Written by Dana Brown, Director, The Next System Project. Article reposted from The Next System Project

They are our collective heritage as a species—both those resources which we inherit from previous generations and those which we create—managed in such a way as to preserve shared values and community identity. The commons are the collective resources themselves, and the practice of collective economic production and social cooperation used to steward those resources—as well as the values of equity and fairness that underpin them—is often referred to as commoning. Many resources can be managed as commons (though often there are attempts to privatize or “enclose” many of those same resources). These can include knowledge, urban space, land, blood banks, seed banks, the internet, open source software and much more.

Potential Impact

The commons are pervasive and as such, often go unnoticed. However, their thriving existence alongside forms of private and public ownership provides a framework for understanding and creating social value beyond the confines of conventional economics.

The rich traditions and successes of commoning provide models for how to push back against privatization and enclosure, ensuring common resources are protected for future generations. Meanwhile, political economist Elinor Ostrom’s Nobel Prize-winning work has disproved the enduring “tragedy of the commons” hypothesis that collectively managed natural resources would necessarily be overexploited and destroyed over the long term.

Taxing the private use of common resources, combined with
redistribution or other efforts to formalize “commons trusts” to ensure their sustainable stewardship, could help stem the tide of privatization and extraction. The tax proceeds could be used as a form of reparation to communities that have traditionally borne the brunt of extraction of their common resources, and to restore those resources when depleted.

Transformative Characteristics

Commoning is a generative and “value-making” process that can decommodify land and other resources, and demonstrate that communities can manage them effectively without private control or state governance. It asserts a different “universe of value” and worldview from capitalism and unfettered consumerism, and helps communities break free from the scarcity mindset of capital. “The commons does not compete on p rice or quality, but on cooperation,” says commons activist and author David Bollier. It “‘out-cooperates’ the market … by itself eliciting personal commitment and creativity and encouraging collective responsibility and sustainable practices.”

The commons, and related peer-to-peer production models, offer concrete, replicable, and dynamic frameworks for sustainably managing existing resources and creating new ones. They also offer a model for deciding what not to produce in order to most effectively protect our global common resources.

Examples

WIKIPEDIA

Wikipedia is a form of online knowledge commons, “a multilingual, web-based, free-content encyclopedia project supported by the Wikimedia Foundation and based on a model of openly editable content.” It contains more than 5 million encyclopedia entries (a shared resource), created and edited by its authors and editors (a community) with a set of community-determined content and editing guidelines (rules). Wikipedia displaced once-expensive bound encyclopedias to become one of the world’s largest reference websites, attracting hundreds of millions of unique users per month and engaging over 140,000 active users—a group that anyone with an internet connection can join—in creating and editing content in almost 300 languages.

EL PARQUE DE LA PAPA

Peru’s “potato park” is a community-led conservation project that preserves traditional customs and indigenous rights to the “living library” of genetic information contained in the over 900 varieties of potato found in the Inca Valley region. The native Quechua peoples bred and cultivated these potato varieties for centuries, but biotech and agricultural corporations moved to appropriate the genetic information in the seeds and take commercial control without the consent of the Quechua people. They then forced the Quechua to pay for the seeds their ancestors had worked so hard to breed and protect. Indigenous representatives organized and successfully negotiated the repatriation of the potato varieties and the rights to conserve them in a 32,000-acre potato park. More than 8,000 community members now collectively manage the park  to “promote the cultivation, use and maintenance of diversity of traditional agricultural resources” and to ensure their traditional agricultural resources do not become subject to private intellectual property rights.

Challenges

Most people are not aware of the pervasiveness and enduring nature of the commons and don’t understand commoning as a viable alternative to consumption-driven and competitive economics. The increasing enclosure and privatization of the commons is erasing our collective memory of many enduring commoning practices. For example, control of the majority of the global seed market (a resource once managed as a commons in many communities) is now concentrated in a handful of multinational corporations. Furthermore, scarcity of some common resources may intensify competition for control in the coming years, while others lack adequate infrastructure support and are therefore vulnerable to privatization.  

More Resources

• The Commons Transition Primer:  https://primer.commonstransition.org

• News, analysis and resources on the commons: www.bollier.org

The post The commons appeared first on P2P Foundation.

Executive Summary

Age-old questions of ownership, control, and distribution in our economy remain as important as ever. In fostering the creation of communities and workplaces driven by values of solidarity, cooperation, and justice, workplace democracy and worker ownership are crucial, powerful tools, and they can and should play an important role in the next economic system.

There is already a long-standing policy agenda for worker ownership that has become a powerful and effective consensus in many countries. This agenda is behind the Employee Share Ownership Plan in the 1974 Employee Retirement Income Security Act, which made available additional tax privileges throughout the next decade and allowed Ronald Reagan to join John Lewis and Karl Marx on the list of those who made public statements in favor of worker ownership.1 It is also the agenda behind both the recent tax incentives for employee ownership trusts passed in the United Kingdom,2 and United States Sen. Kirsten Gillibrand’s recently passed 2018 legislation extending Small Business Administration assistance for worker cooperatives and ESOPs.3

These have produced real improvements for countless workers, but they can only take us so far. We need a policy agenda for worker ownership compatible with the systemic change we know we need on a global scale. If we want to transition to an economy that does not drive catastrophic climate change; dispossession and violence against people of color and the developing world; and gross inequalities of power, income, and wealth, then we need to develop a vision of worker ownership that can contribute to that transition, rather than one that aligns the interests of worker-owners with the shareholders of extractive private corporations that are the problem in our society.4

The initial section of this paper is a review of relevant policy models, including Italy’s decades-old Marcora framework, Washington, D.C.’s Tenant Opportunity to Purchase Act, and the legislative history of existing worker ownership models in the United Kingdom and United States. These will lead us on to a discussion about the principles that should underlie a progressive policy agenda for worker ownership.

The second section of this paper—the policy proposal itself—describes a set of institutions and laws that could enable a substantial share of the economy to transition to democratic worker ownership with “sheltering institutions” that provide a countervailing force against the rigid demands of the market. We aim to offer a path forward for worker ownership for those of us who believe that system change is necessary.

We provide a generalized technical model of a pluralistic “institutional ecosystem” to surround worker-owned businesses; a legal framework that provides an effective right of first refusal to workers to purchase sites and companies that are being closed or sold; and a discussion of the limits of our proposal and an outline of an interlocking mechanism that could fill the most significant of these gaps—especially capital-intensive, publicly traded, and large employers—with an “inclusive ownership fund” that would gradually increase democratic ownership over these key institutions in our economy.

The ultimate goal is twofold: to massively broaden the pool of candidate companies and sites that can be legally transitioned to democratic worker ownership if given the resources (through the right of first refusal) and to substantially deepen the financial and technical resources available to workers at companies and sites within that “candidate pool” to transition their workplace to democratic ownership.

This paper offers tools to activists and lawmakers to promote economic transformation in their own jurisdictions. The appendices offer additional suggestions and implementation details to expand our general model in the United States, where we are based, and in the United Kingdom, where similar ideas are advocated by Labour Party policy as the “right to own”—a term that we also use to describe the full proposal in this paper.5

With these policies in place, societies will be far better positioned to prevent mass layoffs as a result of the so-called “silver tsunami” of retiring baby-boomer owners of small-to-medium business enterprises, many of whom currently close their companies at retirement or sell them to extractive vulture capitalists who asset-strip the firms with little protection for workers. In many localities, extensive legal, financial and technical supports for worker ownership is the best option for maintaining community stability in the face of an inevitable and significant economic transition—one that can be reprogrammed to serve the interests of the many in order to prevent it being exploited by the few.

What the public thinks

A poll commissioned by The Democracy Collaborative with YouGov Blue found overwhelming support for a policy that would give workers the right of first refusal when their workplaces were slated for sale or closure, with 69% of respondents in support and only 10% opposed:

Unlike many proposals that aim at a more egalitarian distribution of wealth, our polling shows that a workers’ right of first refusal is wildly popular across party lines, with 66% of Republicans in support.

Our polling also tested support for a workers’ right of first refusal against support for the existing federal tax subsidies established to reward owners who transfer their businesses to employees by allowing them to defer taxation on such sales. This “1042 Rollover” is very familiar to the employee ownership sector, of course, but not widely known outside of it. Due to its origins under the Reagan administration, this subsidy to owners is often held up as an example of the bipartisan appeal of employee ownership. To our surprise, we found a workers’ right of first refusal outpolls the 1042 rollover subsidy by a 14-point margin, with only 55% of respondents in support of tax subsidies for owners who sell to their employees. Moreover, only 49% of surveyed Republicans supported the 1042 rollover, compared to the 66% of Republican respondents who expressed support for a right of first refusal.

Our polling also found that support for a workers’ right of first refusal increases and solidifies with age—while a solid 59% of 18-29 year old respondents are in support, 15% responded they were not sure. But 81% of respondents over 65 were in support, with only 4% unsure.

Finally, while support was strong across racial and ethnic groups, we found that particularly strong support with respondents identifying as Hispanic, with 78% in favor of a workers’ right of first refusal.

Download and share

originally posted on The Next System

• 1. Marx, Karl, 1894. Capital, Vol. 3. Web: https://www.marxists.org/archive/marx/ works/1894-c3/ch27.htm; Reagan, Ronald, 1987. ‘President Reagan’s Speech on Project Economic Justice’, Transcript: http://www.cesj.org/about-cesj-in-brief/. history-accomplishments/pres-reagans-speech-on-project-economic-justice/.
• 2. Michael, Christopher, 2017. ‘The Employee Ownership Trust: An ESOP Alternative’ in Probate and Property 31(1): p. 46
• 3. US Federation of Worker Cooperatives, 2018. ‘The US Federation of Worker Cooperatives Celebrates the Passing of the First National Legislation That Focuses on Worker Cooperatives’. Web: https://usworker.coop/blog/usfwc-main-street-employee-ownership-act/
• 4. Alperovitz, Gar, 2016. ‘A response to Sam Gindin’, Web: http://www.garalperovitz. com/2016/03/response-sam-gindin/
• 5. The Labour Party, 2017. For The Many, Not The Few. Web: http://labour.org.uk/manifesto

The post Right To Own: A Policy Framework to Catalyze Worker Ownership Transitions appeared first on P2P Foundation.

This week we are talking about deepening democracy in our communities through participatory budgeting and participatory decision making more broadly. We’re joined by three great guests: Shari Davis of the Participatory Budgeting Project, Lorian Ngarambe of the Rochester-Monroe Anti-Poverty Initiative, and Yale University Ph.D. student Alexander Kolokotronis.

Adam Simpson: Welcome to The Next System podcast. I’m your host, Adam Simpson. Today we’re talking about participatory budgeting and, more broadly, broadening the scope of democracy in our communities and movements. We have a great group of guests lined up, starting with Shari Davis, co-executive director of the Participatory Budgeting Project. Shari, welcome to the program.

Shari Davis: Thank you so much.

Adam Simpson: We also have Alexander Kolokotronis, a Ph.D. student at Yale University, and founder and board chair of the Student Organization for Democratic Alternatives. Alex, thanks for joining.

Alexander Kolokotronis: Thanks for having me.

Adam Simpson: And we also have Loriane Ngarambe, a community engagement specialist with the United Way. Loriane, it’s great to have you with us.

Loriane Ngarambe: So excited to be here.

Adam Simpson: Shari, can you start us off with just a brief intro into participatory budgeting. What is it? How does it work? What are some of the benefits and limitations?

Shari Davis: Sure. Participatory budgeting is something that gets me really excited. I’m a person who worked in local government in the City of Boston, Massachusetts for just about 15 years overseeing youth services. While I had seen a lot of really interesting and innovative approaches to community engagement, participatory budgeting was an opportunity to explore that in a way that I hadn’t seen before. My first introduction to this was in my role overseeing youth initiatives. The mayor coming to me saying, “I really want young people to play a leadership role, not just a figurehead role, in how I govern and in how I make the City of Boston better.” When a community, a school, an institution adopts participatory budgeting, it really marks a change in the way that they govern, and a change in a way that they have a relationship with their constituency or broader community.

From that initial introduction, I learned that participatory budgeting is relatively new in the United States, but, globally, it’s been around for several decades. That said, the way that we practice it in the US is also a bit different. The first thing that happens, and my favorite part to ensure transparency, is that community members come together to write the rules that will govern a participatory budgeting process. Then we enter the idea-collection phase, where we collect hundreds, if not thousands, of ideas on how to spend a pot of money to make a community better. We’re not talking about the entire public budget; we’re talking about identifying a space, a line item in the budget, where we can make some decisions together.

After we collect those ideas, we go into the next phase, maybe my most favorite. This is proposal development. This is where community members come together and form a couple of committees to review all of the ideas that have come in based on need, feasibility, and impact. This is an important piece around ensuring equity, not only for the projects that come in but the projects that make it onto the ballot. They work alongside agency or institutional staff to distill and vet those projects so that we have final projects for the ballot. Nothing makes it on a participatory budgeting ballot unless it can really happen if it gets enough votes.

We enter the almost final phase then, the voting phase. Unlike traditional local or national elections, the voting phase is usually a bit longer. It can last a week. And the vote goes out to where people are. That steering committee, and the folks that have been involved in the process, really think about who is typically left out, and how do we really center their engagement in this process, so that their voice is heard. After the vote phase, the projects with the most votes are implemented, truly enacted in the community, until that pot of funds runs out. Then the process begins again the following year, after an evaluation.

When a community, a school, an institution adopts participatory budgeting, it really marks a change in the way that they govern and a change in a way that they have a relationship with their constituency or broader community. That’s the quick-and-dirty overview.

Adam Simpson: Wow, so much to dig into there. Thank you for that, Shari. In particular, you mentioned that participatory budgeting isn’t a new idea. I’ve actually read in some of your work, Alex, that the tradition of participatory democracy having both international indigenous roots. Can you say a bit more about this and how you view participatory budgeting fitting into that historical tradition?

Alexander Kolokotronis: Sure. Traditionally, I think we connect these things to direct democracy, and we think of ancient Athens. But I think a lot of recent work, in the last few decades, has been connecting up this notion around participatory democracy to the Iroquois Confederacy here in the United States. Most recently, in explicit work on participatory democracy, Michael Menser really foregrounds this in his beginning chapters of his book, We Decide. But on through that, into history, we see a lot of other instances of participatory democratic praxis on a wide scale. So, of course, there are the traditions I’ve just mentioned, but then we see larger cases in the 20th century, such as the Spanish Revolution in the 1930s. Then, of course, the coining of the term, participatory democracy, in the ’60s by Students for a Democratic Society in their Port Huron Statement, which itself has a lot of international renown.

Often, if I mention that some of the things I’m looking into with my own research include SDS, Students for a Democratic Society, I’ll hear people from various parts of the world say, “The Port Huron Statement and participatory democracy.” But its practical roots really, really lie in different areas of the world, including right here with the Iroquois Confederacy.

Adam Simpson: Now, there are a variety of ways that participatory budgeting can be deployed. In Loriane in Monroe County, New York, this was part of the antipoverty initiative that you were involved in, which incorporated a participatory budgeting process. What do you think was different about the outcomes, and the initiatives, of that process, as opposed to the outcomes that would have been advanced from a more top-down process, either from city leaders alone, or social impact investors, nonprofits, et cetera? What do you think was different about the fact that this process to alleviate poverty in the Rochester, Monroe County area because of the participatory nature of it? For so long, you’ve always had content experts, people who understand poverty and the issues that people are going through, because it’s the work that they do or it’s what they studied. But context experts are those people who understand poverty because it’s literally their lives.

Loriane Ngarambe: This is the thing I always use whenever I’m talking about communities, or other community engagement efforts over at RMAPI: It’s always that the people closest to the problem are closest to the solution. And for so long, any time people are talking about poverty, and strategies, and solutions you always have this top-down approach. I look at this through a context of content experts, and context experts. And for so long, you’ve always had content experts, people who understand poverty and the issues that people are going through, because it’s the work that they do or, maybe, it’s what they studied. But context experts are those people who understand poverty because it’s literally their lives. They understand it through, and through, because it’s not just a nine-to-five thing for them, right?

Adam Simpson: Right.

Loriane Ngarambe: When they go home, they still have to deal with the poverty. At night, they deal with it when things are good. When things are bad, they understand it at a deeper level. A PB process really allowed an opportunity to see just what happens when you give these context experts an opportunity to really tell you what makes sense for them, right?

Adam Simpson: Right.

Loriane Ngarambe: The PB process allowed for ideas to come up that could be sitting at tables for decades and an idea like 24-hour daycare, that was one idea that came out a couple of times when we’re doing idea collection. It’s just like, “Wait, why isn’t that something that happens more often?” You have A, B, and C-shift jobs, but when you think of daycare, it’s usually for people who are working A-shift. But then there’s all these jobs that are available, and people, especially single mothers, aren’t able to take advantage of them, because they don’t have something like 24-hour daycare, where they can be secure on where they’re leaving their child. It’s things like that, that make the PB process make sense because they’re able to bring ideas and propose solutions that a content expert may not think about, because their understanding to the problem is limited to their experience.

Loriane Ngarambe: So PB just allowed us to really highlight what happens when you co-create solutions with community, rather than come up with an idea, a creative solution, and then present it to the community that has to live with the consequences of whatever decisions are made. So PB just allowed us to highlight that, and it’s really given us a lot of momentum, and energy, and buy-in from the community, as well, too. Now, you have people who then, as part of this process, that say, “We want more. How can we be more involved? What are more opportunities where we can really let our voices shine through?” And it’s just been an incredible experience for us.

Adam Simpson: That’s something I want to ask about directly. I think Shari mentioned a little bit what the process of participatory budgeting looked like, but I’m interested, particularly, in how you get people involved and engaged. I know that a lot of people, they have work, they have, as you mentioned, childcare, they have so many duties going on. Did you find it difficult to get people engaged? What were the strategies you employed there? In your experience, were people really eager to get involved?

Loriane Ngarambe: The main strategy that we used, that was really important, was meeting people where they were at, and not making this be an additional thing that they have to do. For instance, in idea collection, just getting out there and getting people more informed and engaged with what was going on. We would go to places like our Department of Human Services, where people are going to be sitting there for hours anyway to get their benefits or go to their appointments. So, instead of making a meeting, later on in the evening, where they have to find their way there, meet people where they’re at, go to schools, go to libraries, go to rec centers, go to churches, meet people where they’re at. Identify your key communities’ members, people who already have those relationships, people who will be advocates for what’s going on.

It’s a ripple effect, essentially, right? We’ve identified our 20 key people who really understand what PB is and are really for it. So they start going onto their networks and that’s, really, how the engagement bloomed, how the engagement grew. Then you’d have people hitting up our Facebook page, people reaching out to us because their cousin, who goes to their church, told them about this thing that they’ve been taking a part of. That’s really how we were able to get that engagement going. It wasn’t because of what me and my colleague, Graham, are doing. It was more about the people who understood this for what it was and were passionate about it, and so they were looping in their neighbors, their friends, their family. That’s really how the engagement happened.

Then just meeting people where they’re at, mitigating barriers. If we knew that childcare was an issue, then we made sure we had childcare available at a meeting that we had. We made sure we had food. We had giveaways, if people needed it, just to incentivize people to be able to get there, so it’s worth their time, essentially. I don’t want you to have to leave your kids to come participate and be engaged; bring them with you. We’ll have things for them to do, as well, too. Just meeting people where they’re at and being cognizant of the barriers they need to be facing and how you can help mitigate that. That was really important for us.

Adam Simpson: Wow. That sounds like a really amazing process. Shari, could you say a little bit about this and your experience? What do you see as the most successful strategies for getting the community engaged in these participatory processes?

Shari Davis: Well, one thing I want to just underscore is this principle that was mentioned before, and that’s around content and context expertise. I often say, “If I were to build a building, I would get an expert.” I would go get an architect because I don’t want the building to fall down. So, if I’m going to build a healthy community, I need experts to do that. I need people that live, walk, breath, and exist in that space on a regular basis. When we’re infusing their ideas, impact, and, really, voice, we’re able to build communities that are responsive to generations to come. I think that’s a really important piece here.

In terms of what we’ve seen work, and how this really works is, is centering those folks—who now we’re turning to as experts, and have always been experts and leaders in their own right. But if we’re going to center their engagement, we have to design the process with them, and not for them, and that’s why this steering committee component is so important. If we want single parents, or parents period, to participate, then we have to really think through childcare, times that we’re meeting. If we want young people to be in the room, then we probably can’t meet at 10 a.m. on a Tuesday. These considerations and the design process are essential. And that’s not me, Shari, or other members of PBP, that make those decisions. It’s the important folks that are on the ground, the folks that work in government, but especially those that are of the community that we’re trying to engage in a participatory budgeting process, really need to be at the helm of that design.

That’s what we’ve seen work in Oakland, where there’s no minimum voting age, anyone of any age, as long as they can interact with the materials, can participate. That’s what we’ve seen work in the City of Boston, where young people reported being more likely to engage in their community or being more likely to vote in a local or national election, as a result of participation. That’s what we saw in Phoenix, Arizona, where the entire school district engaged in a participatory budgeting process. And, last year, nearly a thousand of those young people that engaged in the PB process also registered to vote in local and national elections.

That’s what we’ve seen be a big piece of success is making sure that community, and those that are representative of their community, are really involved in the design process early, and in a way that they can make some decisions.

Loriane Ngarambe: Just to add to that, real quick. Here, in Rochester, we have a community advisory council. This is made up of community members who have decided to take on that extra time to really be involved with what’s going on, and provide input and guidance to the solutions and programs, and conversation, that are being had around what’s going to be happening with our communities. They played a really important role in the education part of introducing PB to the community. We brought it to them. We explained what it was to them, and they helped with the creation of our steering committee, and getting the word out there. Just to back up that statement, that was a huge, huge component of this, as well, too for us.

Shari Davis: I think you were touching on something that’s super important, and I know Alex can attest to this too. Often times we see councils and engagement strategies, and the councils may work, sometimes they’re a bit defunct, so participatory budgeting can be a way to really build robust advisory council level support. And, to your point, really allow them to infuse the beginning stages of planning that lead to the steering committee creation. And, in the City of Boston, we saw that with the Mayor’s Youth Council. They became huge ambassadors and key to the success of participatory budgeting, and really ran this process, and continue to now. I know that’s true, in terms of what Alex has seen, on the university scale, as well. Things like participatory budgeting on a very, very simple level allow people to connect with one another and identify different things in their neighborhood that they didn’t even have any awareness of.

Alexander Kolokotronis: Yeah, to add to that. At the university scale what we’ve seen is—and you’ll find this again; this is another product of the ’60s—so many schools have a series of advisory committees in every aspect of the school structure, in terms of making school policy, or making recommendations for school policy. What we found, when we were doing our participatory budgeting process at Queens College, was that there were all these committees for different things, related to finance, related to buildings and grounds, related to all these things. As we looked through the lists, nearly all the students’ seats were vacant. It really astonished us, because it was clear that in a school with 20,000 students, there was an opportunity there and that no one, nearly no one, was taking up this opportunity to push things forward.

At the same time, we were recognizing that these are advisory structures and, after all, we, ourselves, are pushing for a process where we actually had decision-making power and weren’t simply being shuffled off into advisory seats that we were afraid might not affect change. But the result in having a participatory budgeting process is that people felt anchored, and felt able to try out, maybe, also sitting on some of these advisory seats, and, maybe, also having that feedback into the participatory budgeting process itself at Queens College.

The effect has been, over the last few years, that students have consistently found certain committees are really great to work within and are able to push things that sometimes may spill out of the PB process. For example, we have, at Queens College, a lot of technology projects have been pushed, rather simply having those projects having funds allocated through PB itself, they’ll be brought into the technology feed committee and will be pushed that way. We’ve seen, in that case, a lot of spillover effects in terms of the preexisting advisory structures and how PB not only provides people with the confidence to step up into positions in those councils or committees but also brings in the information and all the different perspectives that are accumulated through PB into those advisory structures themselves, affecting change in a lot of different ways.

And that’s what we’ve seen, where projects have been, ultimately, taken up and have been funded well beyond the PB process itself at Queens College.

Adam Simpson: I’m really interested in what your views are, all of you really, on participatory processes at different layers beyond different governments, including universities, as you mentioned, Alex, or neighborhoods, and workplaces, et cetera. But maybe, in an effort to begin gesturing toward that, I think one of the really resonating things to me about participatory budgeting is that the community—and this is what I’ve heard from Shari and Loriane—is being treated explicitly as the actor rather than something that’s acted upon. Alex, I wanted to ask, in your research, have you seen what effect this level of gesturing toward direct democracy has on broader social participation and building a sense of community and community wellbeing?

Alexander Kolokotronis: Absolutely. I think, actually, this indirectly gets back into one of the earlier questions you asked, in terms of traditions that this all derives from or is related to. A big push in the first half of the 20th century, and is now, of course, creeping back in and is something that is often addressed by The Next System Project is a push towards workers’ control, towards cooperatives, and towards, really, trying to reshape the workplace from something that is seemingly separate, or it feels separate, from us to something that actually can constitute a community in its own right.

Things like participatory budgeting, I think, do the same thing for neighborhoods, and for any institution that’s using participatory, or has a participatory, budgeting process where people might feel quite apart and distinct from their neighborhood. That’s something you’ll experience, for example, in New York City, where I’m from, where people often get caught up in their daily commute, caught up in a lot of the different transformations of New York City, where, maybe, a lot of locally owned businesses have now terminated. A lot of the community and civic life has slowly been drained. And, of course, New York City has been a big battleground for things like this, when we think of, for example, Jane Jacobs in the ’60s and ’70s, and the fights around neighborhoods and maintaining a neighborhood vitality.

Things like participatory budgeting on a very, very simple level allow people to connect with one another and identify different things in their neighborhood that they didn’t even have any awareness of. This is something I’ve seen time and again. But, in terms of my own research, I really look at participatory democracy within public schools. There are a few reasons for that. One, actually, connects to what Shari and Loriane were talking about. I view the adult-child relationship as the first iteration of the expert-layperson relationship. For me, when I think about these issues in terms of expertise, when it comes to architecture, when it comes to medicine, or when it comes to physical infrastructure, and we talk about the very particular distinctions between expertise in all those realms, I try to get at that thinking about, “Well, how is this expert-layperson relationship constructed from the very beginning and, particularly, within schools?”

Alexander Kolokotronis: I think one thing that we see in schools is that kids, and children, and teachers themselves, often experience the school as theirs, like “This is my school,” or “At my school, we’re doing this.” But, at the same time in their daily life, their daily experiences, they don’t necessarily feel the school is really theirs. Something like participatory democratic processes, including PB, really allow for people to not just take ownership of the school, and take ownership in the sense that what is theirs is actually really theirs, but that they are an agent, as you push forward, within that setting and can constitute themselves as a collective agent in the process.

I’ve seen that in my own research in the way in which students and teachers at more traditionally and, dare I say, authoritarian-structured schools have a far different sense of, and range of emotions, when it comes to their setting, than those, even if there are problems and difficulties at participatory democratic schools and trying to build a community around that, as well. I mean, that might be a long-winded way of getting at that, but I think we see that daily in the daily distinctions between different types of schools and how well incorporated people are, in terms of acting within them.

Shari Davis: Alex, you bring up something that’s so important to me and, as you were talking, I was just thinking about one thing. That is, a lot of what we talk about when it comes to democracy—and we haven’t talked about it or defined the problem—there is no secret that a lot of folks are not happy, or feel that government is not designed for the benefit of all. There’s been reasonable research on this, and I think that one part of the long-game strategy to addressing this bigger problem is to change government, and to change who’s in government, so that government looks like the people that we see in communities, so that they’re familiar with the issues, and so that there is more of a conversation, and there’s not this big divide between those individuals.

How do we prepare folks for roles? Not everyone necessarily wants to be, or is interested in being, an elected official. There are so many roles in government that serve community and I ask myself this question: What does lifelong civic engagement look like? What does onboarding look like? I was a young person who started working in government as a teenager and had nearly a 15-year career in local government, and that was unique. How do we not make that a unique story and make that an opportunity that folks can really attain, and lean into, and explore, especially as a young person? I think, to Alex’s point, introducing that in a school context is so important, and then can become foundational. And organizationally, at the Participatory Budget Project, that’s why we’re not only focusing our efforts on the county level, and citywide level, and regional, and larger scale PB, but we’re also really focusing on school, and school-district level PB, because it’s so important to empower our young leaders that are not future leaders but are leaders today, and need tools and support. [Participatory budgeting] is a way to crack that door open, and now we just have to figure out how to keep that door open, because you have people who, when their eyes are open, want to be more involved.

Loriane Ngarambe: For us, we also had our Mayor’s Youth Advisory group that was heavily involved in this whole entire process. And the energy that they brought, and just the innovation that they brought to this process, it wouldn’t have been what it was without them. To just piggy-back off of when you’re trying to say, “How can we get communities that are more centrally engaged?” You’re right, it is foundational. It needs to start early on.

I know when we would go out into the community and tell people about what this PB process is, you have community members who almost feel siloed from the democratic process that’s going on. You have these people in position of power making decisions, but, to them, it’s like, “I got to figure things out for me. I don’t have time to worry about what they’re doing or how they’re doing it.” Because, in their minds, decisions that are being made are not being made with them in mind because, if that was the case, then these decisionmakers would be way more informed about what really matters for people living in poverty. They’d be more aware of what is it that community members are doing that works, that we can build from, what is it that community members are missing that we’re missing on our end, as well.

This process, a lot of it, was just relationship building and education, as well, too, really informing community members of the power that their voices have. The power that they have, as a collective, when they really stand up and say, “Hey, enough is enough,” or “This is what we need. This is what should be happening.” In RMAPI community engagement, it’s a huge cornerstone, a huge part of the work that we’re doing, because we understand poverty is not going to be reduced, eradicated, or any other word, if community is not a part of what’s going on.

Again, I keep saying this, PB is a way to crack that door open, and now we just have to figure out how to keep that door open, because you have people who, when their eyes are open, want to be more involved; they want to know, “How can I, in my sphere of influence, do something that can make a difference? How can I be more involved? How can I be part of this greater democratic process? What does that look like? There just needs to be more education and strategies around making sure people get the information that they need. So, whatever they decide to do with that, at least, they have that information.

Adam Simpson: I want to turn from how we’re thinking about community engagement and broadening this scope of democracy, and think about how racial equity fits into that. Shari, I know I’ve seen you highlight, and you, as well, Loriane, in the Rochester-Monroe Anti-Poverty Initiative, a participatory budgeting process as a pathway to creating racial equity, and bring that, really, out of frame and into focus. Shari, could I start with you? Can you tell me about the impacts you’ve seen and how participatory budgeting, and participatory processes, in general, can really begin building pathways toward racial equity?

Shari Davis: Absolutely. Since 2009, the first instance of participatory budgeting in the US, we’ve seen over 400,000 people be empowered to decide how to invest over $300 million on community projects in over 30 cities across the United States and Canada. The participatory budgeting projects have played a lead role in most of these processes in US and Canada at some point. For us, ensuring equity, and racial equity, in particular, is a little bit different in every space. No two PB processes are the same, but, honestly, I can’t find two communities that are the same.

With that said, layering in the important elements of racial equity, it really goes back to design. That means, who is designing the process? What are the considerations that they’re making? And how are we ensuring that this process is really centered around people? People that are, you could say, often left out, but these end up being the folks that are easiest to ignore. With that said, I think a lot of our strategy around racial equity is having honest, open, and transparent conversations, and allowing folks to be on the same side of the table. A key element to that is excellent facilitation and training folks to be able to hold space, so that they can have some group agreements, and really be able to dig into some things.

I’m really interested to hear how this rolled out in Rochester, in practice, and I can give a few other examples.

Loriane Ngarambe: I know, when we were designing the process, there was a lot of time and emphasis around making sure that this made sense for our community. What does that look like? We wanted to be very intentional about reaching to, but also reaching past, the usual suspects, as I like to refer to them. Anytime there’s anything new that comes into Rochester, those engaged community members are always there. But we wanted to make sure that we were making an effort to reach behind them, to the people who are not engaged for whatever reason. When our steering committee first came together, there were a lot of honest, sometimes uncomfortable, conversations that needed to be had to say, “All right, so why is it that anytime something new comes to Rochester, the people who are going to benefit from it the most, are always the last to hear about it.” And when they hear about it, it’s usually when decisions are already made. There’s a plan already being rolled out, and they didn’t know anything about it, but what can we do, this time, that’s different?

Having those intentional conversations was really important. They did so much work in creating the guidebook and making sure that they were taking into consideration things that normally wouldn’t be taken into consideration. So having single mothers at the table, having young people at the table, was really important as well. Then having predominantly context experts and then having people, who I call the hybrids, context experts who also are content experts, so they can live in both of those worlds. They’re almost like culture brokers, so they know how to navigate both of those worlds, and being able to think practically like, “Okay, this is something that’s going to make sense,” or “This is something that’s not going to make sense,” and just encouraging those conversations. As staff persons who are helping facilitate this process, we wanted to make sure this was as community-led as possible.

We wanted to do everything on our end to mitigate barriers, to mitigate influencing what these guidelines or rules that they laid out look like, and just really making sure this was community-led, and community-owned. I think it made a huge difference for this process to be what it was.

Shari Davis: Loriane, I have a question for you. First, let me just commend you, because I think often folks get nervous when we talk about opening up transparent processes that center race and, really, that center tension. I think that there’s a way that tension can be healthy and tension can be toxic. But I’m curious if you can talk a little bit about your experience in moving this through government and getting to a “yes” and dealing with some of the strong hesitation around being so transparent. I think folks are often afraid that it’s going to be counterproductive and not productive. You’re telling a different story. I know a different story. How do we get there?

Loriane Ngarambe: Yeah. At RMAPI, we were lucky enough to be able to roll out this pilot PB process without having to do it through government. Our process wasn’t through a city government. We secured the funding, and we helped roll out the process. So, as a result, we didn’t necessarily have to deal with the red tape of government and the bureaucracy that lies everywhere. We were able to really make the process whatever is the community members who were helping design it be what it was. Then, also, at RMAPI we have our three guiding principles of addressing structural racism, being trauma informed, and community building. This is something that we infuse in everything that we’re doing.

Any project, any solution, any process, conversation that’s being had, these guiding principles are meant to be utilized as lenses in which we’re doing all of this, so that we’re not just sitting around sugarcoating what the real problem is. We’re trying to deal with the root causes of why we’re here, and what we’re going to do, and what’s going to make the most sense. Having these tense conversations goes with the territory of doing RMAPI work. So having the right people in the room, and being able to sit in those moments, was interesting, because it was almost the community members themselves guiding that process. When you were in moments of tension, moments of people not sure of how to receive what was being said, just sitting in that moment and facilitating: Where are people’s heads at? How do we move past? What about this do you not understand? Just allowing the space to really get through that, I think, is and was really important.

Shari Davis: Adam, the reason why I very much tagged Loriane in on this is because I mentioned no two PB processes are the same. But a big piece in addressing racial equity is grassroots leadership, and that usually looks like a strong community-based partner that is very much involved in this, because they have the connections, they’ve done a lot of this work, and they have a really good sense of the landscape. Oftentimes we’re talking about bringing these folks together, making these connections, getting them on the same side of the table. I can’t think of one PB process where this wasn’t the case, where there weren’t really strong relationships with community-based organizations that were centered on things like racial equity, housing inequality, gentrification, and really inviting those folks to be at the forefront who are doing some of this deep engagement.

Shari Davis: We need those community ambassadors, whether it is a youth council, an advisory board, or, really, those groups that have the deep relationships in communities with those folks that are often hard to reach, is a key element to centering this process and really using a lens of equity, racial equity, gender equity, and these other pieces. We have to be clear on the goals at the beginning of the process, otherwise they will not show up in the design.

Adam Simpson: Before moving on, I wanted to follow-up, Shari, on something you mentioned earlier about the first PB project in the United States, or in North America, maybe, you said, beginning in 2009, now, over 400,000 participants across the country. I get a sense that PB is spreading, and I wanted to ask, why do you think that is? Why do you think? Maybe, it’s something to do with this particular moment or maybe it’s something that the idea is just compelling to a lot of people. But why do you think PB is growing in this popularity, in this particular moment?

Shari Davis: Well, I think, to be honest and completely transparent, we’ve seen some slower growth of participatory budgeting in the United States compared to what we’ve seen in some other places. I think there are a few things to think about here. In Paris, France, for example, they do a PB process with over 100 million euros, a school-based process, a district-based process, and a city-wide process. The mayor has committed 5 percent of the budget to be decided on by folks that live in the City of Paris. So it can be that big. We’ve seen countrywide PB in Portugal. We’ve seen really big large scale PB processes in other places across the world. And, I think, we’re starting to see some real growth of participatory budgeting in the US since 2009. And, as I mentioned, the practice of participatory budgeting is different in every process, but it’s also a bit different in the United States, and it should be, because the context in the US is a bit different.

I do think that we are seeing a continued growth, and there is a moment here for us to think about what participatory democracy looks like overall, and really, for us, to think about what civic engagement looks like beyond just voting, and what building pathways to lifelong civic engagement are. And, I think, participatory budgeting is not the silver bullet or the only solution, but is one of some innovative solution that should definitely be considered in addressing this. And I think we’re in a moment where we’re seeing an uptick, and a real desire for things like PB.

Adam Simpson: Absolutely. I just want to follow-up on that. As a tool for building community power, and a sense of community cohesion, I’m hoping to hear from folks about how far they think these processes can go beyond budgeting, really, to local issues like zoning or economic development plans. The recent fiasco with Amazon HQ II in New York City comes to mind immediately. But being conscious that one of the criticisms I’ve heard about PB is sometimes that of the decisions that are put on the table by various local governments, et cetera, the amounts of money involved are relatively small, or the decisions involved are not as consequential as they could be.

Maybe we could start with Alex. Do you think that participatory budgeting, or participatory processes more generally, could be applied to bigger economic decisions whether we’re talking about the state level, or the regional level, or even the federal level, or is there really, truly a scale dilemma and this is much more appropriate for municipal processes? I’m just wanting to get a sense of the scale and what are the limitations or the potentialities.

Alexander Kolokotronis: This is a question I thought about for years. Recently, I started to think about the criticism of PB, and what that criticism says in the more underlying way. I think what the criticism of PB does is that it actually says something about the way we understand money. The way we understand money is really this very orthodox neoclassical economics-based outlook of seeing money as something really separate from us. If you take an Econ 101 class, the way it starts, and the thing that animates it all the way through, is the supply and demand curve, and that’s that.

Somewhere the consumer and the producer are supposed to meet at this optimal space. The whole point there is the service or good being exchanged. Money is external to that. Money is not seen as really a part of that. Money is just this separate thing that, at best, maybe helps facilitate that private meeting or exchange. This is the private money story, where we really start our barter. Now, and I think in recent years, what’s really taken off, especially with modern monetary theory, is another story that is more historically based, that it’s not that we were born as these isolated individuals who come to market and then separate; we’re really born into a community, and when we think of things that way, we understand provisioning far differently.

Let’s say I’m looking for a shoe and someone else is looking for a bottle of water. Instead of understanding it as, “Well, we so happen to have this double coincidence of loss, so I’ll give you want I need, and you’ll give me what I need.” It’s rather more like, “You have this, I owe you one.” Then that person, who I’m exchanging with, owes someone else one. Then we come to the question of, well, what is one? One of what? This is something covered really well in David Graeber’s Debt: The First 5,000 Years. We see that this story is not really barter comes first, then money, and then credit. It’s really credit comes first and then money.

The reason why I’m taking this story and bringing it here is that when you think of it this way, money is really a part of, and really emblematic of, the community that we’re building. And money is not really the super-private isolated thing. Actually, money is public. And if we think of it that way, things like participatory budgeting are not simply this add-on thing. Think about participatory processes, like participatory budgeting, as actually really necessary to community control. They’re not simply a tool for someone to maybe pat themselves and look better. And they’re certainly not necessarily this thing that some on the left will criticize as things that are just about crumbs and don’t really get at bigger things.

In fact, I think a really big power of participatory budgeting is it gets at the very question of how we experience money. In our day-to-day lives, we experience money as something completely alien to us, whether it’s our boss who pays us, whether it’s a government that bureaucratically allocates funds, or whether it’s money in terms of the sense in which we don’t have it. What I think you experience with PB is actually really unique and almost a rupture in how we relate to each other through money. We start to see money as not this necessarily disgusting alien thing that’s above us and controls us, or that we lack control in relation to. I mean, you can think of when someone might feel quite ashamed of spending money. I mean, all these dynamics. All of these are reversed or upended, when we do something like PB, where people start to relate to each other through, “Well, how are we going to allocate funds?” Participatory budgeting is an absolutely necessary component to any version of community control at any scale.

I think PB is an absolutely necessary component to any version of community control at any scale. As Shari was referring to, there are some national initiatives, such as in Portugal, with national PB process there, and there have been statewide PB processes, such as in Ontario, Canada, or in Rio de Consul, Brazil. So there have been some initiatives to try and get at this, and it’s really about, I think, getting at the mechanics. But PB is, I think, connecting very much with modern monetary theory, and I don’t think it’s absolutely coincidental that we’re seeing these things dovetail, in terms of their rise in the current political moment, that we’re fundamentally re-understanding what money means, or can mean, to us, and that it neither has to be this thing that is a fetish, as Marxists, might frame it, as the only way money can exist, nor does it have to be a thing where it’s something that we just have to, as a result of being a fetish, feel ashamed of even touching. Rather, it’s something we have to embrace and redesign to have an experience of something far more shared and something that will facilitate the provisioning of community-building, of individual fulfillment, such as you see in the project development phase, where people are individually really cultivating their own projects. These are all things that PB points the way to and, I think, it’s something we have to add more to.

Adam Simpson: We’re getting really close to time, so probably this is my final question. Given what Alex just said, I want to ask you, Loriane, the outcomes of the antipoverty initiative that you were involved in, in the Rochester, Monroe area. The outcomes touched housing, they touch food scarcity, so many different things. And the way Alex was talking about, they do have to do with money, but also these are also very much policy issues. I wanted to know, specifically, what’s your thinking on this? What are the limits of participatory budgeting from just your recent experience of participatory processes? Do you think that it’s possible to engage in the way that you’ve been engaging, in the Rochester community, to make these broader decisions about the local area, and the different bigger economic decisions more broadly?

Loriane Ngarambe: Right. At the Rochester-Monroe Anti-Poverty Initiative, our goal here is to bring system change. So, there’s a lot of information gathering that is required. There’s a lot of understanding of what is a problem; what’s been done that wasn’t working, that’s working; What are some new strategies; what are some new solutions. I think, more than anything, what the PB process does, as I keep saying, is brings community into this conversation and, now, we have to figure out a way to keep community as part of these conversations and part of this solution-creation. But then, also, it sheds light on what the real problems are. It sheds light on not just the problems, but what some of the assets are within our communities that are so often overlooked. Because, when you’re talking about poverty, you come at it from such a deficit point of view and often overlook just how people are making ends meet, how people are living day-to-day with the dire circumstances that they’re living in.

When you’re talking about systems-level change, when you’re talking about policy-level change, all those conversations require evidence, and PB, for us at least, I would say has been a great tool, a great process to bring to light what evidence exists. Because it’s really hard to look at over 2,600 people who voted on the projects that won, because these are things that they feel are important and should be highlighted, and should be regarded as conversation builders around how to really support individuals living in poverty. I think it just provides the evidence to be able to change policies and change systems in a way that, if this was just a closed-door process, when just policy makers stand on policy gains, it wouldn’t be as effective, and it wouldn’t be able to get to the core of what it is that people really actually need to live self-sufficient, full, and complete lives.

Adam Simpson: I know I said that was probably my final question, but I’m going to kick this to Shari, if you don’t mind. I just wanted to get your perspective, just a closing comment given what was just said by Alex and Loriane, on your view of participatory budgeting in the context of system change.

Shari Davis: I think Alex and Loriane raised some really wonderful points. One of them that’s sticking with me is, when we’re talking about participatory budgeting, we’re not talking about blowing up or highlighting only problems. We’re talking about thinking through solutions. That includes really doubling down on the assets that exist in place, building them out, understanding what to duplicate and invest in. Participatory budgeting is about understanding community spending priorities, government spending priorities, and having an opportunity to reconcile them. This is about an opportunity to lift up the lid, invite folks in, and do things better. Ultimately, we’re talking about building more sustainable, effective, and responsible communities. This truly is an opportunity for us to maximize the finite resources that we have to serve folks the best way that we can. This is one strategy of many to do exactly that.

In terms of broader systems change, participatory budgeting, when adopted, marks a real change in the way that folks do business, a real change in the way that government operates. For me, and for many folks, this is a beginning of a larger participatory democratic wave that, I hope, really is fueled and ignited, so that we can see things like participatory budgeting really take hold and become the way that we do business.

Adam Simpson: I can’t thank you all enough for joining me today to talk about participatory budgeting, and all of your work around it. Just a final thank you to Shari Davis, Alexander Kolokotronis, and Loriane Ngarambe. Thank you all for joining me today on the podcast. It’s been a pleasure.

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Executive Summary: Electric utility (re)municipalization is gaining popularity as a strategy to shift away from a reliance on fossil fuel extraction in the context of combating climate change. Across the world—from Berlin to Boulder—communities have initiated campaigns to take back their power from investor-owned (private) utilities and create publicly owned and operated utilities. Moreover, such efforts are increasingly taking on the perspective and language of energy democracy.

Energy democracy seeks not only to solve climate change, but to also address entrenched systemic inequalities. It is a vision to restructure the energy future based on inclusive engagement, where genuine participation in democratic processes provides community control and renewable energy generates local, equitably distributed wealth (Angel, 2016; Giancatarino, 2013a; Yenneti & Day, 2015). By transitioning from a privately- to a publicly owned utility, proponents of energy democracy hope to democratize the decision-making process, eliminate the overriding goal of profit maximization, and quickly transition away from fossil fuels.

Utilities are traditionally profit-oriented corporations whose structures are based on a paradigm of extraction. Following the path of least resistance, they often burden communities who do not have the political or financial capital to object to the impacts of their fossil fuel infrastructure. Residents living within three miles of a coal plant, for instance, are more likely to earn a below-average annual income and be a person of color (Patterson et al., 2011); similar statistics have been recorded for natural gas infrastructure (Bienkowski, 2015).

These utilities are in a moment of existential crisis with the rise of renewables. From gas pipelines to coal power plants, their investments are turning into stranded assets, as political leaders and investors realize that eliminating fossil fuels from the energy mix is paramount to creating healthy communities and stemming climate change.

Unfortunately, often publicly owned utilities in the United States have similar energy generation profiles to their privately owned counterparts (American Public Power Association, 2015). This paper explores the extent to which publicly owned utilities are reticent to take on the new energy paradigm and evaluates their ability to provide energy democracy compared to investor-owned utilities. The results of this study not only identify what principles of energy democracy currently exist in publicly owned utilities, but also provide strategies to reorient and rebuild publicly owned utilities with strong foundations in energy democracy.

Five utilities in three states—Virginia, Ohio, and Nebraska—were selected as case studies to represent a range of regulatory, political, and geographic contexts. Data was gathered through 25 in-depth, semi-structured interviews as well as additional primary and secondary sources.

Results show that publicly owned utilities meet more of the conditions for energy democracy than investor-owned utilities, but still fall short in many respects. However, their structures provide a better platform to change their orientation to an equitable, community-controlled utility.  The results of this study not only identify what principles of energy democracy currently exist in publicly owned utilities, but also provide strategies to reorient and rebuild publicly owned utilities with strong foundations in energy democracy. By looking to the strengths and pitfalls of these studied publicly owned utilities, energy democracy activists who take on (re)municipalization campaigns can intentionally build out energy democracy and create a more just energy future.

Outlined below are some of the major findings, categorized by energy democracy’s energy portfolio, political, and economic conditions:

Energy Portfolio: The publicly owned utilities studied in this paper have higher levels of renewable energy than private utilities. While one of the publicly owned utilities gains the majority of its renewable energy generation from wind, a significant amount of the publicly owned utilities’ renewables come from large-scale hydro power, which has significant environmental and community repercussions. To further energy democracy, publicly owned utilities should enable much more ambitious renewable energy goals from such sources as solar and wind.

Political: Community members’ lack of understanding of their utility’s decisions and the energy system as a whole is a pervasive problem with all utilities studied, though to varying degrees. This has a direct negative impact on participation in democratic actions—like voting or public meetings—and is particularly troubling from an equity perspective because it leaves an elite few to make decisions. Investor-owned utilities use their economic power to further capture political systems and implement their desired policies. Publicly owned utilities allow for a much larger scope of people who could participate and therefore limit elitism, while still suffering from some inequalities. To further energy democracy, publicly owned utilities should identify ways to increase community understanding and counter elitism by increasing the participation of diverse voices. This could be accomplished through such methods as input from local neighborhood assemblies and diversifying utility boards through seat allocations.

Economic: Neither utility structure studied has expansive decentralized renewable energy in their service area. A system based on decentralized renewables would require a drastic change from current business models, but this shift is much more manageable for publicly owned utilities than for investor-owned utilities that pursue profit for shareholders through constant expansion and capital-intensive—often fossil fuel-based—infrastructure projects.

The publicly owned utilities studied that own renewable energy are going through processes of partial privatization. Existing regulation has led them to rely heavily on power purchase agreements (PPAs) with large corporations—even investor-owned utilities—for their renewable energy needs. This is a double-edged sword. On the one hand, PPAs with for-profit entities can increase the long-term costs of renewable energy for a community (i.e. over the long run, it could be significantly cheaper to use bond financing to build and own renewable energy infrastructure directly). On the other hand, PPAs could be used to further distribute ownership of renewable energy if utilities entered into contracts with local community members. However, none of the utilities studied are currently pursuing this strategy.

Revenues from publicly owned utilities studied are generally paid to local governments and not shareholders, allowing profits to benefit local communities directly. This aligns well with energy democracy values, specifically keeping value local and redistributing wealth within a community. Publicly owned utilities also distributed wealth internally in a more equitable fashion. The highest-paid employees at publicly owned utilities studied never makes more than ten times the average lineman, while the highest-paid executives at investor-owned utilities makes more than one hundred times as much.

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The two-day conference brought together a range of scholars and activists to map some of the different ways the search for just and rapid post-carbon transitions is animating a broad range of interventions—by labor and climate justice activists, designers, architects, academics and artists—and is opening up intersectional spaces across movements fighting for racial and gender justice.

During her presentation at Day Two of the conference (starting at 4:21:15), Bozuwa explained a proposal to take the nation’s energy system into public ownership—from nationalizing the fossil fuel industry to returning energy utilities into community hands. The goal is a rapid transition from a paradigm of fossil fuel extraction to an energy future based on democratic, equitable, community control of the energy system.

Conference organizers and moderators included Damian White, Dean of Liberal Arts at the Rhode Island School of Design; Thea Riofrancos, professor of political science at Providence College, and Timmons Roberts, professor of sociology at Brown University and an associate with the university’s Climate and Development Lab.

Day 1

Day 2

Visit our site: The Next System

The post “Public Ownership and Building the Next Energy System” At The Climate Futures Conference appeared first on P2P Foundation.

An estimated 18 million people who earn less than $28,000 a year (less than half the national household median income) live in manufactured housing. That makes it one of the leading sources of affordable housing in the U.S. Approximately 1,000 manufactured housing communities are resident-owned around the country (especially throughout New England). This includes the 10,000 manufactured homes that are part of network of ROCs organized by ROC USA, a nonprofit enterprise that works to scale ROCs in the United States.

Potential Impact

Converting manufactured housing communities into ROCs offers individuals and families who are often marginalized or underserved in the conventional housing economy opportunities for ownership and control. With this comes the ability to address some of the most pressing issues of our time, including access to affordable housing, climate change mitigation, and residential displacement, since ROC households can manage their community’s affairs in a manner that meets their most pressing short- and long-term needs. In boosting homeownership among marginalized populations, ROCs can ensure that stability and resiliency in the housing economy are not wealth-driven.

Transformative Characteristics

When residents in a manufactured housing community own the land themselves, they have the power to avoid the hazards of traditional, commercially-oriented manufactured housing neighborhoods, where residents own (or rent) their individual homes but the land itself is owned by a company that charges rent, sets rules, and oversees conditions in the neighborhood. In those communities, residents face displacement pressures when the landowners decide to raise rents, sell to another company, or neglect maintenance and upkeep. In a ROC, residents cooperatively own the land and manage the neighborhood through elected representatives to a board. This allows the residents to live without fear of being displaced and it gives them direct control over the material conditions of the neighborhood. Some ROCs are market-rate and share costs are out of reach of low-income families. However, many other ROCs are limited equity cooperatives, which keeps the cost of shares low and preserves affordability.

Examples

Pasadena Trails, Houston, Texas

The Pasadena Trails ROC was formed in 2009 when residents of the community purchased the land in their neighborhood from an Arizona-based company. The community received help with financing and other technical assistance from ROC USA and Community Resource Group. Residents leveraged newfound ownership and control over the community to finance and redesign the community’s drainage system, an investment that ultimately protected the community from the widespread flooding caused by Hurricane Harvey in 2017.

Takesa Village, Mead, Washington

This ROC was established in May 2016 by a community of 149 residents. They saw the ROC as a step toward tackling a culture of crime, drug abuse, and abandonment surrounding the community, issues that were neglected while the community was under private management. Residents bought their community with financing support from Capital Impact Partners and the Washington Housing Finance Commission. Since the ROC was formed, the newly organized and better-engaged residents saw significant physical and quality-of-live improvements in their community.

Challenges

ROCs can be handicapped by difficulties in building an engaged community and plagued by an inability to secure financing. They may confront unfamiliarity with ROCs and negative perceptions of manufactured housing communities. Supportive local policies can help, such as “right of first refusal” rules that require that manufactured housing residents have a chance to buy their community before it is placed on the private market. So can technical support from one of the many local, regional, and national cooperative assistance organizations, such as the Cooperative Development Institute.

More Resources

ROC USA is a nonprofit organization that works to scale resident ownership of manufactured homes. The organization provides technical assistance and fundraising support to communities hoping to convert from private ownership to resident ownership.

Download PDF here

Originally published on The Next System

Photo: Pasadena Trails Co-op

The post Resident-owned community appeared first on P2P Foundation.

Isaiah J. Poole: Communities can do more than just put a Band-Aid on the problem of gentrification and displacement, and a panel of researchers who held a forum at the Democracy Collaborative’s offices in Washington discussed the best thinking and work happening on both sides of the Atlantic to keep housing affordable for everyone.

In a panel entitled “The Politics of Land and Housing,” The Democracy Collaborative’s Jarrid Green and Peter Gowan were joined by Laurie Macfarlane, who is based in Edinburgh, Scotland and is co-author of The Economics of Land and Housing and editor of openDemocracy. (Watch the full panel discussion below.) Together, they discussed the financial-sector-driven processes that keep housing costs spiraling upward and how we can move toward a world in which housing is a social good for all rather than a profit center for a few.

“The place that we’ve landed in is suboptimal for a whole range of reasons, and inequality is growing between those who own property and those who don’t; those who are facing higher rents and higher costs versus those who are riding the wave of increasing asset prices,” Macfarlane said.

Macfarlane stressed that “there is no single-bullet solution to what we do about this,” but the two speakers that followed laid out a set of strategies that are beginning to bear fruit either inside or outside the United States.

Gowan drew a contrast between the housing market in Ireland, which mirrors the United States in that it is driven largely by borrowing and rent-seeking, and Austria, where 40 percent of the residents live in “social housing” that is publicly owned and regulated. While in Ireland housing prices soared in the early 2000s before entering a crash that paralleled the U.S. financial crash in 2008, Austrian housing prices have remained stable throughout the past 20 years. One reason, Gowan said, is the attraction of good-quality affordable social housing to middle-class as well as lower-income households, who therefore don’t feel compelled go to into 15-to-30-year-debt to buy a home.

To Gowan, Austria’s example suggests that the US should overcome the negative stereotype of “public housing.” He concedes “there were legitimate issues” with the low-income housing built in decades past, but “that’s not to say that we can’t do better in the future. It’s not to say we can’t have a democratic community- or publicly controlled housing sector that is racially integrated, socially just and fit for the future.”

Green discussed work he did with the Alliance for Housing Solutions to help community leaders in Alexandria, Va., just outside Washington, to grapple with a market that has become increasingly inhospitable for low-income people.

The set of solutions that are being discussed around community control of land and housing, through such strategies as community land trusts, limited equity co-ops, land banks, resident ownership communities and community benefit agreements – together make up less than one percent of the housing economy in the United States, Green said. “It’s a mix of things that are approved by voters at the ballot box as well as some things that agencies can do on their own” with state or local funding. The challenge is to scale-up these solutions in the midst of what is increasingly acknowledged as an affordable housing crisis.

The strategies to address gentrification and displacement discussed in this panel will be explored more deeply in a report by Green that the Democracy Collaborative plans to release in August.

Originally published on The Next System

Photo by Ted’s photos – For Me & You

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A historical legacy of displacement and exclusion, firmly rooted in racism and discriminatory public policy, has fundamentally restricted access to land and housing and shaped ownership dynamics, particularly for people of color and low-income communities. Today, many communities across the country are facing new threats of instability, unaffordability, disempowerment, and displacement due to various economic, demographic, and cultural changes that are putting increased pressure on land and housing resources.

As communities and policymakers alike consider ways to confront these threats—especially within the context of the urgent need for community and economic development—there is an emerging opportunity to develop strategies related to land and housing that can help create inclusive, participatory, and sustainable economies built on locally-rooted, broad-based ownership of place-based assets. This report provides an overview of strategies and tools that, as a group, represent an innovative and potentially powerful new approach—one that establishes, in various ways, community control of land and housing.

These strategies and tools can 1) begin to institutionalize democratic control of land and housing, 2) support racially and economically inclusive ownership and access, and 3) catalyze the deployment of public resources to support new norms of land and housing activity. Importantly, “anchor institutions”—large not-for-profit entities, such as hospitals and universities, that are rooted in local communities—can play a key role alongside community organizations and local governments in catalyzing and supporting such strategies.

Download and read the full report now.

We are making printed copies of this new report available to policy advocates, community organizers, and anchor institution stakeholders interested in advancing on the ground work to shift control of land and housing to communities through democratic ownership. Request copies now.

The post Community Control of Land and Housing appeared first on P2P Foundation.

As our demands grow bolder—true full employment, the rebuilding of the social safety net starting with Medicare for All, an overdue green and just transition—so will the naysayers’ inevitable refrain: “How will you pay for it?” This Left Forum panel on June 5, 2018 moderated by Gar Alperovitz brought together the speakers listed above. They show a way out of the austerity trap and reveal that the obstacles to bold action at a national scale on jobs, healthcare, and climate are political, not economic. This is a partial, edited transcript.

Gar Alperovitz: One of the things that’s happening around the country, as you probably know, is  there’s an upsurge of interest in the idea that the banks ought to be under public control. There are public banking initiatives in something like 30 or 40 cities and a couple of states around the country. There was a forum on this  only six years ago promoting the idea. We’re seeing all over the country a very, very fast pick-up on this, including in Los Angeles, Washington D.C. and several other cities. State legislation pending in Michigan and Washington state.

The subject we’re going after today is probably the other piece of the puzzle, monetary policy and money, because there’s a revolution going on in that area as well. It’s not simply the establishment of public banks, but actually getting down to how money works, a subject that has been obfuscated for many, many decades.

We’re going to go into how the revolution is emerging very, very fast on the ground as well as in theory.

Our first speaker, Stephanie Kelton, is currently a professor of public policy and economics at Stony Brook University. She was also chief economist on the minority staff of the Senate Budget Committee. More important, she was the key economist behind Bernie Sanders’ presidential campaign, so we’re delighted to have her. She is also one of the leading experts in this field and getting a lot of attention, deservedly so, for not only for opening a way to rethink monetary theory or monetary practice, but for explaining it to the public in serious terms.

The ‘pay-for-it’ trap

Stephanie Kelton: I’m going to try to focus my remarks on three broad topics. I’m aiming at a progressive audience obviously, but honestly I give a version of this exact same talk most of the time to conservative audiences. The response that I get in those audiences, it would surprise you probably, is extremely positive.

What is it about what I’m going to say that can resonate both with audiences like this and with a very fiscally conservative audience? Let me jump in and we’ll see where this takes us.

This is just to tell you the kinds of things progressives are up against when they propose a big, ambitious agenda.

Bernie Sanders runs for president on the most ambitious agenda I have seen in my lifetime. Hillary Clinton publishes in her book a bit of an exchange she had with someone who said, “Man, it’s awful. Every time we propose something, he goes bigger. We say we want debt-free college. We want to help make college more affordable. He says, ‘Let’s make it free.’ If we say we want to make health care more affordable and increase access, he says, ‘Let’s just make it free.’ Every time we propose something, he goes bigger.” In this exchange that is included in her book somebody said, “This is like Bernie saying, ‘I think America should get a pony.’” Hillary, the fiscally responsible voice in the room says, “How will you pay for the pony?”

It’s the idea that all of this stuff is so grandiose that it’s beyond reality. This is what we’re up against as progressives, putting forward a bold agenda.

This again is Hillary Clinton, from years before the 2016 campaign, when she’s a senator. She’s talking about the reality of being in Washington D.C.She says, “The reality is you cannot cut taxes or increase spending unless you can pay for it.”

What she’s saying is, and I worked on the budget committee, if you propose to do something, you’ve got to show people how you’re going to pay for it. If you want to cut taxes or you want to put more money in education or infrastructure or defense or anything else, you’ve got to show where the money is going to come from. A congressional budget office has to take a look at it. Things are supposed to be done in a deficit-neutral way so that you’re not adding to future deficits so that you’re not increasing the size of the national debt.

Okay, so Senator Sanders gets accused of putting forward a big proposal and not paying for any of it, right? Everybody “knows” that. That was the accusation, but that wasn’t the reality. He actually attempted to play by Washington rules, which are you’ve got to pay for the stuff you want to do. If you go down his agenda, every item on the agenda, you could really draw a line from what it was he was proposing to the source of revenue that was supposed to pay for it all, whether it was Medicare, infrastructure, making public colleges and universities tuition-free. If you actually looked at what he proposed, it was paid for in the conventional sense of the word.

Now, obviously if you have to find the money, as Hillary Clinton says, then where do you look when you need money? Who’s going to pay for stuff? Who’s got the money? Obviously the rich people have the money. It’s a natural place to look when you’re trying to find the money to pay for a big ambitious agenda. You go for the billionaire class or you go for Wall Street, and you say Wall Street will pay.

If it’s making public colleges and universities tuition-free, which was one of the things he proposed, the pay-for on the other side of that was a tax on Wall Street speculation. You’ve all heard this probably 100 times.

How do you pay for a progressive agenda if these are the constraints because this is the current narrative? This means that you have to fight two battles. You have to fight for the agenda that you’re fighting for, and you have to sell policies on their own merits, and you simultaneously have to wage war on another front, which is you have to fight to raise the revenue. You have to get people to vote for the tax increase, for the closing of the loopholes of whatever it is that’s giving you the additional revenue. You’re waging two battles when you do this. My spending proposal is this, and here’s where I propose we get the money. This one can’t happen unless and until this one happens and you have success on the revenue front.  It actually means that you are in a very real sense dependent upon the rich because you can’t feed a hungry kid, you can’t fix crumbling infrastructure, you can’t provide health care for all, unless and until you can claw some cash away from the people who have it. You need their money. It makes you dependent upon the wealthy.

I think progressives should ask themselves, “What is the purpose of tax?” If your instinct, if your impulse is to say to pay for the stuff we want, my suggestion is you’re doing it wrong.

Rethinking taxes

In the 1940s, the New York Federal Reserve Bank was headed by a guy named Beardsley Ruml. He wrote this really important piece in 1946 called “Taxes for Revenue are Obsolete’” What’s he saying? I don’t know that I need to read the whole thing, but he says basically the need for the government to raise taxes in order to remain solvent and run its affairs is completely yesterday. We don’t do that anymore. Why? Because we have a central bank and because we went off the gold standard. The fact that we changed the monetary system in this fundamental way opens up space for us to do stuff we couldn’t do before when we had to find the money.

You’re trapped in a gold standard framework when you’re operating in this frame of mind that money is this finite thing that exists somewhere, it’s physical and you’ve got to find it, and you’ve got to go get it in order to spend it. Ruml says, no, no, no, that’s not how it works in the modern era – by the way, modern in the 1940s, and we still haven’t caught up with this reality.

Ruml goes on to say the purpose of the tax is not to fund the federal government. The purpose of the tax is multifold. One important thing it does is it allows the government to remove some money from the economy so that you don’t overheat the economy through government spending. In other words, taxes help you keep a lid on inflation. If you just spent money into the economy but you didn’t tax anything back, you’d run the risk of overheating the economy, causing an inflation problem.

Another thing taxes do is affect the distribution of income. You lower taxes on some folks, they end up with more take-home pay. You raise taxes on others, it takes the money away. You impact the distribution of income. You use taxes to incentivize or disincentivize behavior. A carbon tax is a good example. You don’t want as much pollution. You don’t want certain activities taking place, put a tax on it. You want to encourage certain other things like people driving electric cars, give a tax incentive or some form of a subsidy to encourage that.

The last one is he says you might want for some reason or another to have a line item where you can keep track of a certain program, like for example Social Security or the Highway Trust Fund or something like that. Taxes do a lot of stuff that’s important. What they don’t do is provide the government with revenue that it needs in order to operate.

Go back to this picture. You don’t tax the rich because you need their money in order to feed a hungry kid or fix a crumbling bridge. You tax the rich because they are too damn rich and extreme concentrations of wealth especially, but also income, are bad for the functioning of the economy, are bad for democracy. That’s the rationale for taxing the rich. Not because we can’t do other things unless we get money from them to pay for it.

You tax Wall Street speculation because you want to discourage certain behaviors, not because you need their money that you raise from a financial transaction task in order to pay for free college. Think it through. Suppose you said, “We’re going to make public colleges and universities tuition-free in the US. It’s going to cost about $70 billion a year to do that.” Now, to pay for it, we’re going to put a tax on Wall Street. Every time somebody buys stocks or engages in derivatives trading or bond trading, they’re going to pay a small transactions tax. That’s our tax.

Now, you simultaneously have said you want to break up the banks, you want to make banking boring, you want to shrink the size of the financial sector, and you have made yourself completely dependent upon what in order to fund your education proposal? Wall Street speculation. Not only do you need Wall Street to continue to speculate, but you’re going to need them to do more of it over time and grow because of the amount of money need to pay for college and university. You don’t want to hitch your wagon to the very thing that you loathe and are trying to shrink as part of your overall economy. There is a rationale for doing it, right? That would be to discourage certain behaviors, not to fund programs.

The household fallacy

My argument is that when we think about the government’s financial operations we tend to do so with reference to our own. We think of the government as a household. I say, “Well, I can’t go on spending more than I take in year after year and borrowing. I’d go broke.” This is a huge mistake, and if progressives do it, they need to stop it right now. The federal government is nothing like the household. The federal government plays by a completely different set of rules compared to all the rest of us.

If we want to go out and buy a car tomorrow, we have to have the money in the bank or be able to prearrange the financing. The dealership is not going to let us drive off the lot with a car until we have security financing to pay for the car, right? What we think is that the government prearranges its financing – the T.A.B. or “taxes and borrowing”; it collects taxes from the rest of us, it engages in borrowing when it sells bonds. It arranges the financing. It raises the revenue. It has money and now it goes out and spends. The spending comes last.

That’s completely backwards. What happens in reality is the federal government – the House and Senate – get a budget together. If the budget passes, there’s an appropriations process. It is through the appropriations processes that the budget authorization for government spending is triggered. That’s how the government pays for everything. We spend first, and the taxes and borrowing are secondary. The rest of us can’t do this. Money matters.

The fact that the federal government has control of the U.S. dollar, creates it, issues it, and is its sole source, means it can never run out of money.. You can try to create it, but you’d get arrested for counterfeit. You can’t do it. You can’t create high-powered money. The government’s money is special.

How should progressives answer the question, “How will you pay for it?” It’s a trap. Don’t fall into this. What they’re really asking is not how will you pay for it but who will pay for it. The question is designed to name the enemy. Who’s going to be footing the bill? In other words, who’s paying the T.A.B.? Don’t answer that question.

The bottom line is all this pay-for stuff is built around the idea that deficits are bad. They aren’t. Dr. Evil told us a long time ago that deficits don’t matter. Well, it turns out they do, but not the way we usually think about it. Deficits matter, but not because they add to the national debt, burden future generations and all that kind of stuff, create instability in the economy. Deficits matter because the government’s deficits become surpluses somewhere else in the economy. Guess what? Dick Cheney knows it and the Republicans know it. How do I know that? Because they just passed tax cuts that will add $1.5 trillion to deficits over the next 10 years. Why did they do that? Because they know that when a government is increasing its deficit somebody else’s surplus is going up, and they know exactly whose surplus it is. They’re using the budget deficit to channel financial resources to the people they are trying to help. Democrats or Greens or whoever could be using budget deficits to channel financial resources, infrastructure, real things, to the people they’re trying to help.

How should progressives talk about money, debt and taxes? Don’t repeat this stuff about taxes paying for federal government programs. It’s not taxpayer money. This is the wrong frame. Don’t talk about the debt as if it’s something that we owe. It’s something that some of us own. You may have treasuries. Mostly they are concentrated in the hands of wealthier individuals. Don’t talk about government money as if it’s something that the government needs to get from us. They’re the source of the money. We get it from them. They don’t need it from us.

An economy on FIRE

Gar: The next person is going to give us the next step. Michael Hudson is the distinguished professor of economics at University of Missouri, Kansas City. He’s also a research fellow of the Democracy Collaborative. Michael has been in this for a long time. Michael, take it away.

Michael Hudson: My first discussion of modern monetary theory really was in Canada 40 years ago. I was the financial advisor to the Canadian government. At that time the big problem from Canada was how provinces would get enough money to build infrastructure. I’m going to talk a little bit about that because it’s the same problem that the United States is facing today. You can understand it, I think, more clearly in the international sense.

There are two ways of financing infrastructure. One would be if the government, the Bank of Canada, which was more than any other bank able to create its own money, spent the money into the real economy for infrastructure. The banking lobbyists – I won’t call them conservatives; they were radical reactionaries and lobbyists for the banks – said, “Look, if the government creates the money, you’ll have to borrow it, and you’ll have to pay 5 percent, 6 percent, but you can save half a percentage point by borrowing German marks or Swiss francs.”

This was Trudeau’s liberal government, and you can’t get more right-wing than the liberals in Canada. What they did was they borrowed billions for Deutsche marks and Swiss francs that were turned over to the government central bank. What did the government do? All this domestic spending in the real economy was in Canadian dollars to hire Canadian labor, to buy Canadian goods and services, to build the infrastructure.

My point was, why do you need Swiss francs and German marks if you’re going to create dollars? The Swiss francs and German marks ended up in Canada’s central bank as its foreign exchange reserves. What did it need these reserves for? If the government is going to create the money as a result of this borrowing abroad, why have the foreigners?

Well, the answer from the banks was you need the foreign banks as an honest broker because they’re responsible. In literature, you think of bankers as being responsible, but they’re really not responsible. What happened after 1979 was that the Canadian dollar went down from about $1.06 into the $0.80s. The Swiss franc went way up. The German mark went way up. The result was that Canada had to pay a 50 percent premium on the capital as a result of having the banks work as the honest broker for them.

None of this was necessary. The government could spend it into the real economy. The problem is the private sector is not just the real economy. The private sector also is the FIRE – finance, insurance and real estate – sector. You can see today the ability of the government to spend money into the economy through the Federal Reserve’s quantitative easing, technically bailout money to subsidize the finance, insurance and real estate sector. This is considered to be noninflationary.

Who gets to create money

You have to ask, what kind of inflation are people talking about? When they talk about government spending into the real economy and running deficits, they say there will be price inflation. What they really mean is wage inflation. What they want to do is keep wages down. When they talk about inflation of prices, they really mean living standards going up. We don’t want that, do we, because we call that consumer price inflation. We don’t call that rising living standards. The fact is, there’s a disconnect. There’s no reason why consumer prices should rise when wages go up. There’s a disconnect with the largest increase in prices that we have today, whether it’s housing prices and rents, as you have in New York, or medical care.

The government is able to create money now for the financial sector, but there is this patter about why you can’t run a deficit for the domestic economy. Now, what is true for Canada is exactly what Stephanie has explained for the United States. Banks can create money simply on their computers. If the rich people lend this money to be spent, how is the price effect any different from the government simply creating the money? The effect is exactly the same. That’s what they don’t get. You don’t need to borrow to spend into the economy at all. It’s a science fiction story, a parallel universe, as if the governments are somehow dependent on the banks.

All this developed about 100 years ago when the Federal Reserve was created in 1913 and ‘14. Before that, there was a crisis in the United States in 1907. Congress had maybe 18 volumes of national monetary commission reports. One of the volumes explained everything that the Federal Reserve had done, creating money, moving it around 12 districts, pumping it into the economy for the autumnal drain when you have to move the crops. All of this was done by the treasury. The difference is that the treasury was controlled in Washington. I have on my website from an Indian journey all of the documents of how the Federal Reserve was created, essentially to take control of the money supply out of Washington and distribute it to the banks in the various Federal Reserve districts.

You have a whole political fight between the FIRE sector and the government sector. You can only understand this fight by looking at the politics of it.

Unforeseen financialization

The fact is that Karl Marx was much too optimistic about the financial system. His volume three of “Capital” was all about how finance tended to grow and extract more and more from the economy. The FIRE sector today essentially funds real estate. It extracts rents. It raises prices. It backs great monopolies. Banks don’t create money into the real economy basically. They create money to buy companies, divide real estate already in existence. They transfer wealth, but they don’t really produce.

I’m working with Gar’s group to re-describe how the gross domestic product accounts. We actually treat the FIRE sector, finance, as a subtraction from gross domestic product, not an addition to.

Getting back to Marx, Marx expected in the late 19th century that the historical destiny of capitalists, he wrote, was to take banking and money creation out of the feudal stage, out of the medieval European stage and industrialize it and essentially move towards public banking. The whole 19th century was doing this. There are three volumes of the national monetary commissionary report on the right spot for the large German banks and how German banks were working hand in hand with government to finance industry. The Bank of Canada was formed during this time.

Things had not worked out that way. World War I changed everything, and now you have instead of industrializing finance, you’ve had a financialization of industry. What you’re having instead of the government spending into the real economy, it’s starving the real economy.

What happens when a government doesn’t pump money into the economy? That means there are only two sources. One source is international. You borrow the money abroad in a foreign currency that you’ll have to repay at a currency risk. The other source is domestic; you borrow from the banks or you let the banks pump the money into the economy. The problem is the banks don’t pump the money into the economy. The banks only lend essentially for the real estate, corporate raids, corporate loans. They even make loans to corporations to pay dividends. The beneficiaries are the 1 percent or the 5 percent.

The real question of the budget deficits or modern monetary theory is who’s to get the benefit of the money? Will it be the 1 percent or will it be the 99 percent? The answer can be increasing the flow of funds, and the flow of funds, who gets what will make it very clear. Who gets the result of the government spending in forms that do not take the form of a deficit or if it runs the deficit, is it into the real economy or the FIRE sector? You need to divide the private sector into FIRE and into the industrial, agricultural and infrastructure.

Gar: Let me say, I suspect there are people out there, because I’ve done this myself several times, who hear the words ‘the banks will create the money’, and that doesn’t ring straight for most people, that money is actually created. Those questions, I’m sure, are going to hang in the air into which modern monetary theory has the answers. I want you to understand that.

Another way to think about it, although we can easily get into a trap about taxes here: When the government wants to run a war, money does not seem to be a problem. It creates money when it wants to, and it taxes back some of it if it likes to. By way of comment, having talked to a number of folks, the word ‘create’ kind of gets in the way sometimes if you’re not economists.

Fear of a job guarantee

Our next speaker is Pavlina Tcherneva, an associate professor and chair of the department of economics at Bard College and a research associate at the Levy Economics Institute. She’s led the way in showing very, very practical applications of the theory.

Pavlina Tcherneva: Thank you. You are all, I’m sure, familiar with the seven deadly sins. Today I would like to address the seven deadly fears of economic policy. Mostly I’d like to address and face those fears and how to defend a progressive agenda, whatever that may be.

The policy proposal that I’ve been working on for 20-odd years is an employment program that has become known as the job guarantee program that has recently entered the mainstream conversation. A number of senators and representatives have endorsed the program. There are lots of versions of the program out there, but it is a recognition that the government has a responsibility to do something about the persistent problem of unemployment.

What I’d like to do today is basically address some of those seven deadly fears. As the program has discussed, there’s a lot of response, both on the right and on the left, and a lot of it is quite alarmist, frankly. I’d like to ease our fears by addressing each one of them.

First, what is the job guarantee? Essentially, it’s a public option for jobs that offers decent work at decent pay. The public sector acts as an employer of last resort, if you will, when people seek work and they’re unable to find good work at decent pay.

It is a permanent program. The unemployment problem is an ongoing problem, and thus, this program is a standby option for jobs. It’s federally funded but locally administered. It’s voluntary. Nobody is asked to work for their benefits. It’s open-ended. You can go to the unemployment office, and you seek work. There will be a list of options for you. The way we propose it is that those list of options will largely focus on public service and the neglected areas of public sector work. It’s open to all people irrespective of their labor market status, race, sex, color or creed.

The way I think of this program is that it’s an employment safety net, the way we have safety nets for various other problems. If the problem is that you don’t have retirement insurance, we guarantee it; we have Social Security. If the problem is access to food, we guarantee that there will be access to food.

It’s also a transitional program where people essentially get their starter jobs if they need to. They get their stepping stone. They enter into this program and then transition out of it if they so desire.

Overcoming the spending myth

Let’s discuss the fears. The first one that we normally have to address is the fear of spending. It’s based on a deep misunderstanding of what money is and what it does. Again, Stephanie explained how normally there are images that are conjured in our mind that, “Gee, my hard-earned money. I’ve been saving it, and now the government wants to tax it away from me so that it can pay for these policies. Who knows if they’re going to be good or bad?”

We just need to give up this myth of the taxpayer money because this is not how actually the public sector spends. I want to add one other purpose of taxes to the list that Stephanie provided: taxes create demand for money; for the dollar, in a sense. Just think of it this way: If the government tomorrow decided to tax you in Canadian dollars and April 15 you have to deliver Canadian dollars or euros, what will you ask your employer to pay you? Will you ask them for dollars or will you ask them for euros? The tax in this coercive way, if you will, creates demand for the very thing that the government issues: the dollar. The reason is the government needs to be able to spend something that we value to be able to fulfill its various public service objectives.

Here’s one way of thinking about it. The government is the monopoly issuer of the dollar. It is the ultimate source of dollars. Unemployment in a way is people seeking dollars but not able to find them. Whatever the other arguments for addressing the problem of unemployment, and we can discuss that, there is one key aspect to this problem. It is that there is only one sector that can actually choke up the demand for dollars. There’s only one sector that can actually provide it to those who need it, and that is the public sector.

Another piece to the story is that the unemployed are already in the public sector. The government is already responsible for the unemployed. We do the right thing. We provide unemployment insurance, as inadequate as it might be. We provide various other income supports, even though those programs are also underfunded. We have this understanding that we have to provide for people who don’t have access to decent employment or decent incomes.

We provide a slew of programs, but we don’t provide the one that many people need, and that is employment. We are not only responsible for the unemployed, but we also bear the costs of underemployment poverty. If you think of virtually all social, economic and political problems, in one way or another they are connected to communities that have lost their economic life, people who have lost economic opportunities. The distress that families feel not being able to provide for themselves. These are large invisible but very real costs that we already bear.

The fear of spending is the first fear that we need to debunk. This is a bit of an esoteric point, but I want to put it out there. If the government sector is the monopoly issuer of the currency, and it provides the currency in exchange for employment in the public sector, public sector work, then there is an exchange. We establish some sort of baseline value for that currency. We anchor the value of the currency and labor power. We know exactly what it is worth. It is worth $10 or $15 for one hour of publicly useful labor. In a sense, it’s our gold standard. It uses not gold, but it uses labor to anchor the value of the currency.

Big numbers and big government

The next fear is the fear of inflation. I think that that is really the fear of big numbers when we estimate what a job guarantee would cost. We have a proposal that you can find at the Levy Institute website that estimates a job guarantee would cost between $300 billion to $500 billion a year to employ 50 million people. A lot of people have said, “Oh gee, this is an enormous program. It’s going to be very inflationary.” Is $300 billion really inflationary? The Department of Defense, including the war budget, is about $900 billion. Social Security is upwards of $1 trillion. Medicare is $700 billion. Medicaid is $600 billion.

Somehow $300 billion is supposed to generate this massive inflation that will erode the value of the currency. This is not really the problem. A lot of people are actually worried that this actually might push up wages, that it might actually provide wages at a decent living level. We understand that the job guarantee will be the effective minimum wage for the economy, so why would you work for $7 an hour if there’s a public option of $15? The private employer has to match this. We have modeled this, and we find negligible impact of this very bold program on inflation.

The other thing that virtually everybody misses in this discussion is that a one-time adjustment in prices and wages across the economy, across the board, is not inflationary. Inflation is when prices keep going up. If the wage goes up from $15 to $16 to $20 to $25 to $30, then the private sector will have to match it. Yes, that will be inflationary, but no, we are anchoring the floor. We are raising the floor, and we are anchoring it at $15.

The second piece that everybody misses is that the job guarantee actually shrinks when the economy is growing. When the economy is growing, when private employment is growing, when there are ”inflationary pressures” in the economy, the program shrinks. Actually, it’s a dampening effect on inflation, not a fueling effect to inflation.

There’s a fear of big government, of course, but most people ignore the fact that we already have big government. What I already pointed out is that government has devoted enormous amounts of financial and real resources to deal with the fallout from unemployment, underemployment and poverty.

In this sense, the way to think about this is that the job guarantee actually reduces the costs of unemployment.

Whatever you discuss, whatever your policy priority is, always separate the financial cost from the real cost.

When you defend Social Security, don’t fall into the trap of this discussion of how will we pay for it. The question is what would we do with a whole bunch of people who are retiring who don’t have the goods and services that they might require to live a decent life. It is not a matter of financially providing for them but providing for them in real resources.

It’s the same thing with unemployment. It’s not the problem of paying for unemployment, but the problem is, do we really want to maintain this paradigm of neglect, of abandoning our public spaces, of abandoning our public purpose, of allowing people to suffer all the consequences that come with unemployment.

Double standards

There’s also fear of the administrative burden. This is a unique double standard that the job guarantee faces. We never hear that we can’t go to war, we can’t engage in nation-building because it’s going to be an administrative nightmare. The job guarantee uses the existing institutional infrastructure to simply expand the number of jobs out there.

Is it really so difficult to employ 50 million people? Is this really the biggest problem that the government is facing? Well, public education serves 50 million students. Nobody is saying we have to take it away because it’s an administrative nightmare. Social Security, 50, 60 million people. Medicare 44 million. Medicaid 70 million. Yeah, it’s easy to sign a check, but all of this involves a fair amount of administration, and we don’t discuss these.

Fear of boondoggles. This was the fear during the New Deal that somehow the government is going to create bad jobs. Well, just go to the Living New Deal map, and you will find what we did and the legacy that we left. Don’t fall into the trap of productivity. What’s the productivity of these jobs? It’s a natural impulse to say, “But what will people really do?” I can give you a very long list of what they can do. Good useful jobs. The way to answer this question is what is the productivity of the unemployed today? It’s negative productivity. You have malnourished children that go to school because their parents don’t have income to provide for them. That is the productivity you need to be focusing on.

Finally, there’s the fear of political revolution. This was raised by Robert Samuelson in The Washington Post. He says, “Imagine people who work in the private sector who suddenly realize the public option provides Medicare and child care, and they don’t have it. This is going to be enormously disruptive to the business as usual model.”

Look, in information technology, disruptions are considered great, right, progressive. In public policy, disruptions are awful, terrible. This is a defense of the status quo. It is the defense of a model where firms are only profitable when they pay poverty wages. We don’t want to defend this model. We want to disrupt it.

Finally, I think all of this amounts to pure change, but Americans are really not so afraid of it; a recent survey showed that the job guarantee had overwhelming support, and even in deep red states upwards of 70 percent of respondents supported it.

Those of us that have been working on this project are very encouraged, excited that it is in the mainstream, but my cautionary note is that we put way too much on the shoulders of the job guarantee. We have had decades of neglect of the public sector. We have enormous environmental challenges. We are suddenly putting all of these problems on the shoulders of the job guarantee and saying, “Hey, look, see, this is the program that will solve these problems.” It will not.

This program provides jobs for all. This program is a very crucial piece of the progressive agenda, but we need so much more than that.

Rethinking the monetary system

Gar: I want to introduce Raúl Carrillo, who’s the staff attorney at the New Economy Project and a member of the board of directors at the Modern Money Network, and he’s going to talk about actual on-the-ground projects that he’s working on and how they relate to this theory.

Raúl Carrillo: What I’m going to try to do, depending on your opinion, is synthesize or bastardize some of the ideas that were just presented by three of my heroes here and articulate those in a language that is useful, I think, to organizers, activists, people who are in this economy trying to heal the wounds, trying to take care of other people, trying to actually introduce some of these intellectual paradigms to work on the ground.

I’m particularly going to focus on two movements that I’m a part of. The first is the Modern Money movement. I’m affiliated with a number of modern money organizations, but principally Modern Money Network, which a few of us started several years ago when we were law students at Columbia and activists. We started thinking how does this kernel of what we consider to be factually correct analysis of the economy connect to law, organizing, technology, all these other things? How can we build bridges? How can we create packages that are useful for activists and organizers to use?

Over the last five years or so we’ve held about 70 symposia in the United States, United Kingdom, Germany, Australia, Brazil and a few other places, trying to connect MMT (Modern Monetary Theory) to other things.

The other one is that I work for the New Economy Project, which is a 20-year-old nonprofit here in New York City, and we do two things. One is we fight corporate power. I personally operate a financial justice hotline where folks can call when they have problems with banks, debt collectors, landlords, etc. They come to the office. We try and help them out on a very individual level. We also bring some impact litigation.

The second thing that we do is community economic development. We try to build community land trusts, financial cooperatives. We work with co-ops, all the good stuff that I know a lot of people in the audience are involved in already.

What is “the New Economy movement”? The essential idea is we’re trying to move out capitalism, but we have a very, very strong focus on environmental sustainability. The production system with FIRE (finance, insurance and real estate) on top of it, as Michael mentioned, is tricking us, so how do we get out of here?

The New Economy Project has a particular focus on something called the “just transition,” which arose in the 1980s and 1990s. The idea here is that we don’t just want to go to an economy that’s more sustainable. Along the way we want to heal some of the wounds that have been caused. We want to help people who face the biggest threats from ecological disaster. That means a particular focus on racial justice, gender justice, all the various forms of social justice that need to come along with a push to an environmentally sustainable world.

How does Modern Monetary Theory help? I’m actually going to borrow a quote from one of the organizers of this panel: ‘What MMT and PK theory does is it concentrates our minds on the real limits, on the real things we need to make more sustainable.” That means we’re focusing on the real: What’s happening to people, what’s happening to communities, what’s happening to the planet.

The dig-burn-dump economy

If we’re talking about an economy with limits, money is not necessarily the enemy. In fact, a lot of MMTers agree. A dear friend, Fidel, often says our economy runs on waste now. One of the fears, fear of waste for the job guarantee, fear of financial waste, fear of fiscal waste. That’s nothing. We make that stuff. It’s a legal construct. It’s a social construct. Really, the problem is when money is used to burn up a planet.

This is how an environmental justice group in Oakland called the Movement Generation Justice and Ecology Project describes the process that the industrial production system applies to our planet and thus to us: We dig up resources, we burn them, then we dump the waste, we churn it up.

Not only does the industrial production system do this to nature, but the financial system does this to people. FIRE burns people. It’s right there in the name.

What does the FIRE system do? It converts a participant in the economy, you or I whether in our capacity as a worker, a tenant, a borrower, a debtor of some sort, and it turns us into nonrenewable participants. It treats us like it can draw money out of us and then discard us, whether that’s in a place of employment, whether that’s in the credit system. It treats us like we’re disposable. We are waste.

How did we get here? Again, lots of different leftist stories on how this is done, but I think that MMT adds a particular element to this. We all know the story of enclosure, property rights, etc. People become dispossessed. They become part of a labor force that is roving. We don’t have property. We can’t work just for biophysical resources. We can’t just find some land and grow some food, even if we wanted to. We have to pay taxes. By taxes, what we really mean is any kind of fines, fees, obligation with the state. That means the fees you get for walking while black in Ferguson. That means student loan interest. That means a wide variety of things.

The point is the system is set up so we have to get money, and people take advantage of that. Now capitalists are not only trying to control the means of production. They’re trying to control the means of the means of production, the FIRE system, as well as the industrial production system.

How does this system keep going? It acts like the money comes from the users, from the resources that are being used rather than by the system itself. We talked about the taxpayer money frame, how that’s particularly harmful. When we think that the money to keep a machine running has to be extracted from people, we get some really terrible political dynamics.

The other lie is that banks are just either making money wildly or they’re using our deposits and turning back around and the banks rely on us. I would say that the banks are rogue public utilities. They have been chartered by the government, licensed by the government, regulated by the government, and they’re out here not doing their job. When we talk about pushing them to do particular things, we have to recognize that it’s even worse than we thought. They’re powerful. They have the money power. They can create and generate credit at the point of lending. They can do a wide variety of other things that are very, very terrible.

Austerity makes room for financial extraction. If the government is not putting money into the economy, the banks are controlling the borrowing process, and we’re all going to die if we don’t stop it.

Money doesn’t grow on rich people, not on wealthy taxpayers, not on banks. What we want to do is get the money power away from the banks, away from rich people by making claims on the state. You’ve got that giant piggy bank, call it what you will, money can come out of the state. Monetary sovereignty means that you can spend on people, on planet, on communities.

The way that we stake our claim and make the state do that is we establish rights to the things that we want. Then the dynamics for fiscal spending become repooled. We pull money out of state coffers, depending on how much we need based on each eligible individual instead of waiting for whoever in Congress, rich folks, to write that check and change the dynamics.

Basically what we’re talking about here is that MMT allows activists and people to, once they establish rights, pull money out of the system rather than wait for them to push.

What does that mean for activists, for organizers, for leftists? We’re establishing rights. We’re marching for jobs. We’re marching for various other freedoms. We want the entitlements. Fiscal austerity is the enemy even though we might want to be austere towards nature and other sorts of respects.

The plant-nurture-thrive alternative

Now I’m going to go out on a real, I think, new limb here. I’m going to suggest that MMT combined with a new-economy focus on environmental sustainability can take us away from the dig-burn-dump model and into a plant-nurture-thrive model.

Plant. We establish rights with this right to housing, with its right to jobs. We free up space to grow, to pool funding and to have a space outside of the profit motive, even outside of the revenue motive. We can start to do new things within that space. We fertilize the space with more of that sweet, sweet money from the public government. We can start to heal wounds, start to do things more equitably. People from bad sectors will leave to new jobs and a job guarantee. People from bad buildings will leave to new houses and new forms of shelter with the home sprawl movement that’s going on.

I’m just going to do a little bit of implementation here and talk about how MMT can potentially change things. I think that public money for public purpose is awesome, and that’s going to give us a platform to do new things. Eventually, it can be public money for public power. We can do even more. The way that dynamic works is by reversing essentially the dig-burn-dump cycle that we have going on here.

We can eventually move on to even stronger things like unions, to collective bargaining. People leave spaces that are extractive. No one wants to be a part-time prison guard anymore. No one wants to work in fast fashion. No one wants to work in fast food. Not necessarily everybody is going to leave, but it provides people with the opportunity to do so, so we can move again towards a regenerative economy, towards people leaving extractive industries.

Eventually, you can layer on democratic processes into the job guarantee, into the new space that’s been created. Participatory budgeting and worker co-ops can fold into the job guarantee.

Just two more examples of implementation. Extractive finance in housing is dispossessing people, either through the initial capture of land or gentrification. The landlord is in charge. The landlord kicks you out. The landlord doesn’t like you. The landlord segregates people. You get redlined. You get gentrified. You get surveilled by all these crazy consumer reporting systems. Then the threat of homelessness keeps you in line. This is true even for the middle class who’s enthralled to the banks, if not to landlords.

With MMT, what does it look like? You establish a right to housing. MMTers don’t necessarily believe in that, but I do. The point is that you can establish a right. You create a space. Once it’s guaranteed that everyone gets this thing, now you have room to maneuver. The rights pull the money down to tenants. You can have things like social housing projects. Then you can start doing things that are more democratic over time. Community land trusts, mutual housing associations. These things can all be contemplated once we have the funding and public capital. Again, that sweet, sweet fertilizer.

In East Harlem, the New Economy Project is helping to build a community land trust where you take land off the market, the residents own it. These things can be helped by MMT.

Finally, everybody is familiar with the access to credit scenario. I think that in and of itself is a problem that we think that people don’t have enough loans. Really what we want is for people to get more money, for people to get money from the state and from benefits. More people will get higher wages whether that’s through a job guarantee program or something else.

In the instance that people need credit, right now they’d be set with a bunch of predators, whether that’s payday lenders, whether that’s banks acting terribly, whether it’s this new fintech stuff from online, which actually turns out to be just as predatory as the analog version. What you can do with an MMT framework is again, establish public infrastructure. Establish rights. You can do some forms of postal banking. You can do public banking. From then on out the threat of you having to go to a payday lender is gone, so you have room to maneuver. Again, political room and fiscal room. You can start doing things like complementary currencies. You can start doing things like public banking. You can start doing all these more democratic things once the public sector is putting pressure on the private sector and giving civil society room to grow.

As you see here, there is a regenerative model for all of these things. You just need the public money. My friends in Reston, England have a complementary currency program. They generate money, or you could say their own forms of IOUs, which they use in the local community so that people only do business with local business. They’re keeping what they call “clone town London” out of there. These are acceptable in receipt of taxes, which is very interesting.

Finally, Gar mentioned the public banking movement. The New Economy Project and a coalition of other grassroots groups are launching an effort to create one here in New York. The idea there is that the public bank will generate credit to lend to democratic enterprises, ideally we would want federal money, but this is something that is powerful that municipalities can do, and in the process we can highlight a lot of what money really is. It’s a public feature that should be used for the public good, and we can do a lot of political education with this as well as whatever material healing help to organizations throughout New York City. Public money for public power.

Gar: Let me just say one thing. I’m from Racine, Wisconsin. I had an aunt who ran a little tiny Jewish bakery. She used to say, “You know, during the Depression there wasn’t any money around. Then they decided to run a war, and there was all kinds of money around. Why can’t we do that when we want to do that?” That is probably the point.

Photo by kevin dooley

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