi-trillion dollar National Trust in the 21st century. Income from Trust investment will help save Social Security and could help fund an educational birthright for all US citizens.
Some might argue that government investment means government ownership, which means state socialism. But the National Trust outlined here, tasked with spreading personal and community ownership and decentralized power, will be no more likely to institute state ownership and central economic planning than today’s private pension funds, with current assets of approximately $5.1 trillion. Devolution, democracy, sustainable jobs, and empowerment are the informing principles of the National Trust Fund plan.
The National Trust is a practical and market-based solution to deal with the jobless recovery, structural economic changes, and the failures of the Bush economic policies. It will serve as a fundamental tool for US enterprise, jobs, and democracy. It’s not radical, it’s practical, and now is its time.
LINKS
Yes! Magazine provides a list of “Resources for Living Economies” at www.yesmagazine.org . They include Eco-Trust at www.conservationeconomy.net , which supports sustainable development in the Pacific Northwest; the National Community Reinvestment Coalition at www.ncrc.org, working to keep credit and banking services available in low-income communities; and the Institute for Local Self-Reliance at www.ilsr.org . Other important sources include Co-op America, www.coopamerica.org ; American Independent Business Alliance, www.amiba.net ; and Business Alliance for Local Living Economies, www.livingeconomies.org , which supports locally owned, values-based enterprises.