Home Main Forums General Discussion You want concrete policy demands? Here you go. The case for nationalisation

  • Stockholmer (1825 posts)
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    You want concrete policy demands? Here you go. The case for nationalisation

    No more market failure: the economic case for nationalisation

    While Labour’s manifesto has often been deemed radical, its economic policies would be far better at addressing the flaws in the current system.

    https://www.opendemocracy.net/uk/peter-kennedy/no-more-market-failure-economic-case-for-nationalisation

    Yesterday’s general election saw the Labour Party make significant gains across the country and robbed the Conservatives of their parliamentary majority. This was in no small part due to the transformational nature of Labour’s manifesto. Where Labour’s proposals were fully costed, not a single pound sign managed to sneak its way into the Tory equivalent. Corbyn’s Labour outlined measures which would begin to get to grips with some of the country’s core economic troubles. The unveiling of the manifesto precipitated an immediate jump in opinion polls, helping cut the Tory lead to single digits. Yesterday’s electoral swing in Labour’s favour can be taken as a clear sign large sections of the British public are desperately seeking an alternative to a failed economic orthodoxy.

    During an election campaign political debate inevitably heightens in intensity. We’re more likely than ever to discuss politics with friends, family and colleagues who may usually prefer to stay off the topic. It’s hard to argue about economics with your nan in the heat of the moment. If Gary at work says the government can’t keep ‘spending on the country’s credit card’, it’s hard to counter such a fatuous argument with a pithy one liner.

    As any progressive will be painfully aware, decades of ideologically motivated misinformation have led to a shockingly poor understanding of basic economics amongst the general public. Proponents of ‘free-market’ capitalism (a misnomer of the highest order) have successfully overseen the popular dissemination of a kind of ‘common sense’ economics. All debt is ‘bad’ debt, government run industries and enterprises are inefficient, and higher wages will always lead to run-away inflation. This makes for great politics, but has a tenuous basis in economic reality at best. Such a narrative has succeeded by re-writing twentieth century political and economic history to emphasise the failures of economic intervention by governments and minimises the colossal failures of the private sector.

    Andrew Simms and Stephen Reid highlight myriad market failures, which can be found across all sectors of the economy. From the NHS to publicly run railways, government provided services often prove themselves more efficient than their privately run equivalents at home and abroad. The US based Commonwealth Fund recently ranked the NHS as the best health service for efficiency and quality of outcomes (this despite a decade of underfunding).

     

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    My thoughts……..Besides nationalising your health care system, and your public tertiary education systems, a huge push needs to be to nationalise the United States Federal Reserve.

     

    Nationalise the Federal Reserve

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    Alexander Hamilton, the architect of America’s First National Bank, proved that a national debt, if not excessive, is a great advantage to a modern nation. A sustained economic recovery requires a source of credit which can be neither zombie banks nor the federal budget.

    http://againstausterity.org/fed

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    We need trillions in long-term investments

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    According to its 2013 Report Card for America’s Infrastructure, the American Society of Civil Engineers (ASCE) estimates that America needs to invest $3.6 trillion in infrastructure by 2020. This sum – targeted to roads, rail, bridges, power, water, schools and similar projects – is roughly equal to the entire US Federal budget for a year. We can not simply pay these costs on-budget, which would add $600 Billion per year, costing the American taxpayer more than Medicare. A pay-as-you-go approach on the scale we require is not only politically unrealistic, it would place an excessive burden on the federal budget, thus creating a vulnerability to speculative attacks on the dollar.

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    Why we can’t borrow the money from Wall Street

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    In 2011, the Poway Unified School District near San Diego, CA needed $105 million to make needed upgrades to its aging public schools. Unable by law to increase property taxes, and unable to afford the cost of a short-term loan, the district used a controversial loan called a capital appreciation bond.  With this bond, an example of the schemes becoming all too common to keep cash-strapped infrastructure functioning, the District will delay repayment for 20 years, and pay over the following 20 years at a total cost of nearly 1 billion dollars. In addition to the costs of construction, this means another $900 million in interest payments will be foisted upon local taxpayers. Imagine this scenario playing out with $3.6 trillion. Borrowing public money from private banks is not only obscenely expensive, it’s terribly unjust to taxpayers, who will work ever harder to pay for the unearned luxuries of super-rich financiers rather than their own needs.

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    Seize the Fed: Federal lending, not Federal spending

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    We propose to seize the functions of the Federal Reserve System and use it as a national bank to finance the long-term needs of the American people. The policy of federal lending, as distinct from federal spending, can be used to break the current political impasse. Federal lending allows us to make massive long-term commitments at modest short-term costs. For states and businesses, the cost of capital can be radically lowered – down to 0% for public infrastructure, and a competitive advantage of the United States in world markets can be secured. The overriding goal is the creation of 30+ million new jobs in production, with high capital investment, high energy intensity, high value added, and high technology. The theoretical basis and historical validation for the program advanced here is the traditional American System of Alexander Hamilton, Friedrich List, Henry Carey, Henry Clay, Abraham Lincoln, the populists, and the New Deal. The method of transforming the central bank into a national bank to finance a recovery derives from the work of Woytinsky and Lautenbach, interpreted in the light of the experience of the US Lend-Lease Program.

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    Century Bonds for Infrastructure and Science Drivers

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    Either through law or political pressure, the Federal Reserve must be forced to put out a tender offer to states and regional authorities like the New York-New Jersey Port Authority stating the Fed’s willingness to buy an initial $3.6 trillion of state bonds within the next 10 years, with the proceeds devoted exclusively to rebuilding the public infrastructure of the United States. These must be century bonds, with 100 year maturities and the coupon rate must be set at 0%. Once the first tranche of $3.6 trillion is expended, subsequent tranches of $1 trillion each should be offered, until the point at which full employment is reached. The states issuing the bonds can offer solid collateral of the infrastructure improvements that are being created. These state and authority bonds will make possible the long overdue rebuilding of the entire US Interstate Highway System, including its bridges; the national passenger, freight, and commuter rail using the technology of the 21st century; the national electricity production and transmission grid; canals, ports, sewage and water systems; telecommunications; public housing; schools, hospitals, libraries, public buildings, etc. This credit will also be applied to science drivers. From modernising and expanding America’s national laboratories – including high-energy physics, power technologies (such as contributing more resources to nuclear fusion research, and the long-overdue development and deployment of thorium reactors) and biomedical research –  to restarting the space program for exploration and colonisation.

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    I also advocate for this: a financial turnover (aka Tobin) tax

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    1% Wall Street Sales Tax

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    http://againstausterity.org/wsst

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    The fiscal problems of the United States are largely due to the fact that Wall Street pays no taxes. While working families pay 7% or more in sales tax for the necessities of life, Wall Street speculators pay no tax on their share of a yearly turnover of over $5 quadrillion (5,000 trillion dollars) in stocks, bonds and derivatives. A 1% tax on this turnover, equally divided between the federal and state governments, largely solves the budget deficit at all levels of government. It also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services – which are now in effect subsidised because they are not taxed – and the tangible, physical production of manufactured goods on which our economic survival depends.

    A small federal tax on securities transfer was in effect until the Johnson administration. In New York State, a small transfer tax remains on the books, but the $20 to $30 billion yearly proceeds are being remitted to the zombie banks as a result of successful Wall Street extortion. A Wall Street Sales Tax has been endorsed by a growing number of public figures, economists, journalists and legislators, with several bills already having been introduced into the US Congress.

    In May, 2014, 11 member states of the European Union, including Germany and France, agreed to implement the European Union financial transaction tax (EU FTT), which is estimated to charge 0.1% on the sale of stocks and bonds, and 0.01% on derivatives. Opposition to this tax has been centered in Wall Street and London.

    We Demand:

    We demand a 1% tax paid by all US sellers of stocks, corporate bonds and derivatives, all of which must be traded and reported on open exchanges.
    The proceeds of this tax should be split between the federal and state governments to fully fund social obligations, public payrolls and pensions.
    Household-level investment must be protected with a $1 million yearly exemption. The 1% Wall Street Sales Tax is not a “wealth tax” but a sales tax directed at professional financial speculators.

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  • Marym625 (24867 posts)
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    1. On The Daily Radical!

    Normally, a Daily Radical post, the  majority of the article needs to bewritten by the OP author. But this is well researched and obviously a lot of work. Worthy of good discussion.

    Thank you!

    "Once the decision was made to go into Iraq as an invader and occupier,  it’s like our nation lost its conscience. And it has not yet gotten that conscience back." Madfloridian  
  • Punxsutawney (1619 posts)
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    2. I fight this fight every stinking day it seems

    “As any progressive will be painfully aware, decades of ideologically motivated misinformation have led to a shockingly poor understanding of basic economics amongst the general public.”

    Among remarkably well educated people as well at times.

    To neoliberals, everyone and everything are disposable. -  Chris Hedges  “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness" - J.K. Galbraith
  • Ohio Barbarian (4198 posts)
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    3. Andrew Jackson's greatest economic mistake was destroying the Bank of

    the United States that Hamilton had wanted established. It was a total disaster, resulting in the Panic of 1837 which, if anything, was worse than the Great Depression of the 1930’s. He also paid off the national debt, which directly contributed to the disaster. I agree with you that the banking system needs to be nationalized.

    Desperately. Though if this were a few centuries ago I would no doubt be burned at the stake for uttering that heresy. Good post, Stockholmer.

    Ignorance is the foundation of tyranny.   
  • nevereVereven (2979 posts)
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    4. Recommended

    HEARTILY!

    A hologram of a magnifying glass will also function as a magnifying glass, but a hologram of Sherlock Holmes won't solve anything.