Turning anger into action
Practical ways to reform the country’s finances
It’s hard to tell just what the people occupying Wall Street for the last three weeks—and the 100 or more who turned out Saturday for the Occupy Chico event, held on our own Wall Street—actually want. But that could be because the demonstrators are angry about so many things.
They’re angry that Wall Street’s financial elites have pillaged regular Americans to a greater extent than at any time since the Great Depression, and then asked taxpayers to bail them out. They’re angry that the federal government has done so little to prevent it from happening again, and that nobody has gone to jail because of it. They’re angry that so many people are unemployed and that so many young people have poor prospects for employment, and that state governments are so cash-strapped they can keep their public universities open only by increasing fees every year.
They’re angry that Wall Street banks are still making huge profits, and their executives taking home multimillion-dollar bonuses, from the same kinds of dicey merger deals and securitization packages that created the mess in the first place. They’re angry that the top 1 percent of the population has more wealth than the bottom 90 percent and apparently can buy and sell the members of Congress. And they’re angry that foreclosures are increasing, dragging the economy down further, while nothing is being done about it.
The demonstrations are focused on Wall Street, but it’s naïve to think that Wall Street will change its ways on its own. That’s like expecting a tiger to stop eating meat. Besides, we need banks. We all use them, and when they’re functioning as they should, they move capital to where it’s needed and improve our economic well-being.
But how to turn that anger into action, passion into politics? Nicholas Kristof, writing in The New York Times, offers the following practical ways for the protesters “to channel amorphous frustration into practical demands”:
• Impose a financial-transactions tax. A modest tax on financial trades would dampen dangerous speculative trading while raising billions in new revenue.
• Close the unconscionable “carried interest” and “founders’ stock” loopholes that allow billionaire hedge-fund managers to pay a low capital-gains tax rate of 15 percent on their earnings.
• “Protect big banks from themselves,” as Kristof puts it. That means increasing capital requirements and adopting the Volker Rule that limits banks’ ability to engage in speculative investments. Kristof also recommends adoption of a bank tax, based on an institution’s size and leverage, that banks could use to pay for their cleanups—“the finance equivalent of a pollution tax,” as he puts it.
To that we add a fourth goal: creation of a state bank. Currently North Dakota has the country’s only state bank, and it’s a major reason why that state is the only one to be in continuous budget surplus since the recession hit.
A major advantage of a state bank would be to allow the state to steer hundreds of billions of dollars in revenues into productive investment within the state instead of depositing its tax revenues in large private banks with no special concern for California.
A state bank also would be more able to encourage and support local, community banks to finance local businesses and enable them to bypass the rigidity and restrictions of the big private banks.
The California Legislature this year passed a bill, AB 750, that would have set up a special commission to look into creation of a state bank. Gov. Jerry Brown vetoed the bill, saying it could be handled just as well by the Assembly and Senate banking committees. Anyone looking for a way to transform anger into action could begin there—by pushing lawmakers to get to work on a state bank.