Month: March 2018

Guns, Public Spaces, and the Arming of the Commons

by Matt Stannard
March 31, 2018

How should those concerned with economic justice orient ourselves to the discussion about school shootings and the availability of firearms? Many vocal revolutionary lefties have taken the position that “if the cops and white supremacists have guns, we need them too,” and although I don’t necessarily disagree with the principle of revolutionary self-defense (and support oppressed groups defending themselves by whatever means they think necessary), I think it’s important to reflect on the kind of world we are trying to build, as well as the way gun proliferation manifests itself in the capitalist political economy.

Public conversations about safety and security are not exactly self-conscious of their own kierarchic biases; think of how the silly “free range parenting” debate ignores the condition of communities of color, for whom there are often no “free ranges” where children are not in danger of being harassed or murdered by police. Likewise with the debate about whether to allow lethal weapons into public spaces. Liberals will ignore how gun laws hurt oppressed communities. Conservatives will ignore how the weapons industry and the myth of the armed white savior celebrate racist violence against those same communities. I also agree that all laws, including the regulation of firearms, fall harder and more capriciously on people of color—and are often constructed with that very aim. So I’m not looking to extend the hand of a deeply corrupt (even if occasionally redemptive) state onto those communities. At any rate, I’d prefer to debilitate or eliminate the private arms industry rather than punish individuals for possessing guns.

The reason my wrath is reserved for the arms industry is that they make a hell of a lot of cash while lobbying for the wholesale saturation of public and private spaces with guns. Gun lobbyists want guns to be an intrinsic facet of the very structures of everyday life. Besides being an overwhelmingly lethal vision of life, the arming of the Commons is contemporaneous with the privatization, the enclosure, of the Commons. Spaces ruled by the constant threat of lethal violence can be neither free nor cooperative. In the privatize-and-arm paradigm (for the forces behind privatization are absolutely allied with the agenda of the NRA and gun universalists), each affluent home is a well-armed fortress, less-affluent homes depend on the good graces of the wealthier classes (for whom they work anyway), businesses are all lethally armed, able not only to eliminate individual, pathologically disaffected worker-assailants, but also to intimidate workers from collective actions like strikes or slowdowns. In a world where no spaces are unarmed, and people cannot exist in mutual vulnerability, there are no truly public spaces.

Like privatized public spaces, armed public spaces substitute physical force for mutual deliberation, making hierarchies inevitable and participatory governance impossible. So it’s especially disturbing that advocacy of firearm security is focused on turning the “soft targets” of public schools (an especially vulnerable and valuable part of the Commons) into “hard targets.” The construction of the fearful student, the existentially insecure youth, is a fast track to the commodification of life. By defining the lack-of-firearm as a condition of insecurity, we invite the incursion of a warrior class into our already materially overdetermined class relations. All of this makes sense against a backdrop of creeping incipient fascism and neoliberal privatization economics. “Whether wielded by heavily armed police, mass shooters or right-wingers,” Sean Larson writes, “the sheer volume of guns in the U.S. serves to militarize underlying social conflicts.”

That political economy of weaponization is manifest across many current points of the gun debate. So when the White House and Department of Justice promise to aid in the training of armed teachers, they will undoubtedly award firearm training contracts to for-profit gun school cronies. A cluster of banks with proven records of racism and/or criminality–Bank of America, Deutsche Bank, Wells Fargo, JPMorgan Chase, Fifth Third Bank–are providing financial support to arms corporation Remington, as it slogs through bankruptcy. Other banks have refused to do so, citing public perception and general decency. Conservative lawmakers, put off by insurance companies’ risk market-based reluctance to insure schools where teachers carry firearms, are considering forcing those companies to provide the insurance, an irony several layers deep. Here in Wyoming, gun manufacturing businesses prop up a piece of the state’s conventional economy, and business groups welcome the prospect of new gun manufacturers setting up shop in the Cowboy State.

All of this is part and parcel of an economy based on extraction and exploitation. Citing Pamela Haig and Richard Hofstadter, Sean Larson’s amazing article traces the gun market to the desperation of arms manufacturers when wars end. It begins immediately after the Civil War, when

major gun manufacturers were faced with a dilemma: how to create a civilian gun market when the major demand from the military had fallen off sharply . . . in the 1870s, Winchester advertised its Model 66 as useful for “Indian, Bear or Buffalo hunting.” These early links between gun sales and imperial expansion, however, were nothing compared to the cultural campaigns launched a few decades later . . . During the [First World] war, contracts for the U.S. and allied militaries drastically expanded gun production facilities. But planners were already anticipating the postwar problem of, as Haag puts it, “too many guns and too much capacity for too little demand.” Looking ahead to an era of mass production and diminishing practical need for guns, sales and marketing teams set out to construct and reinforce an ideal gun consumer . . . gun manufacturers took the opportunity to monetize racism and fears of radicalism by advertising “riot guns” to business owners looking to protect their shops from “disturbances, either racial or political,” and promoting their firearms as the only surefire way to protect the “industrial life of the nation.” Such overt efforts to militarize existing class conflicts were part and parcel of a broader plan that Winchester called “the biggest and most carefully planned national advertising campaign ever undertaken by any firm of gun makers in the world.”

And so has it continued and evolved.

It’s impossible for me not to see the entire conversation around the Marjorie Stoneman Douglas High School shootings, and the rash of similar shootings, through this lens of capitalism, privatization, enclosure, and militarization. Thinking about how the warrior culture is embedded in materially hierarchical societies, I think about how the gunman, Nikolas Cruz, was a member of the Army Junior Reserve Officer Training Corps program, as were some of his victims. That program’s Parkland-based marksmanship team was partially funded by the National Rifle Association, meaning that gun lobbyists essentially helped train the assailant and wish also to help train those who try and deter or kill future assailants. I can’t even view stories about the non-responsive, seemingly paralyzed sheriff’s deputies who didn’t even try to stop Nikolas Cruz, without wondering whether they were deadened to the danger of the lethality of Cruz’s weapon, or aware of that danger to the point of being terrified, even as LEOs. There are no good decisions in lethalized spaces, and a society wishing to incentivize good decisionmaking should not saturate such spaces with deadly weapons.

Illustration: The Gun Factory, by Joseph Pennell – Online Collection of Brooklyn Museum; Photo: Brooklyn Museum, Public Domain
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On Banking, Heitkamp Forgets Where She Lives

by Matt Stannard
March 14, 2018

Elizabeth Warren is in a bloody fight with the handful of Democrats who support new GOP legislation to roll back Dodd-Frank requirements on banks. The new legislation loosens regulations for smaller “community” banks, but also for the biggest, too-big-to-fail, often criminal banks at the top of finance capital’s food chain. One of the Democrats joining the GOP in that rollback effort is North Dakota’s Heidi Heitkamp, who said of Warren on this matter, “She doesn’t live where I live.”

But Heitkamp lives in the state with the country’s only public, state-owned bank, the Bank of North Dakota. And although she told The Atlantic‘s Russell Berman a sob story about “Democrats [watching] as smaller banks and lenders in their states have been eaten up by larger institutions, due in part to the added burden of regulations created by Dodd-Frank,” there are a couple of half-truths at play here, and Heitkamp should know better.

First, Dodd-Frank has been little more than an exacerbating factor on what was already a steep decline in community bank viability. As J.V. Rizzi wrote in American Banker a few years ago:

There are many things to dislike about the Dodd-Frank Act. Causing the demise of community banks, however, is not one of them . . .  the number of community banks with assets under $100 million dropped from 13,000 in 1995 to 2,625 in 2010–before Dodd-Frank was enacted. The number of small community banks had dropped under 1,900 by 2014.

Second, and even more to the point of why Heitkamp’s position is so weird: the Bank of North Dakota has kept community banks alive in that state through financial support for community bank loans, and regulatory compliance support. The results have been astounding if one compares North Dakota’s community banking scene to the rest of the country. I once explained why in a blog post I wrote for the Public Banking Institute:

Public banks offer unique benefits to community banks, including collateralization of deposits, protection from poaching of customers by big banks, the creation of more successful deals, and . . . regulatory compliance. The Bank of North Dakota, the nation’s only public bank, directly supports community banks and enables them to meet regulatory requirements such as asset to loan ratios and deposit to loan ratios. . . . [I]t keeps community banks solvent in other ways, lessening the impact of regulatory compliance on banks’ bottom lines.
We know from FDIC data in 2009 that North Dakota had almost 16 banks per 100,000 people, the most in the country. A more important figure, however, is community banks’ loan averages per capita, which was $12,000 in North Dakota, compared to only $3,000 nationally. . . . During the last decade, banks in North Dakota with less than $1 billion in assets have averaged a stunning 434 percent more small business lending than the national average.

Stacy Mitchell reached a similar conclusion:

With 89 small and mid-sized community banks and 38 credit unions, North Dakota has six times as many locally owned financial institutions per person as the rest of the nation. And these local banks and credit unions control a resounding 83 percent of deposits in the state — more than twice the 30 percent market share that small and mid-sized financial institutions have nationally.

And so did Ellen Brown, who provides some background on how BND was mandated to help with compliance:

In order to help rural lenders with regulatory compliance, in 2011 the BND was directed by the state legislature to get into the rural home mortgage origination business. Rural banks that saw only three to five mortgages a year could not shoulder the regulatory burden, leading to business lost to out-of-state banks. After a successful pilot program, SB 2064, establishing the Mortgage Origination Program, was signed by North Dakota’s governor on April 3, 2013. It states that the BND may establish a residential mortgage loan program under which the Bank may originate residential mortgages if private sector mortgage loan services are not reasonably available. Under this program a local financial institution or credit union may assist the Bank in taking a loan application, gathering required documents, ordering required legal documents, and maintaining contact with the borrower.

So Heitkamp’s invocation of North Dakota is curious. I can’t say I’m surprised though: BND has saved conservative North Dakota’s financial ass countless times, but state officials and electeds hate acknowledging this–in fact, they almost never do in mainstream contexts.

Warren’s criticism of the new Senate bill is sound. The bill ultimately exempts all but only the top 12 banks in the country from regulations and stress tests. The worst thing Warren is guilty of in this instance is believing (or acting as if she believes) that for-profit banking can be saved at all. We can have that debate another time (I personally believe capitalism makes the consolidation or death of small banks inevitable without massive state intervention). But Heidi Heitkamp’s omission of her own state’s success in propping up an otherwise anemic community bank industry is, to use current parlance, sad.

Matt Stannard writes on cooperative economics, law, and sustainable farming. He was policy director at Commonomics USA and a board member of the Public Banking Institute.

Activists Urge California Public Bank Not Limit to Cannabis Revenue

Grassroots public banking activists respond to CA Treasurer’s Request for Information

by Matt Stannard
March 3, 2018

Commonomics USA (the organization I used to be policy director for, and for which I still serve as a consultant), along with public banking advocacy groups from Los Angeles, Santa Cruz, San Jose, Oakland, San Francisco, Santa Rosa, and Eureka, California, have written a response to California Treasury Secretary John Chiang’s Request for Information concerning a public bank in California, which was written after a year’s worth of public hearings on California’s cannabis banking problem.

That RFI (an RFI is a standard business and governmental procedure made prior to undertaking large projects) was released in late January. But there was a problem with it: It did not reflect the public demand that sparked it. And, given the final direction and gestures of the Working Group, that was a surprise and disappointment.

It should be noted (I’m presently working on a longer piece telling this story) that the public banking movement overwhelmed, and fundamentally changed the focus of, what was initially a reluctant Cannabis Banking Working Group. In early sessions of the CBWG hearings, Chiang went out of his way to instruct participants not to advocate for public banks in general; early scholars invited to the San Diego session insisted public banks were not feasible, and the Working Group was even, at times, jovially dismissive of the idea.

But everywhere the CBWG went, members of the public, during the open comment periods, insisted not only that the Working Group consider a public bank for cannabis revenue, but that it consider a public bank categorically. While Chiang continued to insist that comments be limited to the problem of banking cannabis revenue, members of the public ignored that limit and advocated for the general benefits of public banking.

Chiang’s eventual response was impressive: Rather than further scolding members of the public, the Working Group announced a previously unscheduled hearing in Los Angeles devoted exclusively to the question of public banks, and further, that such a discussion should not be limited to cannabis revenue, but be inclusive of general arguments for and against public banking.

I continue to admire Chiang for that piece of brave leadership (among the privileged, public banking is still seen as a fringe movement, even after New Jersey’s new governor, Phil Murphy, campaigned on creating one in that state). Chiang could have taken a safer way out. Many of us are glad he didn’t.

Nevertheless, the Working Group’s RFI does limit itself to “studying the various administrative and operational structures for organizing a public bank or state-backed financial institution to serve the cannabis industry.” And this has raised the ire of the many groups across California demanding divestment from big private banks and the embrace of a radically democratic model of public finance (more radically democratic, even, than anticipated by the rather conservative, fossil fuel-supporting, pro-police state Bank of North Dakota).

The letter in response, linked below, argues that the best way to envision a public cannabis bank is by envisioning a public bank that is not limited to cannabis:

We invite you to share our vision: a network of public banks (intrastate municipal/regional banks and interstate state banks) that provides a distinct alternative to depositing public monies into Wall Street banks, reflects California’s environmental priorities and social values, and becomes California’s legacy for future generations.
Public banking, at its core, is a shift in the state’s role from mainly providing bank regulatory oversight to also providing banking services, thereby addressing commercial banking market failures. Public banking shares the original ambitions of the postal service, delivering mail to every household, and the rural electrification program, electrifying all of rural America. In our envisioned network, each public bank will provide banking services to its defined community – filling gaps where the market has failed to fully provide affordable deposit, credit, and other investment services. State banks would provide low-cost (probably internet-based) deposit services to large segments of the unbanked population and create pools of credit for large infrastructure projects, affordable housing, and student loans. Municipal and regional banks would focus on developing the small business lending and local investment market; developing financially-responsible alternatives to predatory financial schemes, such as bail bonds and payday lending; and financing local infrastructure projects, including renewable energy and disaster recovery.
The failure of the market is profound and more widespread than is commonly understood. The lack of banking services for the cannabis industry is only one example of this failure. Over 20% of California households are un/underbanked, as documented in 2015 by the FDIC. And, given the ongoing disaster recovery efforts in northern and southern California, the lack of immediate and affordable credit for municipal governments as these communities struggle to rebuild after the fires and floods is a clear shortcoming of the market. Unfunded infrastructure, unfunded new Community Choice Energy organizations, and unfunded affordable housing for public service workers can be financed through a state or municipal public bank. Finally, the state’s revenue shortfall and liquidity crisis during the Great Recession, made worse by the refusal of banks to honor the state-issued IOUs, is another critical example of the need for credit. Without a broader vision, this particular public bank effort by your office may be perceived as exclusive or discriminatory. Such a perception so early on in the public bank feasibility process may be cause for otherwise avoidable resistance from both the public and the Federal Reserve, which may view a public bank “dedicated entirely, or predominantly, to the cannabis industry” as concentrated deposit risk. Moreover, since the Federal Reserve is tasked with addressing financial inclusion, it may be receptive to an expanded definition of financial inclusion based upon a critical analysis of the market failures of the commercial banking system.

While the letter includes specific suggestions that will be helpful to the cannabis industry (such as automated retail cannabis payments), its larger message is that a whole-state, economic and ecological justice approach to public banking is advantageous for the limited policy objective of cannabis banking, because more stakeholders will sign on, and even because the Federal Reserve will be more likely to entertain giving a Master Account Number to a broadly-mandated bank than a narrow one whose only purpose is to circumvent (or, to put it more charitably, make up for the gaps in) federal law. Thus, the response letter suggests “conduct[ing] an ‘intersection’ study throughout state government and its agencies that identifies the specific state social, economic, and environmental policy objectives that a public bank can achieve.”

The letter may be downloaded here:
030218 Letter in Response to RFI