A Discussion of Public Banks and Forestry

Public Banking:  Connecting the Dots
By Alan C. Page, Green Diamond Systems


These ten areas are linked together and will either enhance or degrade the common good (CG) – we must choose well.

Dot One: Food Supply – given any disruption in food supply or transport, it will be very difficult for most localities to support their urban population; most food now has much more oil energy spent on production than the energy resulting in the food.  95% or more of the food consumed in urban areas is imported long distances.  Farms and forests near urban areas are failing because local (small) farmers cannot afford to pay their bills.  Farms and rural forest are viewed as profit centers or speculative assets in developing markets.  In the event of fossil fuel shortages, their functions will be essential for maintaining life and thus should be recognized as infrastructure – a STRATEGIC NECESSITY not an economic decision.
Dot Two: Resource Limitsnon-renewable peak supply capability has been reached globally, from oil to copper; these limits will directly affect all aspects of life that are beyond the capability of a family to provide for itself – disruptions will lead to conflict for scarce supplies.  While peak output of a resource does not mean that the supply is exhausted, it does mean that investment in extraction of materials in increasingly difficult situations will become much less attractive and available supply may fall faster than the actual total stock falls.  See Biophysical Economics, Charles Hall (SUNY Syracuse, NY), the Meadows’ "Limits to Growth", “The Great Disruption” by Paul Gilding.  Other limits exist like dead zones that happen in rivers and ocean from nutrient pollution and top soil loss.  Degradation of fertility and loss of soil carbon are able to be rectified with time, whereas non-renewables are not replaceable.
Dot Three: The Climate Crisis – we all need to act proactively NOW to limit additional ghg release and stop tipping points from being activated.  Such proactive measures are going to require a different means of enabling all facets of decision making and physical action.  ‘Life as we know it’ depends on a stable climate, a limited temperature range and lack of long term highs beyond 110°F.  Imminent tipping points are forecast that may destabilize the climate given a rise of average global temperature another 1°C.  Recent climate forecasts predict an additional 9°C rise by 2100.  This not hysteria, just a projection of well understood phenomena.  Albert Bartlett points out that failure to address a possible disaster is devastating whereas being proactive in a situation where the disaster is avoided simply adds some cost much like one does to insure an asset against fire.
Dot Four: The Purpose of a STATE GOVERNMENT – states were formed by the “people” of an area to do, for all (or those with enough power to be included as ‘people’), things that none could accomplish alone.  A state derives its legitimacy from the consent of the governed.  Today that consent has been co-opted by money and power - corporations are now ‘people’.  In this country states truly own everything. States originally placed property at risk by entrusting it to those who would claim ownership by fulfilling a series of requirements; FIRST by legally acquiring or buying the property and THEN by fulfilling the obligations of ownership by maintaining the property, paying taxes, and any other bills that are associated with the ownership, and participating as a responsible citizen in the day to day activity within the town.  Much commercial scale agriculture and most other endeavors are controlled by absentee owners or managers who have no interest in being or even ability to be citizens.  The state is there to oversee the maintenance of the common good not to pay bills or make certain sectors more well off than others!  Choices made by the governing bodies within a state limit or enhance the ability of ‘owners’ to be appropriate trustees (stewards) of property within a state.  The availability of money now dictates what gets done.  Those who control money are more relevant to those in power than others.  It is imperative for a State to control its own access to funds needed to do its job. Whether these functions are now done well is less important than understanding how ownership and good stewardship actually should / must function for the common good.
Dot Five: Everything Runs on Funding - Fund the right thing!  If a State chooses to conduct its affairs within the economic framework of a sovereign entity in a way that its actions limit the availability of  the credit needed to perform the proactive measures, the common good will not be as supportive or as fecund as if those necessary activities were carried out in a timely manner.  Unmitigated, the first three issues will cause a significant change or even the elimination of the capacity of the biosphere to sustain the common good.  We have the opportunity to act now to be as proactive as possible.  This opportunity is getting smaller with each passing year.  Since, funding is necessary to get things to happen it is essential that we figure out how to fund this needed maintenance as fully as possible.  Historically where public credit formation for the common good was possible for an extended period of time the society thrived.  A society confronted with currency limitation, antithetical to the common good, will experience poverty.  The Revolutionary War was such an outcome.
Dot Six:  Equity – There are many equity issues.  Two basic items are education and long term activity.  Everyone DESERVES AN EDUCATION to their potential (not college for everyone and not necessarily completely free), not just those born in good times or to wealthy parents.  A child born in a depression is no less a citizen of a State than one born during a boom.  Anyone capable of analyzing, proposing, and performing necessary infrastructure activity or maintenance-there-of should be able to obtain the funding to do so with a minimum of interruption of those activities.  Infrastructure style investment is now the sole province of the very rich or a State via borrowed money.  All infrastructure activities should be open for periodic public inspection, comment, and assistance if needed.  Status could become a benefit that accrues from exemplary maintenance of the infrastructure items entrusted to an individual rather than the amount of money one controls.
Dot Seven: Infrastructure – Infrastructure is more pervasive than most people are willing to admit - current definition of infrastructure in most states is inadequate.  Infrastructure maintenance should not be subject to budget wrangling that now dominates our political arena.  School staffing, hospitals, libraries, bridges, roads, and other parts of normal commerce (particularly local food and materials) need to be studied to verify the long term need.  Existing functions must maintained in a safe condition until removed or no longer needed.  Such decisions must not be made lightly and should take extended time (more than one political cycle) for the decision to be made to terminate a function.
There exist long term functions in all economies that cannot provide debt service. These areas perform necessary services for the preservation and enhancement of the common good; they may not have any reliable cash flow.   Many of these functions were done for free by natural processes in less anthropocentric and human dominated times.  These functions should now be classed as infrastructure and be subject to different methods of funding and accounting.  The reclassification of these special functions as infrastructure could remove them from the realm of political discussion.  The distinction of whether such functions should be public or private is less important than the quality of the function performed.  Infrastructure style items seem to have a long term energetic base that must be understood in relation to items 1-3 above.  The investment of substantial energy and materials or the potential for the local production-there-of in or by these functional units have more significant long term consequences for the CG than normal short term commerce.  Several dilemmas exist:  1) Proactive maintenance of forests (and other long term assets) causes the owner to be poorer because of the activity, while the society as a whole benefits from the presence of the long term asset. 2) Being at the end of the food distribution net raises vulnerability. The loss of local staple farming capability anywhere is counter productive to the CG of that locality in times of stress.  3) All children should attain their potential regardless of the economic conditions of the time.  It is more humane and cost effective to raise strong capable children than it is to build prisons or extended care facilities to deal with ill-equipped citizens after they are mature. 4) Basic businesses, local farms, competent engineering firms, local suppliers, and local lending organizations, should not be shut down due to business cycle slumps.  5) Schools and other substantial facilities need to be built with regard for effective use of the embodied energy in the structures and then their function must be maintained rather than being scrapped because the current economics of opening up a new area for new construction is 'better' than abandoning the old structures.  6) Hospitals should serve the clientele regardless of the profitability of the unit as discussed above.  
The asset base of the state is being eroded by the cost cutting measures adopted by entities originally established to protect and empower the people of the locality.  Such practices are not well thought out policy; they could be recognized as Current Funding Errors - Read: Snakes in Suits, Nemesis, The Big Short, Web of Debt, Confessions of an Economic Hit Man, Blood and Oil, The Secrets of American Empire...  
Dot Eight: Debt based credit formation should be limited to those sectors of the economy that need the rigor of a test of capability and need.  There may be areas that benefit from being constrained by an accompanying debt obligation particularly where excesses might occur without such limitations on credit.  Similarly taxation should be linked to excess liquidity being used for frivolous pursuits.  
Dot Nine:  Public Banking - Two Different Bank Systems: The capital base - a State really owns everything.  Citizens may claim to 'own' whatever they think of as theirs, but in fact the ownership exists more accurately as that of a steward who must pay rent or royalties (taxes and maintenance of basic functionality) to the locality in which it exists or lose the asset.   The resource (value) base of a State is its capital base – real estate, rolling stock, undeveloped land, and the potentials of both the real assets and its people.  When push comes to shove a State can monetize these assets in several ways.  The Public Bank credit source is essentially - as needed - "from thin air".  
The potential for abuse of this largess is a most troubling area since anyone may choose to try to feather their nest, so personal ‘need’ must have limits (see Dot Eight). For this reason credit sources must be divided into two categories.  A short term or local normal banking system facilitator like the Bank of North Dakota could be set up to aid normal local banks.  Such a bank should be risk averse.  This system could require regular repayment and incentives to do so promptly (interest or some other penalty for delay).  The second innovative system would fund long term or infrastructure functions where repayment may take many different forms, e.g. repayment at least in part should come from public values produced by an asset, such as clean air  and water from forests.  This second system would require the development of rules to differentiate it from the normal system.
The degree of Public Bank capitalization must be large enough that any rules developed by outside regulators (such as the Bank for International Settlements) cannot affect the continued operation of a State.  Given effective rules and the availability of funding, the infrastructure of the state should be able to be maintained for an appropriate number of capable citizens – too many people who are dysfunctional or who are acting to degrade the common good will bankrupt any system.  Build the population base well and keep it healthy and well educated and well equipped.
Dot Ten:  Opportunities - Local carbon negative energy production, local agriculture, Soil stabilization and production enhancement, local manufacture of essential items,  local maintenance of any significant energy intensive equipment or system, and stable employment, rural sustainability vs urban ghettos
A Simplified Discussion of Public Owned Banks: Connecting the Dots by Alan C. Page  is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License .
Alan Page,
Jul 13, 2011, 5:40 AM