Should You Own the Banks? Should the Public Own Everything?
Branch office of BB&T bank in Lexington, N.C. Creative Commons photo by Dennis Brown via Wikimedia Commons.
Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Monday’s query:
Name: John Duda
Question: What do you think about Gar Alperovitz’s arguments on the need for public ownership in some sectors of the economy in this article?
Paul Solman: An answer on this page can’t really do justice to the work of Gar Alperovitz, who has argued in favor of worker ownership for at least 40 years now. And in theory, what’s not to like?
Moreover, I am sympathetic to a call for public ownership in an age where the private sector wields so much political power. Or, as Alperovitz puts it: “The underlying problem is that the economic and political power of corporations in general, and banks in particular, has grown dramatically.”
But in such an environment, is “public ownership” a panacea? Or will the public sector be subordinated to private interests as, for example, military contracting so often is? (See our series from 2007: Defense Department Sticks With M-16s Despite Problems; Defense Department Examines Body Armor; and Procurement Process Slows Deployment of Improved Vehicles.)
The core argument in the article you cite, John, and in Alperovitz’s book, “America Beyond Capitalism” — first published in 2005 and recently reissued with a substantial new preface — is that government should assume functions such as banking. Maybe. But, one might ask, would we have ATMs if the government ran the banking system? Credit cards, even? In other words, might not public ownership put a damper on innovation? On the other hand, do we really want privately owned banks taking in our money short-term (as deposits we can withdraw anytime) and then lending it out longer-term at a profit, paying their executives extravagantly while we insure their solvency?
Finally, though, I’m leery of statements like this by Alperovitz: “The destructive ‘grow or die’ imperative of our market-driven system cannot be wished or regulated away. In addition to the overriding issue of global warming, countless studies have documented that limits to growth in such areas as energy, minerals, water and arable land (among others) are fast being reached.”
Personally, I am skeptical of the limits-to-growth argument, or at least this version of it. The way I look at it, perhaps naively, earth is endowed with matter, made up of molecules, and with the forces of nature: electro-magnetic, gravity, nuclear. None of these disappear but indeed are “conserved” — continually transformed. Production is the harnessing of these inputs by perhaps the greatest resource of all: what journalist and author Warren Brookes once called “the energy in mind.” Moreover, historically, we seem only to be at the dawn of putting them to use. Admittedly, the noxious byproducts of such production — above all, pollution — may lay us low before we reach technology’s promised land. But predictions about the limits of natural resources seem rash.
For those who wish to explore the matter further, see Martin Weitzman’s classic 1998 paper, “Recombinant Growth,” which can be downloaded here. And then there’s the famous 1980 Simon-Ehrlich wager proposed to Paul Ehrlich, author of “The Population Bomb,” but “won” by economist Julian Simon. The Wikipedia entry on the bet and its aftermath is well worth reading, however contested the write-up.
As usual, look for a second post here on Making Sen$e early this afternoon. And please don’t blame us if events or technology overtake us. This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions