Wednesday, July 21,
2010http://www.washingtonpost.com/wp-dyn/content/article/2010/07/20/AR2010072002754.html
Making the economy more just
By Katrina vanden Heuvel[1]
Congress has passed the Wall Street Reform and Consumer Protection Act, but the
task of transforming our economy into one of shared and sustainable prosperity
has only just begun. Structural reform will come not through the sweep of a
single piece of legislation but with new, innovative economic models that
better
reflect the democratic values of this country.
The good news is that some of these transformative ideas are already taking
root. Here are five ways to build a more just economy that Americans are
experimenting with across the country.
The answer is 'B'
Corporations are compelled to pursue a single objective: maximize profit. In
fact, a company can be sued for following goals that veer from that statutory
obligation.
That's why Maryland State Sen. Jamie Raskin sponsored the Benefit Corporation
legislation that was signed into law this spring. It gives businesses the
option
to register as a "B corporation," an entity legally obligated to maximize both
shareholder value and advance a common public purpose such as cleaner air, open
space or affordable housing. The B corporation's stated public goal is
vigorously monitored by independent, third-party groups. It's a new business
model with social consciousness in its DNA.
B corporation legislation has also been passed in Vermont, and it is being
considered in New York, Pennsylvania, New Jersey, Oregon, Washingtonand
Colorado.
Banks for the people
Hundreds of billions of public dollars have flowed to bail out Wall Street
banks, which, in turn, have rewarded us by resuming the practice of giving
obscene salaries and bonuses while failing to get credit flowing again. One
bank
that didn't need to be bailed out, though, was the state-owned Bank of North
Dakota. The bank, which was created in 1919, avoided the subprime and
derivatives debacle and has $4 billion under management to meet its customers'
credit needs.
The state-bank model looks increasingly appealing to states and residents who
are tired of giving their money to giant multinationals that fail to reinvest
in
their communities. Proposals for state-owned banks are being considered by
Massachusetts, Virginia, Washington, Illinois, Michigan, Hawaii, Vermontand New
Mexico, and they were championed by gubernatorial candidates in Oregonand
Michigan.
Move your big money
Arianna Huffington's Move Your Money campaign handed consumers a creative tool
with which to hit the big banks. It encourages them to divest their money from
those banks and open accounts at smaller community banks and credit unions.
Last
week in New York City, the most powerful local union presidents and city
Comptroller John Liu took another step when they let Wall Street banks know
their response to the mortgage crisis is unacceptable.
The threat made implicitly in a letter -- and explicitly by some of the union
leaders -- is that these institutional investors will move their pensions to
more responsive financial institutions if the banks don't improve
mortgage-modification efforts immediately. The banks have until Sept. 1 to take
specific steps, such as developing a plan to increase the number of
modifications involving principal write-downs.
These unions represent over 500,000 working families, and New York Cityhas a
few
bucks at its disposal, too. Civic and labor leaders can use this model to let
banks know that if they don't behave as good corporate citizens, they will move
their big money to institutions that do.
Taxing the casino
The high-speed wheelers and dealers of stocks, derivatives and currencies in
the
Wall Street casino were major players in bringing our economy to its knees.
That
kind of short-term trading serves no useful purpose, and a financial
speculation
tax is one way to rein it in.
A tax of 0.25 percent or less on each trade would be negligible for regular
investors but significant to those looking for the quick score. It would also
generate significant revenue at a time when resources are slim; an Institute
for
Policy Studies report points out that such a tax could bring in an estimated
$180 billion annually -- more than any other revenue-raiser on the table.
There is also global support for the reform. Britainimposes a 0.5 percent stock
"stamp tax" on each trade on the Londonstock exchange. Also in favor of the tax
are French President Nicolas Sarkozy -- who will chair the Group of 20 in 2011
-- and German Chancellor Angela Merkel.
Worker is boss
The Post reports that non-financial companies are "hoarding" $1.8 trillion in
cash while they continue to "hold back on hiring." Not so the Evergreen
Cooperatives of Cleveland -- community-based, worker-owned operations supported
by a mix of private and public funds. The Evergreen Cooperative Laundry and
Ohio
Cooperative Solar are already up and running, and 10 other such enterprises are
slated to open in the city this year.
Workers buy equity in the co-ops through payroll deductions and earn a living
wage working at green jobs. The businesses focus on the local market -- meeting
the procurement needs of "anchor institutions" such as large hospitals and
universities in the area. Each co-op pays 10 percent of its pretax profits back
to the umbrella organization to help seed new enterprises.
Other cities considering this model include Atlanta, Baltimore, Pittsburghand
Detroit. And other towns around Ohioare considering it as well. At a time when
so many jobs are being slashed or outsourced, the Clevelandcooperatives show us
how we can create local jobs and reinvest in our communities.
Those who believe the financial sector should serve rather than dominate the
economy will welcome these reforms. They are radical and achievable. But they
will demand determined idealism and tough organizing in the years ahead.
________________________________
[1]Katrina vanden Heuvel is editor and publisher of the Nation and writes a
weekly column for The Post.
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