Washington State Bank: A progressive answer to a problem created by right wing economics
Contrary to what conservatives would have us believe, reckless government spending has nothing to do with the current economic crisis.
In fact, both the Great Depression and the Great Recession were caused by the reckless actions of private financial institutions. Likewise, it wasn’t unregulated free enterprise that got the United States of America out of the worst economic calamity in history, and a laissez-faire approach won’t get us out of the current mess.
It’s been more than a year since the government used the common wealth to bail out endangered financial institutions, and during that year those same institutions have done precious little to fulfill their role in a capitalist system: providing access to the capital necessary for businesses to grow.
Conservatives say we should just sit back, cut government spending and regulation, and let the market do its thing: the Herbert Hoover approach, which worked so well before. But perhaps there’s a more... progressive approach.
One role of government is to provide the essential services that the private sector either cannot or will not provide.
So, if the private banking sector cannot or will not provide the capital necessary for businesses to thrive, maybe it’s time for the invisible and increasingly lazy hand of the market to let the more proactive hand of government take over?
Yes, it sounds somewhat exotic; conservatives will even say it smacks of communism, totally ignoring the fact that it’s been successfully implemented in North Dakota, where the Bank of North Dakota has been credited with preventing the Peace Garden State from suffering the same kind of financial crisis that has stricken almost every other state government in the nation.
The idea is pretty straightforward.
House Bill 3162, sponsored by Representative Bob Hasegawa (D-11th District), would create the Washington State Bank. Its role would be to stimulate our economy by financing student aid, infrastructure, industry, and community development, which is what BND has been doing since 1919.
“Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives,” Hasegawa says.
“Imagine keeping our resources local instead of exporting them as profits, never to be seen again—that’s what this bank could do.”
The Financial Institutions & Insurance Committee will listen to testimony on Hasegawa's bill this morning at 8 AM in House Hearing Room D of the John L. O'Brien Building (the House's office complex on the Capitol Campus).
Expect conservatives to complain about the government picking winners and losers. Expect scary words like “socialist,” “communist,” and “fascist” to be tossed around. (Quick mind game: Which of those three works is unlike the other?)
Expect them to wrongly characterize this as a “government takeover” of the financial system, even though it’s nothing more than the government providing essential access to capital alongside of – not instead of – private banks.
And expect to hear the contradictory conservative logic that the government shouldn’t compete with private enterprise because it has an unfair advantage afforded by its size and access to tax dollars, while at the same time saying we can’t trust the government to do a good job because people who work in the public sector are inherently incompetent.
But when they’re saying that, remember this: Conservatives asked for less government regulation of financial institutions, and they got it, it was their laissez-faire economic policies that created the mess we're in now, and trusting the market to sort things out hasn't worked.
In fact, both the Great Depression and the Great Recession were caused by the reckless actions of private financial institutions. Likewise, it wasn’t unregulated free enterprise that got the United States of America out of the worst economic calamity in history, and a laissez-faire approach won’t get us out of the current mess.
It’s been more than a year since the government used the common wealth to bail out endangered financial institutions, and during that year those same institutions have done precious little to fulfill their role in a capitalist system: providing access to the capital necessary for businesses to grow.
Conservatives say we should just sit back, cut government spending and regulation, and let the market do its thing: the Herbert Hoover approach, which worked so well before. But perhaps there’s a more... progressive approach.
One role of government is to provide the essential services that the private sector either cannot or will not provide.
So, if the private banking sector cannot or will not provide the capital necessary for businesses to thrive, maybe it’s time for the invisible and increasingly lazy hand of the market to let the more proactive hand of government take over?
Yes, it sounds somewhat exotic; conservatives will even say it smacks of communism, totally ignoring the fact that it’s been successfully implemented in North Dakota, where the Bank of North Dakota has been credited with preventing the Peace Garden State from suffering the same kind of financial crisis that has stricken almost every other state government in the nation.
The idea is pretty straightforward.
House Bill 3162, sponsored by Representative Bob Hasegawa (D-11th District), would create the Washington State Bank. Its role would be to stimulate our economy by financing student aid, infrastructure, industry, and community development, which is what BND has been doing since 1919.
“Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives,” Hasegawa says.
“Imagine keeping our resources local instead of exporting them as profits, never to be seen again—that’s what this bank could do.”
The Financial Institutions & Insurance Committee will listen to testimony on Hasegawa's bill this morning at 8 AM in House Hearing Room D of the John L. O'Brien Building (the House's office complex on the Capitol Campus).
Expect conservatives to complain about the government picking winners and losers. Expect scary words like “socialist,” “communist,” and “fascist” to be tossed around. (Quick mind game: Which of those three works is unlike the other?)
Expect them to wrongly characterize this as a “government takeover” of the financial system, even though it’s nothing more than the government providing essential access to capital alongside of – not instead of – private banks.
And expect to hear the contradictory conservative logic that the government shouldn’t compete with private enterprise because it has an unfair advantage afforded by its size and access to tax dollars, while at the same time saying we can’t trust the government to do a good job because people who work in the public sector are inherently incompetent.
But when they’re saying that, remember this: Conservatives asked for less government regulation of financial institutions, and they got it, it was their laissez-faire economic policies that created the mess we're in now, and trusting the market to sort things out hasn't worked.
# Posted by Steve : 7:20 AM
Comments:
Conservatives may (rightly or wrongly) advocate laissez-faire, but that was not "the Herber Hoover apporach."
During Hoover’s term, federal government spending increased from $3.127 billion in 1929 to $4.659 billion in 1932—a 50% increase in three years. Indeed, Hoover readily acknowledged his activist approach in his remarks upon being re-nominated by the Republicans in 1932:
"We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put that program in action…"
These are hardly the words or actions of someone practicing a "just sit back" economic policy.
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