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This month, Scott Ferguson speaks with Mario Rendina about the politics of public employment and training in the United States as they shifted over the course of the late 20th century. Unlike our standard episodes, this conversation is an archival treat: it was originally recorded 11 years ago in 2015, three years before the Money on the Left podcast officially began.

Rendina brings over thirty years of hands-on experience working within municipal government in Tampa Bay, Florida—specifically within Hillsborough County. Grounded in his extensive career as a local administrator, Rendina walks us through the decades he spent supervising county initiatives, sketching out how local experimentation actively moved with and against broad macroeconomic shifts at the federal level.

As Rendina explains, local administrators routinely interpreted federal laws regulating public employment and training rather than passively accepting top-down mandates as fixed or uncontestable. Despite federal directives to prioritize private-sector placement, Rendina and his colleagues routinely found creative ways to bolster and expand public employment—whether by baking future public employment contracts into library building projects or dynamically staffing their own municipal offices.

Throughout the interview, Rendina’s testimony tacitly underscores a core Money on the Left lesson: we must not underestimate the institutional and communal capacities that regional governments always-already have at their disposal. While pro-social change requires funding, local institutions can actively leverage their crediting powers and existing infrastructure to mobilize and value local communities.

Ultimately, the conversation maps a troubling yet instructive historical trajectory from Lyndon B. Johnson’s Great Society to Bill Clinton’s notorious “end to welfare as we know it.” While the federal government never fully committed to a well-compensated, non-exclusive public job guarantee during this era, Rendina’s account highlights genuine pro-social advances we can still learn from today. Crucially, it recounts how Reaganite and Clintonian neoliberalism systematically undercut these endeavors over time, defunding public training programs and increasingly privatizing their leadership, operations, and aims.

Conducted with an eye toward future struggles for a federal Job Guarantee grounded in an inalienable right to work, this interview provides a vital archive from which to advance modern movements for public provisioning.

Additional Resources:

• The Full, Raw Audio: Listen to the complete, unedited 2015 recording on our SoundCloud.
• Conference Presentation: Watch Mario Rendina’s presentation delivered at the inaugural Money on the Left Conference at the University of South Florida in 2018.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Scott Ferguson

So, this is Scott Ferguson. This recording is being done on Sunday, July 12th, 2015. I’m here with…

Mario Rendina

This is Mario Rendina. I have worked with employment and training programs since October of 1969. I remember this because I remember looking down at my very first report. I was the statistician for a concentrated employment program (CEP) and I remember looking down at my first report, and I remember keeping that report in my bottom file drawer, and I would look at it every time I wondered about when did I start working in employment and training?

And I looked down there and there was that October of 1969 report. So I’m pretty sure when I got involved in employment and training programs. That’s when it was.

Scott Ferguson

To explain what has brought us together, I’m interested in Modern Monetary Theory and their ideas about large, publicly funded, full employment programs. These programs would be used countercyclically in relationship to the expansions and contractions of the market. You, Mario, have years of experience not only in job training and in job placement, but when there were opportunities – if I’m understanding you right – when there were opportunities, meaning when there was public funding available, indirect job creation. You have already told me some of these stories about creative ways that this was done. I guess, to me, this conversation, in addition to learning from you, about this history and what we can draw from this history to move forward, but it is basically bringing the power that Modern Monetary Theory or MMT brings us, which is the power to use fiscal policy to fund public works programs as much as we need to. With your experience and know-how – I guess one way of putting this question more simply is – what would you do to bring about full employment in the United States if you had no fiscal limits?

Well, we can start by just talking about your career and let your career be kind of a window into this whole larger history. We should start with where we are right now and what county you’re working in.

Mario Rendina

Right. Well, basically, my career started with the concentrated employment program in Tampa, which was the Tampa CEP, also known as TCEP. There are a bunch of people still around that were involved in the sub-program. 

Scott Ferguson

And what did that stand for?

Mario Rendina

The Tampa Concentrated Employment Program. I can’t remember exactly how many, but I think there were only about nine in the country and they focused on specific areas. For example, in Tampa, it was an extremely poor area of Tampa focused, not the whole of the city of Tampa, but on a specific target area. So it was literally focused down on working at the problems in a very specific area. And it was so highly directed to that area that all the staff, which included coaches for participants in the program, coaches that would get people out of bed in the morning if they didn’t show up for appointments.

You had counselors that were trying to come up with an employability plan for the participant. You had job developers that were going out and finding jobs in the community for folks. You had supportive services. We had a supportive services section, which could buy boots and uniforms or whatever was necessary for the employment of an individual.

Scott Ferguson

Is that where something like childcare could be funded?

Mario Rendina

Daycare was the biggest piece of support services, for us, it was child daycare. Of course, it was a hugely important piece of any US person’s employability plan. So anyhow, it was a concentrated employment program and so all these people were supposed to come from the target area, which made it a very pure group kind of thing. Everybody knew everybody else’s business pretty well. You just live down the block from me, and that’s why you’re coming to get me out of bed in the morning, because I didn’t show up for the job interview. 

Scott Ferguson

Oh, wow. So, it had a community feel.

Mario Rendina

It definitely had a community feel to it. I ended up in the program simply because they couldn’t find somebody that had any kind of a statistical background in the target area. So they had to pull from outside the target area in order to get a statistician in there, even though I had failed statistics once and passed it finally once it was social science statistics for social science sociology majors that had it completed in their major. So, in any case, I was brought in by a friend who, in fact, had gone to Vanderbilt and virtually completed his master’s degree. He said, “you need to come over here.”

Now, I had come from being the first man in Aid to Families with Dependent Children (AFDC) in Hillsborough County. I had engaged them for one year. I said, “I will work for you for one year.” That was my promise. At the end of the year, I went with the TCEP program as a statistician, he had moved to a position of evaluator. These are very, very important things in any programs that we need to look at in the future. It’s evaluating the program. I think one of the major problems that we have is that we’re not doing any monitoring and evaluation of what we do. Did it work?

How well did it work? How is the staff doing? What are the outputs? Where did it screw up in the middle? How does the front end work? So anyhow, the concentrated employment programs were, to my mind, clearly experiments in how we do manpower programs where we have concentrations of poverty and all the things that are implicit there. So that was the CEP programs, and they can be found. You can look them up. There’s very, very little information on the CEPs, but the forerunner of all of that was the Manpower Development and Training Act, MDTA. 

Scott Ferguson

What year was that? 

Mario Rendina

1962. 

MDTA was, as much as I can recall, it went to the school systems for vocational training, manpower development through the school systems, the VoTech system. But it also had an element of on the job training and I think they looked a little bit toward the unions as to what could we do in terms of on the job training?

Basically, it was a subsidy to the private sector for a given occupation. Basically, the policy was that the government would pay one half of the wage for a specific period of time. You had MDTA and so you might have welding going on in the school system and you might have on the job training, doing whatever jobs that the private sector wanted that you were going to pay half for over a specific period of time. That was a pretty limited program, at least in the Tampa area. I think the funding was such that you could maybe put together a complete welding program or something like that, where you’re actually buying the hardware as well as uniforms and that kind of stuff.

Pretty expensive stuff. Then you’d have an OJT (On-the-Job Training) program on the side, which could in fact lead to the skills training, which had a skills training component and you had on the job training components. That is what I remember about the way we operated here. There may have been some other variability, but with the CEP program, you brought in EOA Money, Economic Opportunity Act.

Now we’re talking about President Johnson, right? So it’s “war on poverty” money and it was flexible. That was what brought your counselors, your job developers, the staffing to carry out very much expanded training programs and we’re talking about structural unemployment. There’s no question we’re talking about structural unemployment here. So, virtually, in terms of training, if somebody didn’t have a G.E.D., we’d start there. You do a G.E.D., you get your G.E.D., and then meanwhile, the counselor was trying to develop an employability plan that would go on from the G.E.D. You need the G.E.D. in order to go into clerical training, and so forth.

Meanwhile, of course, for the women, we’re providing child daycare in most cases. We were, in fact, an avenue for welfare recipients. Also, if the case manager welfare could get one of our people into the CEP program, then they knew that we could take care of them and the welfare people didn’t know how to get people on jobs.

So there was the WIN (Work Incentive Program) program, which was later actually. There’s Project Hopeful early on, but, these programs would have a sewing class, that would be your project. So, to be able to get somebody into a program where the client could literally move through the program to reach their capability in terms of education and training, was a big deal.

So they would love to have us take on a participant, and the person was tracked through what was called a central records unit. Now, this was the first tracking mechanism for any of this stuff that was done at a local level. We’re talking about a federal grant, a federal grant to a local area…

Scott Ferguson

One time or ongoing?

Mario Rendina

You would renew it. It was an annual renewal with a contract. It was approximately 3.5in thick. All the regulations related to the CEP are there as part of the contract. And you had assurances that ran on for 50 pages and so forth and so on. Then you probably had a good inch and a half of a programmatic description and budgets.

And so it was a highly structured program in terms of what are you going to do? You’re going to have both statistically and narrative wise, you’re talking about how many you’re going to do? How are you going to bring them into the program? How many are you going to bring into the program? 

What’s the flow through the program? What’s it going to be? How many people are you going to put in on the job training and so forth? But the “and so forth” was the critical part of it, and that was skills training of anything that could be offered by the VoTech system in Hillsborough County, which was absolutely extensive.

We had Erwin VoTech later. I’m not sure that Erwin existed originally. Erwin has everything up to LPN training in the medical area and we had welding and auto mechanics and diesel mechanics and all kinds of other things. But virtually anything that they had and also the things that the community college had. So you have his very, very wide range of available training. On staff, we also had a test administrator. So the test administrator would determine that there was one basic test of adult basic education. I don’t know how I remember that, but, yeah, it was a test on basic education. That would be the first thing that would give you an idea of where the person’s grade level was and so forth.

This test administrator could administer a number of tests. We have ways of determining proper directions of people, whether or not they’re succeeding or not in terms of our design versus the school systems design or what have you, but the central record unit was keeping track of all this, and you would see somebody go into a training component and you would know how long they were there, and you would know what happened to them after they came out of that training.

Where did they go from there? All of this was done on a key punch machine and this is brand new stuff. Nobody else had this kind of a drive system. We had a key punch machine and a counter sorter. The counter sorter is the machine that you see in the old FBI movies when they wanted to show high tech stuff.

It’s the machine that made a huge amount of noise and went “BARARARA” and all the punch cards would go into different piles. Well, we had different decks. We had a deck for intake and it would give you the characteristics of the participants. That deck represented the characteristics of the participants. Then when somebody would move from one place like intake to assessment and orientation.

So, anyhow, you might be in this component, you go assessment and orientation, then you move on to maybe skills training or on the job training or something like that. We had teams that were composed of a coach, a counselor, a job developer – at least those three positions that I can recall. People were being handled by six teams, so we would look at the overall statistics of the program at the end of the month and say, “okay, overall, we had so many placements. We had so many dropouts of different kinds, but we also have evaluations of two types.”

One was of each of the teams. Each team had its own set of statistics that were identical to our inputs and outputs. How many people did you send to orientation? How many people did you send to skills training? How were the exits from your team? So the teams were the output of the total system was the aggregate of the units. So each team was being closely monitored and again, I emphasize, monitoring is the only way that you can achieve anything in these kinds of programs.

You have to know what you’re doing and have responsible staff. In order to affix responsibility, you break it down into units that are small enough to where you can look at it and say, “how come Mary ended up dropping out?” So what do we do? We have a meeting every month with every team. We had one monitor or one evaluator that did nothing but the teams and was responsible for doing reports on six teams every month, on every aspect of those teams. On the other side, we had a monitor that would look at the components. How did we do in welding training? It might be by institution. How did we do in skills training? And we had some subcontractors. So we might be looking at that subcontractor that had a very specific kind of a job.

So anyhow, it was a very comprehensive system in terms of tracking individuals through the system. You often discovered what your problems were as you went along and you would fix the system as you went along. So, you know, people are stacking up here at assessment of orientation. What’s going on there? Maybe we should maybe filter down the front end a little bit so that we can handle all the people that are stacking up. Teams can only handle a case load of so many.

I think we were an unusual program of, maybe, nine in the country. So anyhow, that was an interesting program. That was the first one that comprehensively included all these wonderful things like support services and training and so forth.

The delightful person that ran the summer program, which was a summer program. Delightful lady who was probably someone that was dead serious about making a success of her life as a professional, and ran this program. She had maybe more than a high school education, you know, possibly community college.

She ran an elaborate summer program. We’re talking about a couple million dollars worth of summer programs in all the parks and recreation areas and a lot of county departments. It was a huge job. So it was someone who was taking great advantage of being a staff member in an organization that respected black staff for their abilities.

She had the ability to do this. Wow. Great. Let’s let her do that. Let’s have her do that. I think we tried to figure out how somebody would work out best in the organization. Our counselors were largely degreed people. It started out with the counselors. Under the CEP, that was actually a subcontractor of the job service, the teams of the counselors and job developers were under the job service in our house, but they had a director that was in our house that was the job service. Why? Probably because of the job development part of it. You don’t want to have job placement being done by anybody other than the job service. Right? So you have them over your structure that results in job placement. So that was there. But the counselors could be degreed, and they didn’t have to come from the area because it was under a subcontract.

It was a subcontract of the job service, so they weren’t required to hire only from the target area. So we did have professional counselors, two of which I had brought in later into the social record unit to be monitors or evaluators or statisticians. But in any case, all of these folks worked together as teams.

Everybody we had had quirks. Okay. Weird personal kinds of stories.The fiscal officer was a Vietnam vet. He had fixed F-4 Phantoms at one of the bases in Vietnam. He was about my age, I guess, at the time and he was a tremendous fiscal officer.

He could throw money around pretty well in terms of putting it in the right places and he was known to be a Vietnam vet. I had been a little sailor boy at one time or another, “No, no, I’m not, I’m not the right type to take care of situations.” Right? But we could serve virtually any population that came to us.

Well, we quite purposefully developed training that we knew was in demand that was portable. You are talking about demand occupations, but actually one of the more important things is portability. Portability of an occupation. If you’re a nurse here, you can be a nurse there. LPN, same thing. So the medical stuff is really important in terms of portability.

But anyhow, we saw a demand for therapeutic massage. It paid pretty well. It was portable, and it was the kind of thing that we could buy the table. We could buy the training from a training provider. We could do those things, and we could place them, and that was fine.

The Department of Labor went bananas. Well, when they saw the placement that we had placed a massage therapist with anybody, labor went bananas. “What are you guys doing down there? Somebody is going to get a hold of it, the paper is going to get a hold of it.”

The paper did discover that it was a legitimate placement. That was really flying on the edge. But we knew that that was a portable occupation that had a certain amount of demand. And so we’d risk these things. We’d say, “okay, this is a small school. Let’s give them one. Let’s see if they can turn out one massage therapist where they can place. And if that works out, we’ll give them one more.”

I mean, we were not afraid to do a one off of something. So that’s a pretty good example of what was really pretty out there on the edge of what the government and society was willing to do. You could say it’s therapeutic massage and you could back it up, but it just didn’t sound so.

So we were out there on the edge on a lot of things and we’d have a lot of situations in which we would have two competing privates, like in truck driver training and a CDL (certified driver’s license) will get you a job anywhere. Again, portability. If you can drive a big rig, you can get a job here, you can get a job there. We needed jobs for men, also. I mean, at that point we were just thinking about demand occupations. So you’d have some friction between two privates that both did the same kinds of things. We’d decide on the basis of outcomes on who we’d be using most. We wouldn’t be exclusive to one or the other.

Scott Ferguson

So how often, in these programs, in the late 60s into the 70s, how often did you find that there were always demand sectors that you could train, support, and funnel people into?

Mario Rendina

Yeah. I remember inflation but as the economy receded, we were getting into a major recession eventually. Then it became really difficult. But it was at that point that CETA (Comprehensive Economic and Trade Agreement) went to public service employment. Title VI. Title VI of CEDA is public service employment. It was countercyclical.

We were working with structural unemployment. That was our big deal. All of a sudden we’re talking about countercyclical. And we were saying, “what the hell is countercyclical? Counter to what? It’s a cycle, right? Counter to what cycle?” You know, we didn’t know cyclical.

Scott Ferguson

What year is this? 

Mario Rendian

It was ‘73 that the act was made. But I’m pretty sure our recession was getting into the early 80s. You can probably place better than I can.

Scott Ferguson

I think there were several in there.

Mario Rendina

There were several in there. But one that was most profound is when they started pouring a lot of money into Title VI. It was interesting because under the CEP, under TCEP, under the original program, they had, what I now can only assume, was Labor’s attempt at a pilot for public service employment.

We got a small grant for the public employment program and it was like $30,000 or something. What the heck are you going to do with $30,000? And it needed to be a public employee. How many can you hire for $30,000? I amused myself by saying, “look, we’ve got a program that if I hire them into the Central Records unit, they can enroll themselves. They can put themselves into a job, which is to monitor themselves.”

I said, “you know, this could be done with $30,000. You can’t hire more than one person. Why not hire somebody that can also help us out with the rest of our monitoring and stuff.” So anyhow, that was the public employment program and the giggle on that one was I said, “public employment program. Ah! It’s the PEP program!” Labor came down on me like you wouldn’t believe, with Palmdale boots, “No, we’re calling it the PEP program. You can’t call it the program.” “Okay.” But it was this tiny little thing, but it really was the forerunner of the whole Title VI public employment. They didn’t get much of a test out of us.

We had one, right? We converted them. We turned them into full-time employee. They worked up until 2000. They retired from the county. Anyhow, prior to 1970, we were under the hospital welfare board of Hillsborough County. That’s who the grant came to. In January of 1970, we became a county department. So, there’s the transition where we became county employees, but we were funded throughout the whole CETA and so forth. So anyhow, that is kind of a divisor, because all of a sudden you have to have benefits and so forth.

You’re getting into recession and public service employment and Title VI. What does it do? Jobs for people that met the definition of unemployed for a very short period of time. It was the job service definition of unemployed, meaning that you didn’t have a job and you were seeking employment, you had to be seeking employment, and you didn’t have a job for a period of time. I don’t know what it is, two weeks. Whatever it was back then, it was a relatively short period of time.

Scott Ferguson

So this wasn’t really for the long term unemployed.

Mario Rendina

Well, it was because people are coming out of college and they don’t have a job and they don’t have a horizon for a job. We employed a lot of those too. But, what was it for? Okay, it was government jobs that had a huge diversity in Hillsborough County. I’ll get into that in a minute. 

But also for private not-for-profits. And it was jobs. All we would pay is the salaries. So in the county, we built all the boardwalks at Lotus Lake Park, for example, and several other parks. The county would provide the materials and we did all the labor, including a supervisor. You had a contractor that was out of business who knew how to bang lumber together and make boardwalks.

Hire him as the supervisor. What do you do? You hire them at prevailing wages. We need to think about that in MMT, right? We’re hiring people in government at prevailing wages for the job. One guy is banging lumber. He gets that wage and it’s all established in the government structure, right?

We can create new jobs, but basically, let’s say we’re just filling jobs descriptions that exist in, say, the county and city structure and at those prevailing wages. It’s supposed to be a two year term and by that time, the economy will have recovered or the economy recovered enough for the counties and cities to pick up these people.

Okay, the same thing is going on in the state.

Scott Ferguson

Because their tax revenues are increasing.

Mario Rendina

So that’s the presumption. 

Scott Ferguson

Then they can afford to take these people on as full time employees and your funding mechanism ceases to support these jobs.

Mario Rendina

Right, and that’s the concept. Also for private not-for-profits. That was, I think, a very elegant idea because, in a recession, one of the first organizations to feel the pressure is private not-for-profits. I don’t have enough money to give any to the end of the line people. So we had onesies and twosies out there. It would be a job description: “I need a secretary in order to run my whole operation.” So the private not-for-profits, we had bunches of them. They would simply give us a two page proposal saying “I need this for that.”

We ended up with a complete public service employment section. You had the structural unemployment section over here basically doing all the structural unemployment stuff and you have public service employment over here. It was a separate shop. The city did their own and the county did their own.

They simply said, “you’re going to get $6 million and you’re going to get $6 million. Do with it the way you want.” The piece I was looking at was, let’s say, the county’s portion. So we got all the county departments, find out what their needs were and this was over and above whatever they were doing, they had to be over and above whatever they were doing.

Good. So you’re going to create a new library, but you don’t have any staff for it because your budget lines are full-on librarians. You get that built, fine, with public service employment, you can hire librarians that need to meet the eligibility requirements to be libraries, that just an example.

Scott Ferguson

And you can train them if you need to.

Mario Rendina

You could do that. There was a title in which you could do training and employment together. It was designed more for youth, where you do training in a job, and a kind of work experience with related training.

We always wanted it related. None of this business about sweeping the floor over here and learning to be an accountant over here. It had to be related. Anyhow, not too much training. You were usually picking up somebody that had a construction job over here, and see if we have a construction job over here.

So, the areas, in, in the county structure, there were most impacted were, were, things like parks and recreation. Okay. And, where, where you needed staff and where you could train them. You’re training them on the job with county employees at no cost. You know, that’s the cost of doing business is training, is training a new, you know, recreation work.

Okay. Parks and Rec was a big one. That is the single largest part of a summer program when school was out. Where the people in the city, the poor people in the city and in the county send their kids? They send them to the parks. And what we would do is staff those parks.

We had recreation leaders who would take smaller kids and supervise their volleyball or whatever the games were, you’d become recreation leaders. We had park ranger trainees that would help the park rangers with whatever they were doing, which might be emptying the big trash cans into the whatever.

But, it gave jobs for all these people and it provided child daycare for thousands of working parents. It was a marvelous program. Everybody loved that program. So it was fantastic. And it came out under Title 2 at one point. It was the only part that wasn’t structural under Title 2, it was a jobs program. Anyhow, that’s how public service employment was supposed to work, also. It was that you had a need and a way to impact it was staff. If it required equipment or nuts and bolts, that was at the county’s expense. Then the labor was on that side. This is one of the areas where it caught a lot of hell, in terms of the press, because it did have a minimal requirement up front, you could place professionals straight out of college. Okay. They did have student loans. They were people that were going to contribute to the economy if they could get a job. Some of the super examples of that kind of thing that bothers some people sometimes is that the state attorney was E.J. Salcines at the time, and E.J. had come from a school in Texas, this law school in Texas.

And that school became known as EJU, “E.J. Salcines University,” because he would bring them over and they would qualify because they had just been through law school. They didn’t have a job. They had been unemployed for two weeks. They were seeking employment and they would qualify for that. We staffed the State Attorney’s office and if they passed the bar, he’d hire them as full time. Not a bad thing. Mark Ober, our current state attorney? He was from public service employment. 

Okay, there was some high level stuff that went on, as well as low level stuff. I remember a guy that came in under CEDA, but it was the very, very beginning of CEDA and another good friend of mine was a counselor at the time.

I eventually hired him to do monitoring and evaluation of teams, but he was a counselor of one of our teams, and he got this guy, Vietnam veteran, wired to the gills. He was just a wired guy, stringy, strong Vietnam veteran. Crazy. “Yeah, I need a job. I want a job. Get me a job.” Our counselor, my good friend, says, “okay, look, here’s the deal. You give me 30 days retention and I’ll put you on a job. And you know what? You give me 30 days of retention, and you can come back to me, and we’ll talk about it again, and I might put you on another job, but you got to give me 30 days retention.” Playing the statistics game, but to the advantage of the client and to our own advantage. I mean, you know, this kid was beginning to learn how to hold a job. “I gotta hold it for 30 days. I gotta do that or he won’t give me another job.” I went to one of my retirement functions and he was there. He was there after he had gone through the structural program. We eventually got him over into public service employment with the Parks and Recreation Department. He was a multi-trade worker. He could change locks on every park in the county. I saw him one time when he was out there working with some of our summer program people, putting together a dock or floating dock. Yeah, that’s an enormous success. You can see public service employment as being abused. You can see it as being used properly. The whole thing has to do with how you’re going to implement a program. It all has to do with that.

Our implementation, I think, was highly successful, inasmuch as we converted 40% of the people we put into those jobs into full time employment with the county organization or with the private not-for-profit, I don’t think anybody else in the country did that. So it had to do with implementation and taking the regulations seriously.

You know, the regulations are saying that you are supposed to convert people as the economy improves and so forth and so on. So, when budget time would come around, we would say, “pay attention to your PSE people, you know, if you can make a spot in your budget for that PSE person, you need to take them.”

And at some point we started paying the benefits too, because to start with, all we were doing was paying the wages. At some point somebody decided, “oh my God, these people would do benefits.” And that came straight out of the public till, fortunately out of the national money, to back pay the benefits.

I say fortunate for local governments because, you know, there was a lot of back pay due. But anyhow, they really became exactly the same as county employees. A lot of those converted. So there were successes and, and there could easily be abuses. It was easy to have an abuse there.

And of course, the abuses are the ones that hit the papers. But as a program, think about the idea of WPA (Works Progress Administration) but think about that as having it go from top to bottom. Okay. Now we’re telling you about block grants again. CEDA was successful in as much as it got the attention of local governments, because it was a block grant to areas of a certain size.

It gave them a lot of muscle in a lot of ways. But what did it do? It could also take care of an awful lot of things that were going on in addition to, maybe, somebody building boardwalks. We had a pothole crew out there. Let me tell you how much people like the pothole crew.

Because, what happens? “I got a pothole in my yard! People are breaking their axles here.” 

“Call the county commissioner for your area.” 

“I got them potholes here.” 

You know, it was a huge success. It’s two guys behind a truck with asphalt, two shovels and a tamper.

By God, you saw that pothole and the politicians were going bananas. “Wow, what a program!” You can do infrastructure stuff at that level all the way up. That’s what I think needs to be done. First of all, you define infrastructure very broadly to include, at the high end of the whole thing, the electric grid.

Scott Ferguson

Sure. And bridges and dams and…

Mario Rendina

Bridges and dams and all that. And you look at the federal block grants to do those things. My God, the interstate highway system, the bridges, etc.. And let’s not forget the power grid. That’s part of our infrastructure. So you’ve got those, but then you do a block grant to the states and to areas of a certain size, and each takes care of its own and you call them infrastructure projects. They have to be infrastructure projects at the local level, at the state level, and at the federal level. Now you’re picking it up from the bottom to the top, okay. And when you’re doing this big stuff up here, you’re also hiring people at this level and the state is doing the same thing and the local levels are doing the same things.

Scott Ferguson

Things are flowing up and down at the same time.

Mario Rendina

Absolutely. My God, money can’t be spent better than that. You can probably follow the regulations. You see what I mean? If you broadly define infrastructure, so that you get to the pothole, but you say infrastructure and by God, I can write a regulation that says this is infrastructure and your projects must be inside of this parameter.

I can monitor that. I can determine whether you’re ripping me off or not as a local government, as a state government, or if I’m a IAG (Industry Advisory Group) at the federal level. I can see if that’s what is happening. So that is what I see as the cure-all of that. You could get a lot of political mileage behind it if people remember what they could do in their Title VI projects, because there were one offs and there were projects and the projects are what I’m talking about here, being the parks, the boardwalks, the, you know whatever.

Scott Ferguson

And this is during the 70s and the 80s.

Mario Rendina

Yeah.

Scott Ferguson

So did Tampa, or Hillsborough County, have a better time than the rest of the country as a result of these projects, do you think?

Mario Rendina

Yeah. Yeah, yeah. It’s sort of like WPA, right? Okay. You go to North Florida and you go to the Suwannee River anywhere on the Suwannee River.

You will find, within two miles, every two miles, you’ll find a concrete boat launch that is made out of concrete, that was done and poured in the 30s and I guarantee you it is the best boat launch you have ever seen in your life. The whole concept of projects can work fine.

That was done by local labor, no doubt. It can also be very high quality stuff, but with the boardwalks and all that stuff, if you live around Hillsborough County, you need to talk to people. I wish some of the people that put people in public service employment were around that you could talk to because it was a very, very broad program and I’m only remembering some of the projects that went down.

Scott Ferguson

So there was a moment of regained autonomy at the county level where you could do a lot of good. Then came this new legislation from the feds. 

Mario Rendina

We pretty much continued to do the adult work. Yeah. All of that worked out pretty, pretty darn well, really. Meanwhile it’s becoming more and more private and at some point, the Job Training Partnership Act rears its head and JTPA is clearly going to be a private sector dominated council. The JTPA council is going to be private sector dominated and it was. So the shift then goes from government control of everything that’s going on, under a council that they have absolute control over. Everybody is getting what they want anyhow, so it’s not a big deal, to a more private sector dominated kind of thing. The whole thing came back together at one point with city staff and county staff.

Okay, you’re backing in two silos.

But I was like, at one point, the director of both of the operating staffs, whether it was county or city, I was now a county staff member. We’ve gone over to JTPA. But the councils wanted to create one council. They said, “we’re not going to have two CEDA councils,” because for a while there we had two CEDA councils chugging along.

We said, “no wait a minute. The superintendent of schools, they have a meeting over here and then two weeks later he has a meeting over here with this CEDa council. All that crap got to be brought back together. Everybody agrees? Yes, it does, but what we’re going to do is we’re going to run parallel until JTPA goes along. We are going to have one council that controls both of them. Okay. Now this is where privatizing comes into it, because at some point, the director of the council and that staff becomes privatized in every county in the state of Florida, every prime sponsor in the state of Florida, with the exception of Hillsborough.

Hillsborough was the last holdout, where it was run by the government, and at that point, county was the government entity.

Scott Ferguson

What are the political forces or legal changes that create this privatization?

Mario Rendina

The JTPA Council is very private sector oriented.

Scott Ferguson

Which comes from legislation. The law was written to be private sector oriented.

Mario Rendina

Yep. Yep. Absolutely. A lot of the councils really wanted the private sector to have the ball and run with it. 

Scott Ferguson

What years are we talking about? 

Mario Rendina

I don’t know. The JTPA, we can look up. But anyhow, when JTPA forms that’s when…

Scott Ferguson

Is this the 90s?

Mario Rendina

Yeah, yeah, yeah, we’re in the 90s. 

Scott Ferguson

Is this part of Clinton’s?

Mario Rendina

Could be, but he was mostly under CEDA. Nixon formed CEDA. So Ford’s in there, but only for a short while, a couple of years and then Carter. That continues and that was CEDA all through there. Yeah. And I think you can say JTPA is basically a baby of Clinton’s in the 1990s.

I remember my friend and fiscal officer went to work for the Department of Labor, and ended up in Colorado and the Denver office. He said, “You’ll never see a more Republican president than Clinton.” I think he was alluding to the privatization that we were beginning to see.

When the board started becoming private not-for-profits, the law clearly read that the buck stops at the political entities doorstep. Okay, but what would happen is you’d have a bad audit on somebody, and they’d work out some way where the political entity didn’t have to pay money. “Okay, well, we’ll reduce your funding by that $10,000 and then you play games with it up there in Atlanta and make sure that everybody’s made whole.”

So it was never a real threat. Around the state, they became private, not-for-profit, they incorporated. Then they would take the whole show and run with it. Budget, finance, bank accounts, they ran the whole thing. It became a privatized unit and the county was still over here. Here’s the very, very important distinction between the CEDA system and JTPA to follow. As long as it was under the county, for example, or the city or whatever, but under this county, every contract, every modification of contract, anything that had to do with change or new had to go through the county’s budget and finance office. It had to go through the county’s legal office.

It had to go through every office that any agenda item had to go through. It was difficult to do fraud and abuse when it had to go through county legal and county budget and finance, the budgets had to balance. They had to equal the amount of money you had available. They had to add up to something.

They had to do that, you couldn’t put in hidden little items. They might get found. So when you allow the privatization, because it’s the government that allows the privatization, you become a private board. And the county could still say, “oh yeah, we’ll listen to you. You’re a private board. We’ll listen to you. But the money comes through us because we hold the bag on any illegal activities that go on in any of the funds. We’re still holding the bag over here.” And at some point, they gave that up and said, “okay, you guys have got it wrong.” Even though they really were still holding the bag, they gave away the shop.

And when you do that, then you start having things that happened here and other places.

Scott Ferguson

Like what? What happens?.

Mario Rendina

Well, you can decide to have extremely lavish staff parties, like what happened here. The next thing that really happens, though, at the same time as the board becomes privatized, along comes TANF (Temporary Assistance for Needy Families) of which is what? Which is Clinton. Clinton’s welfare will no longer be as it has always been. What do they call it?

Scott Ferguson

The end of welfare as we know it.

Mario Rendina

The end of welfare as we know it. It comes in at the same time as these entities are becoming privatized and Mario’s right in the middle of this mess. Okay. At some point, I became the TANF director, also. Staff director. Writer, too. I did the planning for it. We had a contract, right for TANF. I can’t remember what god awful stuff it incorporated. But anyhow, I had a planner write a proposal and it went out to the world and back came Goodwill Industries and Lockheed Martin.

Oh, yes, Lockheed Martin. They make rockets. They also wanted to do – and did – TANF programs. Not in this area. We got Goodwill and then somebody over there had another agency and over the period of a couple of years, this entity would get rid of Goodwill and get in somebody else. I was there the day that Lockheed Martin showed up at the county trying to talk the county into going with them.

But anyhow, I put out the proposal for TANF with a neophyte planner. She was bright. All this stuff has to go in there. You know, you have got to fix that and so it goes out as an RFP (request for proposal).

We got back 2 in. thick volumes about “how we’re going to do this,” “how Goodwill is going to do all this stuff,” and so forth. So TANF got totally inner meshed with that mess. The councils became the same thing. I mean the TANF council became part of the overall council.

Not only that, but critical to the whole thing is the privatized councils at a state level all get together. We all meet together and we have an organization that is an organization composed of all the executive directors, that are executive directors now because they are privatized. We all get together and we form an organization.

Our organization is so politically powerful, particularly with the private sector, that we tell the state we want the employment service and they got it. This employment service here in the city of Tampa, throughout Hillsborough County and throughout the state are run by the workforce boards, the privatized workforce boards those directors are under and literally say yay or nay to who is going to be the next executive director for the chief of that office.

Okay. So all that is basically under a private, not-for-profit. It’s a private sector deal. All of it. That’s the horror of the whole thing. Hey, when was the last time that you heard, “oh, there’s going to be a workforce board meeting that maybe you should attend?” Or, “gee, I wonder what’s going on with TANF these days?”

Scott Ferguson

So, I want to have you spell out, in a bullet point kind of way, some of the key points of fallout.

One is, concentrated power and lack of transparency and lack of open public engagement.

Mario Rendina

Are you talking about now? 

Scott Ferguson

What I mean, what’s happened since the 90s in your experience? Another thing that you’ve told me about previously that I want to have you talk about, but I’m assuming there are other points that followed as well. But, one is about data collection in contrast to your early experience collections and what all this means for people.

Mario Rendina

Devolution. As long as the government held the bag and things needed to filter through its organizational structure in order to become a product of the board of county commissioners or or the mayor, as long as that filtering process was there, I think two things happened. It was basically for the public good. Okay. We’re approving projects that are for the public good.

Whatever they are training, whatever it is, private sector training doesn’t make any difference. We’re doing all this for the public good because that’s what we do as a government. We filter through all these mechanisms to make sure that it’s good, that it doesn’t look like any fraud and abuses in the middle of this thing. It’s for the public good.

And we have all the controls. One I didn’t mention is that you have a county audit. We also got audited by the county as well as a required independent audit. So you had an independent audit, but the county audited you too. Okay. Now you move over to a privatized board and a privatized organization organization.

Let’s say, I run a private school and I get on that board and I say, “Let’s take any non demand occupation. What I teach in my school is a non-demand occupation. It is what I teach.” But I’m a member of the board and this guy over here is a member of the board, and the school system doesn’t like it.

The school system says “we don’t want you to teach non-demand occupations.” So there’s some squabbling going on there, but they have 50% of the board in the private sector, 50% of the board. It has to be more than 50%. So it’s 50% plus a guy or gal, okay.

So he says, “hey private sector guys. What do you think? I mean, can I do this?” he says, “it’s this damn system school system that is giving me a hard time about this. You know these non-demand occupations that I’m training people in, they’re perfectly fine. If you can get enough of your buddies to say “yeah, okay, we’ll let you have that kind of training.”

And I tried to find demand occupations on the computer and I’m going to follow up on it in a little bit, but I think the system has completely collapsed. You know, the school system, I’m sure, does things in demand occupations and community college because that’s the bread and butter. But in terms of the system, I have no idea what’s going on there.

It’s all maneuvering and not for the public good. That’s the point. It’s for yourselves. We’ve gotten independent. We’re a private not-for-profit organization and by God, if we want to go over and have a conference over in Melbourne, let’s go to the space center. Let’s have a conference over there. Another example: we’re going to have one down in Naples. Naples is a very expensive place. So we go down there and of course in a lavish hotel and all that. Like I say, speakers are of no particular consequence. I think I was a speaker at a number of these, and I was of no particular consequence.

We’re going to do this and then, “okay, it’s golf time!” The links out there are horribly expensive, but we’re holding the event in a hotel where the links are, and you just go out and say, “Oh, okay, so it’s 3:30pm. Well, okay, just enough of the stuff over here. We’re going to go play golf.” I don’t play golf. So they went on to play golf and then you have the evening doing evening social and so forth and so on and then get back together for the next day. But, when you’re privatized, you can do that. How about you try to get a party through the board of county commissioners?

Not only that, under government, you get a per diem. I’m sure you run into that in the education system, right? You got a per diem, you’re going to go over here and you’re going to get so much, so much a day for meals and whatever and either, enough to cover the room, or if it happens to be an expensive place, they cover the room and give you the per diem for the meals.

That goes away in your private not-for-profit. You say, “yeah, I think we ought to have a per diem that, first of all, is going to cover the hotel, whatever that is, and then $200 a day? You think we can live on $200, so let’s do $200 a day plus the room,” for example, you could do that.

As long as it’s policy, as long as we all agree that that is the policy, compared to when you try and do it without it being the policy and the director is in trouble. But if you can get everybody to agree that this is policy. The state will have to let it go by the same, let it go by, I mean, well, it’s policy…It’s not very good policy, but it’s policy.

Scott Ferguson

So maybe a final question.

Is there more of a problem matching people with demand sectors? Is that what you see as the crucial task with public works as a supplement in a way where in a counter-cyclical way or what?

I mean, if the goal is full employment, by which we mean, there is always a job made available for anyone who wants.

Mario Rendina

I think what it boils down to is you have to decide one thing. You have to decide whether or not the employment and training of people is a government function or not. I think it’s as simple as that. It’s either something that the government does or it’s something the government doesn’t do. And as long as the government does it, it will be in the public interest in some way or other.

The minute that it’s not the government’s job, who’s the oversight? And it all boils down to that. It boils down to oversight. And that really gets into your whole business about monitoring and statistics and management information systems and all that. As long as it is considered a function of government, I think you’re okay and the funds come down to the government to spend with all of its safety nets and so forth.

When it gets over on the private side, it is completely opaque. I can’t tell you. I’m a product of the business and I couldn’t tell you the name of what the job service is now. It’s changed three times since I retired ten years ago.

It’s changed three times. It’s the Agency for Workforce Innovation or it’s the Bay Area Workforce something or other. Not the job service anymore.

So, you know, that basically boils the nut down to, it needs to be defined either as a government function or not. And if it’s not, you’re going to get what we got and so we’ve got to move back the other way. 

Scott Ferguson

Well thank you so much. This has been so illuminating. 

Mario Rendina

I’ve had a terrific time. As Lois [my spouse] would tell you, I could go on for hours about this stuff.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

In this episode, we speak with Walt McRee (President) and Peter Winslow (Vice President) of the Public Banking Institute (PBI) about their past and ongoing advocacy for public banking. Founded in 2011 by author Ellen Brown and a core collective of advocates, PBI aims to break the monopoly of Wall Street’s private banking system by establishing a nationwide network of publicly owned, democratically accountable banks. Through this work, PBI seeks to foster a wide-spread monetary and banking system that operates explicitly in the public interest, treating credit as a vital public utility rather than a vehicle for private extraction. 

If private mega-banks are legally bound to maximize short-term returns for external shareholders, McRee and Winslow explain, then public banks operate under a legal mandate to generate shared prosperity, measuring fiscal success in terms of community participation, well-being, and resilience. During our conversation, we discuss the history of the PBI, the myriad projects that public banks can finance, diverse models for establishing public banks, and the organization’s efforts to serve as a catalyst for the growing public banking movement across the United States. 

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Billy Saas

Walt McRee and Peter Winslow. Welcome to Money on the Left.

Walt McRee

Thank you.

Peter Winslow

Thank you.

Billy Saas

It’s great to have you. We’ll start, as we normally do, by asking you to say just a little bit about yourselves and how you came to the Public Banking Institute, which is going to be a centerpiece of our conversation today. Let’s go ahead and start with you, Peter.

Peter Winslow

Oh. Thank you. My background is in business and finance. I received a BA in economics at the University of Pennsylvania State, stayed to get an MBA in finance from the Wharton Graduate School. I was a CPA and practiced in New York for many years.

I’m a Deloitte alum. I’ve had a varied career doing a variety of things. I was doing a lot of work in sustainable economic development, especially economic development within the inner city and depressed sections of the community. That’s how I got invited into public banking about ten or more years ago. I’ve been working at it in Philadelphia and nationally ever since.

Scott Ferguson

Are there a lot of folks who are Deloitte alums who are interested in public banking?

Peter Winslow

That’s a really interesting question.

Scott Ferguson

Well, I’m glad I asked.

00;02;46;18 – 00;03;19;19

Peter Winslow

You know, I haven’t asked. I probably should, but there may be. Accountants approach things in a very meticulous way, but conceptually, and have very definite ideas about money and about how money is used and recorded and valuation and risk and so forth. So it’s banking adjacent.

Some of the work I did was involved with securities firms and that was certainly interesting. But in terms of my colleagues, I don’t know. I’m going to my reunion, when we leave here. I’ll ask some of the folks from my class what their opinions are about public banking and see if I can enlist them.

Scott Ferguson

Let us know.

Walt McRee

Yeah. Well, I guess that leaves me. Yeah. I do not have a Deloitte background. Peter brings up that part of our expertise offerings. My background was actually in media. I started in broadcast media, winding up in Philadelphia in major markets, doing radio broadcast and media consulting, voiceover work out of Manhattan. At the same time, then getting involved initially with the public interest activist issues. I started from here in the anti-war movement which was a long time ago, but seems to be ever present. From that, working into discovering something that was powerful, which was working with Bucky Fuller in Philadelphia, when he launched a thing called the Hunger Project. The Hunger Project was a very simple opportunity for people to participate in an issue that was much bigger than them, world hunger. And to do what they want, and to organize around doing new things to end world hunger with a new understanding about why hunger could be ended.

So Bucky said, “there’s no reason why people starve as a public policy. There’s plenty of food, etc., etc.” I mention that because in the public banking application, we were suggesting something that and you all have been suggesting something that hasn’t and doesn’t exist. That is, we are demythologizing banking. We’re demythologizing money. We’re really looking at a new possibility.

So my work there, where I started a lot of national initiatives around media and so forth, was one part of my background. Along the way, I’ve also been a real estate entrepreneur and developer. I’ve been involved in preserving the arts. Another activist campaign was with an environmental fight along the banks of the Delaware River, which involved taking over the government as a citizen action, involving Abbie Hoffman, that’s the name you remember. It was a very exciting, dynamic experience of local people coming from all kinds of a cross-section of ideological, political, financial, wherewithal to come in to stand together around something that they didn’t want, which in that instance was a pumping project along the Delaware River.

Interesting, I think I mentioned before, that being in this Delaware River valley, where Washington crossed the river surprised the Hessians and the English flipped the whole paradigm of possibility. That’s kind of the context in which I have juiced a lot of my involvement here, which has been about 15 years. I started with the Public Banking Institute back when it started.

I was one of the original participating board members and started a media committee, then got on the board and 15 years later, here I am chairing as president, still working at it. Again, to try to qualify my banking bonafides, through all of my University of hard knocks, Harvard would have been cheaper than what I’ve learned. But I’ve learned at the feet of real experts, academics, bankers, banking people, policy people. I’ve been very fortunate to be able to develop my education that way with the likes of you guys.

Peter Winslow

Well, do you want to talk about the origins of the Public Banking Institute and the work with Ellen Brown?

Walt McRee

Sure. That’s a good one, because if you remember, 2008, when the banks collapsed the global economy, financial economist, Ellen Brown, who’s a noted bestselling author who wrote Web of Debt, circulated a new understand, a story and a research piece, an exposé about how our money is organized and how banking is organized and why this failure happened, and the kind of trap, the monetary trap that we find ourselves in in this current, debt driven, financial arrangement.

So, Ellen’s book got to be very successful, and then Occupy Wall Street occurred in 2011, during which time people suddenly discovered that they were in a category, in a cohort that they didn’t know. That is that we are the 99%. Well we didn’t know we didn’t have the money that’s out there. People knew that they were struggling and so forth, but that was a declaration or a distinction that really propelled the public banking movement. It started in California, but it rapidly got buy-in in Philadelphia, becoming one of the core areas in which I helped to start that with Mike Krauss, back in 2011 and 12.

The Public Banking Institute then has been an educational source, an organizing source, a place where resources and collaboration converge. Also, focusing on looking at how the matrix of money management is not in our hands. To realize how the people have abrogated the most powerful tool, one of the most powerful tools they have beside their goodwill and brotherhood and largesse: money, basically.

That’s what the Public Banking Institute is up to now. I will just say one more thing. We’ve come a long way in our work. For the first ten years, what was required was explaining to people how banking works and what we had found along the way was that a lot of legislators and bankers seem to not know the reality that, for example, that banks create our money when they make loans.

Well, that was a huge breakthrough and also, of course, poo-pooed by the institutionalists who think that, “I don’t know, it’s all, you know, something else.” So, that sort of demythologizing education has been part of this ten years. We worked in markets around the country, probably 30 different markets at least, often running into the same sort of obstacles and complexities that are put there by politicians and the banking associations, the ignorance of legislators about banking and their fear of doing anything new.

So we’ve run to a point now where we realize what we can’t easily do, and that is to create these banks outright because the resistance is too strong, for the most part, but we are finding pockets of support and we are finding very large arteries of public support, which we think is going to put this opportunity into a different plane in the very near future, in part driven by the realities of the day that we live in now.

Peter Winslow

You mentioned Buckminster Fuller and one of the phenomena that Buckminster Fuller identified and worked on was ephemeralization. Money is an extremely ephemeral phenomenon in our society that people live with and don’t really understand particularly well. Sometimes ephemeralization is described as the process of doing more and more with less and less until eventually you’re doing everything with nothing.

With the AI future, maybe we’re headed in that direction, but money is inherently an already ephemeral substance in our society that runs through it as information transfer and is interesting to study from that perspective. The banking system performs an alchemy that is really very interesting and does not have to be and has not been in the past the way it is now. It does not have to be that way in the future. We’re looking for a more robust future, and one that’s more equitable.

Scott Ferguson

Yeah. So maybe piggybacking off of that. I know we’ve already started this work, but give us the ground level pitch, why public banking? You know, don’t we have enough banks to finance what society needs? Why more banks and why public banks? What do public banks bring to the picture and why are you two so into this thing?

Walt McRee

Well, the answer to “oh, don’t we have enough banks?” is, of course we do. But that would be the answer of the organized banking industry of private banks and because we deal with private banks in the US, except for one, that is a corporate private industry driven by profit, and therefore it has no universal obligation to serve.

It is not considered a utility other than the fact that people need money to live. But there’s no structural organizational commitment obligation for them to operate that way. When we would explain this, first of all, “what is a public bank?” people think it’s traded on the market.

It’s not that. It’s anything that is owned by the city, county or state, any governmental agency, that would have the people’s money in hand, would be capable of creating a bank, qualified with the other parameters, of course. The idea is to keep our money at home, to invest in ourselves and our message is “look, every time you send in tax dollars to your city, county, state, or whatever fees and so forth, they take that money and they send it essentially to Wall Street.”

It leaves town and that asset leaves the community, a local economy. What public banks do is say, “well, no, leave that in our own bank so that we can do what the private banks would otherwise do with it.” They’ll speculate and invest in all kinds of things we may very well not want them to invest in when in the interest of making a profit.

Whereas if you keep our money at home, we can keep that money and we do the very same thing, but we can invest in our own stuff; our schools, our infrastructure, our affordable housing, small businesses, etc., where we need the money. That’s the transformative opportunity and it is a comprehensively transformative opportunity that we’re talking about here.

I think that at this moment of where we’re seeing the oligarchy and those forces solidifying and controlling and extracting, it’s getting very serious, local economies are failing. So this message is resonating in ways that it hasn’t so much in the past. 

Scott Ferguson

There’s at least two dimensions here about keeping money at home. On the one hand, there’s the question of how you are mediating extant claims? How they are, quote unquote, “traveling through the system or the so-called plumbing.” But then there’s also the other dimension, which I think is even more mind blowing for people, which is the fact that banks create money.

This is not just about appropriating a finite amount of funds, and I have to put scare quotes around all these terms, that are “circulating in a system.” Correct me if I’m wrong, it’s fundamentally about reclaiming the capacity to generate money for the public and for public purposes.

Walt McRee

Yes.

Peter Winslow

Yeah. There’s been a failure of imagination, to a large extent, in terms of how people conceive of things, conceive of money and conceive of banking. The system is not broken. It works very well for the banks that are too big to fail. You know, periodically, there’s a financial crisis and they get bailed out and life goes on and they continue doing what they’ve been doing. It works very well for the people who are involved in that particular line of business of banking and financing. Large corporations and so forth don’t have any problem obtaining the money that they need for the projects that they want. We don’t have problems finding money to fight wars and a lot of things that politicians decide are worthwhile, but there is not enough money available to serve the public, the public interest.

That’s what public banks are for, public interest that is not profit for private interests. There is not enough availability of money, there’s not fair access to credit for many people in our society, in the community. There is a need for a non-extractive form of financial ecosystem.

One that serves the needs of the people, as opposed to private profit just piling money up, like Midas in his vault. That’s what public banking is all about. It’s really an alternative to the extractive model of the economy, to one that is much more dedicated to where the real needs are for housing, for vibrant local businesses, for the development of cooperatives and so forth.

That’s what public banking serves and it is not intended to replace the existing system. It’s intended to, perhaps, provide an alternative and a corrective, maybe serve as a break or trim tab that does some adjustment to the overall economy. But fundamentally, because of its local focus, it is really determined to serve the needs of the people and the places where those people live and have their local financial ecosystem operating.

Walt McRee

I’d like to just correct the metaphor that you gave Peter. I don’t think Midas had the vault. I think you’re thinking of Scrooge McDuck, just to be correct here. On the one thing, are there enough banks? What we found, when we, for example, were involved in the New Jersey Public Bank Implementation Board  study of where the gaps are. The bankers in the state said, “oh, we’re doing a great job. We make community contributions and little leagues and other things and so forth.” As Peter points out, there are enormous sectors of need that are not handled by private banks. The reason is there’s no money or there’s too much risk. What public banks do in reality, at least when we look at the North Dakota model, we see that public private banks succeed like nowhere else in the country because they have a public bank partner.

The rest of the banks around the country are really at that increased risk to take on social emissions and so they’re really constrained, in that way. Whereas public banks really have it as their purpose to extend credit, and that’s an enormous difference.

Peter Winslow

Banks, small banks, local banks proliferated after the Civil War and grew to be the way in which most people did their banking. But, starting in the 60s, there has been a contraction of banks and consolidation has taken place. Now, it’s a healthy environment if you have new banks being created, going to a certain size and needing to have a greater reach, and an exit strategy for those banks is to be acquired by a larger bank and to have a consolidation and so forth. That’s not really functioning very well at this time. The small banks are really very local, and they are not as apt to be properties that the larger banks are requiring. From an historic standpoint, we have fewer local banks and fewer banks overall and one of the things that a public bank can do is nurture the local financial ecosystem and help all of those banks grow and be more robust.

Walt McRee

As an example of the success of that, in Germany, where the Sparkassen, which is a community owned banks, they have thousands of them, but it is that infrastructure, the fabric, the texture of that community-based financing engines that stabilize those economies, and public banks have been shown to do that across the world.

That’s just one of the things they do is they can keep the community resources in place and keep them moving. So we want that here. I think we had about 15,000 private banks in 1980. Now we’ve got 4100. So we’ve lost a substantial number of privately owned community banks.

Peter Winslow

About a quarter of the total assets of the world are held in public banks. The United States is really an outlier in that respect. We only have one public bank in the United States. That is the kind of a bank that we would regard as the model and that’s the Bank of North Dakota.

There are some other examples that are particular anomalies, but the one that really makes the most sense to look at as a model is the Bank of North Dakota.

Billy Saas

Could we talk a little bit about the Bank of North Dakota? How did that bank get started? And if we’re talking about it as the model, what are its key features that other aspiring publics should try to replicate?

Walt McRee

Well, I’d like to just step in with making a reference to my own history. The farmers in North Dakota in 1915, I think it was, were being put out by the banks. The Minneapolis banks, the granaries and the railroads were all conspiring, if you will, to set prices that made the idea of farming in North Dakota even less desirable and certainly less profitable.

The citizens said, “hey, we’re not stupid here.” They created a new political arm called the nonpartisan league, a very fitting sort of a moniker for where we should find ourselves these days, because the common need of the citizens there was clear. They needed to have more economic stability and control on what was happening to their money and their assets.

They wind up taking over the government, which is what we did in Bucks County, Pennsylvania, with this water fight. It was just hugely invigorating to find your neighbors out in the streets. Well, in North Dakota, the Nonpartisan League started a group called the Six Bucks Suckers.

Six bucks was their annual fee to become a part of this movement. That was enough money to drive this thing for a couple of years. Then they took over the legislature in 1919. The first thing they did was to create a state granary. That granary was the largest in the country, and it’s still operating, it belongs to the state of North Dakota.

The next thing they did was to create the state bank. That really helped to firm up things. 107 years later, that bank has made North Dakota the most stable state economy. It is also a bank that is the most profitable of any bank in the United States, profitable in terms of a return on equity.

No scandals along the way. One of the beautiful things about having your own bank, and there are many, but the ability to respond to crises was demonstrated in numerous instances in North Dakota. The Grand Forks fire and flood that wiped out Grand Forks, North Dakota and Grand Forks, Minnesota illustrated how important it was for a local bank to be in place, for the public bank to be in place, because that fire and flood wiped out both towns and an enormous amount of damage.

The North Dakota bank was there the next day and said, “look, let’s clean this stuff up. Don’t worry about the money. We’re going to do what you need for machinery and stuff. We’ll handle the money later.” As a result, North Dakota’s Grand Forks recovered within only a 3% loss of population during an extended period of disaster. Across the same river at the same spot in Minnesota they had to go to Wall Street. They had to go to Minneapolis and borrow the money to recover. They lost almost 20% of their population. Now that’s a huge equity loss, huge asset loss, realized because they didn’t have the means to finance themselves. Well, there were other instances that the bank has stepped in like that.

In the 30s, when the crops were drying up, farms were being reclaimed by the banks, the bank came in and said, “listen, guys, don’t go anywhere near the foreclosures. Just stay put. We will buy your farm. You stay there, the weather will change. You know, things will come back. And when the things do come back, we’ll sell your place back to you with the mortgage that you can afford.” I mean, that kind of flexibility and sort of utility is so logical. It’s like a family mentality, you know? “Hey, we’re all in this together, and we’ve got this money, and you can use it and we’ll save it for you. We’ll save your hide.”

That’s a beautiful thing about one of the transformative aspects about having a community owned public bank.

Peter Winslow

Yeah. The public bank can respond to disasters and crises much faster than other resources do. For example, during the Covid pandemic, the state of North Dakota had put in place a PPE program before Congress acted. When Congress acted, it was able to merge its program into the national program.

But it was out there almost immediately. The same thing when there was a government shutdown recently, the state of North Dakota said, “well, for the people who are not getting paid, you know, we’ll provide them with support and with low interest loans to get them through, for people who have a problems with their mortgages as a result of these hardships, we’ll have forbearance and a moratorium.”

The bank allows the whole community to be more resilient and responsive. Public banking, we’re looking to do two things simultaneously. We’re looking for a systemic change, which gets technical when you dig below the surface of it. We’re also interested in the purposes to which a public bank can be put.

These things go hand in hand. But they’re really quite distinct. One of the things about the Bank of North Dakota is that half of its assets are in participation loans, which means that they are taking 50% of the loans that are being originated by the local banks. By doing that, they spread the risk, they have a collaborative relationship with those banks because they’re looking at the books and those obligations together, and it allows those local banks to take on larger projects than they would be able to based on their own capital, because they have the Bank of North Dakota behind them.

This participation model is one that we think is really, very, very sound. It is conservative from a financial and legal perspective, and it’s one that has served North Dakota extraordinarily well and we think it translates to other locations.

Walt McRee

And systemically, on the banking topic, we believe, I mean, it’s very clear, community banks and credit unions are essential financial infrastructure for any community, and our commitment, and the way we devise or design future public bank applications is to make a very clear distinction that we’re in a noncompetitive position, that what we do is collaborative partnering with their loans to build that business and to enable them to do new business.

So we think community banks and credit unions, the private ones, not the Wall Street ones, and up through new ones, not the Wall Street ones, are really, really important. That’s one of our focuses these days.

Peter Winslow

This is something that we think scales that is helpful both for big markets like Philadelphia and for small ones. In Philadelphia, if we want to do a major water project, we float a bond and support it with the bond. The bond is supported by the revenue stream that comes in from the water project and so forth.

A small town in North Dakota can’t go to the bond market. They don’t have the capacity. They’re not big enough. They can’t play in that pool at all. But if they want to do their water project, they can go to the Bank of North Dakota, get a long term loan at 1%, and do their water project.

So, the infrastructure needs across the country are extraordinary. They’re estimated to be in the trillions, like 5 to 7 trillion dollars of infrastructure projects that should be done in the United States to bring it up to world standards. That’s how far behind we are. One way to do that is with the public bank.

There’s a form of public banking, which is being proposed, which is the National Infrastructure Bank. So that’s a form of public banking that we support. It’s a different model than the one of the Bank of North Dakota, but also a public bank.

Scott Ferguson

Right. It’s important, I think, for listeners to realize who are new to public banking, that there’s not just one model there. Like anything, it’s a design question. What do you want to accomplish? Then you can decide what you want to design for. A bank is not like a simple, stable thing, like a pig or a cow.

Not to say that those are simple animals, but, we think of a cow as a cow is a cow is a cow. And maybe they’re not. But we think that way. And a bank is not just a bank, a bank, a bank. You can do all kinds of things with it. So, for example, I think this has been implied in what you’ve been saying, but, maybe to bring it out into the open as a kind of lesson, the Bank of North Dakota model is really a kind of banker’s bank, right?

There’s not a brick and mortar outlet for any old person just to come deposit their money in and get a car loan from. It’s really doing work at a higher level in assisting lower level banks, community banks, credit unions to help them be as robust as they can and socially responsive as they can, or as you can imagine, all kinds of other designs that maybe do dip into offering financial services.

It does seem like you all are more on Team “Not Compete” with the private sector. But you know, I think we at Money on the Left are maybe a little more comfortable with some crowding out, but that can be a productive tension.

Peter Winslow

Well there is another example in North America of a kind of public bank that competes. Yes, you are correct. We are attracted to the noncompetitive collaborative model, but the territorial bank of Alberta, there was a branch bank of Alberta that does full service banking in conjunction with private banks that also do the same thing.

It is a substantial bank that also anchors the community. So it’s not  a bad model, but it is a model that we don’t exactly reject, but we’re more attracted to the banker’s bank, wholesale banking model that is exemplified by North Dakota.

Walt McRee

To look at a variation of of that, if one were to work in an area like Montana or Wyoming or someplace where there are real huge banking deserts, if you had the wherewithal, the means, there was enough capital assets to create a bank in those areas, you could create a retail public bank in that setting where you’re not threatening the private industries.

Peter Winslow

Or even in an urban environment. There are lots of people who are unbanked and underbanked. If that’s the problem that you wish to address, you could have a public bank that would provide them with credit cards, to use their plastic, and that would be available.

Another form of banking that is attractive is postal banking, where all the post offices in the country can be places where people can go to do their banking.

00;37;36;07 – 00;38;22;02

Scott Ferguson

Do you know much about the history of postal banking in general? I’ll just take the opportunity to reference something that’s near and dear to my heart. So they’ve had postal banking in the UK, or they did. I know this because I am, in part, a film and media scholar and historian and during the 1930s, a man, a filmmaker named John Grierson, who nearly invented the form of the documentary. In Britain, he got public financing at an office and the name changed at different moments but for a lot of the period in which he was working and hiring people and commissioning films, it was part of the British Post Office. They made all kinds of public service announcements, advertisements for postal services. There’s a film that includes a W.H. Auden poem called Night Mail.

Some of these are really experimental and they’re part of avant garde cinema. In any case, there was one film that was commissioned to be made by a New Zealand filmmaker who had traveled to London, named Len Lye. He made several films. But the one film in particular that is so near and dear to my heart, is called Rainbow Dance, and it is for public banking.

You can tell that public banking kind of comes in at the end and you can tell he’s just kind of flexing his experimental cinema chops. I don’t think it would fly today, per se, but it’s a gorgeous film. It’s so lively. It’s so experimental. It’s so vibrant.

Every time I watch it, I think, “Wow. To live in a world where, you know, avant garde artists at the top of their game are creating incredible experimental esthetic works to celebrate postal banking, public banking. Oh my God.” So anyway, that’s my one in. But I’m curious what you all know about postal banking, its history and where did it go?

Peter Winslow

But, if you have the itch, you can still go to your postal service and get a money order. That’s what’s left.

Scott Ferguson

Right. What counts is banking? 

Peter Winslow

But public banking was pretty widespread in the 30s. It was really promoted, I think, by the Roosevelt administration.

Walt McRee

Postal banking disappeared in the 60s, I think. I believe it was from the pressure from the monopolists who control our banking world these days. There has been a desire to resurrect it, in part, because of the Postal Service’s own financial difficulties. But if you’ve been following those stories, you recognize that it’s one of the targets of the monopolists that want to privatize the Postal Service and keep their monopoly on banking, as well.

The unions of USPS were all in support of it, and they were ready to try a couple of models, a couple of examples of it, but it got shot down. And of course now, the postal board of directors, Scott, are all eight appointees of the Trump administration.

So everybody’s into where they can get a pound of flesh out of public assets and so you really have to fight for that. But I think that that’s one of the many fights that we’re faced with these days.

Billy Saas

So I know that there are, in Louisiana, publicly commissioned artworks, murals, from the New Deal era in those very post offices that would have been probably providing some of those banking services. The public-ness of the public bank does not exhaust itself in the finance question, it can be so much more.

Right. You mentioned, Walt, now a couple times, our current moment, and the urgency of public banking. I’m wondering with respect to your observation that the message is resonating more with more audiences today. If you could maybe reflect on what has worked and what has not worked as well, as you have been spreading the good word of public banking over the last 15 years. As you were talking about your history with PBI, there are, in terms of the timeline, many points of potential overlap and alignment between your story and Modern Monetary Theory as such, getting its own kind of national pseudo-mainstream moment. Part of their mission, as they’ve articulated it — I’m speaking of folks like Stephanie Kelton and Randy Ray — has been that, they might call it a little bit more directly, debunking, or where you’d call it demythologizing, clearing the way for an actual conversation to happen on the grounds of reality. They have talked and reflected in different ways about their approaches, their strategies for talking to audiences that are unable to see it clearly because of the mythology, because of the mystification, we might call it. I wonder what has worked best for you.

Do you have some strategies that you use? Certainly in talking to you, you have gone seamlessly into your description and history with us, with a sympathetic audience. But what does it look like when you approach folks who are maybe a little bit more cynical, skeptical, or flat out not having it?

Walt McRee

Yeah. The moment that we live in is fraught with all kinds of risk, danger and loss in terms of what the public has access to and what our assets have been and what we would like to have for the future. I think because that’s getting to strike home and so much in the way that the people are losing their assets and their prospects and feel disconnected from the economy that they’ve been working in, that there is a more receptive listening, that doesn’t help them understand banking too much.

I think if you tell them that money is made out, ex nihilo, of nothing, and it’s unlimited, and all of the principles that guide the wisdom of MMT, is still very much a skeptical word for a lot of people and yet people are hungry for some sort of parity, or at least fairness, in the economic world.

So I think the listening is changing out of the necessity to have some bright shining something or others somewhere on this. Also, as we see the corruption of the exploitation and how at every little point of juncture between the privately held powers of economic influence and connection are just sucking out the wealth of the people.

So the banks have been bullies. Will you come along with the idea that a bank can be a community asset? And you describe what public banks are and keep our money at home, invest in ourselves. So, we don’t have that already? Where is that? That’s the instinctive response. “We don’t have that already?”

So they’re still learning that they’re trapped in a system that has got them by their cahones and they don’t like it. So they’re willing to listen more to what we have to say about that.

Peter Winslow

We have to engage with multiple audiences. When we’re talking to most people, you go to a community meeting or your neighborhood association meeting and you talk about public banking, people get excited. They love the idea because at 35,000ft, what’s not to like? To have, in addition to the private banking system, a banking system that’s in the public interest rather than for private profit.

People get that and they love it there. Their concerns tend to be that if it’s public and it’s something that’s put together by our legislature or city council, how do we prevent this from being a slush fund? How do we prevent it from being corrupted with favoritism and so forth? So, discussion about governance becomes really, really important and all of that. When we’re talking to the people in the legislature, they get it and they can get pretty enthusiastic about it. Then it’s a question of convincing their colleagues, and then there are people who get campaign contributions from the people who are supporting the interests that oppose public banking. So you have that consideration. 

When we talk to our friends, our local bankers and credit union folks, they are interested, but they have some concerns about how that upsets their existing relationships. They have correspondent relationships with different banks. They have relationships with banks that give them investment advisory services and things of that nature. The same thing when you’re talking with officials who have connections with Wall Street and with investment banks, where they place their bonds. What’s this going to do to our bond rating? If we have a public bank, we say this will improve your strength and so forth. 

So each of these audiences has different concerns, and we talk to the people who are involved with affordable housing or business development and so forth. They get it for what their needs are. Same thing when we talk to the people in unions. It depends on who the audience is, what the concerns are and how we go about addressing those concerns.

Scott Ferguson

How about the mainstream press? And by mainstream, I mean a pretty broad swath. So like, it doesn’t have to just be our ill fated CBS News and The New York Times. It could also be, you know, major progressive magazines like The Nation and things like that. We have our own publishing platform and we do the best we can.

I’m assuming that maybe there’s a little bit more legibility with public banking. But, what about your own efforts? You know, Walt, you were involved in broadcasting and various forms of media, what’s your relationship to the press and to the journalistic world?

Walt McRee

We do exist on the periphery of development thought and policy and so forth. Because money is a bit of an esoteric pursuit, you have your own section of the newspaper for that. Of course, because we really find ourselves at odds sometimes with some of the principles of economy, that they’re operating a debt structure, a debt monopoly, and we’re talking about something that’s not that, that it’s entirely a different world, It’s kind of out there. They don’t think it’s maybe necessarily a mainstream concern. I would also say that our resources are limited and so we haven’t done a major job in moving the media forward as much as I would certainly love to do, but we’re working well past our weight already. But I do think that that is a conversation that’s going to change, in part because, I’ll give you an example, we have a national conference coming up in October in which we will build some awareness.

It’s called Public Banking, Public Prosperity: Declaring Financial Independence on America’s 250th anniversary, is an opportunity for us to focus on how we’re still trapped by the Bank of England. We’re still locked into the financial structure that made that, in part, as Ben Franklin said, was the reason for the revolution, which was because they wouldn’t allow us to create our own currency here.

That was the primary driver, according to him, in Philadelphia. And by the way, the public banking thing started in Philadelphia with the Quakers back around 1720-1730. It was community funding. Hey, you want to build a barn? Yeah. Here’s some money. We know where you live, and we’ll help you build it.

No taxes at all. We were all taking care of each other. I think you guys did a brilliant job illustrating the kind of liquefaction of public assets that can become part of a democratic financial policy and  platform. It’s a lower and smaller “d” but that’s part of the moment too.

We are at that point where the citizens are so threatened by their own survival, in their own futures, that we think they’re going to be paying a whole lot more attention about how we keep our money at home and not double the cost of our infrastructure by paying Wall Street. That’s the fact. When we go to the bond market, that immediately costs double, whereas if we find our finance ourselves, it’ll be a lot cheaper and we’ll also keep the profits as the Bank of North Dakota’s wonderful history has proved about how it’s grown.

Peter Winslow

So in Philadelphia, the leading newspaper is the Enquirer. We have access to the editorial pages of the Enquirer. When we do place editorials about public banking and public banking related issues that are important for the city, we’ve had that relationship for quite a while. We are not reported on a regular basis in the business section.

It would be nice if we were, but that’s not what the business section readers are interested in right now. So we do not really have access to the business section. However, at our conference in October, I’m pretty sure we’re going to have access to the front page of the Enquirer and that we’re going to be making news that is worth the Enquirer paying attention.

I think that will follow for other media. We have a monthly zoom program that we’re doing now. Coming up on our 54th edition of Financing Philadelphia’s Future. We invite the press to that, and periodically we get channel ten that will come in depending upon what it is that we’re discussing, we may get somebody from the media who will come and listen in. They don’t necessarily report on us, but they are keeping track of us.

I should mention that we do have some folks that are knowledgeable about public banking and interested in it and report on it, such as New City, and that’s also based here and has a national reach. It’s not the mainstream media, but it is a viable media outlet.

Walt McRee

I would just add that where there are local public bank initiatives like in California; Los Angeles, San Francisco, East Bay, Sacramento all have visible campaigns. They’ve been doing a great job. They’ve got a lot more people involved in their effort and focused on media work. This is a great story, and I think that it becomes increasingly relevant as we’re able to bring in the legislators who want to speak to it and look for an advantage.

In New Jersey, for example, Governor Phil Murphy, the outgoing governor of New Jersey, made it part of his public campaign for office. It was a winning message. It was very simple. He said, on the stump, “last year we spent a billion and a half dollars on building the infrastructure of the future in Japan because we would spend our money, then the Bank of America put it there. What did Bank of America do for us, for New Jersey? $250,000 in loans for the whole year.” 

The comparison was, are you investing locally or investing elsewhere? Another thing on our agenda is public pensions. Trillions of dollars of public dollars sit in the hands of private managers. They do not have a stellar track record of returns. They’re only focused on returns. The money’s not going into your communities, by and large. That’s one of the things that the Public Banking Institute is focusing on making some impact.

Peter Winslow

There are many ways in which a public bank can be capitalized. One of the simplest and most straightforward is to have the local municipal pension fund invest in the public bank.

Scott Ferguson

Absolutely. We had a behind the scenes call a little while ago and we were getting into some of the weeds and technicalities of public banking. How do you start a public bank? I don’t want this to get too wonkish or too nerdy, but I think a couple of examples might be helpful just to give our audience a sense of how there’s different ways of doing this.

I’m going to make a gesture and then you guys clean it up. You add and correct me. One of the dominant models here is you need a movement at the state level with state legislatures who are willing to create what often gets called a legal framework, a set of laws that make it possible to to charter a bank at the state or municipal level.

Then that clears the way, as they’ve done in California, to have local movements for a Bank of San Francisco or a Bank of Oakland, etc., etc. but that’s not the only way of doing it. We learned from you on our call that there are efforts to kind of circumvent that state process because, you know, that’s hard, and instead develop a kind of a public investment authority of some kind. You were even telling us about one model where somebody who was involved was a former banker and somehow had a legal charter already and so it’s allowing for the possibility of acquiring a bank. These are just radically different paths up the mountain.

Correct to me, flesh it out, paint a better and bigger picture than I’m able to.

Peter Winslow

As a practical matter, there are two pathways that we usually follow toward creating a public bank. One is, in one step, to go get a bank charter. You can get a bank charter by buying one, taking one that is already in existence and convincing the banking authorities that you want to convert that to public ownership, or to create it anew, in one step. What we found in Philadelphia and also is true in other places, is that sometimes it’s better or the pathway is to do it in two steps.

The first step is to establish an authority that does all the things that you want your public bank to do as a revolving fund, and have that authority seek a charter to become a bank. So those are essentially the two ways that we see as pathways. If, in Philadelphia, we could have done it in one step, we would have.

But, for a variety of reasons, we took a different path. We use the Pennsylvania economic development finance law, acts 1 and 2, which is on the books and has been used over and over again to establish public authorities for particular purposes and to establish the Philadelphia Public Financial Authority.

We were successful in doing that. We had legislation that was passed 17 to 1 in the city council. So there’s a veto proof majority and Mayor Kenney at the time declined to sign. So it went into law and is now an ordinance of the city of Philadelphia without his signature.

But in order to take the next step, the mayor needs to appoint the initial board of directors for the financial authority and mayor Kenney declined to do that and his successor, who voted for the legislation when she was on city council, Mayor Parker, has also not yet appointed the initial board of the financial authority.

Scott Ferguson

Are there reasons given? Is it just a kind of a timidity, a political risk aversion? What’s going on?

Peter Winslow

I think that there is a political power struggle that’s involved. In Philadelphia, we have the PIDC, the Philadelphia Industrial Development Corporation, which has been around since the 50s and is very large. It is governed by the Greater Philadelphia Chamber of Commerce, which are the established business and financial interests of the city.

They see a public bank as being a competitor, and they are not comfortable with the democratic governance structure that we have for the Philadelphia Financial Authority.They are saying, “well, you know, we already have institutions that can do all of these things.” We don’t because we don’t have a bank.

If you wanted to establish a bank, you could do it. We invite you to, and we would invite you to have democratic governance rather than the governance that exists for PIDC. So that’s the primary problem that we have. The other problems that they have are sort of saying, “can we afford it? Is there a risk that is involved in this, will the city have to be on the hook if things go belly up?” Questions that we really would like to have a conversation about, because we think that all of these objections really are smoke and that we like to blow that smoke away so we can see it more clearly.

Walt McRee

There are lots of reasons, or not reasons, but excuses that are put in the way and I think Peter touched on several of them, but one of them really is about the power structure. The power power politics. People don’t get into office these days without having money. The interest behind them, banks are very much a part of that scene.

As Dick Durbin said about Congress, “banks own the place.” That reality is part of our democracy. That is part of the corruption that is part of this moment. But starting a bank, it’s not against the law to create a bank, North Dakota proved that back in the 20s and 30s.

It’s not necessarily against the law. Depends on what your state constitution might say or what your limitations are for your municipal authority and so forth. They’re all different situations, but they’re not generally prohibitive of a community having its own bank. It depends. Obviously, it’s a complicated affair on some level.

But, the willingness to do so comes from the need. People say, “look, we really have to do something about our housing or our infrastructure,” and they don’t see a way that their tax base is going to swing it, then what, what kind of outcomes? The state of Washington is looking at that situation now yet again.

They’re out of their borrowing capacity. They’re running out of money, which is sort of a systemic failure of the monetary system. So we’re talking about a whole new horizon frontier of the ability for us to create our own money out of our own equity, in our own terms, and with our own mission.

This is the public option that exists not just for banking, but for other utilities, for the schools and environment. I mean, all of these things deserve to have the public power in place. So this is really about a systemic rejuvenation and renewal and I want to see a transformation into a new day where we’re not dependent on being supplicants to big money interests.

I would just say there are all kinds of things that happen along the way of making a public bank. A revolving fund, which is where they want to send you, which is what happened in New Jersey. They send it to a revolving fund. People need to know the difference between a revolving fund and a bank.

A depository bank enables your capital to be leveraged ten times, roughly speaking. Okay. Well, that’s a money tree, that’s a money cranking machine that has to be tempered and operated properly and balanced with risk and all of that. But it is a much different thing than a revolving fund now. To answer your question a little bit better, Scott, I would say, and as Peter pointed out, these intermediaries among municipal financial authorities or organizations are interim steps, fine. As long as they are part of a continuum of a purpose, that once we get this system working, once we demonstrate that we know how to do this, once we’ve got the public governance structure in place, once we’ve established the separation between this and government political control, then we can get on with formulating a working model for a local public bank. Totally doable.

I think you’re going to see that illustrated. I will give you one more example of how that has worked and I think it’s working excitingly in Vermont. Back in 2014, when we were working on that, the treasurer, who said, “look, I understand this, but I don’t like it though.”

Even though the state Congress approved it, she said, “as treasurer, I’m not going to do it. But I will tell you what I will do. We’ll put in a new plan called ‘10% for Vermont.’” What that was, they would use 10% of their available cash balance on deposit in a Canadian bank, but in a big bank.  “We’ll use 10% of our balance and you can use that for local investment. We’ll do it through our economic development agency.” That was 10-12 years ago? Well, since then they have had $30 million that wound up in local investment out of that effort. Now, 12 years later, it has gone from 10% to 12.5% and grown to one over $110 million of investment in the bank.

I think they’re in a different place where they say, “you know what, this is a good pile of money. We can really make this into a bank.” That is one approach that would be another way of starting a bank. Use your industrial or development authorities and agencies as vehicles, as capital sources to transform them into a depository, singular depositories, narrow banks, the things that are just used for specific public investment.

Those are very real, very available opportunities that do not require a great deal of heavy lifting or fabrication.

Peter Winslow

There are green banks around the country.

Walt McRee

…That are not banks.

Peter Winslow

…That are not banks, but they’re called green banks for solarisation projects and things of that nature. There are a lot of them around, but none of them are banks. If there were a bank, like in Philadelphia, we would be able to support the Philadelphia Green Capital Corp, which is our green bank in Philadelphia.

We’d be able to support them and their programs and be able to expand their programs enormously. But one of the things that may happen as the federal government starves the states and the cities, public banking is going to become increasingly attractive to the politicians because it’s a solution to their problem.

It’s a case that we have to make strongly because it’s the case that holds whether they’re starved from the federal government or not. It’s a question of the ability of a government agency in our federal system to exert its own sovereignty.

Walt McRee

The National Association of Counties recently did an assessment of that and said, because of the cutbacks at the federal level, these counties are looking at, in the next ten years, potentially a $1 trillion lack of resources that their budgets are not going to be able to compensate for because they weren’t designed to do this without federal support.

So, that’s part of this moment, the very dynamic moment for our money. It’s our money and people forget that it’s our money.

Peter Winslow

The public bank also can be a source of liquidity for local governments because the nature of the tax revenues are periodic and the nature of the expenditures are not.

Billy Saas

Well, as we start to wind down here, I want to direct our listeners to check out publicbanking institute.org, where you have more of your resources. But I want to ask both of you, pertinent to what you were just sharing, where else can people who are interested in following the latest in public banking, where should we be looking?

Where are the most exciting sort of moments for public banking right now?

Walt McRee

Well, I think we need to pay attention to what our neighbors’ needs are. What is needed? What is wanted? What must we stand for? To be driven by a mission. It’s always about a mission. The Bank for North Dakota had a mission. Every public bank has a mission. When you discover what it is that’s missing and needed, then you have a reason but also focus an energy that can be aligned around it.

I think that one of the things that we’re starting at the institute is a public banking community action network, which will be very much like an individual declaration of “I’m in favor of starting publicly owned financial institutions in my town.” We will be networking and creating a collaborative understanding where we can communicate with each other.

Not just within the sector of public banking interest, but in all of these other sections, like working families, community environmental justice and fairness, all of these other organizational frameworks become part of a common thread of community, of how we’re going to get this institutional framework established. The politicians are going to need to see the people standing together around this, because it takes an enormous amount of courage and even when they’ve got it, like Bob Asagawa, God bless him, up in Washington state, has been at this for ten years in the Senate. He’s still at it and it will take a while. When people stand together, that’s a whole new possibility. Again, part of this moment we’re in is where people are standing together.

We’re not going to be fooled forever about how we are being treated and how people are taking this opportunity to take our stuff away from us. 

Peter Winslow

It’s a national movement at the local level and people can watch what’s happening in the build up to the conference in Philadelphia in October. People can see what’s happening in their local states and cities. New Mexico has a very vital program that is looking toward success.

California has a framework, where a variety of cities are working on this. I don’t think we’ve mentioned New York very much, but New York is also a place, New Jersey, Pennsylvania, Massachusetts, Vermont, Oregon, Colorado, Colorado is very big.

You see on the Public Banking Institute website a map that shows where there are state and local initiatives underway and have links there to get in touch with your local effort.

Walt McRee

Yeah. I just want to reinforce that if you go to publicbankinginstitute.org, there’s an enormous amount of resources there to give you a background and links to things to really get the inside scoop on how the Bank of North Dakota works. There are five videos that are made of a presentation that Don Morgan, the president of Bank of North Dakota, made in New Mexico back in January.

Easy guy to listen to. He really lays it up straight. It’s not difficult at all to understand. But you see how beautiful the symmetry and the synergy is of how that bank works.

Peter Winslow

Individual websites in Philadelphia, like the philapublicbanking.org website. In addition to information about our combined effort that’s called, Project Beloved Community, which is built upon Martin Luther King Jr. ‘s concept of a beloved community, which is based upon a non-extractive economy.

All of the videos of Financing Philadelphia’s Future are there and on YouTube, and similar information is available in Colorado and Washington state and so forth. So there’s a lot of information that people can get, and through the Action Network, be in a position to join and coordinate with their neighbors.

Scott Ferguson

Well, Walt and Peter, thank you so much for joining us on the podcast. We so look forward to future collaborations with you and we so thoroughly enjoyed this.

Peter Winslow

Thank you so much.

Walt McRee

Thank you very much for having us and guys, we really admire your work and, indeed, look forward to the future collaborations. We’re going to need each other’s brains and courage to press on. So, thanks.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

Billy Saas and Rob Hawkes speak with Sheridan Kates, ecological economist, activist and Green Party candidate for Islington Council in North London in the May 2026 local election. (Update: Since recording, Sheridan won her seat and is now an elected Councillor.) In her academic and political work, Sheridan rejects both the economics and the language of austerity, and instead prioritises democratic, inclusive, and participatory institution building. Sheridan’s activism extends into a commitment to public economics education via her work with Modern Money Lab UK, which held a series of public workshops in London and then a 2-day anti-austerity conference in Bristol in 2025. As a signatory to the Greens Organise ‘Pledge to Oppose Austerity in Local Government’, Sheridan both welcomes the gathering momentum behind campaigns for a UK wealth tax and argues that they do not go far enough. Amidst a new wave of excitement surrounding green politics in the UK, especially since Zack Polanski’s election as Green Party Leader in September 2025, Sheridan looks to a future where our economies are redesigned democratically to put people and the planet before profit.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Billy Saas

Sheridan Kates, welcome to Money on the Left.

Sheridan Kates

Thank you for having me. It’s great to be here.

Billy Saas

We are interested in talking to you about many things, but we want to start by asking you to tell us a little bit about yourself and how you found yourself where you are in your thinking now on economic and public policy.

Sheridan Kates

Yeah. Well, I have a bit of a circuitous route to where I am now. My background is completely unrelated to all of this. I started out as an engineer. I initially did a master’s in general engineering. I didn’t know if I was going to specialize in civil. I really loved the idea of building things that actually exist in the real world.

But my dad was a software engineer, so I basically went that route instead, specializing in electrical and computer science. I really did that for a long time. I worked in the tech industry. I ended up getting into the big tech worlds right out of college.

We probably knew it was starting along the evil routes but didn’t know quite as well some of the challenges that we see with some of these big tech firms that we are seeing nowadays. I was working at all these different types of companies and seeing that we were, in theory, really trying to do good by our users, right?

We wanted to create products that made their lives better. Then you’d find the things would start to really go towards the profit motive rather than what was good for the user. I don’t know if I should be naming names, but one of my big companies I worked for at the start of my career was Google.

When I started at Google, it was super clear what that ad was, right? You had a different colored background for the whole ad section. These are the ads, these are the search results. And over the years that’s become less and less obvious. I struggle as a relatively sophisticated computer user to see what an ad is on Google.

Now, there’s this tiny little badge that says ad. A lot of that is to get people to click more on ad results. They try to make sure that the users are getting a good result when they click through, but it just feels like it’s moving towards money and not actually good things for people.

I started moving through different companies and trying to see, “okay, well, you know, I’ll try and work on a company that’s like trying to help people through fighting the climate crisis or these types of things.” But then you would just find that all of them sort of ended up in this world and not necessarily even in a bad way.

They were just forced to compete in this world of capitalism where people have to choose the profit margin over what is good for users. At this climate company I was working at, in theory, it was doing this demand response for energy. So basically rather than firing off a gas power plant in the middle of the day when you needed more energy, it would say, “okay, you’re using a whole bunch of energy. Stop using energy for now, then other people will be able to use that,” and that in theory is good, right? You know, it basically means you don’t have to deploy another power plant. But they didn’t tell me before I joined the company that some of their biggest customers they were working with to turn off were bitcoin mines.

In theory, you’re helping the environment, but do we really want all these bitcoin mines? Could we not invest in battery technology instead of having all of these mines using energy? So again, this theme continued and it felt to me like I would never find a company that actually was going to be doing things in the way that I wanted.

And I came across Doughnut Economics in 2017, Kate Raworth and also Jason Hickel’s The Divide. At the time, I was very ignorant of the global north and my country’s role – both the UK and I also lived in the US for a very long time –  in subjugating the global South and then putting us in the situation that we’re in now.

Then I came across the concept of degrowth and I have gone on a journey of many masters. That was my second master’s, my master’s at the University of Barcelona. That degree is really fantastic. You can do it online, but it really gives you a very broad sense of what degrowth is.

Within that, I think you can kind of find your place and for me, the thing that really stood out was economics. We are told all over the place that we will not get the good things that we want if we do not continue to have growth. That’s how, in theory, governments are providing all of these public services, but understanding money for what it is, it basically meant that I felt that I really needed to understand this from a left perspective and so I did a final master’s. As part of that degrowth master’s was really understanding that I wanted to drill into post growth economics and how that could actually work in practice, how that really works with the money system. Steven Hail’s degree, at Torrens University, Modern Money Lab really felt like the right fit for me because that gave me the grounding that I would need to really be able to speak to how money works, why I’m moving towards a post-growth economy that wouldn’t crash the economy.

In fact, it would just be a really different way of thinking about things. I ended up quitting my job to do that master’s a couple of years ago. I was lucky. I have to be clear on that. The tech industry gave me this cushion that meant that I could go and try this other thing.

I’m very grateful for that. I think it’s important to not let yourself get sucked into that world where you’re just trying to get the bigger house and then just end up living up to your means. So I did try and set that up such that I could change into this other way of giving back.

I decided to go into economic education and Modern Money Lab is the place where that final degree was offered. We wanted to put together courses, like, Steven Hail is just so generous with his time, so we facilitated some of those courses here in the UK.

We also put together a conference which I think Rob came along to, which is great, but we just really wanted to get the word out there, to try and give a political education, which I feel is missing especially around money. It’s this big scary thing.

It’s really presented to be like, “oh, you know, don’t worry about this. You can’t understand it.” I really wanted to change that. I think the approach I’m taking right now is throwing spaghetti at the wall and seeing what sticks, because I also got very involved in the Green Party about four years ago and now in local elections here in Islington, which is where I live in the UK. 

What I like about the Green Party approach is that it is all about listening to people. I’m part of a team that’s been door knocking in the area that I’m working in for a decade or more. We started for this election that’s coming up in a couple of weeks two years ago. We started door knocking to find out what people had to say about the local area. We want to know what the green spaces were like, what the bin collections were like, just the stuff that really makes a difference in people’s lives. We’ve built up deep connections with people in that area now, and I think, as part of that, hopefully we’ll get elected, but we’re not going to stop door knocking after that. We want to keep doing it. We want to try and keep pulling people into forums like Peoples Assemblies where we can do participatory budgeting. I really love what Clara Mattei has been doing at the University of Tulsa with the FREE (Forum for Real Economic Emancipation) projects where she’s been doing lots of political education.

I’d love to be doing more of that locally. So yeah, it’s really kind of a wide range of areas. Oh, and the thing I didn’t mention on top of that is also the national policy. So we can probably get to this as well, separately. But, the Green Party of England and Wales, all of the policy is member driven and so we have these policy working groups and I’ve been working with the Economics Policy Working Group for about the last 3 or 4 years and then last year I took on the co-convening role of that group. So really trying to help both at a local level, but then also like a national level from the economics policy side for the Green Party.

Rob Hawkes

That’s really wonderful. Yeah. There’s so much we probably want to come back to many of the topics you’ve already raised there. I think that the point about education, about opening up conversations about money and economics, though, is such an important one. One of our friends and colleagues, part of the Money on the Left group is Jakob Feinig, his concept of monetary silencing is a really important one for us as a group.

It’s such a powerful concept. All of the conversations about what money is, to how it works, to who creates it, who gets to make decisions about where it will go, who can create money, why it can be created, what its purposes are and functions and the kind of mechanics of monetary design, monetary silencing kind of takes that off the table. Like you just said, it kind of puts us in the position of like, “:this is just the way it is, and you just have to kind of just get on with it or it’s too difficult for you ordinary people to understand.”

So, yeah, I wonder if you could just say a little bit more about those events. I was hoping to come to one of the events in London last year, and I think we were in touch around that time, but in the end I couldn’t make it. But yeah, there were two workshop events in London that Steven Hail ran as Modern Money Lab UK events and then of course the conference in Bristol that, again, I was unfortunately not able to get to in person, but I attended remotely. Can you say a bit more about what happened at those events, how they worked?

Sheridan Kates

So Steven Hail and then also Gabby Bond, who is the director of the Modern Money Lab group in Australia. Steven and Gabby put together some fantastic courses. I really love the way they’ve done it, actually. It’s broken out into modules throughout the day.

It’s almost like a taster, actually, for the two intro modules for the master’s that I did. Basically, the way that it works is that Steven will give a lecture for like 30 minutes at the start, but then they have breakout groups and they’ll randomize everyone in the room. So it’s super social.

You get to meet all these different people and then you talk about the concepts that you just heard. It might be like, you have a section on exchange rates or a Doughnut Economics crash course and then you come back into the room about what you’ve learned, but it’s kind of putting everyone on an equal footing and hopefully encouraging people by saying things like, “you know, no silly questions.”

You know, everyone is just sharing their knowledge and getting that out there. It also pulls in the Finding the Money film, which I think is a really useful pedagogical tool, which I US-focused. We need to get the UK Finding the Money. That always blows people’s minds too.

It’s just a really, really good overview. A really key feature that I really think we should be focusing and centering in all of our work is food, right? You know, there’s food included and people are eating together over lunch and there are snacks all through the day.

Clara Mattei does this as well with her FREE gatherings. I say FREE gatherings, it stands for the Forum for Real Economic Emancipation. That kind of community is really built around food and then safety around questions and unsilencing or demystifying money.

So that was incredibly powerful. I should definitely plug – or Steven will kill me – that he’s coming back in the summer to the UK and all over Europe. Maybe we can share this in the show notes or something? He is coming to Brighton and various other places over Europe, so we should definitely let your listeners know about that.

And then the conference, what we wanted to do with that was try to open up these concepts outside of just the people who come to economics conferences. We have had like three areas of focus; health, housing and employment and making sure that there are jobs out there.

What was really compelling about that is that you can get people from groups who weren’t necessarily thinking about this and just sort of present, “okay, well, is this a different lens of thinking about how government spending works and the power of public money to fund the things that you are advocating for.”  I don’t know how these organizations feel about it, but it’s almost like you either want the funding or you want to put yourself out of a job, because this should be provided by the government. I don’t think we’re ever going to put ACORN [Association of Community Organisations for Reform Now] out of a job because ACORN does fantastic community organizing. Even if everyone had a house I’m sure we’d still need that. Some of the charities around poverty and all this kind of stuff, in the ideal world, I don’t think would exist.

If we can help all of these organizations understand how government finances actually work and what the real world constraints are to spending rather than the perceived ones. That was really the goal. So we specifically didn’t call the conference like anything around any school of thought, we called it The Anti-Austerity Conference. We pulled in the Keynes quote, “anything we can actually do, we can afford.”

I think it went down well because of pulling together academics, but also people from the different groups. We really tried to make sure that the online experience was as good – as much as possible – as the in-person, again, really prioritized food. There was a fantastic onsite cafe in Bristol, who did really good catering for us.

But yeah, I think those are themes of how we try and put these things together. The thing about the conference is, we’ll think about how that should evolve and we’re all doing different things, throwing the spaghetti at the wall just to see what sticks, but I do like the goal of reaching out beyond our own community. That is where we want to continue to go.

Rob Hawkes

Yeah. Yeah. Absolutely. The online experience was great as far as I was concerned, although it was Bring Your Own Food if you were an online participant. But yeah, I’ve got the full title:  “The Anti-Austerity Conference: Anything we can do, we can afford,” which is, like you said, the Keynes quote, “debunking money myths to end austerity in the UK.”

One thing that did stick in my mind from being an online delegate at that conference was a moment where you were directing a Q&A after a panel, after a paper, and you quite deliberately said, “I want to hear from someone who’s not a man next.”

I think those were your exact words.

Sheridan Kates

Yes.

Rob Hawkes

Why did you say that? I mean, why do you think that was an important move to have made and perhaps how it speaks to a kind of a wider issue and an ongoing one in conversations around economics?

Sheridan Kates

Yeah. I mean, obviously there are very few non male voices in this space and often they are the loudest. I think it’s really crucial to just remind people that their voices are as important and the more that you hear someone else who isn’t a man ask questions, and they sound like you, even though it might seem small, but, I think it really does matter. It also just shows that the space is for you. It was also part of the outreach, honestly, like, we really tried to make sure that we didn’t just have a room full of the usual suspects, I do keep getting that feedback at the events that we run. They are more diverse than the ones that you typically see.

Like, we also had an event actually in UCL (University College Longon) that was a screening of Finding the Money. We had an entirely packed out, very hot room, where Zack Polanski came along and ended up doing a panel with Patricia Pino, Josh Ryan-Collins, chaired by William Thomson and that had such a range of people, like ages, genders, I think it’s just really important to make sure that we understand that economics is for everyone and keep calling that out.

Rob Hawkes

Yeah, absolutely. The Modern Money Lab master’s has ringfenced scholarships for Global South students that are specifically for women. So, so yeah, that’s kind of a little part of this wider, important conversation, isn’t it?

Sheridan Kates

Absolutely. And again, I would be remiss to not say if anyone who has money would like to sponsor more of those you can definitely reach out to Steven and Gabby we’d love to get more of those available to people. Every bit of support helps.

Rob Hawkes

It’s a wider question, isn’t it, in terms of who studies economics, who feels that they’re kind of entitled to contribute to conversations around economics. It’s bound up with other questions. When this episode goes out, Billy will have introduced it with our usual introduction to Money on the Left as a podcast that reclaims money’s public powers for imaginative intersectional politics.

Yeah. How important is intersectionality to the way we think about economics?

Sheridan Kates

Yeah, huge. Obviously, so much of the issues we see are exacerbated along racial lines. Looking at, for example, health inequalities. We see in the NHS (National Health Services) that people of different racial backgrounds are treated differently. We need everyone’s voice at the table to be inputting exactly how money should be spent and not just with equality, but from an equity perspective.

There are areas that have been massively underserved for many, many years. Where can that be improved?

Billy Saas

So part of your activation and your mobilization post-Modern Money Lab master’s has been these events and the organizing and being active in the Green Party, you’ve also been writing in those contexts. I wanted to ask you a bit about a piece that was published in November where you talk about wealth taxes in the UK. The piece that we’ll also link to in the show notes is called “Wealth taxes don’t go far enough.” Per the Modern Money Lab conference, there’s some debunking work that needs to be done around wealth taxes. Could you walk us through the scene there in the UK around progressives advocating aggressively for a wealth tax and where you’re wanting to see that argument go and evolve?

Sheridan Kates

Yeah. Yeah, for sure. I’m hugely supportive of wealth tax from an inequality perspective. The thing that advocating for wealth tax really helps us is pointing to the enemy in a lot of ways. Right? The elites have just been allowed to run away with money accumulation.

Pointing out that there’s going to be a shift towards ensuring that those types of people are taxed fairly. Why should someone who’s earning an income be relatively taxed a lot more than someone who’s getting money from capital gains and dividends? That kind of thing.

So I think that’s fantastic. I think the trap that you can get into is when you claim that it’s going to pay for everything, that the money that you’ll get from wealth taxes will cover all of the things that we need to do. I point out in the article that the numbers are vast.

There’s hundreds of billions that need to be found every year just to get our public services back to a few years ago when they were already highly degraded, they need to be much better. We need massive programs of both building, but also buying back homes to turn them into social homes, because we used to have some of the best social housing in the world here in the UK.

Now the government spends the vast amounts of money that it used to spend building council homes on funneling money directly to private landlords via housing benefits. That is just absolutely shocking. There’s a lot of money that needs to be found and the numbers don’t add up if you’re just going to be looking at wealth taxes.

This is just the start of a long journey and I think that with that blog was, there’s a particular kind of audience that will read a big blog like that, but I’d love to work more on getting some short form video stuff out there that could appeal to a range of people, but trying to get people less terrified about the idea of government spending.

What does it really represent? How does it compare to like, for example, the private credit or private credit creation that no one talks about. It’s obviously vast. Just speak to the power of government investment, especially in these industries where private companies aren’t going to get the returns.

I think Brett Christophers speaks so well about the shift towards renewable energy. The profits that you get from renewable energy are so much lower than the ones you get from fossil fuels, even nuclear to an extent.

You are not going to get the private sector to build all of this. It really has to be from the public sector, or you get into a situation where the public sector has to subsidize the private sector to build all these renewables and then the benefit of the lower prices doesn’t filter through to consumers.

You then get what we see in the UK, where net-zero is seen as a dirty word now, because there’s been all of these renewables and yet, energy prices are at all time highs. So yeah, really drawing attention to the fact that it’s not just about wealth taxes is just super key in this environment.

Billy Saas

It’s such a great conversation starter. I mean, talking about the political education of thinking about money and thinking through money, it’s something we talk about a lot. How financial literacy and the conventional refrain is sort of apolitical, but financial literacy and the critical frame that we prefer and assume is very active to what you’re up to is political to the core. I know that you’ve been doing a lot of listening and canvasing, but have you had much opportunity to share these ideas with those who have not been previously initiated into them? And if so, what’s the reception been like?

Sheridan Kates

I think it does make sense to people. I think you have to adjust for where they’re coming from because, if you’re talking to someone who thinks they know how this stuff works. You know, maybe they’re a bit of crypto investing on the side. You don’t know what you’re going to get when you’re doorknocking, right?

You have to be really careful to think about where that person’s at and whether it makes sense to be having this big conversation on the doorstep if you’ve knocked on their door unless it comes up. I think that’s tricky.

I think a lot of people came to the Bristol conference without a huge understanding of this stuff. I think like some people were saying they’ve basically been lying to us like when they learn this stuff. Obviously there’s a lot of nuance that comes on top of it.

We’re not trying to say that this is limitless, but it’s just a different kind of constraint. We know we want to be thinking about the real resources as the constraints and environmental constraints. There are planetary boundaries. Just because we can afford to reopen coal mines, should we? From an environmental perspective, probably not.

There is somewhat of an excitement in learning this stuff, but I think it’s on us to find better ways of getting to the point across snappier and in a faster way because I don’t know that I’m always the best at it. Sometimes, I think you can lose people.

Obviously people care about their bills right now, right? The cost of living crisis in the UK is horrific. If you can explain how these things will make their lives better, then, great. We have to get to the point where we’re making it clear to people we’re not trying to prove something to them that there’s a reason why we’re talking about this, that we understand what their real issues are and then get to the point where you capable people are telling me that we can’t afford this unless you increase everyone’s taxes. Look at that. Now we can have a conversation about this. But yeah, I think it’s about picking your moments.

Billy Saas

And knowing your audience. I think that’s critical. This person I knocked on the door of, do they want to talk about money or am I interrupting their dinner?

Sheridan Kates

Quite so. I will make it clear that that does not come up much on the door. Really, people care about the potholes and when their bin doesn’t get picked up. 

Rob Hawkes

Right. It makes sense, in lots of ways, why the wealth tax conversation happens in the way it does. For anyone that’s kind of broadly willing to get on board with the idea, it makes sense. We can see that, there are the rich people, they have the money and so if we want to do more things for the public, we need to get some of that money. That’s an easier concept for most people to get their head around then. Well, money is a public utility that is inexhaustible and we just need to decide democratically on how we go about using the power of public money creation…

Sheridan Kates

…to mobilize the scarce, real resources that we actually have and then that’s the hard conversations, which I think is really compelling. I think what’s fascinating right now is this whole AI situation, right? Obviously this is like booming and people really don’t have any say in this. Some people find it can be cool for certain situations and stuff, but ultimately people feel like they have to learn this stuff otherwise, they’re going to get left behind. But if we can have democratic conversations about, “okay, well, these are the real resources that are actually having to be used for this whole AI boom. Do we want to be using this for this purpose? What is the impact on the environment?” and have conversations around this and maybe change the way that we approach this. I think that’s really compelling.

Rob Hawkes

Yeah, absolutely. In your piece, I’ll quote you, “In a world where we’re no longer scared of losing rich people’s money because we know it doesn’t fund our public services, we can set up direct democratic institutions like people’s assemblies and use them to decide, as a society, how much money we want to allow anyone to have for themselves.” And potentially lots of other things, too. How does that kind of democratic institution building feed into your thinking?

Sheridan Kates

I think there are multiple levels of which this needs to start happening. A lot of the local doorknocking we’re doing is about wanting to set up participatory budgeting and people’s assemblies. Also, there’s a pledge from the Greens Organise organization that 800 councilor candidates signed up for, where essentially we would try and mobilize people locally through trade unions, through local councils, but basically have them lobby up to central governments that we need like wealth taxes. It is still important to push for those, but also things like restructuring the way that we deliver social care. So right now that is completely delivered by private equity, pretty much. We want to restructure that to then take those organizations back into local economies and employ local people, making sure the money stays locally.

Building those blocks needs to start locally. But then there’s also other initiatives here in the UK around abolishing the House of Lords and potentially replacing that with the House of the People. Maybe you could get people elected through sortition, to do a four year term that they would get trained for. That would mean that anyone could come and do this like extended jury service or something like that, so that the interests of people are actually coming in rather than the interests of unelected representatives as in the House of Lords and not really democratically elected in other cases.

Rob Hawkes

Yeah. I just wondered if we should do that with the head of state as well. We should just sort of draw lots and everyone gets a turn.

Sheridan Kates

Yeah, absolutely. With the right training, I feel strongly that that should be within reach.

Billy Saas

I feel like there were a series of films in the 1990s that that was their central premise, more or less. Just like average-Joes making it to the highest…

Rob Hawkes

King Ralph wasn’t it? There was King Ralph.

Billy Saas

So there you go. I think there’s one called Dave.

Rob Hawkes

But yeah, we can include the pledge in the show notes as well because it is a really great set of commitments and talking points. One of them being an emergency summit to make communities heard, which is a commitment from all the signatories. Do you want to say more about that? 

Sheridan Kates

Yeah, I mean, basically we want to keep this momentum. We have some kind of green wave happening. I’m touching all the wood around me. If we live up to this expectation, we should see a lot of green councilors coming up after the elections in the next couple of weeks.

We’re in a crucial decade for the climate crisis. We’re in a crucial time for people’s affordability. Everyone is having a really hard time right now. The rejection of the two main parties is happening right now. So with the Tories and Labour, many people are going towards Reform on that because they feel like they have this different story.

But a lot of people now are coming to the Greens and we need to show them that we are not just like the other parties. We are going to do things differently. We are going to take the trust that they’ve put in us and build something in a democratic way and this summit is key to making sure that that momentum continues and we don’t just end up being like the other people who just get into power and don’t have anything happen. So yeah, active planning happening on that. Like I said, we want to make sure that trade unions are involved because it’s a very exciting time.

Billy Saas

For those of us in the United States maybe, but elsewhere in the world, who aren’t as up to date on the Green wave, could you catch us up on the more exciting moments.This episode will be published in the middle or certainly close to those elections.

Sheridan Kates

Like six days before.

Billy Saas

Yeah, yeah, yeah. So what should we be paying attention to or what should we know as that ramps up?

Sheridan Kates

Yeah. So a quick summary. There was kind of a little bubble back in 2015 for the Green Party, which kind of got eclipsed by Jeremy Corbyn becoming leader of the Labour Party. There were very similar values. A lot of those people went over to Labour. We know what happened there with the election in 2019. Since then, there’s been a bit of a languishing. There’s been various things cropping up, but last year Zack Polanski ran for leader and I mean, Zack’s really awesome. I think I wish he’d been sort of on our radar from the economic side as well for a long time, because I went to a Green Party conference in Bristol in 2023, and he was deputy leader at the time and in his speech said, “government’s budget is nothing like a household.” And I’m like, “oh, well, I wasn’t familiar with your game, Zack!” I then reached out to him to try and get him to be a speaker on our panel at the UCL Find the Money event that I mentioned earlier..

So we’ve been trying to get him along to all of these events and actually we had asked him for the MML (Modern Money Lab) Bristol event, literally as he announced his leadership bid. I think we got very lucky because he ended up doing our conferences as one of the first things he did when he was leader and massive kudos to him that he didn’t cancel.

He really believes in his commitments. So thank you so much to Zack for coming and speaking about the political situation in the UK.

Rob Hawkes

It was like the days after he was elected, wasn’t it?

Sheridan Kates

It was days after. I think we just got so lucky because we asked him months prior. I knew that Zack would do really well. It’s been fantastic to see his rise, but I think what’s really key, though, is to call out that nothing has changed in terms of Green Party policy.

We’ve always had these really good social policies. We’ve always had these really strong environmental policies. Zack is just an incredible communicator. He’s really gotten out there. He really understands social media. From the start of Zack’s campaign, he added a lot of members to the Green Party, but after he got elected, it’s just been this crazy trajectory. Like we had maybe about 60,000 members roughly, and now we have more than 225,000. It’s only been just over six months. We are probably the second largest party at this point in the UK because the Labour Party has stopped reporting its membership numbers.

Reform is still up ahead, but we are quickly closing. The other really amazing thing that happened was the by-election in Manchester. So, Hannah Spencer is amazing and she ran an amazing campaign against both Reform and Labour, coming out on top. That’s the first time the Greens have ever won a by-election. So I think all of these things compounding are just really showing that the Greens are no longer a small party.

We’re one of the major parties. It’s also kind of wild because we have five party politics now in the UK with our first-past-the-post system. This is really causing, I think, a lot of instability. I think we are kind of lucky in that we do have this situation where an insurgent party could come in and create this kind of upset.

I know in America it’s a lot harder with the way that everything is structured. I think we are going to have to try and move towards a proportional representation approach, because otherwise we really run the risk of an unstable government, year-to-year.

Rob Hawkes

Right. For any listeners unaware in other parts of the world, Reform UK is Nigel Farage’s party and is likely to turn into a very kind of Trumpist government if elected and for a long time the opinion polling has been really frighteningly showing a big lead for Reform.

And yet, as well as membership numbers for the Greens surging, the polls have been kind of creeping closer and closer. At least one recent opinion poll actually put the Greens kind of slightly ahead or a fraction of a percentage point ahead. 

Sheridan Kates

That’s right. The average of polls are showing definite drops for Reform now and Greens on the way up. So we just have to keep at it with the hard work. But I think it’s quite an exciting time.

Rob Hawkes

I want to just go back to that sentence you mentioned from Zack Polanski about the government not being like a household. Zack Polanski said the government is not like a household, as you say, before he was elected leader, but he said it on the day he was elected leader. He went on BBC, the flagship BBC Newsnight program.

I think it’s difficult to maybe get across to listeners outside the UK of just how that was quite an extraordinary moment, actually. It was the first time I’d heard anyone on a kind of mainstream BBC flagship news program, sit on the sofa and say, “government budget’s not like a household.”

He said something similar again in a major speech of, around a month ago, at the New Economics Foundation, on economics. I imagine that most Money on the Left listeners will be familiar with this, though, and it’s not a surprise to many of our listeners.

But, why was that such an important thing to say and such an extraordinary thing for a leader of a major British political party to say?

Sheridan Kates

Especially since the 80s when Thatcher told us “there’s no such thing as public money, it’s only taxpayers money,” we very much have adopted and endorsed this idea that we need to balance the budgets. Austerity years, like we were sold by George Osborne, that we had been very irresponsible as a government before the financial crisis and the only way to address this was via austerity. I think he actually even referenced that Rogoff and Reinhart paper that was discredited and I don’t think that was ever actually a big kind of reckoning to that publicly. Basically saying that we needed to reduce our debt, where all of the measures for austerity only increase the debt.

So we’ve really been playing in this sphere where the government doesn’t have any money, and we need to be taxing it and we can’t be borrowing because look at those yields, look at the interest rate that it has to pay on the bonds.

It’s much higher than all these other countries and she’s really got to tighten her belt. So I think just having a major politician out there saying, “well, you know, actually this is not the analogy we should be looking at.” The BBC actually has been pulled up in the past for saying things like “maxing out the credit card” and saying that there is no money left, but they continue to do it.

Having a politician on there challenging them, and I think honestly really throws them and it’s delightful to see presenting this alternative. I think he does it in really good and interesting ways as well. Speaking to things like multipliers where it’s just common sense, right?

That if you spend money into the economy and it goes to a place that’s going to then be circulated multiple times in the economy, rather than just going directly to subsidize some billionaires to provide Covid personal protective equipment, which is like a large part of what happened on our side, then this is actually a really big benefit to the economy.

So, yeah, I think it’s just a real game changer. The thing that we really need to do now is find more people in Zack’s position, because he can’t be the lone voice out there. I think we need to give him cover and make sure that more people are talking about this publicly.

Rob Hawkes

Yeah. Yeah, absolutely. I think the other thing that has really struck me from the things that he’s been saying is the emphasis he places on storytelling. He often says, telling a different story is really important. Of course, as a humanities kind of person and at Money on the Left where, you know, we’re all about kind of narratives and metaphors and storytelling as so fundamentally important.

I’ve said and written myself saying that storytelling is another word for accounting. The way we account for things in monetary terms is all to do with how we tell stories about who’s important, who matters. It comes back to those questions we were talking about before, of the kind of intersectional questions of whose voices are loudest, whose voices are being pushed to the margins. It is partly to do with how we tell stories and how we account for people.

Sheridan Kates

Yeah, that’s really interesting.

00;43;51;16 – 00;44;16;25

Rob Hawkes

Kind of tied to that point and going back to the documentary Finding the Money, Maren Poitras’ brilliant film. Maren’s a former guest on Money on the Left many years ago when she was making the film. But, another former guest, Lua Yuille, says in the film a line that really sticks in my mind from it, “if money is natural, then who has the money is natural as well.” Again, it comes back to the kind of monetary silencing thing. If we accept that everything is the way it is, that is just the way it is, then, the kind of the status quo is natural as well.

Five men have all the wealth and the power. But once you start to realize, “oh, the system has been designed this way, but we could design it differently,” that’s when we can open up new kinds of conversations and new ways of imagining the future.

Sheridan Kates

Yeah, exactly. Actually, I really loved one of Zack’s Bold Politics podcast episodes recently. This author, Zakia – I have completely forgotten her last name, I hope we can drop that in the show notes as well – (Zakia Sewell) wrote this book called Finding Albion. It is all about finding the old folk tales from thousands of years ago that center completely different people.

So,even the name Albion is the old name for England. It references white, but it’s not necessarily clear what that white was. Was it the white cliffs of Dover? There’s also a story about this Syrian refugee who went to England. Her name was Albia and she set up a matriarchal society there.

These stories that got lost through history, the ones that got kept are the ones that they wanted to be kept right. The ones that they had was the history that they wanted to teach people, to believe that we were just amazing in the two world wars and don’t think about what we did in the Empire. It’s all about thinking how we frame stories, which stories we bring to the forefront.

I think that is also the way to convince people that the story might be living through right now could also be different. So I think that that episode is really great.

Rob Hawkes

There was a bit of a hooha, as we say in the UK, about the potential redesign of banknotes about a month ago, wasn’t it? The Bank of England announced that the banknotes were going to be redesigned and the new designs were going to feature animals on them.

Nigel Farage in particular got very upset. A man in the Newsnight and in the BBC Question Time audience got very upset about it as well and blamed those Greens and he said, “oh, it’s those greens with that kind of woke agenda that are responsible for all of this.”

Nigel Farage posted a video about replacing Winston Churchill with a beaver, and he literally said, “I’m not making this up. They’re going to replace Winston Churchill with a beaver.” He obviously was making it up because the Bank of England quite clearly has said they haven’t decided which animals are going on the banknotes anyway.

Sheridan Kates

That was not to mention the fact that it was voted for by the public. 

Rob Hawkes

Yeah, it’s a democratic monetary design. 

Sheridan Kates

Exactly.

Rob Hawkes

It seemed sort of silly or you could dismiss it as a bit of a silly media moment, but it was telling, wasn’t it, that he was upset about replacing Churchill, but he wasn’t upset about Jane Austen or Alan Turing.

Again, it sort of comes back to question kind of whose stories are we telling and who’s the center of the story.

Billy Saas

Perhaps we could find our way down by doing a little bit of storytelling – Sheridan, if you’ll indulge us – about the kind of the future that you see yourself fighting for that is motivated by or at least sort of supported in some way by this kind of public money perspective, we’ll call it. What do you see coming down the line? I think we could all use a little bit of that optimism that you referenced or alluded to before. How do we be positive about where we’re going?

Sheridan Kates

Yeah. Gosh. When you’re so focused on helping people with the problems of the now, and then you have to jump back up to e visions of the future, I do think that is really compelling. I think ultimately, democracy, but proper democracy, direct democracy underpins all of this.

Just thinking about, collectively, how we can design a better society. If we were thinking about the kinds of jobs we thought should exist in the world or just in our country to start with, just look at even the NHS situation where resident doctors are graduating their programs and there’s no placements for them to move on to.

Understanding that that’s a designed world. The world that we could create would make sure that all of the placements that we need for all of the doctors and to staff the struggling NHS, this would be a conversation that we could have together. Money should not be the thing that holds that back.

It’s the real resources. Here we have resident doctors who literally could be going into these placements, and so extending that to every part of your life. Obviously, the unions won the five day working week, but you know, with fewer jobs available, why shouldn’t we be thinking about making these four day working weeks so that we have more time to spend in our communities, with our families, and think about all of these things about how we should design the world. 

I think moving towards a framing of efficiency, which is something that we don’t really talk about. In this world where we talk about growth, how do we keep growing the economy so that, in theory, some of that will trickle back down to provide the services that we all care about.

Well, what if we actually were just designing the economy to provide those services in the first place? I think it’s just an incredible rethinking of how, rather than just leaving things up to the market, we can work together collectively. There are huge multinational businesses already who are doing this kind of design, like at Google, where I worked, you couldn’t launch a new product until you talked to the team that controlled all the machine resources. If you needed to launch something that was going to increase the amount of traffic to a Google service by a certain amount, you need to make sure that those machines are there because otherwise, the whole thing’s going to fall over.

So they want you to believe that it’s far too complicated for us to design our economy in this way. But, some of these companies have annual revenues that are higher than entire countries. If they can do it, why can’t we do it? When you start to understand that this is within your control, we could be completely transforming our streetscapes in city areas, we could be training up people to restore the beautiful parts of the environment. We could move away from ads everywhere.

It could be public art, or it could be advertising community events. There are all these things going on in people’s areas, but they don’t know about them. The epidemic of loneliness is another huge issue in the current situation that we’re in. Then obviously, as part of this as well is moving away from fossil fuels. We are in a scary time. It’s hard to talk about it without freaking people out but the temperature rises that we’re seeing are pretty intense. This was supposed to be the decade that we were stopping the increasing EV emissions and getting that back down again. Understanding that through public money, we could be investing in that complete transition, but also not in a way that just requires business-as-usual, but just with renewables. We get back to this “efficiency” conversation here, right?

Do we need AI, for example? Like if we didn’t have AI, maybe we could have far fewer data centers and require far fewer renewable resources. Everything is connected. I think it’s work. It’s a different kind of work, but I think it’s a nourishing work that actually puts us in a kind of communion with the people who are around us and makes us realize that we’re not just all individuals.

Billy Saas

That’s beautiful. I’m all in.

Rob Hawkes

That’s really wonderful.

Billy Saas

You’re a great storyteller, and I appreciate that. Yeah.

Sheridan Kates

Oh thank you. So sweet.

Rob Hawkes

Yeah. Absolutely. That’s really wonderful. You might have just answered what I was just about to ask you, but one of the things that still comes up or one of the lines of attack now against the the Green Party of England and Wales is that it’s not really green anymore or it’s been kind of it’s just been taken over by the Corbynites who left the Labour Party and it’s about these kind of crazy economic ideas or it’s about wokery, but it’s not really interested in the environment anymore. I think you may have answered that, but do you have any more to add? 

Sheridan Kates

Yeah, I think it’s wild. I think a lot of these attacks are coming from people that it’ll take a while for them to kind of come along to this way of thinking. Anyway, those policies are not going anywhere. It’s just that people already know that we are for the environment. The brand that we need to be building is that we are about people and planet.

Zack likes to say this thing, “Our vested interests are not big businesses. We only have two vested interests: people and planet,” and so many of these things are connected. This kind of goes back to the start of my journey. Seeing the relentless quest for profit, all of these things are connected to the continuing stress that we’re putting on the planet. There’s evidence that we can decouple carbon emissions from GDP because of renewable energy, but then obviously, there’s also the issue of the sacrifice zones. We mean the mining areas in Chile or the Congo where we’re taking these minerals or deep sea mining right now, which is a terrifying idea. There’s all these minerals on the bottom of the ocean that they can scrape them up with big trawlers, but they don’t understand what that will actually do to the whole ecosystem.

Just as a normal person and just thinking about, “would this be a good idea?” It seems like a terrible idea. Yes, there’s some decoupling from GDP and emissions, but there is no evidence whatsoever that there’s any GDP decoupling from material use, anything that is driving GDP is very much increasing material use.

Even with the emissions, decoupling is not happening fast enough. We need to be on a pathway where we are massively reducing, especially in the global north. People will say, “okay, the UK is a small percentage of like the overall emissions,” but historically we are not a small percentage. The Industrial Revolution started here.

It is on us to be at the forefront of making sure that we decarbonize, and we’re very much not at the forefront right now. Obviously, China’s doing a fantastic job, but it, overall, still has high emissions. But it is on us and why should any other country do this if the people that originated the Industrial Revolution don’t do it as well.

So, yeah, I could talk about green stuff all day, but, I also want to talk about the way that people’s lives could be different because that’s so connected.

Billy Saas

That feels like a splendid place to end it. Sheridan Cates, thank you so much for joining us on Money on the Left.

Sheridan Kates

This was an absolute pleasure. Thank you. 

Rob Hawkes

Thanks so much.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

We speak with Ely Fair, who studies structural inequality and poverty in urban geographies from a heterodox perspective. Fair holds a Ph.D. in Economics from University of Missouri, Kansas City and is presently a visiting instructor in Economics at Knox College. 

Examining the institutions responsible for social valuation, maintenance, and transformation at the neighborhood level, Fair focuses especially on the role of housing policy in the racialization of U.S. cities. During our conversation, Fair not only spells out important discoveries in this critical research, but also outlines several positive policy solutions designed to remediate the unjust development of urban geographies.

In doing so, Fair explicates his work on the legal history of complementary currencies in the United States, emphasizing the generative role they can play today in advancing housing justice, empowering municipal governments to mobilize labor to create and maintain safe and affordable housing.

Lastly, Fair relays his findings about The Freedman’s Savings Bank. Specifically, he contends that the bank’s collapse was a result of the federal government’s “negligent paternalism,” creating a moral and equitable obligation for the U.S. government to finally restore the outstanding deposits. From here, Fair proposes a targeted program of restitution that leverages digitized archival records to identify and compensate approximately half a million Black American descendants.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Billy Saas

Ely Fair, welcome to Money on the Left.

Ely Fair

Thanks. Glad to be here.

Billy Saas

Would you kick us off by just telling us a little bit about yourself and your background, how you came to the sort of questions that you’re asking in your research?

Ely Fair

Yeah. My name’s Ely Fair. I have a PhD in Economics from University of Missouri, Kansas City. I’m currently teaching at Knox College in Galesburg, Illinois. Most of my research is motivated by structural inequality and poverty. I got quite interested, while living in Kansas City, in the racialization of cities, how cities intervene in housing policy and the history of the landscape within Kansas City, which is characterized by starkly divided race and income and therefore also neighborhood quality.

It’s actually a strange town because it was built going south and then about 50 years later, they white-flighted it going south. So there’s a race line that runs directly through town, and on one side you have housing stock that was built at exactly the same time and for the same group of people, which were mostly like white, middle-class people. So on both sides, it’s the same housing stock historically. But then for the last 50 years, one side has been over 90% black and the other side has been over 90% white. This identical housing stock has then evolved through the maintenance decisions of people and the capacity of people to maintain their homes and their neighborhoods such that now, many of the neighborhoods on the black side of Kansas City are completely destitute.

There’s like lots of abandoned properties, lots of properties that have been removed. So you get this kind of widespread abandonment phenomena and coupled with that, then a lot of childhood asthma problems, childhood lead poisoning, all these kinds of social diseases that come from concentrated poverty. So I got curious about how this dynamic evolves and looking at how municipalities attempt to intervene in neighborhood change to create stable living environments and stable neighbor environments.

Some of my work then is around housing maintenance, neighborhood stability, and some of the work is then on local currencies and how cities can go about bringing the labor resources, which are in the community, there’s like lots of unemployment to bear on this question of safe and affordable housing for the neighborhood.

Scott Ferguson

Correct me if I’m wrong, this is a kind of institutional orientation or maybe even commitment of the UMKC (University of Missouri Kansas City) econ department or social science Ph.D. to the community and to the city. Right? There’s all kinds of local research that’s done by PhD students all the time. At least that’s my memory of when I visited years ago.

Ely Fair

I mean, yeah, absolutely. I mentioned things like concentrated lead poisoning or asthma, the only reason I know about them is because other PhD students have done epidemiology work on Kansas City, looking at how housing and poverty and disease are concentrated. There is a lot of work done like that in Kansas City.

The most recent study I did was looking at the way that your neighbors’ maintenance level – how your neighbor upkeeps their home, and how that affects your price. The reason I have data on maintenance level is that for 13 years UMKC sent grad students out to catalog external qualities of homes in Kansas City.

I think 250,000 parcels were observed with 15 different characteristics, so there’s this very rich data set on what these houses look like from the outside; both the houses themselves and the grounds and then the sidewalks and other kinds of municipal infrastructure, which then I was able to use to make these little micro markets and ask questions like, “when you’re in a neighborhood that is declining because people are not maintaining their homes how does that impact your own sale price?” Then if it brings down the price of your home, then that will also affect your likelihood of maintaining your home, right? Because when we maintain our homes, we get that money back when we sell the home. Right? But if all the houses are decreasing in price, then you can get this kind of group negative group dynamic in which one person under maintaining brings down your house price, which makes you under maintain, which brings down their house price, and you get progressive decline.

That’s the kind of thing that cities can intervene in and have a lot of legal authority to intervene in, but they have to figure it out. We as economists want to identify how those dynamics unfold so that we can inform urban planning.

Scott Ferguson

So you take a different approach to the problem than mainstream neoclassical economists typically would write, maybe you can walk us through how you do the way the approach works for the mainstream and what it is that you’re doing that’s different.

Ely Fair

The primary worldview that – what we call – “new urban economics” is working within is one that assumes that the housing market is going to be a perfect market. So there’s no transaction costs, there’s perfect information, perfect competition across the market and that would mean that the market should allocate resources correctly. The economic theory says if everyone knows everything, nothing costs anything, everything happens simultaneously, then you can have perfect allocation. If that’s true, then cities should not intervene either through zoning or through code enforcement, etc., etc., because if someone wants to purchase a poorly built house that’s cheaper, you should let them purchase that house. That’s a revealed preference of theirs to purchase a house that, for instance, has black mold in the walls,

So when the city says you can’t have black mold in your walls, the city is also saying that the consumer has to bear the cost and new urban economics would say that that’s unjustifiable, that the cost is unjustifiable. Of course, the problem in housing is a long-lived built-environment.

We can’t change it. We can’t move it around. We basically know nothing about houses as consumers, which is why we hire realtors and the transaction costs are really large, right? If you have a new neighbor that you don’t like, you don’t move out of your house. That’s not what happens. It’s hugely expensive to move and because of that, you can get areas of concentrated behavior. For instance, for my research, there are areas of concentrated under-maintenance where you have a group of people that either don’t want to but probably because of the money issue, just can’t maintain their homes like they would like to to keep them safe.

Because they can’t, they cause their neighborhood to progressively decline. So the other big change in how I’m looking at that compared to the mainstream is that mainstream economics tends to do what we call comparative statics, where you look at a snapshot of the the city and you say, “let’s assume that what’s happening in the city right now is what people want, and that price is correlated with desire today,” and then you take another snapshot in the future. The problem then is you can confuse current prices with past development. So it’s like, is your home expensive because you bought it because it’s next to a school? Or is there a school next to your home because your home was already expensive and you were already living in a nice neighborhood that the city wanted to invest in?

So if price and neighborhood investment are interrelated over time, then it doesn’t make sense for us to look at snapshots in time. We want to look at evolutionary processes and then for a city they want to figure out, “okay, is this evolution that’s happening in the neighborhood going to lead to a healthy, stable neighborhood or a neighborhood that is in some kind of decline that requires serious intervention,” and you want to identify it early enough at the right moment to pivot the social dynamics.

Scott Ferguson

Something that you brought up in our pre-recording conversation was something about the specificity of the United States in the ways that municipalities, and especially cities, are empowered to make all kinds of decisions, presumably because of our federalist structure, and how that really informs your work. Maybe you can speak to how a real appreciation for the law and legal history shapes the way you pose questions and how you respond to them.

Ely Fair

We have an interesting set up because municipalities are the ones primarily charged with determining how things are built – so codes – and where things are built – which is zoning – and also how things are maintained. How things are maintained has been traditionally done through building codes and now some cities are starting to break that off into its own kind of maintenance code space.

The actual structure of the cities is legally bound within the municipality, and they can take really extreme measures. On the one side, you can have zoning that says like, “nowhere in this city can there be an industrial park.” On the other side, you could be like, “Actually, you can put things wherever you want. It doesn’t matter if it’s next to a school, you can still build an oil refinery.” Right? So with regard to where things are placed, the city has extreme latitude. And also this applies to what is built. So, the city can say, “oh, this building can’t be more than four stories tall.” It can also say “there has to be a plug on every wall, every six feet.”

As they dictate what gets constructed, how it’s constructed, they also dictate the cost of construction, right? When the city says you can’t just build a shack in someone’s backyard and have someone live in it, they also say that  the cheapest housing that we could make and put over someone’s head is not legally allowed.

I think we actually see a lot of conflict around this right now with the rise of homelessness and encampments and the Supreme Court ruling saying that you’re allowed to displace people for being in public spaces means that there is actually this municipal conflict over whether or not cities should allow informal, uncoded and unzoned housing.

How permanent is that housing allowed to be? If you’ve been in California at all in the last 15 years, this is very pressing. One of the decisions that a lot of those municipalities have made is like, “we’ll allow you to be housed in informal ways that are not legal as long as it’s not very permanent.”

As long as we can come and tear it down every six weeks and you move to another place, that is fine. This kind of inhibits people from upgrading that informal housing. I don’t want to sound like I’m going to say there’s a good reason to chase people around from encampment to encampment. I think there’s good reason for municipalities to want to have laws that control what is built. Historically, the reason we have code enforcement is there were slums and the slums had slum fires, and people died. You were like, “oh, Chicago burned to the ground. We should probably have thought differently about where the houses were and how the houses were constructed.”

But over time, that has resulted in rising housing quality across the United States, but also rising housing burden as wages haven’t kept up with the quality increase in houses since the 1970s. So housing is increasing in quality, but still with these very concentrated pockets of low quality housing, called the ghettoization process.

Billy Saas

So maybe you can help us parse and account more clearly for the distinction between the kind of neoclassical, mainstream approach to these problems and the way that they observe the rise in homelessness on that side and propose (or don’t) solutions to that problem, with your own more heterodox, kind of institutionally backed, MMT-informed approach. How do they see it? What’s their solution? And, and I guess, in a word, why are they so wrong?

Ely Fair

I don’t want to make a puppet of large and diverse literature.

Billy Saas

We can be nuanced, but they’re wrong.

Ely Fair

Oh, I will make them a puppet. At the most extreme people with regard to homelessness, people will say, the reason we have homelessness is that we have refused to allow people to purchase homes of a quality that they can afford. We’ve done that by changing socially what we consider to be habitable homes. The warrant of habitability, which is like a legal doctrine that comes in the 60s, but it’s heavily debated in the 60s and 70s, it says, like, “municipalities can just tell you what is habitable.” When they set that bar, that becomes the legal bar within the municipality. So we have eliminated a lot of housing that I think we all would agree is not dignified for people living in such a wealthy society and a society in which we believe in, at least theoretically, some kind of intergenerational mobility. A person has a right to be born into a safe place, live in a safe place, it’s not going to make them sick, and that’s going to enable them to prosper as a human right. This is kind of the individualist democracy ideal. 

On the more – I would say – conservative neoclassical side, people would say, “look, poor people simply don’t have enough money. They should be allowed to live in the housing that they want to buy and can afford to buy and it should not be the role of the government to inhibit that housing.” I would say that we live in a weird techno dystopia. We are like science-fiction rich compared to 100 years ago. If we can’t figure out how to distribute resources in a way that people can live with what we would socially consider to be dignity, that’s a distributional problem.

That is a problem of lack of government intervention and not a problem of too much government intervention. I also think, yes, the city has broad power to call forth resources. If a city wants to have housing that we think is safe and stable, cities also have a lot of tools at their disposal to support communities in producing and maintaining that kind of housing and, right now, partly because of what economists have been telling them, that when they intervene in the market, they just mess everything up.

Cities have been wary of driving the direction of resource allocation within the municipality in order to create safe and stable housing. Part of that is being wary of making mistakes, recognizing that urban planning has made some pretty heavy mistakes in the past, and part of that is that they don’t have a lot of data-informed work coming out of econ about how: given the fact that cities are not currency issuers in general, how do they use relatively limited financial resources to make pretty hard decisions about how to create community stability?

I think that’s the work of economists. That’s that stuff we should be telling them. We should say, “oh, we evaluated this policy, we evaluated this neighborhood change. It turns out if ten years ago, the municipality had come in and supported this community in these ways, then we would expect to see a very different outcome now.” Some kind of like an evolutionary outlook on the city.

Scott Ferguson

So how would the worst caricature of the worst conservative neoclassical urban economists explain the Chicago Fire? Is that just an externality? Is it an act of God? Is it a market correction? How does that get explained away?

Ely Fair

I mean, if you say the market would work if we had perfect information, zero transaction costs, perfect liquidity, etc., then if you have a market failure, it’s one of those problems. One of those things didn’t happen. So it becomes the role of the state to probably create better information. So then the state makes the market work better by recognizing that people have imperfect information and providing more perfect information.

This is like the kind of mainstream argument for something like the FDA. It’s not that they should regulate the thing, they shouldn’t regulate what the food is, but they should tell us what the food is so that people don’t lie to us about what’s in the food anymore. The market was lying to us about what was in the food, and we had all these market failures.

For instance, with the fire in New York City just a few years ago that killed a bunch of immigrants because the fire doors weren’t maintained properly. You could get two solutions. You could say that was a risk and these people dying was within the distribution of risk that they accepted and that’s what they paid for. They paid for this distribution of risk. Or you could say they weren’t aware of the true distribution of risk, so the role of the city shouldn’t have been to enforce the codes around fire safety. It should have been to more effectively inform those people about the true distribution of risk, so that they could either pay more money to get the fire doors fixed, or or accept the potential risk that they took on in regards to their families dying.

It’s rarely stated so callously. One thing that I found quite appalling when I first got into urban econ is a pretty consistent finding that black women heads of households in the United States do not prefer to purchase as much housing as their white counterparts. So after controlling for income, you still find that black female heads of households do not purchase as high quality of housing as their white counterparts. If you can’t say, “oh, what we found was some kind of structural racism,” then you have to say, “oh, there is some kind of cultural feature in which it turns out that black mothers just don’t care as much about the quality of housing that they put their children in as white mothers,” which to me doesn’t pass the smell test at all.

If you have a study that finds that, what you say is, “oh, I have found some kind of structural racism.” It is obviously untrue that any group of mothers cares less about their children than any other group of mothers, right? That’s obviously untrue. I must have found some kind of other problem.

But, the mainstream can’t really accept that it in its most extreme forms anyways.

Scott Ferguson

Right? So they default to this kind of Moynihan culture of poverty.

Ely Fair

Yeah. You’re just like, “well, we have “black” as a control signifier. It shows less purchasing for housing. We have discovered some kind of cultural feature right.” The cultural feature, for whatever reason, is that black mothers just don’t prioritize safe housing in the same way that white mothers do.

And I’m like, “that’s that sounds like a weird racist thing to say.” If you just said it to someone at a grocery store, you might get slapped, right? 

Scott Ferguson

That’s why you put it in an econ journal.

Ely Fair

For me, it is quite clear in Kansas City – this is true of much of the United States – but Kansas City has highly segregated housing. That the neighborhood-decline there is not about not really caring about having your yard not have trash in it or not really caring about whether you have gutters on your house. It’s a manifestation of a concentration of poverty, which we know creates all kinds of social diseases. It is also just like a lack of income. 

I’ve had this pushback from other economists, “why study under maintained housing? Isn’t it clear that what people need is better paying jobs? So shouldn’t we just be talking about the labor market?” I think there’s legitimacy to that. On the other side, I think that we could use the power of municipalities to activate our communities to make a safer housing environment that was more stable without also needing to figure out how to get people better paying jobs.

We can put more than one pan on the fire, maybe, right?

Scott Ferguson

Yeah, yeah. So maybe before we get into some of your policy proposals, your potential solutions, maybe we can get a little snapshot of just some of the more fine grained findings that came out of these evolutionary housing studies at this really intensely micro level.What did you learn? What are the tendencies, at least in the areas that you studied from this data set from UMKC.

Ely Fair

In Kansas City’s core, I use street level observation of homes. So we have 250,000 of these parcels that have been observed and sales from 2010 to 2020. Okay, can we predict the sale price of your home just looking at the kind of micro market of the maintenance around your home?

When someone’s looking to buy your house and you walk out the front door and you’re like, I like this house and you look out at the neighborhood, what is the neighborhood that you see? So let’s call that the micro market of the house. How does people’s visual perception of the upkeep of that neighborhood affect the price?

I took a little sliver of the front of every parcel that was sold, and I made a little bubble. I basically included your micro market as all of the homes that are within 60ft of the front door of your house. What I found in Kansas City was that, after controlling through your own quality of your home, that just that feature explains or predicts, let’s say, because this is actually what the statistics are doing, predicts about 20% of the price of your home.

Not knowing anything else about the features of your home, just how well-maintained your neighbors are, after accounting for your own maintenance, accounts for about 20%. If we think of this as like a common pool resource problem, like, tragedy of the commons, I don’t know how to say this right. If my neighbor’s maintenance brings down my price, then I’m going to tend to also bring down my maintenance level, because when you’re looking to sell your home and you think maybe I’ll renovate my kitchen, it’s going to cost me $25,000, and you think I could get that $25,000 back when I sell the house. The house is going to be worth $25,000 more, right?

Then you renovate your kitchen and then the house is upkept. Or you repaint the house. Right? If the house is in a market that is compressed and you’re on the low end of the market, you’re not going to get $25,000 out of the house. In Kansas City, it’s becoming more expensive, but you can buy a house for $50,000, which means that renovating the kitchen is only going to give you a couple thousand dollars.

You’re never going to just add $25,000 to the house. The house is only worth $50,000. In that market, no one’s going to renovate their kitchens because you can’t get the money back. So as that price comes down, your return on maintenance comes down and so if my neighbors decrease my price by 20%, then – if we think it’s linear – I decrease my maintenance level by 20%. That in turn decreases their price, that decreases their maintenance level. It just comes back and forth. Then we have a situation in which the individual decision to under maintain is actually harming your neighbors, and that is in turn causing them to make individual decisions that harm you. So if we take an atomized view of the world – which is what the mainstream within economics would do, each individual is making their rational decision – you still get downward dynamics in which the neighborhood falls apart. This is some of the work I’m doing right now, one of the things that the city wants to kind of figure out is like, “okay, we figured out that under maintenance at the municipal level at these micro market levels is causing neighborhood decline.”

How does the city intervene? Does the city make some kind of rotating fund that helps people invest that stops that process? Then you still need to figure out when the process is about to start. You need to figure out how much that rotating fund would need to be. And this is an idea I think is underused and potentially powerful. Cities can give you $25,000 to fix your house and be like, “give me the $25,000 back when you sell your house right.”

The primary method we’ve used for helping neighborhoods maintain is usually through HUD grants. They’ll target a neighborhood, and they provide micro grants for maintenance. If you’re a homeowner, you can get a little bit of money. The problem is the money does not seem to be enough. The density of investment does not seem to be enough.

So if you offer someone $5,000 you can’t paint your house for $5,000. So if I was in a situation where I didn’t have the money to reroof my house, $5,000 isn’t going to do it. I need most of the money to reroof my house, or maybe all of it.

A municipality then runs into this problem. Are they paying for that with US dollars? If they are, they need to get those US dollars from somewhere. How do they get those resources? Right now, most of that money is coming from the federal government through block grants. It’s just simply not dense enough.

So this is kind of some of the work I want to look at next. How do we identify these downward spirals? How do we identify these tipping points when neighborhoods start to decline? How much maintenance investment support do we need to stop the decline such that the process of decline just never happens and the homes maintain their value? The black-white wealth gap in the United States is 20 to 1, so white families have about 20 times the wealth of black families. It is much larger than the income gap. Part of that is because of the history of racialized neighborhoods and the fact that black concentrated neighborhoods are perceived as declining in value.

Because of the income gap, they are also more likely to be under maintained and to end up in a situation in which you have under maintenance -> under priced -> under maintenance -> under priced cycle, then there are a lot of black families that own homes, but those homes do not appreciate at the same rate as the average white home.

This is where the wealth gap has been created. We concentrated poverty and we concentrated black communities and then those homes slowly depreciated in value, while white homes appreciated. If we want to reverse that kind of process, we want to figure out how to stop the neighborhood from declining in the first place.

Scott Ferguson

Yeah, I assume that there’s all kinds of factors that we have already talked about, unemployment and underemployment, which of course disproportionately affects black communities. But also, I would imagine banking and financial instruments like home equity loans impact it as well. If you’re if you’re making very little because you’re unemployed or underemployed or just…

Ely Fair

…or intermittent unemployed, right?

Scott Ferguson

Right. When you don’t have financial security, I’m assuming a bank isn’t going to give you a home equity loan.

Ely Fair

We do have an income gap. A white-black income gap has been persistent, but the income gap is not nearly as large as the wealth gap. Because wealth in the United States is predominantly houses, that’s the channel to target.

Whether it’s under banking, whether it’s downward maintenance price dynamics, whether it’s some kind of crowding effect, housing is the wealth that’s being lost. There is an ownership gap too between white and black families, but it’s not, at least in Kansas City, as dramatic as one would think, considering how dramatic the wealth gap is.

It’s about the homes that black families end up owning and what their appreciation is compared to white families. 

Scott Ferguson

Yeah. This is Sandy Darity’s point, all the time

Ely Fair

All the time. Right. Yeah.

Scott Ferguson

You’ve already begun to broach the topic, but concerning some of the mixed policy responses, what are some of the challenges of coming up with active public policy at the municipal level to treat these issues?

And then all of this is teeing up what we really want to talk about as well which is your work on complementary currencies, where they fit in in your work and and the legal history that you’ve done around that. But let’s not get ahead of ourselves. So let’s start with the housing policies themselves.

Ely Fair

Yeah. I mean, it’s difficult for cities because maintenance is a cost. So, when you force certain kinds of outcomes at the neighborhood level, you create expense. One of the things that’s interesting about code enforcement is the legal space is huge, so no city enforces the codes that are on the books because it would be too burdensome.

It’s recognized as being a burden. The city could come into your house right now and be like, “oh, it turns out, since this house was built, we change these codes, so all of this stuff has to happen.” Because they know that, what cities have done is try to train code enforcers to employ a lot of discretion and latitude to assess the likely ability of the person to pay and then ask for some kind of mitigation based on the ability to pay, which, as near as I can tell, has not been abused as much as we might expect.

I’m always very suspicious of someone who is essentially a cop being told, like, “we know that you could do anything you want, just decide what’s best.” Chicago started doing a thing where they used code enforcers to evict homes that the police department doesn’t like, because the code enforcer can knock on your door and come in, whereas the police cannot.

It’s not considered a search by the courts. Cities could do everything. The question is, “What do you do?” How do you facilitate a situation in which you get people into a position where they can actually help themselves stabilize their own housing? And so you have a couple of problems.

One is obviously, landlords are in a really different position than owner occupiers. A thing that Kansas City has done, which I think is smart, is they started making landlords pay a fee every year. I think it’s $45 right now to register the rental. That money pays for randomized code enforcement checks that just happen because one of the problems in rental properties is if I call and I say, like, “my toilet’s leaking black water into the basement,” the city will come and inspect it and be like, “this is not habitable. This must be fixed.” 

My landlord knows it was me. There’s no denying it. No one else knew that my toilet was leaking into the basement except for me. So then you get either rent hikes or eviction, right? So there’s a lot of danger for poor tenants. So one thing cities are trying to do is make a mix where you may be enforced differently on different kinds of people, whether they’re a tenant or a landlord or owner occupier. 

Also different municipalities are treating code enforcement really differently depending on what they think the problem is, which is part of the work I’ve been trying to intervene in. So in Miriam, Kansas – a suburb of Kansas City –  if your house needs a new roof, they put a sign in your front yard that says, we’re going to fix this roof in two weeks. We’re going to pay someone to do it and then they put that onto your tax bill. If you don’t pay your tax bill in three years, they seize your home and they sell it at a tax auction. That’s what happens when you don’t pay your taxes. They seize your home and they sell it at a tax auction.

So the logic there is coming directly out of the econ literature. It says, “if the home is worth maintaining, then the market would allocate the home to someone who is willing to pay the price of the home, plus the maintenance. If the home is currently occupied by someone who is not willing to pay the price plus the maintenance, it should be reallocated.”

So then it must be some kind of a market failure, right? The person is unwilling to move out of the home to sell the home and move into something that’s affordable to them. It’s an evaluation of what the problem is, which I don’t think is very accurate to what the problem actually is.

My work and the work of urban studies and urban economists then is to be like, “how do we evaluate this really complicated market in order to understand what the problems are so that you can provide solutions?” This is entirely speculative, one of the problems I think that we saw in places like Kansas City is: the white flight happened in the 60s and 70s, right?

We had industrial working class, middle class families. Black families get access to neighborhoods in Kansas City that they previously didn’t have access to and buy into these very nice homes. The housing stock is beautiful. It was built around the turn of the century. There’s a lot of very nice housing stock.

They bought into these homes and they never probably really had money to pay someone for maintenance. But it didn’t really matter because they had a family unit that could provide maintenance for themselves. You have people get on their ladder and clean their gutters. They’re not ever probably paying someone to do that.

So you roll forward. They’re in their 40s. When this happens, you roll forward 40 years. They’re all in their 70s and 80s. They can’t get on a ladder. And then ten years after that, you’re like, “oh, well, these gutters haven’t been cleaned, which means your siding is rotting and your house needs to be condemned.” If the city had seen that transition of labor, that the labor being provided by the family towards support of the unit was no longer able to be provided at that time, they probably, for not very much money, could have actually intervened and been like, “all you really need is some kid that needs a little bit of work to come by and get on a ladder for you because you can’t do it anymore. It’s not safe.” But if you think that the market’s going to just reallocate those homes, you don’t make that intervention. And if you think like, “oh, actually, housing is a social good, it’s pretty complicated how and why it gets maintained and how and why it looks the way it does,” then you try to make community based solutions to provide those labor resources. 

Scott Ferguson

So what are some of those that you have thought through that you would advocate.

Ely Fair

One of the things that’s interesting about housing is, in general, most of the cost is labor, and the materials are reasonably cheap and most of the skills are reasonably easy to acquire compared to lots of other kinds of things.

Compared to even just fixing your car, it’s like, “oh, it’s actually just easier to fix your leaking sink.” It takes 20 minutes on a YouTube channel and you save yourself a couple hundred dollars, you know. So, one thing I would like to see in a city like Kansas City doing something where they say, “okay, we’re going to rent this warehouse and we’re going to buy basic housing supplies like sheetrock and studs and whatever, and have a tool library and if you want to come in, we will, teach you to do the basic kind of repair that you need to do. And then you can get permission to rent tools and to purchase materials from us at cost.” It’s really expensive to have someone come in and reseat your toilet when it starts leaking into your basement.

It costs more than the toilet, but it’s actually pretty straightforward. In the neighborhoods that are under maintained, we also have a ton of slack labor. This is one of the paradoxes of capitalism. The places that there’s the most to do, there’s the most underutilized labor. Is it possible for not that much money to upskill this community such that they can actually provide these services for themselves?

I think the answer is probably yes. All of those families in their 70s and 80s have some niece or nephew or some friend of another family who could definitely have done that work if the person just had a 30ft ladder or was able to go to a class and learn how to reseat a toilet.

So I think that those are the kinds of solutions, in part because cities are so cash strapped. Maybe this is an opportunity to think about complementary currencies, but cities could also incentivize this kind of work.

Scott Ferguson

You can imagine a municipal job guarantee or at least public works program where you’re expanding this so that it’s not just about a pooled set of resources and a pedagogical center, but the city’s paying people to go out and do this work at a living wage for little to no money.

Ely Fair

There is a lot of legal space for municipal complementary currencies that are tax driven. Interestingly, they’re very rare. Municipal currencies used to be less uncommon. Tax driven ones, I don’t know of any example, actually. Which is a little unfortunate.

It does, of course, get complicated because a lot of the designs that I tend to be more reluctant or skeptical about would be able to allocate a lot of resources, part of how they do that is they make a complementary currency that’s tax driven through taxes that are already being collected by the city.

And because cities are always so cash strapped, it becomes really dangerous for the city. So municipalities tend to be quite risk averse about this because; one, the city really doesn’t want to end up in a constitutional battle. They’re not trying to go to the Supreme Court to say like,” oh, this is not widely distributed enough to be considered competitive with the US dollar,” like all of these weird legal rulings we’ve had. So they have to be avoidant of that. They have to make sure that the currency is clearly, for the purposes of the federal government, not competitive with the U.S. dollar. But they also, they can’t do anything with the currency when they bring it in as taxes. But they do stuff with U.S. dollars when they bring them in as taxes. They spend them as US dollars. But when they bring back the currency that they spend, that is their local funny money, it doesn’t provide anything to them. It’s hard to figure out a good design that really – and I know you all have been working on this, and thinking about it a lot in places like New York City – can provide an increased labor pool that’s far short of a job guarantee that also doesn’t necessarily put the city at risk. 

So, like in my municipal currency paper, one of the things I propose is some kind of direct labor tax rate. I’m from Lawrence, Kansas. I was working on trying to convince some people in Lawrence to do this, and it turns out everything is always complicated. In Kansas, taxes have to be approved by the state. So the city can’t issue a thing called a tax, but also taxes are collected by the county. I actually got the county to agree to accept the local currency in taxes. He was like, “I don’t know why we wouldn’t, I guess, but it’s weird, you know?” But maybe something could be designed where it’s not called a tax, and then maybe the state wouldn’t care.

Scott Ferguson

That’s actually one of the things, thinking about this, theorizing it, writing about it, talking to people about it, even trying to consult and advise leaders about it, so much of it is about language.

Ely Fair

Yeah, you’re a rhetoric person, right?

Scott Ferguson

You can call it one thing in one meeting and it doesn’t go over well and you switch it to another thing, another term and then somehow it’s fine. I just wanted to add that in there.

Ely Fair

Yeah, yeah. Complimentary is potentially very powerful, actually, because one of the things that the courts have been very clear on in the history of, what I would call, nonfederal currencies, is that they cannot compete with the US dollar. So, the contracts clause of the Constitution, they’re like, “no, no competition with the US dollar.”

So there’s actually an interesting recent case in which an Austrian economist, internet guy was like, “the US dollar is not real. It is not backed by anything. It is fake money. This is why we always see inflation. What we need is a real currency that we can really transact in.” He started printing gold coins for the explicit purpose of creating an exchangeable commodity that would replace the US dollar. The circulation was basically non-existent. He is in jail. He was arrested by the FBI. They were like, “this is not acceptable.” The big thing wasn’t that they were made out of gold, that they look like the US dollar or anything. It was just that he was saying the point is to replace the U.S. dollar and they are not into it.

Interestingly, the courts have been very accepting of nonfederal currencies that are not designed to circulate broadly, usually defined as specific geographies or specific commodity targets. So like, if, for instance, New York City issued a currency that was pegged to the MTA rideshare where you’re just like, “one of these is worth a rideshare.”

That probably would be totally fine because how they’re conceiving of what money is something that’s universally convertible across any amount of space. The monetary theory in the courts is often a little weird sometimes. A thing that was a problem is subdivisions of the currency, so currencies that have not been subdivided for the purpose of wide circulation or for easy use. But this is a strange thing now because you use digital wallets, they’re infinitely subdivided. Missouri got into a bunch of trouble because they issued a currency that was tax driven. You could pay taxes with it. You could pay ferry rides, you could buy salt from the state with it.

They also paid state workers with it. They also gave micro loans or startup loans for businesses with it. One of the big problems for the Supreme Court was that the currency was denominated like the US dollar, so that it was easy to use in day to day interactions and they were like, “no, this is designed to be current. Currently this currency is designed to be current. It is intended for everyday use.” So probably you could avoid these kinds of problems if you’re like “oh no, it’s only a digital wallet. It’s just a digital protocol. It’s only good in New York City or it’s only pegged to an hour of labor or something.” The thing I was trying to work on in Lawrence and, ultimately, got sidetracked with grad school was to say, “okay, everyone over 16 who lives in town owes the city ten hours of labor a year.” The city will set a sale price on these things. So if you want to buy one from the city, you can buy one from the city at $20. Okay. Then you set a maximum exchange rate with the US dollar, but you don’t defend a minimum, because if the city agrees to buy these things for U.S. dollars, then it puts itself at some kind of risk, right?

It has to defend the exchange rate. So you’re just like, “no, I’m only going to defend one side of the exchange rate because I can always provide these for you if you want to give me $20.” This means that the currency couldn’t accidentally explode. It’s going to float somewhere below $20, and then you just provide these things to nonprofit services. If you wanted to do something like a housing renovation project, then you could be like, “oh, it turns out, actually there’s already nonprofits in Lawrence working on this stuff, right? There’s already Habitat for Humanity.” Then a person could call Habitat and be like, “hey, I have this problem in my home, and I fall within some kind of means test or whatever,” and people come over from, you know, any random person comes over who’s been trained to do the work or a little team and they do the work and they get their currency and then the currency is just taxed away. If someone wants to work for Habitat for Humanity all the time, then the city can just facilitate an exchange.

The person knows that they might get paid up to $20 an hour for this work because someone else is going to not work for the city and is going to need it to pay the tax, but that it’s going to float somewhere underneath there. Then the city could target the low end and say like, “oh, we’ll never issue more than this many so that we try to float it near $20 an hour.”

What you’re going to get then is wealth redistribution from people that don’t want to work for the city towards people who want to work, and you’re going to increase the labor utilization. So it’s not a job guarantee, but it is a job guarantee-light in a way that could meet some pretty targeted labor distribution goals.

It becomes, I think, more difficult if you want to utilize all of the slack labor. How do you tax away all of the slack labor without putting the city at some kind of exchange rate risk?

Billy Saas

Can we just do a quick sidebar on the constraints, the legal constraints on complementary community currencies? It’s fascinating to hear about the cases that you shared. I wondered if you could maybe help us better understand through an example of a case, maybe the weird Austrian guy with the gold coins is case enough, but it seems to me very clear that there are – in the space of cryptocurrencies – several pretenders to the throne who would very much like to and have avowedly, I guess in different ways, said that they aspire to become something to rival or displace bank money, which is US dollars. How, if these smaller municipal cases are litigated at the highest level, how is it the case or how could it be the case that things like Bitcoin, Ethereum and all the rest are permitted to continue to exist and flourish?

Ely Fair

Yeah. I mean, with regard to cryptocurrencies, they were categorized as commodities by the federal government. Once they’re a commodity then it’s just like trading any other financial commodity. They might say that they intend to be current and they tend to circulate as money: they don’t. I think the government has not felt like that was potentially threatening. I don’t think that there is a case, not that I know of any legal cases, in which any federal government has been like, “this thing is not an illegal kind of taking of our power.”

Scott Ferguson

Correct me if I’m wrong, but it seems like the opposite has happened. This is what the whole turn to stablecoins has been about, if I understand correctly, which is about fully integrating these speculative assets into the banking system and now we have President Shit Coin and Chief who is all about it, so there’s no competition at all.

Ely Fair

It’s not clear what the difference is between what a stablecoin is and a contemporary bank deposit, except that the bank deposit is a stablecoin issued by the bank and therefore regulated within the banking system as a depository institution and the stablecoin is issued by some programmer somewhere. If it is pegged to the dollar, if it exchanges to the dollar, unless you start accepting that for debts owed to the government, unless you start accepting that for taxes, it can’t replace the dollar, it operates through the dollar.

Scott Ferguson

I think there are some states who are accepting crypto through taxes.

Ely Fair

In the United States?

Scott Ferguson

I think so?

Ely Fair

I know some foreign governments have done that. We could go off on the weird things people are trying to do with crypto. I do think that those technologies could be very useful for producing tax driven local complementary currencies because they enable secondary exchange.

It is cheap and, technically, rather simple for a city to be like, “everyone in this city will have an account on this simple ledger protocol, and that means you can log in to the website, which is hosted at Coinbase or something and sell and buy our local currency and when we issue it, we issue it to your wallet and when we tax it, we just tax it from your wallet.” Because those protocols exist, they make some exciting space for local currencies because one of the problems has been that local currencies are cumbersome. People don’t really like operating in multiple currencies, particularly if they’re not exactly equivalent. But if your local currency is pegged to the dollar, who’s defending the exchange rate? Right. Does the city take on that and is willing to buy the local currency for US dollars? In Lawrence, we had a non-tax driven currency for a while, when I was growing up. It was annoying. Is this other money? It was 1 to 1 with the dollar but it’s like a different bill. You got to put it somewhere different.

Billy Saas

It’s one more thing to think about.

Ely Fair

You have to put it somewhere different in the register. People took it, but they didn’t really want to take it. One of the advantages of some of the open source work that happened with the Bristol Pound, and that is it’s an interesting case because the Bristol pound went digital and then died.

But I think that they were on to something there. Credit card transaction fees cost 3.5%. There are open source versions of those protocols. You could have a debit card that quite easily had two accounts in it. You go to Europe, you swipe your card, they’re like, “do you want to pay in euros or dollars?” They just click the button and there’s just a conversion.

Scott Ferguson

South America, too.

Ely Fair

Those digital technologies could enable a local currency to defend an exchange rate. You can be like, these are 1 to 1 but when you take U.S. dollars from the debit card, we charge you the 3.5% fee. When you take the local currency, we don’t. There’s an incentive for the business to take the local currency that doesn’t require income and actually maybe produces income for the local currency, because then the local currency gets these 3.5% fees, then they can actually buy these things back maybe sometimes.

So I think there’s a lot of interesting opportunities there.

Scott Ferguson

I guess I just want to highlight a meta point here, which is that there’s not just one kind of complimentary currency and even what you call it, is it a parallel currency is, is it just another form of credit that’s regional, right? What we call it, how we design it, what its material features are, what its functionality is?

All these things are up for grabs. You know this. I’m just saying this for our listeners. It’s totally a design problem. It’s going to be unique in different situations.

Ely Fair

And to get back then to Billy’s question about some of these legal cases, how do they get to the Supreme Court about what’s happened? I think we can illustrate some of this thing that you’re saying, Scott, about design problems is like, so with the Articles of Confederation, right? The first government of the United States, states issued their own currency.

One of the great failings of the Articles of Confederation was that states were issuing their own currencies, they were competing with exchange rates, and they were competing with trade. They were doing things like beggar thy neighbor policies to attack each other around currency exchange rates. So one of the first things in the Constitution, in article four, I think, is a clause.

It actually says states may not issue debt instruments at all. This is weird because they immediately decided that states need to issue bonds, but the contract clause then has been, over the course of time, litigated to mean that less-than federal entities may not issue currencies designed to monies designed to compete with the federal money.

For instance, like I mentioned earlier, the Missouri case, there’s other states that also issued currencies in the 1800s that were deemed legal because they were chunky. So I think Kentucky did one where it was like only $500,000 bills, basically. Because they could only be used for very specialized transactions without some kind of secondary instrument, the courts deemed that they weren’t competitive. But in the 1800s, there were a lot of problems with this in the United States because a lot of places didn’t have sufficient currency in circulation from the US government. Banks issued their own paper money that were good on deposits. This is part of what the Federal Reserve actually comes about to try to solve, that is banks were issuing all this paper money good on deposits. But then how does one bank know to accept another bank’s money? And will they actually accept it or not?

Scott Ferguson

And at what rate?

Ely Fair

That was the kind of the preponderance of money in the 1800s, there was like a lot of this.

One thing that the federal government did when they decided they didn’t want any more bank money, the courts decided that the contract clause did not apply to non governmental entities in general. So, if the bank is part of the state, the bank can’t issue money that looks like federal money.

If the bank is not part of the state, it was allowed to. So even the Bank of Arkansas, which was wholly owned by Arkansas, was allowed to issue currency that basically looked like the federal dollar was pegged to the US dollar because they weren’t part of the state of Arkansas. There’s a Supreme Court case about that. Some really weird little differentiations.

But, one thing that is interesting is that the federal government basically taxed away bank issued currency by passing a law that made it so that there was a fee every time the thing was issued. So every time the bank put it back out, they had to pay a fee, which made it so that they couldn’t defend their own money as being worth the same amount as the US dollar.

That law expired in the 60s or 70s. At the time, someone at the Treasury Department was like, “it doesn’t really matter that it’s expired because it would be illegal for banks to do this anyways.” It’s not actually clear that it would be. There is no law that would make it so a bank could not just start issuing paper money again. The way that we got all of that out of circulation is gone. So, the municipality could then work with a local bank to issue a complementary currency and actually maybe kind of shield itself. Then these design questions become really important in the courts for whatever reason.

If it looks like the US dollar, they don’t like it. If it’s called a dollar, they don’t really like it. If it says like “this thing is good for services provided within Manhattan,” they’re like, “this is cool. This is fine.” Services are not the same thing. There are these weird technical design problems that I think make no sense, but for whatever reason, in the past, the courts decided made a lot of sense. These days there’s not that much litigation around it because complementary currencies aren’t that common anymore. But all through the 1800s into the early 1900s, both bank money and state and local money were quite common and so determining the space for them was really important in the courts.

Billy Saas

Well, it seems like one easy trick would be to present your community currency or complementary currency as a commodity and you’re good to go.

Ely Fair

Yeah. Or exchangeable commodities. There’s a court ruling that says that something is not money because it is exchangeable only explicitly for commodities.

Billy Saas

So, paradoxically, tax driven chartalist but also barter forward.

Ely Fair

Yeah. In company towns where the currency would be almost exclusively issued by the company and goods or goods at the company store, those have all been deemed legal, right? Because they’re only good for goods and not for, I don’t know, the other thing that we do with money as a debt instrument.

For us, it’s money. It’s the same. But, in the past, that wasn’t deemed to be the case.

Scott Ferguson

Some municipalities and states took company scrip as taxes, which is wild, right? 

Ely Fair

Totally. So I mean, they were current. They were exchangeable. They were used in everyday transactions to keep track of debt. But for whatever reason, the courts have been interesting about it. So one thing we issued after the war, there was a brief period when there was some military money issued that was good on train rides.

It was just issued as part of a payment to military personnel. You got paid in train rides.

Scott Ferguson

We could call those vouchers and then are they a currency? There are functional differences. There are. Of course there are. And there are design differences. But I also think that moneyness is a multifaceted thing. At what point is one system a set of debt instruments and at what point is it a voucher system? Anyway, I interrupted you. Go ahead.

Ely Fair

No, no it’s fine. I think for us, then of course in our thinking about how to design things, we want to think about what latent resources or underutilized things, whether it’s labor, or is it seats on the metro that are like underutilized that we could we could push utilization through some kind of tax driven currency and then we have to be careful because, yeah, municipalities are relatively weak compared to the federal government.

They can’t afford really expensive mistakes. I think this is part of the trick for us as people that are thinking about this and talking to municipal governments about it is like, is there an easy stage to kind of structure something that is easy to buy into, relatively cheap to begin, logical.

This is part of the thing I really liked about the idea of some kind of community service. Everyone knows what a community service hour is. You could just hand someone a piece of paper that says Community Service Hour on it. They’re like, “I know what this is.” It presents very little risk for the city because that is a new tax.

You wouldn’t even have to call it a tax, right? People wouldn’t necessarily even think that it is a tax. You could just say everyone in the town’s required to do ten hours of service for a year.

Scott Ferguson

Social responsibility – which is – what is a tax?

Ely Fair

Right. Social responsibility. That design is really convenient in that it doesn’t present a lot of threat to the municipality. It is potentially inconvenient in that it may not be very scalable. You may not get to a point where you’re like, by not defending a stable exchange rate the bill will probably never be circulated as a money instrument, because it’s not clear what it’s worth compared to the US dollar. If you peg an exchange rate, you can get a lot more circulation of the money, but in some way you have to defend your exchange rate. So you take on exchange rate risk.

So it’s like, hopefully we would be coming up with clever little designs where we’re like, “oh, there’s like a little toy version of this. It’s easy for a city to do and cheap and kind of understandable,” that then if it works, we can kind of progressively take on other features that would enable more resource utilization.

Scott Ferguson

Yeah. I mean, one of the things that I’ve been talking to Jakob Feinig a lot about is, using the multiple understood crediting system in our public education system. That might be a way of mobilizing labor and community service from very young and have it just be part of a kind of civic pedagogy and participation so that could be one thing. I want to bring up one more thing as long as we’re just kind of, I don’t know, this is really cool. This feels like a seminar, right? Like this isn’t like our usual interviews where we’re – okay. I’m enjoying this. So on the one hand, it seems like there’s an imperative to design, in multiple senses, semantically, rhetorically, legally, technically, technically, materially to design systems that are maximally legible to the public, which means that they have to somehow resemble or plug into the US dollar psychologically, ideologically with relative ease. Yet at the same time, you have to cover your ass legally and know the history of the law and realize there are certain buzzwords or certain design choices you have to avoid.

It seems like the trick is to somehow go maximally in both directions at once and find the right mixture. But, you know, I think about things all the time, this is more like when my kids are in elementary school, but when my kids are in elementary school, it’s the holiday season and it’s time to get their teachers some little gift.

And it’s like, stop at Starbucks on the way to school and you pick up a $10 or a $20 Starbucks gift card. Right? And nobody thinks twice about that. Right? It’s this massive complimentary currency or whatever we want to call it, that is narrowly receivable and yet widely receivable, because there’s Starbucks all around the country, if not the world.

You’re locking in your liquidity, right? You’re restricting your liquidity and it’s not denominated in like, this is 7.3 Starbucks. There’s not weird denominations and we don’t even call it something else. We just say it’s $20 in Starbucks. The amount of psychosocial, ideological machinery that goes into just making that feel smooth is fascinating to me and I kind of want to conjure that ethos in designing a public currency that is not just feeding a multinational corporation.

Ely Fair

Totally. Like I was saying earlier about the community service hours scheme, one of the things I really like about it is it creates wealth redistribution from people that don’t want to work towards people that do, but how that happens is you allow the currency to float, right? It sacrifices this other thing.

Another thing, when I was working with some folks in Lawrence is, do we peg this thing instead to like bus rides.” Our buses are highly underutilized, right? The city’s constantly like, “should they be free for people that need them?” 

Scott Ferguson

They’re spending money on advertising campaigns.

Ely Fair

If you make the bus ride a known conversion. You’re like, “oh, a bus ride is a dollar,” then when I buy bus rides then you’re like, “I work for bus rides.” Theoretically, more people would take bus rides because they’re like, “well, I have all these bus rides on this weird card.”

You could probably exchange them sometimes too. Maybe not as much as we might want because it’s not just a dollar.With the Starbucks dollars, it’s the same. If you went to sell your $20 gift card. What would you get for it? Not 20 bucks. I know you can’t sell SNAP, but when you sell SNAP, you don’t get par. Starbucks will not defend the exchange rate. They will only sell the thing at the exchange rate. We kind of want the city to defend the exchange rate in order to make it really work.

But it’s tricky to figure out how to actually have them do that. One thing I was thinking about, also in Lawrence, there’s a pretty strong downtown community or downtown business association. The Downtown Business Association would do gift cards that would be good within the Downtown Business Association area. They could deal with distributing the US dollars later among the group of them, and they could probably actually sell those at a discount, knowing that the money is held right.

They could drive people into kind of a local currency scheme being like, okay, you give us 90 bucks, we’ll give you $100 worth of downtown credit, basically. Then that downtown credit becomes widely used within the downtown area. It drives local economic development and you get some discount, but then you only get one aspect of the policy, then you get more local economic development and you’re like, “oh, that’s cool,” but you don’t get labor utilization.

Scott Ferguson

Ben Wilson has been really big on property taxes. I don’t know if you have thoughts about that. Then there’s a demand at the level of landlords, right.

They need this local currency to meet their tax obligation and it can be structured in lots of ways as we’ve been saying. It could be a discount on your extant tax bill or it could be in excess. Not on this proposal, but in your labor hours proposal, you’re suggesting not a discount because that creates the so-called dollar drain, instead, it’s an additional obligation.

Ely Fair

That’s the danger, that you create a dollar drain, you create a liability. The city doesn’t want their funny money. They have no need for it.

Scott Ferguson

If you don’t do a discount, if you do an additional obligation. I mean, you know, that’s politics.

Ely Fair

Totally. And then it’s a question of, do you defend the exchange rate? What resources are you hoping to utilize? And how do you make it feel fair and equitable? You could, for instance, have the tax, like I was saying in Kansas City, there’s a fee for being a landlord that they use to do these maintenance checks.

You could also have a fee on landlords. You could be like, “landlords, you have to accept some of these Ithaca Hours.” Maybe you tax everybody in Ithaca Hours, and then you say, like, “everyone needs to give us ten Ithaca Hours a year, but for being a landlord, you have to give us another ten and if your tenant is unable to find work at the rate, they could always work for the city to pay you this thing which you will accept in exchange for rent, because it’s as good as rent to you.” Right? How do you drive it? It’s tricky. I think part of it is an imagination problem.

Scott Ferguson

Nobody’s on this beat. Yeah.

Ely Fair

We’re not accustomed. And it’s interesting because, when you look at the history of it, people in the United States were quite accustomed.

Scott Ferguson

I mean, that’s what Jacob Feinig’s book is all about. Yeah.

Ely Fair

Every term I take my intro macro students to our archives at Knox College and we look at all this old money. We have a lot of cool, old money, we have Cuneiform tablets and Roman coins and whatever. We have a lot of stuff from the Confederacy and stuff from the colonies and whatever.

There’s also Bank of Galesburg money in there. There’s just like a $10 bill. It looks like a $10 bill. It just says Galesburg across the front of the face of the president, you know, and people are always like, “what is this?” And I’m like, “People took that. That was used. People took that here. People accepted that money.” I think we need to design for ease. We need to design, like you said, we don’t even call Starbucks dollars anything else but dollars. We need to design for, somehow, our intuition about it and then hopefully also in a way that makes it so that we can expand the function of these things as time goes. I also think there could be a lot to do, but not that much.

Kansas City is like, I mean, the metro area is like 3 million people or something, just about, 2.8 or something like this. It’s a lot of labor service hours. Could we stabilize neighborhoods with those labor service hours?

Absolutely. What is needed for someone to get their yard cleaned up? It’s time.  It doesn’t really cost almost anything. It’s a crew that’ll show up and help get all the trash in the dumpster. So there’s a lot I think there for the quality of life. There’s like a lot of opportunity for us to move resources towards increasing our quality of life in our built environment without having to think too big. It can become intuitive initially without being like, “this is a local job guarantee,” in the sense of like an employer of last resort, right? Which would be awesome.

Scott Ferguson

But you can do like a neoliberal frame Trojan horse. It’s like, “We’re just going to pilot this program. We’ll test it.”

I don’t want to let you go without asking you about this other aspect of your work, that, I mean, everything’s connected, but it doesn’t exactly fall into the discussion that we’ve been having so far in a narrow sense, which is, you’ve done some pretty serious historical research about the rise and fall and injustice of the Freedman’s Bank that was established after the Civil War for freed slaves and black people in the United States.

We can probably do a whole episode about this, but maybe you could just give us a little teaser, and then we’ll link to the paper in the show notes, but maybe you can just tell us about what you discovered and what you’re advocating for.

Ely Fair

This is like, yeah, another history project. Right after the Civil War, black Americans, recently freed, black Americans were very underbanked and so there was a unique chartered bank, the Freedman’s Bank, that was not under standard banking regulation, it was the only an inner state depository institution at the time and was chartered directly by Congress and was supposed to be overseen by Congress.

The purpose was to bank formerly enslaved black Americans. This was the idea, right? So it was supposed to be really conservative. They were like, “we’re only going to put our money into us bonds and in AAA securities,” a very conservative investment portfolio so that it would be like a secure depository institution, because this is for deposit insurance, for instance, Congress is supposed to oversee the bank. They didn’t. It rapidly expanded to over 30 branches across the south with millions of dollars worth of deposits from formerly enslaved people and then just kind of widespread fraud and capture. By 1873, it went bankrupt.

It turns out when it goes under that there was fraud at every kind of level you could imagine. But at the board level, they had not invested the portfolio in the way that they said they were going to or that they were required to by law, and instead they’d invested it in a bunch of speculative railroad bonds and also mining bonds.

For those history buffs, the one that might be listening, this is the Grant administration. We have the1873 financial crisis is actually about mining and railroad speculation bubble and basically invested all the money there and they just lost everything. So over the course of the next 15 years, depositors are able to get a little bit of their money back, but most of the money is just gone. At the time, there’s an inquiry in Congress, they’re like, “this was fraud. We were supposed to oversee this bank. We didn’t. We should get the money back.” The president’s like, “we should give the money back,” the comptrollers was like, “we should just allocate the money.” That kind of continues, actually, until the 19-teens that people are like, “oh, yeah, remember how we should give all those people back this money that they were defrauded of under the nose of Congress.” Then it never happens, right? Of course, there’s like a lot of racist pushback about allocating money towards black people, etc., etc., etc., a lot of vitriol, but also recognition that it was the duty of Congress to oversee this bank. They failed to do it. So, a lot of that history has been told.

One of the things I did then was to be like, “okay, if we assume that this bank didn’t go bankrupt and instead they had held the money in these conservative portfolios that they were supposed to hold the money in, but no one was just able to get it until now. How much money would there be?”

So one of the problems with doing this kind of historical restitution work, and part of the reason people in the United States broadly are so opposed to reparations is there’s this question of like, “who gets the money? Who do you give the money to? Like, why this random black person and not this other random black person should have? Should a black person have to have had enslaved ancestors? What if this person had more enslaved ancestors? Do they get more reparations? Why do we not give reparations to poor white immigrants who were also, disenfranchized?”

This kind of equity debate is constant. So I was trying to avoid that and say, “no, we have most of the books, the account books.”

We know the exact amount of money held by the people. We know how much money they got back. So that means if we can decide on what is a reasonable investment portfolio across this time period, we can tell you how much money would be in the account today if the account existed. Then, actually, the Freedman’s Bank deposit books are this treasure trove of genealogical information for Black America.

They’ve been digitized, and people have been using them to trace their ancestry. Then we get this kind of fun project where you say, “oh, there is money we restored in this bank account to its exact penny.” Given this portfolio decision, whose money is it? And then you get this kind of fun project of being like, “oh, I could do genealogical work, and I could find an ancestor of this person and be like, ‘oh, do you know that you have $10,000 in the bank account?’”

I did this estimation and was like, can this be reasonably done? The answer is yes. And now I’m going to pull it up and it turns out if it was just 100% long term US Treasury bonds, it’s about $1 billion and that’s about $2,200 per account. If it’s like 70% US bonds and 30% the S&P index, that’s like $5.8 billion, or about $12,000, $13,000 per account.

For context, in the US budget, $6 billion is a kind of normal pork barrel. It’s pretty big for some senator to win for their state, but it’s the kind of thing that is won for senators’ votes: $6 billion. This is also convenient compared to reparations. We’re talking about maybe $14 trillion, $6 billion is not very much money for the US government at this point.

For the average black family, $12,000 is actually quite a lot of wealth. In some ways, trying to use a historical injustice to make a very discrete claim for restitution that is not politically infeasible from a budgeting perspective and wouldn’t be earth shattering, but certainly would be a nice injection for the families that were kind of debunked when the US Congress committed this fraud 150 years ago.

Scott Ferguson

There’s also a collective memory project in multiple senses. What was this bank and what did the government do? I mean, all of these things would be part of it, in addition to thinking about genealogy for just the sake of genealogy and then genealogy for the sake of what is owed.

Ely Fair

Yeah, totally. It’s just a little project. I mean, we see this in full force now with Project 2025, but one of the things that the more kind of conservative, or I would say, regressive elements of our society have done very well is they have done these little research projects and then from them built model legislation that makes it really easy for people to be like, “oh, also this.”

Scott Ferguson

Yeah, right. Plug and play.

Ely Fair

Plug and play. Part of my hope in doing this work is that the project has been justified and kind of operationalized and there’s a scope and it’ll take like one person who’s like, “this seems like a cool pet project I could maybe get reelected in my district on,” who’s also on the Appropriations Committee to be like, I’d like this to go into the omnibus package and it would just happen. That background work has to occur before you can get that. I think there is a lot of space for us to do this kind of work of making easy wins for people that would also like to win in the way that we think winning looks like.

Billy Saas

Well Ely, this has been a great conversation. Thank you so much for joining us on Money on the Left.

Ely Fair

Thank you so much.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

For over twenty years, India’s national rural jobs program provided a legal right to work for over 265 million people–the majority of them women–serving as a vital lifeline against poverty and a global model for social security. Tragically, however, that lifeline is now being cut.

In this episode, we speak with Khush Vachhrajani, writer and national coordinator at the Social Accountability Forum for Action and Research in India, about his recent article in The Wire, “How to Kill a Golden Goose: MGNREGA Repeal Reveals More than it Hides.” Vachhrajani contextualizes the sudden 2026 demise of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and its replacement by the new Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (VB-G RAM G). As he explains, this shift effectively “kills the golden goose” for millions of rural workers by replacing a demand-driven legal guarantee with arbitrary budget caps and centralized control. We discuss the neoliberal money politics behind this move: a calculated transition from a rights-based framework that empowered workers to a supply-led scheme that prioritizes fiscal austerity over human dignity.

Still, our dialog is not merely a post-mortem of a fallen policy. From the “Save MGNREGA” nationwide agitations to defiant resolutions passed in thousands of Gram Sabhas, the people of India are actively fighting to reclaim their right to work. This episode explores both the devastating effects of the repeal and the growing movement of workers, unions, and activists who refuse to let this Golden Goose go quietly, proving that the struggle for democratic accountability is far from over.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

William Saas

Khush Vachhrajani, welcome to Money on the Left.

Khush Vachhrajani

Thank you so much. Delighted to be here.

William Saas

Could you start by just telling us a little bit about your background and what brought you to the kind of questions that you’re asking in your most recent research, which you’re producing through your position at the Social Accountability Forum for Action and Research, or SAFAR, and sharing on your Substack?

Khush Vachhrajani

Sure. So, I’m from India. I’m from this city called Ahmedabad, which is in the western state of Gujarat. That’s also where the Prime Minister comes from, so, I think it has gone on the maps because of that. But it’s also the state where Gandhi was born and a very long part of his life after coming back from South Africa, when he started his journey in India, began from the state that I come from. I studied in a school that was sort of built on the foundation of some of the principles that Gandhi himself sort of taught us as a society. I currently work with a collective called the Social Accountability Forum for Action and Research.

We are a group who’s just interested in making democracy work on a day to day basis for the most marginalized. We don’t see democracy as just an election-to-election arrangement, but also in terms of a person’s right to be heard, a person’s right to grievance, a person’s right to participate in the smallest decision making that affects the person or the society as a whole.

The work also is sort of anchored in some of these democratic principles. Apart from that, I love to read. I have been a follower of many of the progressive ideas that you all have sort of built over a period of time on Money on the Left and also have learned immensely from the writing, and the guests who have come here which has also sort of shaped a very core part of my own politics around money, around looking at monetary design. I enjoy music. I enjoy sports, and I have a lovely dog who’s going to turn five years old this year, and her name is Estelle. And that’s it. That’s more or less about me.

Scott Ferguson

That’s great. Can you maybe talk a little bit about some of your experience? You also studied in the United States and worked in the United States for a little bit.

Khush Vachhrajani

I did, so I did my master’s in public affairs. In the US, I was at Brown University in 2019 and 20. So my education was over when the pandemic sort of kicked in. During my time in the US, I also spent three months working in Houston, in the Mayor’s Office of Complete Communities, which was an initiative largely to identify and then work towards supporting under-resourced and historically underrepresented communities in Houston. My task was to sort of look at the habitability question in one of those communities called Gulfton, where I learned a lot around some of the challenges that the United States also face in terms of the politics of, at times, immigration, challenges around creating a safer environment for many of the people who come to the United States with a lot of ambition or aspirations, and sometimes also out of desperation.

So, I had a great time working with the mayor’s office and also sort of learnt a great deal about what are some of the day-to-days of the immigrants who live in Houston and how a mayor could support them through that administration. So, yeah. Before that, I was also sort of engaged in working with governments and civil society in India.

My education built on my lived experiences in India and sharpened my imagination, I would say, as well as my ability to contribute to some of these things that sort of affect the lives of people.

Scott Ferguson

What occasions this conversation today is the publication of an article that you wrote titled “How to Kill a Golden Goose: MGNREGA Repeal Reveals More Than It Hides,” and it was published in a publication called The Wire. It’s essentially criticizing and diagnosing the radical curtailment and maybe even demise of this public works program that’s been around for decades, since the 90s, I believe, in India.

It’s a terrible situation, but we found that your analysis and your framing of the argument to be really thorough and quite inspiring, despite the fact that it’s such a tragic situation, precisely because you frame these politics as a politics of not just money, but monetary design.

So I don’t know where you’d like to start. We could potentially start by talking about the nature of this program. Some people who listen to this show might be aware of this program, but, probably a lot aren’t. So maybe we can just start with, where did this program come from? Where did it arise? Maybe the happy part of the story before we get to its dismantling, very recently.

Khush Vachhrajani

Right. The more hopeful part, I would say. These state backed public employment programs have been around in different parts of India since the 80s and the 90s, largely framed around Social Security for rural workers in absence of decent agricultural work, but more so as a protection against famine or any sort of climate crisis which might affect the agricultural work itself.

So whenever there was absence of work due to these kinds of scenarios, the government would come in and they would focus on largely rural public works, which can be done through manual workers. Against that kind of work, they would provide them wages for sustenance. So these kinds of programs have been around in India since the 80s and 90s in some parts.

And the experiences of those programs became a backbone for a broader advocacy in India, especially after the 1990s, where India sort of liberalized, opened up its economy, adopted the neoliberal, market-based framework in the economy, which brought in a lot of resources, finances and money to a very, very small section of society in a sense.

But the precarity in rural areas amongst workers, especially manual workers, agricultural workers, construction workers, deepened over the entire decade. So in the late 90s and early 2000s, the experiences of these public works programs in other parts of India sort of became a central piece of argument that India needs a federal job guarantee kind of a framework.

It was also sort of demanded or was framed as a program, or a demand, as a state’s obligation to its people. It was articulated as people’s right to work within the constitutional framework. It was framed as a sort of politics of money that the people are deeply interested in and which sort of breaks away from the neoliberal framework that the state was pushing, in a sense.

So, in 2005, after the advocacy of about 7 to 8 years, the Mahatma Gandhi National Rural Employment Guarantee Act came about. So MGNREGA is what it is called, in a shorter sense, or sometimes in India, we also call it NREGA. So, NREGA was sort of conceptualized with this vision that every single person who wants to work can get work under this program.

There will be wage parity amongst men and women. Again, it was a breakthrough at that time. The government sort of decided a particular floor at which people are to be paid and that the floor will be revised every year based on inflation. So it’s sort of created a progressive framework which was rooted in creating a public option for employment.

While it was demanded to be a program which is running throughout the year, the government sort of enacted this law where each household will get work for up to 100 days a year. So instead of every person, it was like one person per household for 100 days. And, in terms of its design, if there are four people in a household who are above 18 – the working age – let’s say, for example, then all four people would be a part of, what was called, a job card.

Amongst those 100 people, anybody could come out and work. So it was again like 100 days per household. That’s how the program was shaped. In addition to creating this public employment option, it also created, as I said, a wage floor which was equal for men and women.

It also sort of provided 10 rights to the workers themselves; to each and every one of them will have a job card, they can go and demand work at any time, they will get work within five kilometers of their radius, they will get certain facilities at the worksite, they will get paid within 15 days of completing work, they will have the power to audit the kind of work that is happening around them (etc.). It was a very, very progressive legislation which was fought for by people’s campaigns and struggles for almost a decade. So that was basically the foundation of how the law came about. When it was passed in the parliament in 2005, it was passed unanimously, across all party lines, across all different political ideologies.

It was passed with a very emphatic belief that this is creating a right to livelihood or at least a path for people to claim the right to livelihood, but also with sort of an understanding that within the new liberal economic framework, this is the least a country could do for its people, which is sort of a public option at a particular rate for just 100 days a year.

So that has always been there and that is also something that I address in my article that this has never really been a revolutionary program the way that we all want, but it was still fundamental as a cornerstone in people’s politics in India.

Scott Ferguson

Was it restricted to rural areas or did it also operate in urban areas?

Khush Vachhrajani

It was restricted to rural areas, which would be about almost 70% of India. So it’s still pretty universal in that sense. What emerged after all these years of NREGA being operationalized is also that, during Covid, there were several urban employment guarantee programs, which were designed and launched in urban areas as well by different state governments.

In 2023, my neighboring state, Rajasthan, enacted an urban employment guarantee law itself, which mandated 125 days of urban employment on very similar lines of NREGA . So that is also one of the contributions, which I don’t really talk about in the article that has come out, but this is definitely something that I’m writing in my next piece reflecting on these kinds of effects that NREGA has had in the political imagination of Indian society as well.

Scott Ferguson

What’s your sense of the kind of work that has gone on in the auspices of this program, that I would assume is pretty various? There’s not just one type of employment. Do you have a sense of the variety of work?

Khush Vachhrajani

Absolutely. So another beautiful part of the design of the law, since it was fought for by a people’s movement and struggle which sort of informed the overall design, every local unit in India – that local unit in rural areas is called a Gram Panchayat, you can also sort of understand that it’s GP – every GP has to first think about all kinds of work that they can do under NREGA.

So it is not a top down design. It sort of stems from the most decentralized local unit, and each Gram Panchayat is supposed to create, what we call as basket of works, at least 2.5 times the demand that may exist in the local area. So they have to make sure that they are able to imagine and they’re able to create enough work in their area so that they are able to meet demands up to two and a half times, which is quite great. The works that we’ve seen in India has varied a lot also because of the kind of geographies that have been we have seen in the northeastern part of India, which is very, very remote, with very deep forests and hills where this program has been used to build pathways for people living in the valleys to come up on the main road and get connected to the public transportation system in the southern part of India or even in the western part of India where the droughts are very, very common. We’ve seen this program creating step wells in villages, which is sort of a local traditional mechanism of storing rainwater. In the northern part of India, there are mountains in the Himalayas which are prone to landslides. We have seen this program creating a more ecologically sound infrastructure that is needed for the local community to not only commute, but also to sort of earn a livelihood.

Another aspect of the program has also been that different kinds of people can access the program. So if, let’s say, I’m a person with a disability, then the program design allows me to work either in my own backyard or in my house, and it will be counted under the NREGA. If I come from an historically marginalized community, which in India we call scheduled tribes and, the scheduled castes (Dalits).

So if I come from the Scheduled Castes or Scheduled Tribes, I can work up to 200 days. Sorry, actually, 150 days in a year. If I am a person with disabilities, I can work up to 200 days a year. So all these progressive thoughts of who’s working, where they are working, and who is sort of making claims, is rooted in the design of the program.

There is enough documentation, a lot of writing, and several documentaries which have also been able to record the range of work that NREGA has been able to create. Even in the program design, they are all called assets. The NREGA has been building assets and not just work because these are all rural social infrastructure which is aiding the economic, political, social lives of people.

It’s been quite extraordinary in my experience, I have seen this operate in multiple geographies, multiple parts of India. I have also worked at a NREGA site during my experience in Rajasthan. These are all manual works. Imagine they are creating a small canal to make sure that the water flows smoothly between farms sometimes. In popular opinion writing, all these works are sort of termed as low skill works. Okay, but anybody who has worked in NREGA would be able to say  how highly skilled these works are. It’s not easy to both design and plan and then dig a stepwell. It’s not easy to build roads. 

Scott Ferguson

I don’t know how to do that.

Khush Vachhrajani

Exactly, exactly. Right. All these works are sort of termed as low skill, manual works, but I always term them as manual works which are building social, political, economic, architecture in many of these villages.

William Saas

So I don’t know if you’ve attended any meetings of the GP’s, or if they are documented in these documentaries, which I am absolutely excited to take a look at later, but do you have a sense for what those meetings are like? It strikes me that they’re probably more than just getting together and writing down a list of tasks to complete, but might end up being more expressive of community values and, as you say, social relations at the same time as they are about identifying work to do. Can you just provide any kind of overall broad or personal description of what goes on at these things?

00;21;59;12 – 00;22;26;18

Khush Vachhrajani

Absolutely. These meetings, at the GP levels, are called Gram Sabha, which are basically convenings at the village level, in translation, and all the decisions which pertain to the GP or the village or the local unit are supposed to be taken only in Gram Sabha.

So it is like a general body of all the voting members of a GP. Right. From deciding what kind of work that needs to be done to the kind of money that will be needed to do this work, which, in the program, is called the Labor Budget. It is also developed in these Gram Sabha. To understand how these Gram Sabha work, and the picture that I’m going to sort of share is also how a Gram Sabha is really well organized, right, or is very well planned because like all other democratic functions, it is also a function of how active the voter is, how much power are they exercising as citizens of the Gram Sabha. There will always be vested interests. There will always be attempts toward the participation of people. But in some of these most thriving Gram Sabha that I have seen or many of us have seen, it takes place in layers.

First and foremost, there is a caste layer in India. India is a very deeply caste society, where the caste hierarchies govern many of these social relations, power struggles, control over resources and MGNREGA plans for these kinds of things. So if, let’s say, a well has to be built or a tree plantation has to be done to develop a garden, for example, which area would it take place in the village? Which are the communities that would benefit out of it? All these conversations are quite central to these discussions in Gram Sabha. So the first layer that these Gram Sabha try to facilitate, again these Gram Sabha, which are organized with an intent to make many of these things work, is to unpack what are the needs of different groups and communities within that village, wherever they are located and situated in terms of infrastructure.

The second layer that it unpacks is the layer of gender. I have said in my article that more than 50% of these workers are women workers. They are the ones who are in the villages. They are raising kids. They’re taking care of elderly parents. They are taking care of the farmlands. They are the ones who have not really migrated out of the villages to urban areas for work. So, the gender layers are very important in these kinds of conversations and the kind of infrastructure that women might need. Most of the time, the way Indian villages are organized is the responsibility of fetching water.

If I do not have access to piped drinking water or water for domestic chores, it falls on women. So where a well will be built or where the location or the site of a step well or even a canal depends on how women participate in these Gram Sabha. And then the third very, very critical layer comes as to what are the social needs of a community?

Does a school need, let’s say, a toilet or a playground or, does a hospital require a boundary wall sometimes, or a library requires a bit of renovation or a person wants to build, let’s say, a cowshed, or a small poultry kind of a mechanism to earn a livelihood. So these are the conversations that also take place in Gram Sabha and based on all these engagements the basket of work is developed. Based on the basket of work, then the Legal Budget is prepared. How much money will be required in the form of wages to execute the work? What will be the material cost?

How much of this material would we need to build all the assets under the NREGA for that year. So that is how these Gram Sabha sort of function and, again, we have also seen these Gram Sabha as places for deep contestation amongst the community sometimes. 

So in India, the person who’s elected and who’s the chair of the Gram Sabha is called Sarpanch, who is like the elected mayor of the GP. Mayor equivalent for a rural area. So it will also depend on the community where the Sarpanch comes from or if the Sarpanch is a woman or a man, if the Sarpanch is from the Dalit or the scheduled caste community, or if a Sarpanch is a graduate. All these things will sort of factor in how that Gram Sabha is being governed.

Then, in many areas where we have seen really transformational work happening or these really productive assets for people are being developed, there is also a role that the state has played in facilitating it. We have seen some really progressive bureaucrats, progressive governments, state governments especially facilitate these conversations in terms of providing more support to the village in bureaucratic functionaries, or on the role that they can play in facilitating this dialog between the elected members of the government and the general body, what are the kind of insights that they can provide, in terms of what might benefit the village in the long run vis a vis short term? So all these sort of permutations and combinations go into creating the basket of works which are then required for the Panchayats to submit under the NREGA program.

Scott Ferguson

So, we wouldn’t want to overly romanticize this program, because as you said, it’s, you know, in the context of a neoliberal era, it’s sort of the least that can be done. Yes. At the same time, I think it’s worth drawing out some of the radical potential here. I mean, I feel like you’re already talking about it, but I just kind of want to bring more meta language to it.

So we’ve got the context and the geopolitical context is neoliberalization. I mean, there’s lots of ways of describing what neoliberalization even means in the first place, but certainly a market ordered society where non-democratic, private allocation, is supposed to be the best, the most efficient, etc., etc..

The market is supposed to perform certain kinds of mechanisms that are dada dada da, and so on. All these basic questions about “who we are as a people,” “how do we organize and cooperate,” “how do we organize our labor,” “what is the mode of production,” “are there multiple modes of production,” “how should we go about this in the first place,” are just off the table. That’s the power of the neoliberal paradigm as a kind of, you know, radicalized reboot of the liberal paradigm. It seems like the jobs program in India really deeply contests that paradigm and offers an alternative, beginning not just with the kind of the democratic impulses in these local GP organizations and meetings, but also the way that these basic questions are being reposed from the bottom up once again. I mean, not just bottom up in terms of democratic participation, but bottom up ontological, conceptually. I think, so often neoliberal market logic presumes that if there are needs, the market meets them. And if the market isn’t meeting the need, it’s not a real need.

Khush Vachhrajani

Exactly.

Scott Ferguson

This is not new to anybody who’s familiar with any of the writings about public works programs and job guarantees. It’s not news to anybody who follows Modern Monetary Theory. Nevertheless, I think it’s worth really underscoring the way that this program just poses the question of: who are we to one another? What do we owe one another? How are we going to participate? And what are the needs of our community that are not de facto reduced to a reified neoliberal market?  I still teach Karl Marx all the time, for as many issues I have with Marx’s work nowadays, one of the fundamental questions he’s posing and what his critique of the alienation of labor is all about is not just, “oh, I’ve made something and my product has been yanked away from me by the owners of production,” but the very democratic question of how do we organize our labor together as a community? How do we even do that in the first place? And what should we be doing together? It seems like, again, not romanticizing it, but as an impulse this program has potential to pose that question in a very deep way.

00;33;14;15 – 00;34;06;23

Khush Vachhrajani

Absolutely. There was no better way of putting it than what you’ve already done, Scott, really. The program was in action for the last two decades and even a little bit before that, but in the last two decades, we have seen so many GPs, Panchayats, really understanding the democratic power that they have as a unit in the larger schemes of affair. Progressive, elected leaders of these Panchayats would make sure that their claim to democratic money is heightened and it is sort of demanded for. Even from civil society and progressive groups, they have sort of latched onto this program to unionize some of these workers who have been working under NREGA and not just workers, but also, there is a concept of a “mate”, the mate is basically a friend who’s just supposed to sort of supervise a work site so we can also call them a work site supervisor.

So there have been civil society groups and unions to sort of unionize these workers and the mate to demand for full implementation of the program in the community, to demand expansion of the basket of works in the community, to sort of innovate at times as to the kind of infrastructure and assets that can be built, and their relationship with the village itself. Many of these really macro imaginations and philosophies come together in a program like this in a very real sense. One thing that I also mentioned in my writing is how it shapes the relationship between a landlord or a contractor and the workers themselves. In absence of a program like this, my power to negotiate wages is very, very limited.

And in the Indian context, it has been documented quite well that before this program was introduced in the villages, irrespective of how good or bad it was being implemented in the village, the fact that this design existed automatically pushed rural wages a lot. It really shifted the conversation from working at almost slave wages to working at dignified wages.

If, let’s say, the rural wage is set at 100 for now, the shift that we saw in the earlier years was not a 101 or 105. It was huge. It was 150, 200 at times. So it shifted, and in the one, it also sort of set what workers were actually losing by this program not being in existence.

We have seen that throughout two decades, even in Panchayats, where this program has not really worked because of many reasons. With the government in power that we have today in India, the last 5 to 6 years have been really, really difficult. Actually, the last whole decade has been really difficult for this program. There have been budget cuts. There has been public mockery by the Prime Minister inside the parliament about this program, despite all the structural challenges, the loss of wages has not come down. The faith that people have on the ground about the potential that this program could have in their lives and in their environment has not really gone anywhere.

Yes, there has been disappointment that the program has not been implemented, but we saw it in Covid that when state governments really pushed from their sides to implement these programs, people were coming out demanding for work. People were coming out to think about the kind of infrastructure that they need during pandemic and after.

What you also articulated so well, and this is something that I’ve tried to even sort of hint at in my article and I’m not really sure if I have been successful at it, but political imagination of a common person, and most times, a woman living in a village in India, really changed, as to what is possible in their lives.

The women workers, even today, are coming together protesting against repeal of NREGA from all different parts of India. Not because they were very happy with this framework and they were all hunky-dory. But it is the faith in the design that this is their democratic right, this is their claim to democratic money, and it is their faith that if one day I have an equal power to operate in this economy, which otherwise is extremely unfair to me.

That, I feel, has been the crux of the last two decades of NREGA. With all its ebbs and flows, the people, every time when they were offered an imagination of a progressive, public, employment program or a job guarantee kind of a program, people latched on to it and they really made sure that it works, wherever it works.

00;39;48;07 – 00;40;32;01

William Saas

Just want to give us a pass for a bit of romanticization. I want to underscore and emphasize a bit more. The NREGA seems like a program out of time in a couple of ways. One is that it’s under appeal now, that’s the obvious one. But “out of time” in terms of the two decades, as you just described, are periods noted for their intensification of neoliberal logics rather than their lessening. As I’m hearing you narrate and reading your work, it becomes, I think, obvious why and from what trajectories this program would be challenged and undermined, but that it has taken so long to get there is remarkable and I think a testament to the people who make up the NREGA projects, that do the baskets of work. Before we get to the repeal, I feel like we’re almost there, but living in the romance just a little bit longer. Was there any kind of more cultural work, artistic work commissioned or called for in these meetings and identified in the baskets of work? So, public art, public music?

Khush Vachhrajani

Fantastic question and not really, but I’m very glad that this has come up. And a colleague of mine who might listen to this podcast would be really happy to listen to this question as he comes from a community… 

William Saas

What’s his name, let’s shout him out.

00;41;28;24 – 00;42;02;03

Khush Vachhrajani

Oh, yeah. His name is Paras, Paras Banjara. He comes from the community that traditionally has been the nomadic tribes in India. His whole identity is also of a cultural activist among many of the other hats that he wears. But, unfortunately, in this regard, the ambit of works are limited to manual works and not really art cultural in that sense.

But in 2022, if I am getting the year right, I think it was around 2022 or 2023 again, in the aftermath of the Covid pandemic in India, which was disastrous for many communities economically, and the communities were already recovering from a demonetization experience in 2016 that really terribly implemented tax reforms in 2017, which was then followed by a pandemic. So there was this long period of real economic distress. So Paras, along with some of the other friends in, again, the state of Rajasthan, who are all sort of cultural activists and who look at culture as commons, work with local traditional artisans who specialize in folk music and different folk instruments.

They advocated for a very similar public employment program, 100 days for Rural Artisans in Rajasthan. It was centered around folk musicians, and the design was again very, very similar, where it would provide a 100 day wage employment to all these rural artisans, wherever they are. The basket of works were kept very, very wide, but it ranged from teaching in a school to performing a government function or to sort of participate in these Gram Sabha as cultural artists and entertaining people and talking to people about their art forms. It was quite a broad ambit. Implementation of that program was very, very haphazard. But the imagination was there, and it was something that has been fought for by Paras and some of these groups for a very long time. These are all traditional art forms and, really very, very strong and almost culturally extinct practices of folk music that stem from years and years – and in my understanding – centuries of traveling around the world as gypsies or as nomadic tribes from which they’ve picked up all these different art forms and music, and they’ve sort of made it more Indian. In one of the conversations on culture as commons, we saw many of these come together to perform a very different version of a bagpipe, a very different version of drums, a very different version of a string based instrument in that sense.

So that imagination has been tried. Not very successful, but the state did try to push for something like that. I remember, I think, in the US there was something just after the Second World War, tried in Washington state, if I’m not wrong, a public arts program. I think it was one of those states in the US. So it just tried.

Scott Ferguson

So I have a question, which I guess, in my mind, both comes from a place of ignorance and insight. So I want to ask about the so-called informal economy in India, which I know nothing about. All I know is that people tell me that it’s a large informal economy and by this I take to mean that it is not being directly organized by the rupee.

My ignorance is, I just don’t know how this works because I don’t study it. I don’t live there. The maybe slightly more insightful part of this is the Money on the Left presumption in our analysis is that there’s no ultimate outside or absolute inside and outside between a formal monetary economy and what might lie beyond that. In fact, what we call informal economies themselves have their own forms of language and accounting and responsibility and capacitations.

We, at Money on the Left, tend to try to blur the distinction between the so-called formal and the so-called informal. But I’m wondering if A) is anything I’m saying just off, and B) especially since the program was not year round or if it worked year round, but for only 100 days, so it wasn’t full time, right? I guess that’s what I’m looking for. It, of course, must have interacted in complex ways with the so-called informal economy. Do you have any sense of how this played out?

00;47;30;23 – 00;47;57;00

Khush Vachhrajani

A limited sense. I would try and sort of put out what I feel, and my understanding and I think the more general understanding in India about an informal economy also sort of stems from the fact that more than 90% of the Indian workforce is engaged in informal work. And what we mean by that is also that that work is not on any contract.

They don’t really have an employer of any kind. There is no fixed salary that is credited to their account by the end of the week or the month. There is no Social Security and it’s almost always a daily wage earning. So if I am a construction worker in a city, I would just go stand in, what we call a “Labour Chowk”, or, let’s say, a corner in a neighborhood where all these workers would come, let’s say, around seven in the morning, eight in the morning, and they would be picked up by a contractor to, let’s say, fix somebodies house for the day and that would be their job, and they would earn from the day. The second day would be something new, a new task, with a new contractor, a new place.

Scott Ferguson

But they’d be paid in rupees?

00;48;50;23 – 00;49;24;19

Khush Vachhrajani

Yes. They will be paid in rupees. Most of these people would earn in cash, physical cash. There have been several policy decisions which have tried to get many of these workers to be a part of the formal banking systems, largely through direct payments to their accounts. But still a lot of the Indian informal workforce earns in physical cash.

That’s also because that’s how they spend on a day to day basis, with the emergence of fintech and again, a very, very deep neoliberal financialization of banking itself, where they are charged every time they take out money from the ATM, there is no way that they can afford to lose any more than sort of what they’re getting, which is also really, really very low.

So these are the kind of people that we generally imagine as informal workers and in rural areas, where the NREGA was implemented. Actually it is still implemented till March 31st. The informal economy would be implemented in multiple ways. There is, one, direct agricultural labor. So I could be a farmer but with a very, very small landholding.

So it would not be enough for me to sustain. So along with working on my own farm, I would also be working in somebody else’s farm on an hourly basis or task basis or a day to day basis and I would sort of get money based on that. Or I would be a landless farmer and I’m working as a laborer, either as a contractual laborer with a farmer and then I would be employed for the entire season. Sometimes it is also out of precarity of different kinds where I could be a landholding farmer sustaining myself, but, for any reason, my crop got destroyed or there was a drought and I have loans on me, so I’m not able to pay off those debts. So, I am forced to work as a local. A lot of rural work is also construction. So again, it’s like what I describe for a city, it is  very similar to what would also exist in a rural area, where I could go to a worksite in the morning, and I could work from morning to evening doing manual work, and I would be paid for that.

These are the kinds of ways in which the informal economy is sort of organized in villages. What NREGA did was just push how the engagement with the contractor would be. That contractor could be a person who is working in the worksite, or the contractor could be a farmer themselves or the landlord at times, in just helping them negotiate at what price the manual work would be offered.

Scott Ferguson

So let’s talk about the devastation of this program. I mean, I’m assuming there were reactionary forces who wanted to end it the whole time. I’m assuming that it gained traction, but how did this all play out?

00;52;22;10 – 00;52;48;28

Khush Vachhrajani

Yeah, the trauma, the trauma. So, as I said, when the current BJP (Bharatiya Janata Party) government came in power in 2014, the prime minister, in his very first speech in the parliament, made a huge public mockery of NREGA by saying it’s a program where there is no pothole, so people first would dig that pothole and then they would fill that pothole. It’s that kind of a program that has been running and, he also said that he would make sure that this program sort of survives long enough for people to remember how big a joke this has been in the Indian economy. That was sort of a proclamation of where the public policy would be geared towards, in one sense. The program, however, was not killed directly through a new law, like what we’ve seen now, but it was sort of dismantled structurally through three means from 2014 to 2025, when they got a new law in itself. It’s also quite interesting because to many of us, who have been looking at how the repeal came about, it caught us by surprise along with the swiftness with which it was done. And, even the parliamentary procedures around this new law was quite something for us to see. But, our analysis and understanding has been that over the last 11 years, the program has been dismantled slowly to a level where people, many of these Panchayats, have not really seen works opening for three or four seasons now.

So for them, the program has always been dead. So this new program coming in makes very little impact on NREGA. But coming back to how I think it was dismantled over the first 11 years were three ways. 1) A very, very big focus on introducing very modern digital technology infrastructure in a reality where there is no phone connection or there is no internet connection. They introduce things like, digital identity based payments. India has one of the largest biometric programs called Aadhaar. They made sure that every single worker’s bank account is linked to this digital ID card, which is called Aadhaar. It is just a biometric identity program, nothing else.

It was proclaimed as that. So each and every person is sort of tagged to this unique ID, and then the money would be transferred directly to their bank account instead of it first coming to the Panchayat, or the GP and then through the GP, then getting it in the form of cash. And it was sort of introduced as a means to curb corruption, reduce inefficiencies and to make the whole payment mechanism very transparent.

Again, there is an Indian reality that has been narrated ever since the Aadhaar was launched in 2008, there would be difficulties in matching names of people on one document to another document. There will be typing errors. There is not enough infrastructure on-ground to make sure that these things are rectified. Then it is forced, from top down, in a manner where if there is any error, my money would be stopped, then it’s a catastrophe. That is what happened. So when they introduced this, we call it ABPS, which is the Aadhaar Based Payment System, it led to many bank accounts where the money sort of never reached the worker because there was a problem with the name.

There was a name mismatch or there was a mismatch in the biometric. As I said, it’s a biometric program. So they have to go and make sure that they verify at the branch location in rural areas that they are the same people and any reasons that the biometric has failed. So that is another reason why, despite working, they would not get their money.

And thirdly, it also sort of created an architecture where we’ve seen cases where, like, I think in 2022 or 23, close to 60 to 70 million people were just not paid because of these kinds of inefficiencies. So this was one of the first things which was introduced. The second thing which was introduced then was a biometric based attendance system at worksites where every worker before beginning their work on a particular day would have to go in and make sure that they are at a geotagged worksite.

They would have to do the fingerprints and make sure they match what we called a “muster roll”, which is just like a list of all people who are going to work at the worksite. So basically this was a digital attendance mechanism date. The geolocation of the work site and the geolocation of that worker has to match to make sure that the worker is not sitting at the houses and getting paid for not doing the work.

All this sounds fantastic, but it is just not practical. There will be issues with geotagging and that is what we realized. The person who is doing the geotagging has, let’s say, geotagged the wrong work site. Workers have come to the right work site because they know in that area in the village where the work site is, and it would just not match. Or everything is okay, the work site is matched, it is geotagged correctly, the workers are at the correct site, but there is no internet, so they have to move 500m up and down. Then the moment they move, the work site goes beyond the geotag range. So, people would come to work, but they would not be able to start their work because the attendance is not marked.

So there are so many people who came to work, but they were just not able to work. And that also creates a huge disappointment and a disincentive for workers to make their way all the way to the work site.

Scott Ferguson

Real quick. A meta comment on what you’re saying here. In the States, we call this “death by a thousand cuts,” right? It was eroded from the inside before the big blow knocked it out. The main point I wanted to make here is that, it’s not just that the development and implementation and ongoing evolution of the program was a question of contestation over monetary design in both narrow and capacious senses of that term, but the counter forces, the reactionary forces, the contestation against the program was also a function of monetary design in multiple senses.

01;00;49;28 – 01;01;22;09

Khush Vachhrajani

Absolutely. You have got it absolutely right, that it is a death by a thousand cuts. This is something that we also have spoken about and written about quite a lot. One of the most insidious ways in which the program was killed was also around the democratization of money where the union government stopped paying state governments their dues.

The way this program is organized is that all the wage payments, 100% of the wage payments, come from the union government, who is the monetary sovereign government. And for all the material costs which are involved in any public work, 75% come from the union government, 25% comes from the state government. That has been a design that has been agreed upon which has been ruling since 2005.

But over the last seven, eight, nine years, we’ve continuously seen wages being withheld. So imagine workers are working on the ground and they’re just not being paid and the pressure is being felt by the state government and the state government doesn’t have the kind of money that is required to pay these wages. So if the wages are withheld, workers are not going to come to work. At the same point in time there is a provision for what is called a social audit in NREGA, which is basically going beyond the financial audit, but giving power to the Gram Sabha – the fundamental unit that is responsible for running this program – to also monitor how the program is being implemented, considering all these different parameters around how people are working with these worksites, how their experiences have been. Now, social audit has been a mechanism which has been fought for by people’s campaigns and struggles to ensure that people have a right to monitor the implementation of this program.

It is not left to a third party or the government to dictate how the program is to be functioning. The way it has been designed is, 0.5% of NREGA’s annual expenditure is earmarked for social audits. So the money has also been kept aside in the monetary design of this program. Then, in order to facilitate the social audit, each state has to create these social audit units, which are supposed to be independent autonomous bodies and that 0.5% of state’s total expenditure would come to them. Then they would make sure that they go to a  Gram Sabha, they prepare a team from the  Gram Sabha to then audit what has been happening.

So this has been an inbuilt mechanism for transparency and accountability within NREGA, which has been weaponized against different state governments where they have been told that “we are not going to release money to you because social audit reports have been terrible,” without understanding that when a social audit report is bad or whether it is sort of unearthing corruption, unearthing misuse of money, the department that is supposed to act on those findings and fix those gaps is supposed to be the rural development department.

It is not supposed to be these social audit units whose job it is to figure out what is happening, no. So even their money will be withheld, so the social audit units are left to dry and the states are also not getting money. This is something that we have documented systematically through our work as well, that there have been social audit units who have not received their dues for five, six years.

There have been state governments who have not received the wages of the workers who have worked in the state governments for several years. There have been court battles. The state of West Bengal went to the High Court of the state. They won. They went to the Supreme Court and the Supreme Court said that the government has to release the money.

But what I mean to say is, and this is something that also sometimes troubles me, that our understanding of what a monetarily sovereign government can do, this is actually a flip side of that. They’ve decided to not really provide that democratic money to the money users in their federal mechanisms. The state government was to compensate these autonomous independent units, they were supposed to be the checkers in the system in that sense.

All these things have been used systematically to kill the program when all these digital interventions that I spoke about earlier were also introduced under the name or under the guise of transparency and accountability. It was to say workers are not working at the worksite.

Hence we are sort of introducing this worksite monitoring mechanism. It is insane because there are more than 100 million workers across India who work at these worksites and India does not have the kind of technological sophistication, infrastructure, architecture to be able to facilitate any of these big tech interventions and these are also not just benign interventions thought to make the program work.

These are also data and a very strong market linked surveillance of testing certain hypotheses, like whether the biometric attendance system in general could work in a place like India with 100 million rural workers. They don’t want to introduce this system for rural workers. They want to introduce this for something else, but this is a proof of concept.

Can direct payments to bank accounts work and what are the kinds of complications? So how do we then design a structure for these high scale financial transactions which happen amongst the top 5% of Indian users today? India has something called UPI, Unified Payment Interface, which is this free and open source payments protocol for digital payments, which is sort of different from Venmo in that sense.

But this is also a kind of proof of concept for interventions like those which are deeply market linked, which are all financialization of finance. It’s been really terrible to see the kind of experimentations which have been done on these hundreds and millions of rural workers, whose daily earnings are peanuts even under a program like this.

What we heard last year was that they also want to do facial recognition technology through drones at these rural worksites. The amount of money that is being spent on these technological interventions vis-a-vis the amount of money that the simple rural or manual worker is earning, it is insane. It just doesn’t make sense in the traditional public policy cost benefit analysis framework.

It just doesn’t add up. Right? So whose interest it is serving, is something that I think has been fundamental to many of us. We’ve followed the evolution of these digital architectures that have been forced upon people where there is no Opt-Out option. If I demand that I want my wages in the form of physical cash, I just can’t.

It has to come to my bank account, right? This takes away the idea of a monetary design which is free, fair, and just, which is democratic in that sense. There is a little bit of a technicality to clarify.

So they’ve come up with this new law, which is called the VB GRAM G Law. It’s a very long, complicated, full form. So I’ll just cut it out and call it VB Gram G. So they, one, have legitimized all the digital technology architecture that they introduced to NREGA as part of law, which is crazy and which is scary and which is unacceptable by all means, because all these interventions, which they did earlier in the NREGA were just through circulars and guidelines, there was no legal legitimacy of any of these things. Now it has that. Second, it also has sort of passed the law but then not on-paper repealed NREGA.  There is confusion around whether both of these will coexist, not coexist and how it will sort of play out.

But in the new law, they’ll also sort of change the fiscal arrangement of the program. Instead of the Union government being responsible for 100% or wages, which is the majority of expenditure in the program, they’ve shifted that burden onto the states and they said that the entire expenditure will be borne by states and the Union government with the share of 60/40.

The state governments do not have that kind of money. There’s no way any of the state governments could actually shell out 40% of the expenditure. So it’s just impractical. There is no way this can be done. Another crucial aspect of the new law is that – earlier, as I said, the labor budgets or the budget for the program would emerge from bottom up through these discussions and deliberations in Gram Sabha and Gram Panchayat, which would feed into the state and then the Union government budget – now, they have said that the Union government arbitrarily determined based on “normative” parameters, how much the allocation for this program in the current state would be. What those normative parameters are, we don’t know. They’ve not really specified that.

Scott Ferguson

I just want to point out to the listeners that you put scare quotes around normative, when you said normative. You were not using it straightforwardly. 

01;12;26;01 – 01;13;01;02

Khush Vachhrajani

Absolutely. And anybody who reads the law multiple times, it would become more and more evident that some of these arrangements in the new law are insidious designs of killing federalism and sort of completely turning the monetary design upside down, making it extremely top down. As to why they would not specify what that normative allocation would be, they said that any state government or any local government, whatever program schemes they’re running on their own, can be merged with this new VB GRAM G law. There will be no consultation, no dialog with the state government on what they are okay with, what they are not okay with in terms of the arrangement or the normative allocation itself. If a state government wants to opt out of the mechanism, they either have to enact a law that is in line with the VB GRAM G law or better, or they completely let go of the money under the program. So even that 60% shared they can let go. 

One more thing, NREGA was a universal mandate. It was implemented universally across all GP’s. Anybody could ask for work anytime in the day. In the new law that they proposed, they have said that the Union government would notify the states and the districts in the sub-units where the program would be implemented. No consultation, no check-in, nothing with nothing.

It’s just like they will determine where all it will be implemented, and it’s also that they can change that each year. So there is a switch-on, switch-off clause. So today they can notify, let’s say there are five areas in XYZ states without consulting the XYZ states and putting the burden of spending 40% of that amount. Then next year they could very well be, “okay, XYZ States are done, no I’m going to move to ABC states. XYZ states are done and they have no power to really sort of claim the right of democratic money in that sense. So the way they have structured the new law is they will notify the area, they will notify the works, the state governments will have to spend 40% – there is no opting out of that – and I, as a union government, can notify, let’s say, all villages of a particular state, let’s say it’s an opposition ruled state, but normatively allocate only ₹1 to that state and say that, “okay, 60% will come through me, which is like 60 cents that would come from me, 40 cents you spend.”

Any expense that is over and above the normative allocation, the state has to spend. So now for all those villages where the Union government has notified work, the state will end up spending and there is no way it is implemented. So it is also to kill some of the politically opponent states financially, which is detrimental for the Indian economy.

It is not a matter of political preferences, but also the fiscal structure in the federal structure of the state itself.

Scott Ferguson

Well, you’ve begun to answer a question I had, but I’d like to pose it explicitly and have you contemplate it, which is: what you’re making clear, is that the new law didn’t end the program. It just crippled it. It created such new designs and strictures that it’s just now designed to fail.

But the question is, why didn’t they just get rid of it? Why didn’t they just pass a law that said, this is over?

01;17;10;20 – 01;17;35;19

Khush Vachhrajani

Because the political stakes are very high, I would say. What I was also describing earlier, even in areas where it has not been functioning or it has not been doing very well, or the democratically making has not really been at par with many of the other high performing states. The sentiment and the significance of the program has always been there.

To take away that absolute final thread that people are hanging on to in a very deeply unequal neoliberal economic framework would be a bit too much. It would be something that would be politically unacceptable and that is my reading. I could be partially wrong in this, but the reason why I feel that this is one of the major reasons is because they’ve got this new law with full intention to repeal NREGA.

The intention is not to change its nature. The intention is to repeal it, but they also want to repeal it in a gradual manner. So in the Union Budget, which was announced a couple of weeks back, we had allocated a little money for the new law as well as they have allocated some money for NREGA. Our understanding is that the money that is mandated is also for some of the spending expenditure under NREGA, but they’ve not really passed legislation in the Parliament saying that NREGA is over now and from April 1st, this new law begins. April 1st is the start of the financial year, so we have April 1st till March 31st. They’ve not yet made that clear. So our understanding is that they’re going to go along with both these laws sort of simultaneously existing while keeping state governments in limbo, because the state governments have no idea what are the notified areas in their states.

They don’t know the normative allocation. They don’t know how much they are supposed to budget from their own limited resources. So they’re going to continue that for a little while. And maybe in 6 to 8 months, then completely phased out NREGA. They would then implement the VB GRAM G Act, which practically would destroy fiscal federalism in India because there is no state government that is anyway close to even implementing a program like that. The amount of financial burden that the state governments would have is just enormous. In our understanding of monetary operation and how sort of public money works, it’s just not possible that the state governments are able to deliver on anything like this even remotely.

William Saas

The critical part of the story that you’re articulating is the big tech intervention, as you put it.

And this might be one place where we can learn the kind of cutting edge of the neoliberal playbook. These biometric systems, do you know if they’re intellectual property of private firms that have been licensed by the Indian government? Or are these state run software that are monitoring these work sites and doing precisely the opposite of what they’re supposed to do on the tin, which is to make things more efficient. Of course, they’re breaking these work sites.

01;22;28;24 – 01;23;13;07

Khush Vachhrajani

I think it’s a mix of both.That is why the Indian state has really been an interesting case study. How they’ve created a market of monetizable data of almost each individual or each citizen of India.The way Big Tech is functioning at the moment in a program like NREGA is private corporations working with the the Union government in developing and designing these software, they’re housed within the ministry of IT or what we call as National Informatics Centers as well. NIC, whose task was the digitalization age of Indian society. So these softwares are sort of housed within the NIC and they are the intellectual property of the state. What we don’t know enough of is how some of the data that is being generated through these softwares and actually it is that, none of these things are working because if you’ve seen the kind of images which have been uploaded on these digital attendance monitoring systems where people would just click like a photo of a cow or they’ll click a picture of an empty drawer and they just upload it and the ministry and the NIC don’t have the capacity to go through these millions of photographs which have populated. Right? So in that way, it’s also garbage in and garbage out.

But I think what they are trying to do – and this is a little bit of a leap of faith assumption – is attempt to understand what are the complexities of a biometric system that big tech needs to be aware about. There’s something that is being tested and trained across such a large mass of population that would sort of give a lot of information just on the design of the kind of infrastructure that has been set up and it will also start creating new forms of data of individuals who otherwise were completely out of this whole market economy. They were not making digital payments. They were not part of a formal banking system.

They were not part of the whole cellular revolution in one sense. They were not using mobile data. So a lot of things have happened in the last ten years where because these workers had to access more and more digital banking, they are forced to get on smartphones, they’re forced to buy data packs.

Their presence in this neoliberal economic system has been heightened almost by force and design and many of these things are linked to Aadhaar, it would also start generating very unique information about a very large set of population whose footprints otherwise were invisible in an economic sense. You might have actually heard this, they’re all called DPI, digital public infrastructures which have been sort of pushed by the Gates and the Fords and the Rockefellers of the world, who are part of the digital governance reform initiatives. Our whole understanding of the way DPI has come about in India is that it is very, very closely linked to the state-market nexus.

In one sense, it has not emerged organically from people or democratically through participation. It has been coerced through exercises of demonetization, exercises of linking bank accounts to the Aadhaar, transferring rural wages or subsidies or scholarships, all the public money only through digital banking. Earlier, India also had a very thriving post office system so if they wanted to digitize it, they couldn’t just very easily digitize post offices. A post office exists in every single village. Banks don’t exist in every single village, but this systematically clears the post office mechanism to pave ways for these banks and financial intermediaries to have access to biometric information, payments information, and attendance information in some sense even though it is not really useful.

It’s a design which is really screening of human rights violations, but also techno feudalism in a very concrete manner, which is now legitimized through a law like this, there will be rural stack of works. I don’t understand what that means, but the conversation of stacks and DPIs has become mainstream through this new act that has been passed.

Many of these reflections are also coming from a place where we, as a part of SAFAR, teach a course at National Law School, Bangalore, on digital technology, society and governance. Many of our conversations sort of revolve around the India stack, which is a payment infrastructure, the application infrastructure, and the identity infrastructure, that has been sort of promoted as the most ingenious thing that the Indian Government has done in decades.

But it’s also only to monetize data and information of common people at a very, very large scale in India but also outside India.

Scott Ferguson

So as we turn to wrap up this conversation, I guess I’d like to hear a little bit about current resistance, if there is any. Clearly you are resisting and clearly your organization is resisting, but I’m kind of curious to hear what’s the nature of resistance to this new law and the undermining of this program?

01;29;45;28 – 01;30;17;12

Khush Vachhrajani

The resistance is definitely there in areas where workers are organized. There have been protests, there have been sit-ins, there have been petitions to bureaucrats or to elected members, there have been district level convenings of workers, there have been long marches of workers in different parts of India. So the resistance is there for sure.

A belief is, that while it may take a bit of time, because of the size and the scale of the country and the complexity of the country, the resistance will start showing up more tangibly when the Panchayats or the local rural unit goes into election or the local district goes into election.

That is one way. The second is also that there are many progressive groups, associations and networks who have started advocacy with progressive state governments on creating an employment guarantee framework that is backed by state governments. How practical would that be considering the fiscal challenges that the state government would face. The attempt is to also try and imagine, collectively, how it can be done as an alternative to what the government is offering and also to build public consciousness around the limitations of this new law that is coming about.

It’s also an attempt at public education. Just yesterday, 12th of February, there was a total strike across the country, not just on the issue of NREGA but also on several other anti-labor, anti-worker legislations that had been passed by the Union government. Close to 300 million workers had come out on the streets to resist and protest, segmented in different parts and not really sort of gathered at one place.

But again, the news is out there and these resistances are going to build up, that is what my understanding is, and I am a bit hopeful, a bit optimistic about the medium and longer future of a program like this in the short run. I think because the program was so systematically dismantled and a counter narrative by the ruling government has already started spreading on the ground that the new program is going to give them 125 days instead of 100 days, there will be a phase where we will see in the short run, for lack of a better word, inaction from people on the ground or resistance of very minor scale, but nothing really tangible in that sense. But our understanding, while working with several movement campaigns has been that the inequality, the precarity, the status of falling household incomes, the debt levels, these are all growing so fast and it is all so acute that a void of a program like NREGA will be felt in very, very tangible terms. It will also be felt in cities, we assume. Women who are staying behind in villages, taking care of farms and cattle and the elderly, the children, in absence of a program which will employ 50% of those women, they really have no choice with their dignified livelihood for they to start migrating to cities in search of employment that is paying them their daily wages. That is yet to be seen.

The macroeconomic impact of the repeal of NREGA will be felt for a very long time. It is again, another piece that I’m sort of building towards. The austerity politics of this government over the last 11 years has now led us to a stage where the debt levels are alarmingly high, incomes are falling and wages have stagnated for the longest period in the history of the last 30 years or even in the history of Indian independence in that sense. So I think it’s all a very terrifying sign for the Indian economy. With public employment and, in all honesty, all of us have been even writing to the government, talking to the government, telling them that, if the aim was to just 125 days of work, that could have been done even within the NREGA form, they could have just amended the law, added 25 days more because the long standing demand for the last ten years have been that if you do 365 days of NREGA you increase the minimum floor wage from 200 to 500 rupees. All these conversations could have been taken into consideration. Looking at where the Indian economy stands today, it is very unfortunate to see that the government’s fiscal policies are very, very stagnant, I have written a couple of more articles actually that highlighted how the government in their public communication, has been constantly grappling with the fact that the industry or the market is not investing enough in the economy.

My whole point is, yes, because the sales are not happening. There is no demand. When there is no demand in a capitalist economy, nobody’s going to invest. There’ll be unemployment, there’ll be stagnation of wages and no matter what tinkering that they do through the monetary policy, it’s not going to work. It has to be done through a very, very strong fiscal policy, through fiscal stimulus, by putting money in people’s pockets, through wages to incomes, through pensions, through scholarships, so that they’re able to then save and spend in the economy.

But it seems that this is a very alien concept to the government in power, which has been taken over by the neoliberal economic thinkers who are caring more about the stock market than the lives and livelihoods of people.

William Saas

So no consumer demand, but a surplus of pictures of cows at work sites or around work sites.

Khush Vachhrajani

Yes.

William Saas

Useless garbage-in, garbage-out, data collected.

Khush Vachhrajani

Absolutely. And just between us, here’s a funny, funny anecdote. We had somebody come into our classroom for the course I mentioned in my earlier response. That person said that the total number of people who are employed in the federal department that oversees these technological interventions and whatever that is coming to them, is a grand total of two.

So it’s a grand total of two people in a ministry looking at the design, the development, the deployment, and what is coming out of these so-called technological master strokes. We know what the future holds. It’s unverifiable information, but I would not be surprised if it is true.

William Saas

Yeah, I can imagine a kind of absurd comedy-like novel written about those two bureaucrats in charge of the 100 million person program.

So your Substack, it’s called “The Lighthouse,” but it’s, also you can find it by going to moneypolitics.substack.com. Money politics, obviously, is a phrase that we’re very invested in and familiar with, and we’ve talked about your article “How to Kill a Golden Goose,” which engages particularly with the work of Jakob Feinig, and moral economists of money and monetary silencing.

Just a last question. On our way out the door, we, at Money on the Left, have been interested in and talking about complementary currencies in the development of alternative payment schemes. I’m ignorant also of the history of complementary currencies in India generally. But do you have any sense of any movement in that direction as a way of sort of filling the holes and addressing the gaps that are being created by the government?

Khush Vachhrajani

Not really. That is something that I’ve been thinking about as well. So I am not really aware of any such efforts. I would love to know more if there are people who are working on things like that. It’s also something that I think about in the times when fiscal federalism is under attack.

What is it that the state governments could do differently to sort of survive and sustain in such a hostile environment from a very dominant political force that is there to last? It’s something that even I need to learn more about. Again, Money on the Left has been something which has really shaped my thinking and it has really pushed my own imagination in the sense of being able to think about ideas like this. I look forward to reading more about works that are happening around unique currencies in the US and some of these other experiments which are happening in Europe, which has come up in both Superstructure and the podcast.

So, yeah, I keep my eyes open for things like these and I’m really, really curious to learn more as to what India can do or Indian states and society can do in terms of alternative currencies and just imagination of monetary design in general.

William Saas

Well, Khush Vachhrajani, thank you so much. This has been a wonderful conversation. We’re very, very glad to have had you on Money on the Left. Thank you.

Khush Vachhrajani

Thank you so much.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

In this episode, we speak with Tyler Creighton about the ongoing struggle to save the Consumer Financial Protection Bureau (CFPB) from defunding and closure at the hands of Russell Vought in the second Trump Administration. Creighton is a lawyer at the CFPB and a member of the National Treasury Employees Union (NTEU), Chapter 335. Before joining the CFPB, Creighton clerked for the Massachusetts Appeals Court and, prior to that, he was an organizer for pro-democracy reforms at Common Cause and ReThink Media. We talk with Creighton about life at the CFPB under the leadership of Vought, central architect of the notorious Project 2025 document and avowed opponent of the agency he now directs. 

During our conversation, Creighton details how, in spite of Vought’s attempts to defund and close the agency, the CFPB continues to survive. In Creighton’s telling, the agency’s endurance owes in no small part to the continuous labor actions undertaken by the NTEU and its members. In February 2025, for example, the union sued the Trump Administration, securing an injunction against Vought’s efforts to close the agency. (Read the judge’s extraordinary Memorandum Opinion here.) Then, in late December, a federal district court judge ruled that the Trump administration must continue to fund the CFPB through the Federal Reserve, contradicting Vought’s absurd claim that the CFPB can no longer seek financing from the Fed because the nation’s Central Bank is operating at a loss.

Despite the NTEU’s string of successes, the fate of the CFPB still remains to be determined. The good news, however, is that there are ways that you can support the bureau as it rounds into its second year of the second Trump Administration. Learn more about the fight to save the CFPB from the CFPB Union website. Follow and share news from the NTEU account on Bluesky. Join the union’s public demonstrations, if you live near or find yourself visiting Washington D.C. You can also help fund the NTEU’s activities by purchasing any number of cheeky items in their online merchandise shop. 

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Billy Saas

Tyler Creighton, welcome to Money on the Left.

Tyler Creighton

Thank you. Glad to be here.

Billy Saas

It is a pleasure to have you. We are looking to talk to you about a lot of things. You work principally now as a lawyer with the CFPB, the Consumer Financial Protection Bureau. Could you just maybe kick us off by telling us a little bit about what that’s like now in January of 2026?

Tyler Creighton

Yeah. The past year at the Consumer Financial Protection Bureau has been just a little bit different than my prior few years at the CFPB. I will say, I am an attorney at the CFPB. I’m here just talking in my own personal capacity. Nothing I say can be attributed to the bureau, representing my public sector union: the National Treasurer Employees Union.

But, yeah, it’s been an interesting year. I joined the bureau in 2022, so I’m actually a relatively new employee compared to a lot of other people that have been there since the start. When Trump got elected, it was a little unclear exactly what was going to happen to the CFPB.

It’s kind of been a little bit of a political lightning rod for its entire existence since 2011. But we didn’t really know what to expect. Oddly, we kind of flew under the radar for the first month. Our former director who had been appointed by President Biden, Rohit Chopra, stayed on until the end of January, and into the first week of February before he was finally fired by the president.

That’s when everything really changed. Trump appointed the architect of Project 2025, Russel Vought, as our acting director. Within days of him being appointed, he had closed down all of our office buildings and kicked everybody out and had sent an all staff email saying, “stop performing any work task, whatsoever.”

Everything just kind of came to a crashing halt and a lot has happened since then. They have been trying to close us down since that first week in February and, although they have really mucked around with the operations of the bureau – despite the best efforts – it is still standing.

I think this is largely in part due to a lot of dedicated workers at the bureau who have been organizing through our union and using litigation to keep the bureau alive as Congress intended.

Scott Ferguson

Can you tell us a little bit about just your own personal history? How did you come to the CFPB? You’re a lawyer. What’s your background? What’s your specialty? What do you do at the CFPB in particular?

Tyler Creighton

Yeah. So, I’m actually a relatively new lawyer. I graduated law school in 2021 and I clerked for a year on the Massachusetts appeals court, and then went directly from there to the CFPB in 2022. I work in our Office of Supervision. I’ve primarily focused on the mortgage market, although I’ve also done some work on student loans and auto loans.

I think a lot of people don’t really know what “supervision” means at the CFPB or “supervision” across other financial regulators. But, at the CFPB, in terms of compliance, we kind of have our enforcement division, which is, I think, what people generally think of when they think of regulators. These are the folks that are running investigations and suing bad actors when they find potential legal violations.

That’s all very public. These lawsuits will be on the public docket and you can read the complaint and you can see all the details. Supervision is very different. It is a confidential process. This is an authority that was granted to us by Congress and the Dodd-Frank act, which established the CFPB and gives us authority to conduct periodic examinations of certain financial companies that are under our authority.

What that means is we request a bunch of information and documents from an institution, and then we have teams of expert examiners who are looking at the information and making sure that policies and procedures of the companies and their functions are all complying with our various federal statutes and regulations. If we identify any problems, we try to resolve the issues in a collaborative process with the companies.

It all remains confidential. For the most part, everything is kind of resolved in that confidential space. It only kind of comes out later if companies are disagreeing with our assessments, or it seems like the conduct is particularly egregious or intentional in which case the issue might end up getting into the enforcement side and then leading to litigation.

I’ve been doing that work since 2022. Unfortunately, as public reports show, that work has more or less not existed since February of 2025. Just hoping that we can kind of get back to actually supervising the companies that Congress intended us to.

Billy Saas

And so that’s just a function of companies, I guess. What side is that lack of continued supervision activity most attributable to. Is that a function of the top down directives from Russ Vought, or is it companies not feeling like they need to participate any longer? Can you talk to us a little bit more about that?

Tyler Creighton

It is directly attributable to Russ Vought stop work order in February that, for all intents and purposes, really hasn’t fully disappeared or really been rescinded.

Scott Ferguson

So what determines what is actionable work versus what must be stopped?

Tyler Creighton

You know, we are civil servants. We don’t go off and sort of just do our own thing. We are directed by political leadership on what our priorities are and what the work is. We have not been authorized or directed to do the supervision work that we had previously been done.

Billy Saas

It’s similar on the enforcement side, I would presume as well.

Tyler Creighton

Yes. I’m not on the enforcement side, but yes, I think public reporting shows that there isn’t enforcement going on. Investigations are not continuing. And you’ve seen publicly that a lot of open litigation has either been dismissed or settled, including a number of open consent orders that companies and the CFPB had already reached and had not yet expired have been terminated prior to the expiration date in the consent order.

Scott Ferguson

We’ve started to talk about the division of labor and the division of the institution a bit. But I was wondering, to the best of your ability, I know you haven’t been there from the beginning, but can you give us a little more detailed sense of when the CFPB arises? Under what circumstances? The specific things it was tasked to do and what it has been doing ever since.

Tyler Creighton

Yeah. So, the sort of neat and tidy story of the CFPB’s founding is that it’s really a product of the subprime mortgage mortgage crisis that triggered the 2008 global financial crisis and then the Great Recession that followed, which, as many people remember, there was kind of rampant fraud in the mortgage markets.

There was a lot of predatory lending that led people to default on their mortgage and then massive foreclosure crisis. And in the wake of that, or really in the in the midst of it, Senator Elizabeth Warren, but then-law professor Elizabeth Warren, wrote a couple of journal articles in like 2007, 2008, that talked about or envisioned a new federal agency that would really be charged principally or entirely with regulating consumer financial products with the eyes of the consumer in mind or the benefits of the consumer in mind.

She kind of analogized, saying “we have agencies to stop unsafe toys and toasters. But we don’t really have that for financial products.” And so she envisioned this agency as kind of being analogous to some agencies that already existed. Those articles resulted in Congress passing the Dodd-Frank act in 2010, which is one of then President Obama and the newly elected Democratic majorities in Congress first major bills.

The idea there was to essentially consolidate a bunch of split and overlapping authorities that are then split across a bunch of agencies and consolidate that all into a single agency that could take a more holistic and dedicated approach with consumers that would be front and center. Then it also added some  new authorities as well.

At this point, I already talked about the enforcement and supervision aspects of the bureau. There’s also the consumer complaint database, which some listeners might have used before. I think there’s been like 5 million consumers who have filed a complaint since 2011 when that started. That’s been a tremendous tool to quickly resolve individual problems between consumers and companies where previously, maybe the company didn’t feel like they needed to do anything, but now there’s kind of this public record out there when consumers are complaining and they feel more compelled. Then, at the bureau, there’s also a lot of market research that folks are doing to identify potential risks and hazards and new products, new financial markets. Then there’s a lot of consumer education resources that the bureau puts out.

In my mind, some of the clearest, concise information on what you should be thinking about when you’re getting a mortgage. Like, here’s step one here, step two… I was working at the bureau at the time, I think it was right before I started working there and was buying my first home and was just like all over the website using the resources, which have been, I think, a huge help for people.

It’s not just mortgages, it’s auto loans, or if you have problems with credit reporting, just a ton of great information.

Scott Ferguson

Is that all still up?

Tyler Creighton

It is all still up. Yeah. I definitely was worried in the early days about a lot of that stuff going away in some way. 

Scott Ferguson

It’s not too woke.

Tyler Creighton

Yeah, it’s practical enough. We haven’t gotten into a lot of the litigation that has been going on, but there is an injunction that’s still in place that is preventing the kind of full shutdown and wrap up of the bureau.

I don’t know to what extent that injunction is planning on keeping up a lot of these existing resources that the bureau has put together over the years.

Scott Ferguson

Can you tell us a little bit more about how the consumer complaint database works? I mean, I’ve never used it, so I have no idea. Is it like a Yelp review? You can just like, have an account log on or is it a little more formal? Do you need a lawyer or something like that?

Tyler Creighton

I don’t know if it’s quite Yelp-review status, but it’s closer to that than like a formal thing where you need to write out a very legalese complaint. It’s very accessible. You can log in and you put the company that you have issue with, you write a narrative about what happened and on the public facing side, if you put in any personally identifiable information that will not appear on the public side of the consumer complaint database, but other people can see what you wrote about, even if they’re just like your neighbor or whatever. There is a rule in Dodd-Frank that the companies have to provide a response.

It doesn’t necessarily say it’s got to be a substantive response or it has to rectify or agree with the consumer. I mean, the consumer can be potentially wrong, but they have to provide a response. By and large, if the consumer has raised a legitimate issue, you look at the company response and the company will have provided some kind of remedy, whether it’s erasing a charge on the person’s credit card that shouldn’t have been there or fixing some inaccurate information on the consumer’s credit report or whatever it is.

Oftentimes the complaint, if it’s legitimate, will result in some kind of action that benefits the consumer. On the bureau side, all of those complaints are taken into account when you’re thinking about enforcement and supervision. Where’s the risk? Sort of like an early kind of warning system to the regulators of where there’s risk, where there’s problems, because obviously the consumers are on the front lines. They know where the issues are and so it’s a great resource for the CFPB to figure out where to dedicate finite resources.

Scott Ferguson

Obviously, the CFPB has a history of contestation around it. This is maybe the most life threatening, so to speak, battle that the institution has faced thus far. It’s not like the first Trump administration was very happy about this institution either. So I was curious if you have a sense of the history of largely Republican challenges before this particular present moment.

I know from doing a little bit of research that there was a court case that had to do with how the director was appointed and the reasons that the director could be removed. So any of this that you can speak to, to just contextualize what’s going on now.

00;17;36;10 – 00;18;08;14

Tyler Creighton

Yeah. There’s a lot of history there. You know, it’s no secret that most politicians on the right and Wall Street banks have not been the biggest fan of the CFPB, and have tried various ways to reform it or get rid of it in whole. There have been two very high profile Supreme Court cases challenging aspects of the CFPB structure.

The first one, which you mentioned, was about the ability of the president to fire at will the director of the agency. If folks been following any of the legal cases going on in the current era, this will be very familiar to people, because we have Supreme Court cases about this very issue with regard to the FTC commissioners (Federal Trade Commission) and also potentially down the road, the Federal Reserve, and the ability of the independence of the fed and whether or not the president can can get rid of fed chairs.

So anyway, back in, I think it was in 2019, there was a challenge to the provision of Dodd-Frank, which said that the director could only be removed for cause. That was challenged. And the Supreme Court struck down that provision. Since that time, the director has been essentially removable at will by the president.

Since that happened, the presidents have used that power. So, when Joe Biden came in 2021, he used it to get rid of the existing director who had been appointed by Trump during his first term. Then when Trump came in in 2025, he used it to get rid of Chopra, Biden’s director.

The kind of more existential case was in 2024. That one challenged the constitutionality of the CFPB funding structure, or funding mechanism. We are a little bit distinct, not entirely unique, but different from a lot of other federal agencies and that we are not part of the Congress’s annual appropriations process. So, you know, all this talk of government shutdown last year, and currently they are trying to get the funding bills together so we don’t go into another shutdown at the end of January here, but the CFPB is actually not part of that. We have a dedicated funding mechanism. Where the director is required to request money from the Federal Reserve who gets money from interest payments and fees, paid by their member banks.

Our directors are required to request money from the fed to carry out our functions. Congress has tapped the total amount of money that we can request, but that funding is just always there. It doesn’t require Congress to pass a new bill each year saying like, this is how much money is available for the CFPB.

The constitutionality of that mechanism was challenged by an industry trade group. Ultimately they lost pretty bigly, in terms of our president, and I forget the exact breakdown, but it was like 7-2 or 8-1 in terms of the breakdown of the Supreme Court justices. They were not able to convince many of the justices, including some that are very far on the right and sympathetic to these types of arguments, that the mechanism was unconstitutional.

We survived that. Then, obviously, more recently we’ve come under the attack of just trying to shut down the whole place by pure legal fiat. Congress hasn’t repealed the agency or anything, but we’re just going to try to shut it down because we want to.

Billy Saas

Well, thanks for that. It brings us nice and up to date. There’s more that we can say about those current court cases. And I want to talk about the union’s efforts, and advancing those cases, and defending the CFPB from those attacks. I want to step back just a little bit.

We mentioned the complaints division or the complaints process that consumers previously had available through the CFPB. In addition to the enforcement supervision, for the complaints, I understand that those would sort of become the grounds for action. Is that correct? Like, on behalf of enforcement or from the CFPB, there could be efforts taken to address those complaints.

Tyler Creighton

Yeah. I mean, so obviously we have finite resources over a rollover of these massive markets with hundreds of hundreds of players, and we have to take in whatever information we can to help focus where we’re going to use those resources. So complaints are one of many different data streams, whether it’s enforcement or people in supervision, that we are using to help identify which companies we should be looking at, which practices we should be looking at.

Sometimes what you get with the complaints is maybe that individual consumer’s complaint was rectified. So they were charged an illegal late fee on their mortgage and the company said, “Okay, great. Yes, we did that. Sorry. We will credit your account,” but they don’t really say anything about if this affects other people or is this a one-off thing?

Was it a systemic problem? You don’t necessarily get that information. The other divisions can kind of use, “oh, there’s this one consumer, maybe there was a couple,” and it sort of indicates, okay, maybe this is more a systemic problem that requires additional looking into and ensuring that it wasn’t just this one consumer who got their issue rectified, but actually all of the impacted consumers got the issue rectified.

Billy Saas

Yeah. So in any case, it’s a line of communication between everyday citizens, consumers, and the government. That’s a highly valuable thing. I wonder if you could say something about where we’re at now with the stop work order and, it is my understanding that the closest equivalent to the complaint line is like individual state attorneys general, right?

If there are bad actors in the financial sector, and maybe you can tell me if there are others, the most charitable reading of the perspective on the argument for closing the CFPB would be like, “there are already enforcement mechanisms in place at the state level.” What exists and maybe help us see through that argument.

Tyler Creighton

Yeah. The consumer complaint database is a very, very powerful tool. I highly recommend that consumers continue to use it even in this time, because I think companies are continuing to respond to it despite the CFPB’s kind of beleaguered status at the moment.

In terms of other regulators out there, if the CFPB’s current trajectory continues and it is not operating at anything close to what it was doing in 2024 and before that, the states will step in to a certain degree. But the attorney general’s offices are already overtaxed on other things.

They also are only responsible for the actions and the residents of their own state. So, you know, if the AG of Massachusetts brings a case because they’ve noticed that some mortgage lender is selling predatory loans, that’s not necessarily going to help the person that is in Mississippi that is also getting predatory loans from the same provider.

It creates this real patchwork where, depending on where you live in the country, you’re going to be given more or less protection from these companies. The bureau has this kind of national outlook and has a lot more resources in terms of lawyers, but we also have economists and people that are familiar with the market and data technologists and all these other people that a lot of state regulators don’t really have. It really helps to identify these new products that are complicated. It’s not necessarily obvious how they work or how they might be harming consumers. I think that’s been really important to have at the CFPB. There’s been a lot of innovation in financial services. And then also, a lot of these states have just come to rely on the CFPB expertise and that they’re going to be there.

So, yeah, again, they’ll adapt, but I think, in the end, consumers will be the ones paying the price.

Billy Saas

If the CFPB continues down the way it’s going, they’re probably not going to rechannel that direct fed funding to the individual states attorney generals.

Tyler Creighton

No. Yeah. Probably not, probably not.

Billy Saas

And so those resources go away and I think it would increase the burden on those states individually, who are, under the current regime, limited to tax revenue and local politics. 

Tyler Creighton

This just reminds me of how kind of nonsensical getting rid of the CFPB is. You know, it all started when Elon Musk’s DOGE (Department of Government Efficiency) folks came in trying to eliminate fraud and waste, or purportedly trying to eliminate fraud and waste. The truth is that, at the CFPB, prior to the current administration, we had returned something like $21 billion or more to consumers through our efforts.

If you break that down in terms of how much money is going back to consumers versus how much money is going to pay for the CFPB’s operating cost, it’s like almost a $3 return on investment for every dollar that goes to the bureau is going to result in nearly $3 going back out to consumers, because we’ve identified some illegal practice and gotten refunds.

So, there’s obviously bloat in the government, and probably some bloat at the CFPB, but like, by and large, the consumers and Americans are benefiting greatly from the relatively small amount of money that was going to the Bureau to keep it running.

Scott Ferguson

So I’m chomping at the bit to hear the story of the DOGE occupation of this. But before we do, I guess I wanted to ask one more preliminary question. I have not studied this document closely, maybe I should have, but Project 2025, which is Vought’s little brainchild. As far as I’m aware, it includes language about what the intention of this administration was when it came to the CFPB. Were people in the agency reading Project 2025 and sort of like, I don’t know, bracing themselves for this or strategizing or not really.

Tyler Creighton

I don’t remember that so much. I mean, there were probably some conversations here or there of people who had taken a peek. I mean, honestly, I don’t. I don’t know if you have looked at it recently, but it’s pretty sparse on the CFPB. There’s not a lot of meat on the bones there. I mean, it kind of gestured that, “Oh, yeah, we should just get rid of this whole thing,” but then it ultimately has like a few bullets that are much less than that. It seems fixated on a completely fabricated idea. I honestly don’t even know where they got this idea from. The civil penalties fund, which is the fund that the bureau operates when we do enforcement litigation and the companies have to pay some kind of penalty to us, and then that gets redistributed back out to consumers.

They have this completely fabricated idea that the penalty fund was just the slush fund for like liberal advocacy groups. That’s like the main thing that it’s focused on in the Project 2025 document. Honestly, I just don’t even know where that comes from. It sounded like there was a minimal amount of consumer education that’s been funded through the penalty fund, absolutely tiny compared to the amount of overall money.

Maybe that went to some groups that are involved in that consumer education. But like to say that it’s just this slush fund for liberal groups and that’s the reason why we got to get rid of the whole thing, it just struck me as really grasping at straws there. 

I don’t think we talked about it too much, but there was a lot of waiting. Elon and company have been talking about taking the chainsaw to the government, and it was unclear what was going to happen because a lot of people at the bureau have been there since close to the start.

They went through Trump one. They thought, incorrectly – now we’ve all learned – that it wouldn’t be something similar to Trump one in that, things changed, things slowed down a little bit, but after some initial kind of bumpy-ness that happens with any change over administration, from what I’ve understood, I wasn’t there so I can’t speak to it from personal experience, but like they were doing similar work to what they had been doing before. Priorities changed a little bit. Maybe they weren’t using some legal theories that they had been using before. But, you know, they were doing good work. I think people kind of thought that something similar would happen, and were obviously proven wrong by that.

But, I think in those first couple of months after the election, while we waited to see what was going to happen, that I think that was sort of the optimistic take.

Scott Ferguson

So walk us through this early timeline of Musk and DOGE first. Is that prior to Vought?

Tyler Creighton

It’s concurrent, really. You’ll have to forgive me a little bit because at this point, it’s been almost a year and a lot of this was like moving quickly. I wasn’t personally one of the people who was in the building when this was all kind of going down. Musk and his folks have been infiltrating other agencies in the lead up to us.

So we had kind of already seen the USAID (United States Agency for International Development) playbook: go in there, take control of all of the computer and data systems and then just start quickly closing up shop.

The exact tick tock of this was, I think it was January 31st or February 1st, Cobra gets fired. Initially, Trump appoints Scott Bessent, the Treasury secretary, as acting director. But on the president’s first day, he sends a message to all staff with six bullet points or something like that, of the work that should stop including enforcement, oddly not supervision.

So we continued to do that.

Scott Ferguson

Is that because he didn’t know about it?

Tyler Creighton

That’s my speculation. But I don’t know for sure. So we continued and then, by the end of that first week of February, the first DOGE people started accessing the building, which is right across the street from the White House in DC. Then Trump appointed Vought right at the end of the week.

He sent out an email saying, “you can’t come into the building anymore,” and then on that following Monday sent an email saying much more explicit things, expanding on the six bulleted things that Bessent said we weren’t allowed to do and just said, “don’t perform any work whatsoever.” Then it was really in that first week under Vought when things were moving very, very quickly, we had been kicked out the building and told not to work.

The union actually organized a very quick action at the building, like that, I think even before it was officially closed. So folks were picketing out front and then Vought used that picketing as the pretext for closing the building, saying that, “my employees feel unsafe coming to the building because a bunch of folks are chanting and holding signs…”

Scott Ferguson

Who are also employees.

Tyler Creighton

Who are also employees, yeah, exactly. In that preceding week – this all kind of later comes out in litigation, we were not totally privy to it at the time – but basically there starts being leaks to members of the union that folks in H.R. are racing to fire everybody, to just completely axe the place in the same way that they did with USAID. Running just exactly the same playbook.

So as that information is trickling out through union members and colleagues, we are getting legal counsel through our national union to figure out what to do about that. They file a lawsuit very, very quickly in that first week and are able to get a temporary restraining order by that Friday immediately following Vought’s appointment and it later comes out when we are arguing for a preliminary injunction. A temporary restraining order is very temporary and so we’re filing for a preliminary injunction, which would hopefully stop firings, stop the shutdown going while the litigation that our union had filed precedes. While we are gathering evidence, while our attorneys are gathering evidence for that preliminary injunction, we get all of the details about what was happening in that first week. I encourage people, if you have a minute to go look at the district court’s opinion when the chief finally granted the pulmonary injunction, that’s just like documenting all of the emails and the meetings and everything that’s happening. They are just absolutely racing to fire 1700 people. It’s up until like the moment on late Friday, there are attorneys in court with the DOJ trying to argue for this temporary restraining order. H.R. is getting emails that there’s this court proceeding happening right now, and they’re like, “no, just get it done. Get the firings out the door, like we need to get them done before the court acts.” It’s like Friday afternoon. They’re trying to race to get them out. The court just got it under the wire to get the temporary restraining order in place before everybody at the agency was fired.

Scott Ferguson

Can I ask a potentially sensitive question which you may not be able to answer, but are the HR folks, they’re people in the agency who do HR? So they’re just sort of following instructions in doing all this?

Tyler Creighton

Yeah. So I mean, DOGE was a small-ish operation. They needed actual people who had expertise and some experience actually working in government and know how things work to effectuate what they wanted to do. So in the government, we have these things called reductions in force, which are effectively like mass layoffs when an agency director wants to change priorities or Congress has cut funding again. None of that happened here.

But like, they were trying to use these reduction in forces to get rid of everybody. They’re using the H.R. people within the CFPB to get that done. You can look at the litigation. A number of people filed anonymous declarations and actually then testified in court about what was going on in these meetings that they were being brought into about, where they were just trying to quickly fire everybody before the court was able to get the restraining order done.

And actually, I forgot an important detail with some of my fellow employees who were actually fired during that first week, because it was horrendous and more uncertain for them. But, yeah, there were successful firings of about 200 of our term and probationary employees in that week of February, while they were racing to get rid of the rest of us.

Fortunately, those folks were reinstated through our litigation. But it was obviously unexpected from them and there was one employee who has a big profile in the Atlantic. She was in her doctor’s office getting a cancer diagnosis when she was illegally fired, or when she received an email saying, “you’re fired.”

It’s not the worst part about it, but just kind of an insult to injury, with these notices, because they were trying to get them out so quickly, they failed the mail merges. It just said, “dear [first name, last name],” instead of like “dear, ‘the actual person’s name,’ you’ve been terminated because your skills and needs are no longer relevant to the work that we do.”

So, yeah, it was a horrendous week, but fortunately, we are still here a year later because a lot of people moved quickly to get into court and stop this.

Scott Ferguson

So what’s been going on this year after the first week?

Tyler Creighton

Yeah, it’s hard to think back on it all. In those first few weeks and months, it was very frenetic and really all-hands-on-deck with people really stepping up to make these declarations to the court where they’re essentially being whistleblowers to talk about what was going on on the inside with these firings.

The union is organizing weekly pickets out in front of our building. We had a number of court dates where we’re organizing events out in front of the court. Everyone was very fired up and working together to kind of support the litigation that was going on inside the courtroom. We weren’t the attorneys involved in it, but the rest of us were outside, telling the public the story about what was going on and why this was important.

I think that slowed down a little bit as the litigation dragged on, but we’re continuing to organize and get our message out about why the bureau is important and why we should be able to get back to work and also about workers rights. These are good working class, well-paid jobs and there’s something to be said about how we’re in the middle of an affordability crisis, and they’re trying to get rid of these jobs that are very secure for people who are in the middle class.

So we’re continuing to fight on against the immediate shutdown. One thing that Congress was successful in doing last year was actually lowering our funding cap. They cut the max funding that we can get almost in half. So we’ve been continuing to work with our legislative partners to hopefully get that reversed and get the cap back up.

Then we’re pounding the drum to get Vought impeached, which is another priority for us as a union.

Scott Ferguson

I have another question. How has the press been in your experience and the collective experience of the union? Does the press ask the right questions? Does it tell the right stories? Does it care enough? Does it focus on what’s going on enough? I’m just kind of curious to hear you talk about your experience precisely with publicity and, like, the politics of publicity around this crisis.

Tyler Creighton

I think publicity around these kinds of major rule of law, democracy stories can be tough for the press, but by and large, I think they have covered this past year of the bureau well. There obviously is the day to day of what’s going on in the litigation. But there’s also been a number of great pieces about what this means more broadly to consumers.

A lot of good consumer snapshots of people who had been helped in the past by the bureau and the fact that if we ceased to exist, that person who was facing foreclosure and was able to grab this lifeline to keep them and keep their family in their house, that won’t be there anymore.

There’s been a lot of good reporting on that front. There’s a lot going on in the Trump administration right now, it’s hard to keep anything focused. Where does the CFPB rank in the list of the many, many other things that are happening right now?

Is it the most important thing? People have disagreements about that. I think I’ve generally been impressed with the coverage. I think one difficulty is like, how do you tell the next part of the story?

It’s like, there’s only so many times you can say, “oh, here’s this consumer who was helped by the bureau, and that help won’t exist anymore,” right? Only so many people can write that story. So what’s the next page in the story as we continue. We’re coming up on the year anniversary of this whole saga.

That’s nothing unique to this particular fight. It’s true for any kind of advocacy policy fight that you’re going to have. Before I became a lawyer, I did communications advocacy for issues around campaign finance and voting rights and we had the same kind of issues on those topics as well.

Billy Saas

Journalists love a news peg. Perhaps the year anniversary will generate some additional impetus for coverage here.

Tyler Creighton

I totally agree with you. It’s something I’ve been thinking about because this conversation’s a good impetus for it. It’s been almost a year since Elon Musk tweeted “R.I.P. CFPB,” a year ago and we’re still here. That can’t necessarily be said for some other agencies that got targeted.

What’s the difference? I think the existence of our union and the organizing around that has actually been pretty key to that. There’s been some allusions in some of the reporting to that effect, but I think it’s a little bit of an untold story that the organizing of the workers themselves has been pretty critical to preserving this agency that Congress created. It might not exist if the union hadn’t been as organized and kind of jumped on the issue as quickly as it did.

Scott Ferguson

Something you told us before we started recording was that Vought is this kind of spectral presence who never shows up. You said you’ve never seen this man, who is your boss. Has anybody seen him at the agency? Presumably Musk actually showed up into the building to occupy it, and people saw him, but, has anybody had direct communication with Vought?

Tyler Creighton

Not sure. Yeah, I have not. Initially we were 1700 people. We’ve lost a lot of people. But like, you know, with organizations of that size, you’re going to get email communications talking about organization priorities and what we’re doing and have broad staff meetings to kind of keep everybody on the same page. That has not been a thing that is happening at the Bureau.

So, yeah, he is the director, but, I can’t say I’ve had any direction from him.

Scott Ferguson

So there’s been more recent litigation and litigation that has gone in the agency’s favor. Back to this funding question, maybe you can tell us about the arguments made on both sides and how this has all played out.

Tyler Creighton

Yeah. It’s funny when you said, “in the agency’s favor,” it actually technically went against the agency, if you think about the agency and who currently runs it. But, yeah, it went in favor of keeping the agency alive and protecting consumers down the road. We secured a preliminary injunction back in March against firings, against contract cancellations, against closing up shop essentially, or to kind of generalize. But, while that injunction has been in place, Russ Vought has not requested any additional funding from the Federal Reserve since he took over. The agency happened to have quite a large balance when he took over, so that wasn’t a problem for a while.

Scott Ferguson

Does that tend to be a regular periodic request, or is it just sort of as needed, whenever?

Tyler Creighton

It’s a little slightly out of my expertise on this, but I think it’s generally been quarterly. I’d have to look back at the statute on whether or not it actually needs to be quarterly or it can kind of be as needed. I think, in effect, it kind of acts as needed.

Prior directors have planned out the year and have a sense of how much money it’s going to be required and then make quarterly withdrawals for that money. But anyway, Vought hadn’t requested any money, so while this injunction against firings existed, we were quickly dwindling our reserves. It was getting to the point where he was saying that the agency wasn’t going to have any more money at some point in early 2026.

The position he was taking was this, novel and fairly ludicrous legal argument that Congress created this dedicated funding for the CFPB by allowing it to withdraw money from the Federal Reserve’s revenue. But, the language that that Congress used was the Federal Reserve’s, quote unquote, combined earnings. To date, that has been understood as the Federal Reserve revenue. So any money that it earns. He took the position that, “Oh, no, actually combined earnings is referring to profits,” which is a weird construction for a government agency that isn’t a for-profit enterprise that’s trying to make profits. But, you know, putting that aside, he took the position that it is the feds operating revenue minus their expenses.

Since sometime in 2022, if you do that calculation, it’s actually a negative. So it’s been losing money, if we were to analogize it to a for-profit institution, which it’s not. So he said, “I’m not permitted to request additional money because Congress hasn’t provided any set aside.”

Why would Congress have said, “okay, we’re going to have this dedicated funding mechanism, but it only works if the fed has profits.” But if it doesn’t, then this agency just disappears for that time. You know, it doesn’t make a lot of sense. But, our lawyers went in and filed a motion to clarify that this novel interpretation, that had not been used before, wouldn’t let the agency off the hook for complying with the preliminary injunction against firing staff, against canceling contracts, against shutting down the agency.

In late December, the district court agreed and said, “yeah, this interpretation of the statute of combined earnings makes no sense. You, Vought, have manufactured this funding crisis, and I am not going to allow this thing that you’ve manufactured totally on your own accord to take you out of the injunction that is still in place.”

Essentially, they are setting up this scenario where you could either request money and comply with the injunction or you could continue to drive the CFPB into bankruptcy and therefore be out of compliance with the conjunction and face the consequences of that. Just last week, Vought  ended up saying, “Okay, although we disagree with your opinion, federal judge, we will request the money.”

So he requested enough money for, according to the letter to the court, for this quarter, which I guess will go until March. So that’s where we’re at now. Concurrently, the preliminary injunction that started this whole thing is under appeal to the full D.C. Circuit Court of Appeals, which will hear arguments in that case in late February.

Billy Saas

We have seen a lot of things over the last year, but administration officials complying with judicial orders is not top among those. Do you have any sense for why Vought  would have proceeded or honored this? I don’t know. Do you have any ideas why?

Tyler Creighton

I don’t really, I haven’t really seen any theories put out there. He obviously didn’t do it happily. He made it very clear that he wouldn’t have done this, if he was able to act on his own accord.

Billy Saas

Well, I’ll say kudos to Russ Vought in this one instance. Compliance. Do more. He could do more.

Tyler Creighton

Yeah. Doing the bare minimum.

Billy Saas

I wanted to maybe return to the point that you mentioned, you’re here as a member of the union. The CFPB is not even 20 years old, but the union that y’all are a part of now, chapter 335, has been around for at least 100 years.

It’s associated with the Treasury. Could you talk just a bit about the union and maybe, by way of wrapping up, give our listeners some sense of what we might or what they might be able to do, and to support the union’s efforts.

Tyler Creighton

Yeah. I won’t be able to speak to the 100 year history of the union.

Billy Saas

Understandable. Yeah.

Tyler Creighton

A bit beyond my knowledge, but we’re a local chapter, 335, of the National Treasurer Employees Union, which represents employees at a number of different agencies across the federal government. As I was saying before, I came to the bureau in 2022. So, I don’t have personal experience with the union’s early days, but as I understand, it was formed towards the end of 2012.

So a little over a year into the existence of the bureau and the history between 2012 and 2020, I don’t get the sense that there was like a ton of agitation going on. You know, it was helpful for workers, but has really kind of transformed, I think once Covid was like dramatically changing workplace norms for the federal government, but also for workers in every sector of the economy.

There were a lot of open questions like, “what are the expectations around work from home?” Making sure that people had correct set-ups at their home offices as they had to quarantine and such. I think there’s just been a lot of good organizing and build-up since then. So there was a lot of work being done. 

This is kind of the tail end of when I’m coming in. So again, I’m speaking primarily from reports from other people, not my own personal experience on this, but, after Covid, as with all companies, it was like, “so what are the rules around working going to be as we kind of get back to a quasi-normal life?”

There was a lot of union organizing around the contract around remote and work from home policies and all that. I think that was a stepping stone to a bigger internal fight around pay and pay equity at the CFPB, which I think one reason why our union has such good strength is that we actually can negotiate on pay and benefits, which is, as I understand, not something that is universal across other federal agencies where their pay is set by the GS (General Schedule) scale and Congress. Our pay is not. It says something to the effect of, “we will be paid in comparable levels to people at the Federal Reserve,” which also has its own payment structure. Despite that language, our pay scale had not changed since the founding of the bureau. Meanwhile, the Fed’s pay scale kept going up.

There was this increasing disparity between the workers at the Fed and the workers at the CFPB, even though the statute said that we should be paid at a comparable level. There was a very big campaign spurred by the union that was very galvanizing for people around rectifying that issue.

Updating the pay scale to bring us closer in line. We didn’t get as far as we were intending, but closer in line to what the pay scale at the fed is, and also to help decrease disparities among similarly situated employees at the CFPB, where there were just these kind of arbitrary pay differences between people who had very similar experiences or had very similar responsibilities.

It was coming out of that that I think just set the union up very well. There were structures in place like good leadership and trust among workers that, when all of this most recent mess started in 2025, we kind of had some communications infrastructure in place to quickly gather intel about what the heck is going on at the CFPB and get in touch with appropriate outside counsel, get them the intel that all the workers are providing and then also get out into the streets and have mechanisms for getting information back out to the workers. Those kinds of early internal organizing efforts, I think, really set us up, even though the current fight is so radically different. There’s also been a lot of bumps in the road as we’ve tried to turn a union infrastructure that was mostly focused on applying pressure to our internal leaders who had their own interests, but at least were listening and receptive and we could sit at the same table with them, to, now, really focusing outwardly because our current leadership doesn’t care about the work life is like. I’ve been trying to get other people outside of the bureau to understand what’s going on and why this fight is important.

But I think it’s been pretty impressive. And I don’t think there’s any doubt in my mind that if the union didn’t exist in the way that it did in February 2025, that we wouldn’t be having this conversation about what the future of the CFPB is going to be. The future remains very uncertain, but it’s still here.

Every day that it continues, it increases the odds that it will continue to exist in the future. I give a lot of props and kudos to the leadership of our chapter to really inspire people. We had pretty good membership going into this.

Just in terms of the percentage of workers who are in the bargaining unit who actually pay membership dues and are considered members of the union, but it just went through the roof, like everybody joined. We’ve opened the merch shop. That’s a very, very long winded response to your question, but in terms of one way that you could support and get involved is we have a merch shop which has some great sweatshirts, hats, shirts, that I see all the time on people that are not from the CFPB. All that money goes to support the union in various ways. In the past, we had used it as resources for employees who had been fired and then don’t have income and were facing other kinds of hardships. So, that’s definitely one way to support the group.

As I mentioned earlier, we are advocating in Congress to increase our funding, cut back to where it was prior to the big beautiful bill, which decreased it. And then I think, most importantly, we got to get Russ Vought out. You know, he’s been terrible at the CFPB and he’s been terrible across the whole government as the head of OMB (Office of Management and Budget). So, you know, we’re continuing to beat the drum for impeaching him.

Scott Ferguson

What would be the legal grounds for impeaching him?

Tyler Creighton

The legal grounds? Well, remind me what the Constitution says about…I should know this as the attorney on the call, but he did the bare minimum by requesting funds back in January. But, you know, for the past year, he’s just been blowing through every legal safeguard around, like, around how you treat workers and firing them and withholding money that had been appropriated by Congress. I think there’s plenty of grounds to say that he’s been derelict in his duties.

Scott Ferguson

For sure. You know, I think one of the biggest revelations for me that’s come out of this conversation is, I became aware of the union and appreciating the work of the union, but not really knowing the extent of it. I don’t think I had a strong sense, and I certainly didn’t know anything about the history of the union, but I didn’t have a sense of the way that union organizing and infrastructure and activity has been constitutive for the survival of this agency.

That’s really inspiring to hear. Maybe sometimes we hear these stories like, “well, you know, one judge made a decision and it’s either good or bad or some crisis happened and people responded,” but I really appreciate this backstory too. It’s really great to hear that y’all were organizing around actually different issues, right?

Like, you were building capacity for a crisis that you didn’t even know was coming, but because you had built this capacity and taken on at least two major problems, when this major, major crisis hit, you were ready. That’s just such an inspiring story and lesson.

Tyler Creighton

Yeah. Yeah. I couldn’t agree more. At the same time, I shouldn’t forget to say that obviously other people have been involved in this outside of the union, which has been very integral. The legal counsel that NTAU (National Treasury Employee Union) retained for this case has been just like some of the best attorneys work I’ve seen.

So, you know, yes, the union’s been very integral in getting the information and doing the outside organizing and getting the message out. But inside the courtroom, our attorneys have been absolutely great. There’s been a number of other advocacy groups, whether it’s the Student Borrower Protection Center or NCLC (National Consumer Law Center) or Public Citizen who have also been involved in the litigation in various ways and then also activating their own members and doing public education around the bureau as well.

So we are not, by any means, the only folks that have been important in this fight. But, I do think it has been a very integral piece of the story and as you’re saying, kind of hidden, I think, in terms of the role that the union has played.

Billy Saas

We’re going to be sure to include a link to the union page and then also to the union merch shop. And speaking of that, I brought up a window here, and I’m going to do something I don’t think we’ve done in any show so far, but your merch is so great that I want to share it and talk about it. This Skully 335 hoodie. Yeah. Tremendous. No artist is credited, but listeners, I would encourage you to go check it out. I’m pretty sure I’m going to get one here as soon as the calls are over. But you have it.

We have some pretty provocative imagery. Can you talk to us about this, to have any context for us? 

Tyler Creighton

I’m, unfortunately, the wrong person to answer this question, because I really was not involved in it, in any way. But the folks that were. Yeah, I don’t know where they came up with the art and who did it. We honestly should make that public on the site, but yeah, it’s not what you’re going to expect from the union merch stuff.

You’re talking about the Skully hoodie, and I don’t know if it’s this specific one, I think there’s a couple of different versions, but my father-in-law has one. He lives in a town up in rural Maine and there’s weekly actions on the bridge over the water in Maine where people gather to protest whatever insanity Trump is up to that week. He’s just wearing his skully sweater out on the bridge with all of the other folks in Maine. So, yeah, there’s a lot of great stuff in there. There may have been more and some of it has been dropped over the times, but there’s also all just a lot of like inside joke type stuff that, if you were following the litigation closely at the time when we were getting all of these revelations about what was going on behind the scenes in these emails and such, there’s a lot of, good content around that as well.

Scott Ferguson

So, I saw a “Fed Up” shirt. Is that actually connected to the organization “Fed Up”, or is that just a slogan that you all came up with on your own?

Tyler Creighton

Again, I don’t know. I’m the wrong person to answer that question. My assumption is that it’s a very common slogan that if you were to be in DC with all the other federal workers, you would see that as a common sign. My guess is that we have just done it because of that. But, there might be more of a backstory to it.

Scott Ferguson

Yeah. Then something else again, we can keep this in or not, but like, I actually think it would be cool to include some of this merch in the art in our episode graphics, you know?

Billy Saas

Yeah. So in that case, we would definitely want to know who the artist is and see if they are down to share for the cover art’s collage work. But, anyway, we are having too much of a blast looking at all this stuff. It’s really great merch.

Tyler Creighton

Yeah, it’s too bad we didn’t do this before Christmas. It’s a great holiday gift. I know a lot of people that were giving it for holiday gifts.

Billy Saas

Yeah, well, there’s all sorts of great occasions. And, you know, you just want to support unions all year round, right?

Tyler Creighton

Exactly, exactly. So yeah. And it says here 100% of the proceeds go to the CFPB Solidarity Fund, which has, as I said, in the past, been used to help workers who’ve been illegally terminated and are facing various financial hardships because of that.

Billy Saas

Well, I just found the Skully 335 bomber jacket, and I’m just even more excited. This is a super, super high note to end on. Tyler, is there anything else you wanted to say before we say goodbye?

Tyler Creighton

No, I don’t think so. We covered a lot of ground today. I hope I didn’t ramble on too much and go into too many rabbit holes, but I appreciate it. I appreciate the time and the focus we could put on the union’s efforts and on keeping the CFPB alive. You know, Congress created the agency before for very specific reasons.

We went through a huge mortgage crisis. A lot of people lost their homes and it’s been doing great work since then, and there’s really no reason to get rid of it. So, we’ve kept it alive for the last year, but obviously we need people outside of the union to help us. So encourage you to get involved in whatever way that is, whether that’s buying some merch or calling Congress and telling them to make sure they don’t let Vought win and kill the agency.

Billy Saas

Excellent. Thank you so much, Tyler Creighton, for joining us on Money on the Left.

Tyler Creighton

Thank you.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

We are joined by David I. Backer, associate professor of education policy at Seton Hall University, to discuss his new book: As Public as Possible: Radical Finance for America’s Schools (The New Press, 2025). The right-wing attack on education has cut deep. In response, millions of Americans have rallied to defend their cherished public schools. Backer’s incisive book asks whether choosing between our embattled status quo and the stingy privatized vision of the right is the only path forward. In As Public as Possible, Backer argues for going on the offensive by radically expanding the very notion of the “public” in our public schools.

Helping us to imagine a more just and equitable future, As Public as Possible proposes a specific set of financial policies aimed at providing a high-quality and truly public education for all Americans, regardless of wealth and race. He shows how we can decouple school funding from property tax revenue, evening out inequalities across districts by distributing resources according to need. He argues for direct federal grants instead of the predations of municipal debt markets. And he offers eye-opening examples spanning the past and present, from the former Yugoslavia to contemporary Philadelphia, which hastens us to envision a radically different way of financing the education of all children.

Backer’s book is thus a must-read for anyone interested in building a robust and democratic public education system today and in the future.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Scott Ferguson

David Backer, welcome to Money on the Left.

David Backer

Hi there. Thanks so much for having me. I guess I’m a longtime listener, first time caller.

Scott Ferguson

We are so overjoyed to have you. So we’ve invited you onto the podcast, finally, after many years, to talk about your forthcoming exciting new book, As Public as Possible: Radical Finance for America’s Public Schools that is set to be published December 2nd. Do I have that correct?

David Backer

That’s right.

Scott Ferguson

Cool. We want to dive into this book, but per usual we’d like to invite you to introduce yourself to our listeners a little bit. Talk a little bit about your intellectual, academic background and work and what brought you to this book. I think we’d also love to hear something about your history as an activist and an organizer in educational spaces and potentially beyond. So, the floor is yours.

David Backer

Thank you. Well, thank you again for having me. Again,  I’m a fan of the pod, and I’ve learned a lot from it and a lot from you, Scott, in particular over the years, so it’s great to be with you and with your listeners. About me, I started studying philosophy in undergrad. I guess I’ll start there. I was really into the philosophy of mathematics, logic, that kind of stuff. I don’t know what it was.  I was a terrible math student growing up. I guess I hated math and not only that, one of the reasons I hated math was because if you weren’t good at math, you weren’t smart. I wanted to be smart. Everyone wants to be smart, right? I was made to feel like I wasn’t because I wasn’t so good at math. I hated tests. I hate practical jokes and it really felt like one big practical joke. Like, what’s the answer, you know? So, I really hated it and I hated all the emphasis that my parents put on it growing up.

Scott Ferguson

Were they big math people? Did they work in mathematical professions? My father was an accountant, by the way. Big math and incredible penmanship.

David Backer

Yeah. My grandfather was actually an accountant and my whole family’s from South Brooklyn and, I found out recently, worked in the Empire State Building in the 40s and 50s, but he was actually the nicest in terms of all this stuff. He was the most understanding of all of it somehow. My parents, I don’t know. They had sort of reformed Jewish middle class types of anxieties about having a successful son and being good at math is just such a badge of success that there was a lot of pressure. I don’t know what it was, but I got that from teachers. You get that from everywhere too. 

So by the time I got to college, I took a logic class for a language requirement and the professor said I was really good at it. She ended up being my advisor and I ended up taking a course with her over and over again where she just created her own sort of graduate seminar in lieu of a graduate program in philosophy of math and logic. I also studied continental philosophy and I had a real hatred of the continental analytic divide. I really didn’t like it. I didn’t understand it. We had a little group as undergraduates and we tried to name ourselves. We were in Washington DC, so we called it the Washington Circle. We tried to really do it up, you know. We called ourselves the “New Positivists” because we were positive about all philosophy. We’d get together and have these reading groups, people would give papers on Heidegger and the empty set, or things in philosophy of law. I just really hated how some of these professors on both sides, frankly, were so dismissive of the other when I felt that there were tools on each side that were really great. After that I found I really had a flavor for teaching. I also thought philosophy was great to do with young people and so I was a part of the Philosophy for Children movement.

Scott Ferguson

You were? Get out! Oh my goodness. For years I was intrigued by that. I never joined it, but oh my goodness. We’ll have to talk in more depth about this later. But anyway, go ahead. Go ahead.

David Backer

I think it’s all relevant because I really thought these ideas were liberatory, and I felt like thinking this way could have helped me as a younger person before I got to college both personally and intellectually. We had a high school philosophy seminar where we set up relationships with schools and we had students in the philosophy department go out to the schools and lead discussions about whether or not you’re awake and stuff like that. I got really into teaching and I had a background in the youth movements and the Reformed Jewish movement and I’d gotten a taste for facilitating discussions and learning in a very horizontal way. I really like being in the classroom. My grandmothers were both teachers and so after I graduated, I became a high school teacher. 

I was at a Catholic school in Washington, D. C. for two years and I really loved it. After that, I got a job in Quito, Ecuador, teaching at the American International School there. In South America I really “got” left politics. I didn’t really have a left analysis until I moved to Ecuador in 2008. I’ve been relatively lucky. Speaking of activism, I’ve been thinking about this, and maybe this would be an appropriate place to recount my own background in this way. I have been lucky world-historically. That is to say, when I went to college in Washington DC, I went in 2002. Then, in 2003, there were the marches against the war in Iraq. I moved to Ecuador after that and that was Rafael Correa’s first term. Technically it was a second term, but they passed a new constitution that gave rights to nature and everything. It was really far out. I moved there right during that vote in 2008. So, I was in Quito for a while. I taught high school there. I read Paulo Ferrari for the first time and that really opened my eyes to the space of the classroom in the wider social structure and what I was up to in this sort of neocolonial project. The longtime Ecuadorian teachers at the school getting paid half what I was getting paid as a twenty-something from the States. I was trying to make sense of all this. 

I read Capital for the first time with David Harvey’s videos along with a friend of mine who was an anarchist but also working for the UN as a speechwriter. It also happened at that time in Quito, Dan Denvir and Thea Riafrancos were there. It was cool. I felt I kept wanting to read more and study more and I thought I was gonna be a high school teacher the rest of my life, but I’d been rejected from philosophy graduate programs in my previous attempts to apply to them. I just thought, “well, is there anyone that does philosophy and education? I really like teaching and I like education, but I really like philosophy. Like, can I do both?” There’s a program at Teachers College Columbia. One of maybe two or three in the country. I’ll apply and if they say yes, cool. If not, I’m just gonna teach high school in New York City and figure it out from there. 

They let me in and then I started doing my doctorate from there. But in a continuation of world-historical luckiness, I moved back to New York City in 2010 and then Occupy Wall Street happened in 2011. I became very involved in Occupy Wall Street and the education working groups. I was mostly in Occupy University, but a lot of my closest friends were in the Occupy Student Debt campaign, which then became Strike Debt!, which then became the Debt Collective, which is one of the more powerful, successful kinds of movement groups we’ve seen in the last couple of decades. I was really, really into Occupy. I mean, hours and hours and hours. I never slept at the park because I had a bed in the apartment, but I was there when it got evicted but we kept going. The thing I was most active in was a thing we called the horizontal pedagogy workshop. We held it in Trump Tower, in the private public space of Trump Tower in 20011 and 2012. We met for a full year. We’d meet every Thursday for a couple hours and we came up with a set of protocols that we thought were good like learning and studying methods that were consistent with the Occupy movement. We were there in Trump Tower because we thought Trump represented everything that was wrong with the country. 

Billy Saas

For a little color, where in Trump Tower? Like the lobby? 

David Backer

In New York City, and this was very important to the Occupy movement, there were things called privately owned public space (POPS). Privately owned public spaces are designated by regulation that says if you’re gonna have a big building that you have to have a certain space, like an atrium or a sitting area, that the public can go and sit. I don’t know if it still is part of the building codes. I’m not as familiar with the building codes, but that was the Occupy Wall Street movement’s strategy for occupation, to use this kind of quirk of the building regulations to find these spaces and then just go and never leave. We didn’t occupy it properly because we would leave, but we would come back every week. There was an atrium at 57th and 7th Street in Trump Tower that was privately owned public space. We would just sit in there and do our thing. There were privately owned public spaces all over the city. The Occupy movement had maps where they could direct you to POPS and they encouraged people to go to those different spaces to get the embers of the occupation flowing in other places. 

Scott Ferguson

Did you get harassed? 

David Backer

We were never harassed. We made friends with the kind of cop or the security guard who was on beat. He thought we were just a bunch of weirdos.  No one ever gave us too many problems. I mean, we were sitting there in a circle talking. It was a bunch of nerdy anarchist types. We came up with a set of protocols. There were a bunch of us from different places that were coming at this from different angles; a psychoanalytic angle, Latin American particularly, philosophy for children, a Brazilian angle from my friend, Jason Wozniak, poetry and interpretation angle. We just sort of brought our interest in teaching, studying, and learning. We kind of thought, “well, how can we do this for the movement?” We opened it up to the movement. We said, “if you want to come and study anything or whatever, just come.” We were basically doing the same thing every week. Someone chooses a text, one time the text was the atrium itself, so we just wandered around the building.

Scott Ferguson

Nice. Like Fred Jameson. 

David Backer

Yeah, yeah. Our protocols were very simple. You check in, you say how you’re feeling, and then you write a question for discussion about whatever the text is. Or you examine a text, whatever the text is, then you write a question for discussion. Then we made a list of all the questions. We read the questions out and then we see what happens. We just did that over and over again for different texts and it was transformative for me. I made so many networks, it was my first organizing experience, and I had the first energies of a young person in a movement in a country that hadn’t had a big movement moment like that in a long time. And I still use those protocols today. I still teach with that kind of thinking in mind. This is a really long answer. But you said I could speak at length, right? 

Scott Ferguson

No, I love it. It’s great. This is perfect.

David Backer

The next way in which I was world-historically lucky was, I got my first job after I’d defended my dissertation, which was on the ideology of discussion facilitation. I had used that horizontal pedagogy experience as one case of a series of cases. I did a sort of Marxist psychoanalytic workup on classroom discussion. I got my first gig after defending in Cleveland, Ohio. And it just so happened I was living just a few blocks away from where Tamir Rice was murdered. The Black Lives Matter movement that was emerging at that time in 2014 and 2015, Cleveland was a node of that. They actually had their national conference that next year at my university, Cleveland State University. Now, the way that Black Lives Matter worked, at least in Cleveland, is you really organize with affinity groups, and at that time you call them ally or accomplice groups. There were a bunch of interesting Catholic worker types who were there in Cleveland and I was teaching courses in social foundations of education and also doing teacher-student teacher field evaluations. I would go to the schools and I would observe someone who was learning to become a teacher as they were working with a mentor. I would be the faculty contact. I would meet with the mentor, I’d meet with the student, I’d make sure that they met all of their certification requirements, but also I got to get into these schools and see what the Cleveland schools were like and what Cleveland was like. There was one thing I wanted to mention too, there was this project where I met up with some anarchists. At that time. I was coming out of Occupy, but Occupy, by 2014, had been metastasized into different things. I found some kin who were former Bread and Puppet alums. 

They had bought a house for nothing in this neighborhood of Cleveland called Buckeye. They were calling it an urban homesteading  organizing project where they would go to this house, they’d work on it, but they’d connect with their neighbors. They were white, right? But this neighborhood is like an all black, working class type of place. Buckeye did not appear on city maps. It was literally a disappeared-neighborhood in the city. In my last semester at Cleveland State I was like, “oh, this would be a great thing to do with a class.” So I had a class and I made the class project mapping Buckeye and the educational reality of Buckeye. At first, I was like “everyone has to,” but then the pushback was so immense that I had made it optional. I wanted people to go to the house and meet me at the house and have just a discussion in the house and go to the neighborhood. 

I was thinking of the Black Lives Matter movement while doing this because I had mostly white middle class Clevelanders training to be teachers training to be elementary school teachers. There were young white conservative type women, and I was asking them to go to this sort of township/apartheid area of their city. I literally had a mother of one of these students meet with me and say that this assignment was endangering her health as a mother. She had had brain surgery and she thought that she was so worried about this that she was gonna have a relapse. I had another parent who followed his daughter in a car behind her car when we went to this neighborhood. There were parents who were worried about their students being trafficked by the neighbors, you know just wild stuff. 

Scott Ferguson

They lived in the city?

David Backer

They lived in the city. They were training to be teachers in Cleveland.

Scott Ferguson

Because you hear about this, the people who live in rural small town areas or exurbs where they’re paranoid of the city, but people who live in the city are afraid of having brain disease relapses.

David Backer

The parents live outside the city and the kids are going to Cleveland State. The kids are living in the city because they’re going to Cleveland State or maybe they’re living with their parents and commuting. It’s in and out. There’s cities and then there are cities, right? There are places in every city where you say, “well, we don’t go there.” I haven’t written about that, but I really would love to someday. I was in Cleveland for a while and then I got lucky again because in 2016, while I was in Cleveland and in the dead of winter, I was watching the presidential primaries, and I heard that Bernie Sanders was gonna run. I had read a piece about Bernie Sanders in the New York Times magazine in 2006, and I was impressed with him then.  I remember the kicker to the piece was about how he was concerned with teeth. I don’t know why I remember that, but this was a senator who was concerned with teeth. I was like, “well that sounds cool.”

Kshama Sawant had run and won in Seattle, and it was feeling like a turn. In Occupy, we were not concerned with electoral politics. We were concerned with prefigurative politics. We didn’t want a truck with the state apparatus at all.  We were gonna make the world we wanted and then see what happened. I always remember the story from Denver. I don’t even know if this is legend or if it actually happened, but the occupation there got a request from the mayor’s office to negotiate demands from the occupation. Apparently the occupation agreed to the negotiation but sent a dog as their lead negotiator. That was our attitude. But when Kshama Sawant won I was like, “Oh, that’s cool. Maybe we should get elected too. Like why not?” I feel like that would probably be important.” 

Then Bernie Sanders started running and that was cool, and then Trump was running and that was terrifying and then by the time 2016 came around, we moved to Philadelphia for my first tenure track job. The reason why I feel kind of world-historically lucky to be in Philadelphia in 2016 was that Philadelphia had one of the biggest and most active Democratic Socialists of America chapters. It had about a hundred people, and at that time the DSA was probably about like a thousand members or something. I’m looking for a movement, looking for a place to get involved because, at this point, starting in Occupy, I really wanted my research and academic work to be with the movement, to help the movement, to be part of the movement. It wasn’t going to be about the movement and it wasn’t gonna be from the side, it was gonna be in it. I was gonna try to help if I could.  I was like, “well, this seems like an interesting organization.” Cornell West is on the board and I don’t know, I guess I’m a socialist. I don’t know. But I felt like electoral stuff was cool. They were endorsing Bernie Sanders and they were out on all these strike lines. Verizon went out on a big strike that summer. 

I joined and that was in the spring of 2016 and I actually went to a Brooklyn DSA meeting. We spent a summer back in New York City on our way from Cleveland to Philly and I went to a Brooklyn DSA meeting that was twenty people in a basement of a school. Now I think it’s thousands and thousands of people, right? We’ve just elected a mayor so just thinking about that experience is sort of amazing. But being in Philly and DSA, I had a period of several years of intense factional socialist work. It was oppositional factionalist work, which was unpleasant and I thought it was important, but I caused problems. There were a group of us who were causing problems and we were fighting over what we thought socialism should be and a lot of the lines of that were race class lines. Philly is just a really interesting place to be doing organizing. I did a ton of work there, that brings us up to today. 

When I got to Philadelphia, I wanted to be with the movement and I got a job at Westchester University doing policy and law and education. I was like, “what policy law thing would be great to apply my framework?” At that point I was completing my second big project after the discussion project, which was a rereading of Althusser’s educational theory, which I thought had been severely misinterpreted in the tradition of critical education, and maybe more widely in cultural studies. I was like, “well, it would be fun to apply that framework to what I don’t understand. What do the movements seem to be focused on in Philadelphia?” 

In Philadelphia, they were focused on the school buildings. The school buildings were toxic. There was a teacher who had been diagnosed with mesothelioma, a longtime elementary school teacher, and they attributed it to the untreated asbestos in the school building. The working educators, which at that time were a left caucus of the teachers union, had made toxic schools a campaign priority in their organizing. A lot of the demands were like, how do you get money for the school buildings? We need money for these school buildings. How do you get that money? I thought to myself, “I have no idea. I have no idea how that works and I’m a professor of education. I should understand.” So I started teaching about school finance around 2017 and studying it more closely and then I encountered the bond market for the first time. 

Scott Ferguson

I’m sorry. 

David Backer

Yeah, I know. It’s when you meet the reaper, right?  The last thing I’ll say, and this brings us to when we met, Scott, was in Philadelphia during the pandemic shutdowns in 2020. I would say the most recent very radicalizing moment for me was understanding the possibilities of the municipal liquidity facility and reading more and more about MMT. I had been reading Naked Capitalism and Nathan Tankus since Occupy, really. They were critical of Occupy in various ways, but it was important, because that’s where I got my news. I had been reading about MMT and the blogosphere and all that, but suddenly now to have an interest in school finance, to be focused on the project of school buildings, and the school building financing tied up in this municipal bond market and then have the municipal liquidity facility burst into existence like that  was quite a moment for me. 

I made connections to you and Robert Hockett and Nathan and we started a campaign with our little organizing group, which at that point had actually broken off from the DSA. The campaign was to push the Philadelphia Fed president to advocate for  school districts to be eligible for the municipal liquidity facility to issue low-cost long-term loans directly out of the Fed, backed by the Treasury. We had a call and he got flooded with emails and he took a meeting with us. We didn’t advance because, in 2020, Pat Toomey killed the MLF and salted the earth to some degree. That sort of brings us up to today. I started a newsletter. I’ve gathered all of these experiences in my life, education, philosophy of mathematics, Marxism and now I’m training them on school finance and trying to make it more movement oriented.

Billy Saas

Maybe we can pull back. It seems like from your own personal experience in your long term study, in this book you provide a framework or a sort of diagnosis of how financing for public schools works currently. So can you give us a picture or a sketch of the mess as it is by way of getting us into your very helpful and exciting proposals to fix it.

David Backer

I’ll just add one other thing to my answer, which is that now I moved back to New York City in 2023 and who gets elected mayor? Hey hey! So I’m very lucky.

Billy Saas

You had a rabbit’s foot in that back pocket or something.

David Backer

No, seriously, I was like, “oh, we’re moving back to New York.” I don’t know what’s gonna happen now and look at that. I mean, I’ve got to be able to do it. 

Scott Ferguson

Have you ever inverted the causality? Maybe you’re the causal force. I’d like to invite you to move to my city, if possible. 

Billy Saas

New Orleans, next.

David Backer

This is the justification for a book tour, I suppose.  So, school finance and how it works. It’s not irrelevant to that Mamdani thing because I’ve been in touch with the campaign. I’m sort of peripheral to the campaign, I wouldn’t say that I’m working with it, but because I was involved with it early on on the ed policy side, if the DSA is running a candidate, I just get involved. If people want help with school funding, I just I’m like, “yeah sure, whatever. You want me to write something, I’ll have ideas.” I did that with Nikil Saval’s campaign too, when he was first elected in Pennsylvania. Okay, but you asked about how school finance works and what we should do about it.

Billy Saas

We’re looking for as public as possible. Currently it is not very public. Is that right? 

David Backer

Well, it depends who you ask and what “public” means.

Billy Saas

I’m asking you from New Orleans, the belly of the neoliberal education beast where we have CEOs as principals and whatnot.

David Backer

That district got fully charter-ized by Paul Vallas in the wake of the terrible hurricane.

Billy Saas

Mm-hmm.

David Backer

It’s the only district that’s fully charter-ized. Philadelphia’s the next biggest with a third charter-ized, and guess who was leading Philadelphia schools, Paul Vallis, before he went to New Orleans. School finance and the image that I use in this Baffler piece, which was inspired by reading Scott’s book and teaching it over the summer, school finance is in a straitjacket. The threads of this straitjacket, the belts and the buckles and the sleeves of this thing are made of a a hard-to-comprehend-in-it’s-totality set of government regulations and revenue streams through taxation, borrowing and repayment. In between studying philosophy and mathematics, I think about infinity sometimes. Between every two numbers, there’s an infinity of numbers. It’s like between any two governments, there’s an infinity of governments. Governments, particularly socialists, who over the last ten years have been interested in electoral power, since Socialist Alternative and Kshama Sawant sort of led the way on that.  These governments are essential to understand, but no one understands them in a comprehensive way. You have technocrats at every given level who will understand their little position and their little thing, but not the whole of the thing,

Scott Ferguson

And who’s criticizing it, right? 

David Backer

Who’s critiquing it? If you wanted to think about it dialectically, which I do, you actually have to know where the forces are arrayed and where the pressure points are.  But to do that, you have to understand the thing. Honestly, I’ve met very few people who, number one: understand it comprehensively like that from the school board seat, let’s call it. Or even the teacher union and the school board’s subcommittees, right? In the school boards you have finance committees who review budgets for school districts who will recommend cuts when austerity comes in. Who’s on that subcommittee? I’m just gonna try to zoom out. I’ll paint a portrait here, and start from there. So the subcommittee recommends a series of cuts to a school board, most likely at a meeting attended by the superintendent, who the school board picks. Now, sometimes the school district itself can levy taxes and issue bonds, but sometimes not. Sometimes the school district is just the department of local government, or of the municipal government.  The budget and its borrowing and its expenditure and revenue are limited by its relationship to that government. But sometimes that government is a town, sometimes it’s a county. Sometimes there’s a consolidation. So sometimes there are consolidated school districts that are then subject to different municipal regulations. Sometimes there are regions. There are regional authorities. There are even, in Pennsylvania, intermediate units. But I just learned today at a meeting of organizers in Iowa that there are regional bodies called AEAs, educational associations that are conglomerations of school districts trying to coordinate resources, particularly for special education. We haven’t even gotten to the state level yet. All those things occur within the state government. 

But in the state government you have the Department of Education and its sort of state decisions, its state constitution, its state courts, its state legislature with the state assemblymen and the state senators who all oversee this. Not to mention sometimes there are county courts and municipal courts that become very important in school finance. These state governments also have school finance programs, state grants programs, and then sometimes they have capital programs where they provide aid, sometimes they don’t. The state governments can issue bonds. Now, there are sometimes authorities that issue the bonds for school districts. Sometimes the authorities issue them for individual schools, in the case of charter schools, and sometimes there are borrowing authorities that issue bonds across state lines. There are three states in this country that issue bonds across state lines primarily for charter school and private school capital financing financing. One of them happens to be in Arizona. I was made aware of this recently and it just blew my mind. It turns out this one, I think I want to say it’s La Paz County, but maybe not. There’s a place in Arizona that has a borrowing authority where the municipality gets most of its revenue for issuing bonds for charter schools primarily in Texas, private prisons in Oklahoma and Texas, and surveillance technology. That’s how they finance their capital expenditure.

Scott Ferguson

How does it get routed there? Is it like they offer a certain kind of premium? How do they attract this?

David Backer

Low borrowing costs, and a lot of times these places, if they have technical expertise in a very specific form of public financing like for instance charter school financing, they just become known as a shop that can do that. A history of how that relationship started is definitely worth writing. There are these networks of borrowing authorities and at the state level you can have several borrowing authorities, economic development authorities. Sometimes the county has a borrowing authority. That’s how the school district finances its buildings. In New York it can happen that way a lot, but also in Pennsylvania. A lot of times states will have dormitory authorities for the higher education institutions, private and public, so you can actually get bond statements for Columbia University in New York by looking at the New York Dormitory Authority, which was actually formed in the wake of the 1975 fiscal crisis, which was basically just bonds. 

Nobody wanted to buy New York City’s bonds and no government bailed them out. No bank did either. Typically, at the local level, taxes on property are the ones that are levied. As an answer to your question, is this public? Tell me if you think this is public. School districts or their municipalities will levy a tax on property within the boundaries of that district. That’s how they fund the school upwards of, I think, 45% on average, but the average hides extreme inequity in the sense that you could have an area where the suburbs are wealthy, predominantly white, where 95% is funded through property taxes because their property is so high. Now, is it public education if a student who lives, let’s say, in the south west of Philadelphia, and their mother wants to send them to a school in Upper Darby, and she does that, and then she gets arrested for it. You can’t cross that school district boundary. That’s not for everyone. 

When I think of public school, I think of public school for everyone and it’s certainly not public when you divvy it up like that. There’s a phrase that school districts are fortresses. I think that’s right. This school district can’t be for everyone. There’s a phrase that was bandied about in the neoliberal period under  Bush and Obama, “schools that are good independent of your zip code.” That was their justification for charter schools. But like if you were to just sort of flip that slightly and say like what would it take for every school in every zip code to be a good school? That’s public education. We don’t have a system like that and for all the reasons that I’ve talked about, the federal government only puts in about 8% funding for it. It was anemic and compromised and confused even before Trump started dismantling it. Now, who the hell knows what’s gonna happen? This past July, at the federal level, school districts around the country got an email saying, “oops, you’re not gonna get your payments from the federal government. Sorry.” They ultimately did, but it caused a lot of uncertainty. 

The federal government — just to finish the sort of levels — has only really pitched in for public education in times of war and for its own military and imperial concerns. The first big federal initiative in school funding that we see is in the wake of World War I. When the US decides to get involved fashionably late to the conflict, I suppose. They find that their draft yielded a bunch of very sickly white boys from the country who didn’t know how to read. They were concerned that if they wanted to be projecting power across the world, they better have literate, healthier white men. So they decided, well, maybe we should pony up for some education at that point.  The next big stage isn’t necessarily a war, although it’s a war to some degree, a proxy war against communist revolution, it is the New Deal. You have the New Deal, which is a big bastion of social democratic programs and funding and particularly in school infrastructure. Very exciting reconstruction finance creates the precedent for a lot of the creative thinking today about how we should be doing this. 

As Derek Bell argued, the Brown v. Board of Education decision, which reverses the Plessy v. Ferguson ruling about segregation, the political economic context of that in 1954, a good ten years before what we saw as the civil rights eruption of the 1960s, that happens because a couple of the Supreme Court justices were on a world tour and they kept hearing the same line over and over again, which is, “why do you pose as the country of freedom in the Cold War against Soviet Russia when you treat your people so terribly in segregating particularly black students, African American students in the schools?” They felt like they were losing the Cold War on that message so they thought, “well, we better do something about this.” That’s Derek Bell’s argument. I believe him. 

I think that integration happened because there was an interesting convergence between white capitalists in their fight against communism. Other times, you see the federal government being generous. You see the result of that civil rights movement in the Great Society legislation. Those projects, those educational policies that we know of as the ESEA, Elementary Secondary Education Act, have been diluted and compromised since then. The last big moment we saw was, in the wake of the most recent crises of 2008 and 2020 pandemic shutdown. The thing about education is that everyone’s so worked up about it and everyone wants to have their say, but very few people understand how the money actually flows. 

The reason why certain things happen and other things don’t, I think, is because of these monetary flows. I do not think it’s public. It’s something else. People who get really excited about values like democracy and citizenship and the like will say, “well, we have to protect our public schools.” If you think about the financial values that those schools rest upon, I don’t get as excited. Not as many people are looking at school finance as a leftist, as a Marxist and from these sort of heterodox or political economic frameworks, from the perspective of racial capitalism, or private property as the problem.

Billy Saas

As a parent with a child in an elementary school in New Orleans, but I think this is representative too, one of the probably most common touch points parents and families have with school finance is being constantly solicited by their schools for donations and support. I’ve found it interesting myself, right? I show up to these, they’re good events. They’re fun. But they’re about fundraising. So schools are perpetually in fundraising mode and it reminds me a lot about what we’re talking about with the relative lack of publicity for our public school system. There’s an analog in the public media system, right? 

There’s a similar act in public broadcasting act in the 60s that sort of permits folks to think and talk about things like national public radio as a meaningfully public thing when it’s really supported by charitable donations and philanthropic donations from individuals with a paucity of actual contribution from the federal government. So just to kind of notice the rhetoric of “public” when it comes to these pseudo-public institutions  does a whole lot of work and — like you demonstrate in your book — takes a lot to undo and to separate and demystify.

David Backer

Yeah. I’ll just note something I thought of when you were talking was sometimes the reverse happens, which is something was more public than you thought because it was so decentralized. In the second Trump administration’s dismantling of higher education financing at the federal level, the indirect cost threshold dropped my jaw to the floor when I saw just how much money was flowing into universities from the federal government for all kinds of expenditures. I didn’t think of the university system as being as public as it actually was, but it took a wrecking ball to reveal just how powerful it was. Obviously, it could be way better and whatever, but I didn’t know that that was like that. That’s one of the reasons I wrote the book. 

I started focusing on this stuff and talking about it because I feel like education is something that we all care about very deeply, and it’s an extremely important part of the terrain of political organizing. Historically and now, if you think about the ways in which the right wing is able to kind of cobble together coalitions on issues in education and the like, but without understanding how this stuff actually works. How can you have an understanding of state power? And then how can you then take state power and be effective? One of the writers who I really love about love on municipal finance named Alberta Sbragia has an image in the beginning of her book called Debt Wish from the 1980s and 90s about municipal finance and cities. Her line is like, “people who are interested in politics but don’t understand municipal finance are like doctors who are scared of blood.” I think about that a lot. 

You know, particularly as Mamdani’s taking power now, but I think actually over the last fifteen years or so in the wake of Occupy, which was a wonky movement. One of the things that we read in Trump Tower was Carl Levin’s report on credit collateral debt obligations. In the wake of the 2008 financial crisis we read that report. We read the Senate report. I think that there’s a deep bench, particularly being in New York City now, there’s a deep bench of people who are on the left who now are very interested in this, or have been interested in it for a while, and have the chops to actually really change things, which maybe turns the conversation to what you asked about before in terms of the policies I talk about in the book.

Scott Ferguson

Well, I’d like to get into some of the more fine grained diagnostics that you lay out in the book. There’s the issue of how taxation is set and these mill rates and then there’s the bond market, and then you have a whole section on teacher pensions. I’d like to give some time to each.  Maybe to ease our way into how this totally dysfunctional tax finance system is structured, I’d also like to defamiliarize it by asking you to talk about the kind of historical background, right? It’s my understanding from reading your book that the school districts weren’t always, in all cases, these siloed fortresses, especially as financial zones that were atomized and had to kind of sink or swim on their own because they were integrated into state level finance in a more  robust way. Am I remembering correctly? How do they get from that to this system that is designed to fail around just taxation?

David Backer

You’re sort of asking a historical question. To some degree, I think historians have actually done some of the best work on school finance in terms of this larger project of what I call politicizing it, or activating school finance. They’ve done some of the best work because, in history, you can tell stories and you can tell stories about how it was otherwise. A lot of the historians of school finance have told really excellent stories that show us how things have emerged, but also how they could be different. There’s a slew of historians that I’d want to shout out. Michael Glass has a new book called Cracked Foundations that will really blow your mind about Long Island and the New Deal. But there’s Esther Cyna and Andrew Kahrl and  Kelly Goodman and others doing great critical historical work in this space. Matthew Gardner Kelly wrote a book called Dividing the Public, which has partially informed my little potted history there in the second chapter where I tell this story about how the school district actually as an entity goes all the way back to colonial Massachusetts. That entity has existed to some degree in a relationship with pro private property and private property financing. 

Since then, it is actually an extremely old branch of our government. But with the relationship of that entity to both the region and the state government and the federal government and then the ways in which that entity receives its financing has shifted and manifested differently in different places over time. The story that you’re referring to is that, for a long time, the property tax levied to fund public schools was a white working class victory against a previous system called the poor rates bills, which was a way of financing  school for the poor schools for the poor through tuition paid for by taxes on the poor. It’s called a pauper tax. You declare yourself a pauper and then you have to pay. It’s a sort of tuition, but the state sort of centralizes the tuition monies and pays for these schools. They also relied a lot on philanthropy, churches, and the like. But you know, working classes were like, “no, we’ve got to tax property for this, the property owners should pay and everyone should be able to get schooling.” Those property taxes were levied by the state government and the state government would allot the the funding based on property taxes across the districts and that is a much more redistributive policy than what would end up happening at the turn of the 20th century, which was the districts levying that property tax within their own boundaries. So those district boundaries were not as loaded with the racial capital relations as they were before that levy. 

The other part of the story that I tell is the story of home rule charters and local control and the ways in which municipalities decided to have their own constitutions. In addition to the state constitution, the federal constitution, you’ll have a local city charter, which is essentially your city constitution and how school finance is sort of wrapped up with that. The way I tell it in the book, that home rule movement, which sort of starts in the 1870s and then really booms in the early 20th century, links up with the real estate zoning movement that then also links up with the local property levy that creates the situation that we have today. Some historians recently gave me some feedback which I think is helpful to note, just that home rule was not a uniformly negative thing. There were a lot of victories, important victories, like in the case of the District of Columbia.  where home rule is extremely important for having relative autonomy to be able to provide for your citizens. But I still think it’s part of that story. If you don’t have home rule charters, you don’t have the situation that we have now, which is where places that have very high property values can tax a little bit and get a lot for their kids. But if you can’t afford to live there or you don’t live there, sometimes next door you can’t go. 

There are maps. There’s one called Crossing the Line from New America. New America is an association that has a great map that shows across school district boundary lines just how bad it is. That gets to the mill rate question that you were talking about before. The mill stands for millinesium, which is every thousandth. A mill rate is the number of dollars per thousand dollars of assessed value that a school district or municipality is gonna tax. You all have published great work around the tax revolts and thinking about tax revolts and actually it was from you that I learned about Josh Mound’s really important history of school bond voting that I actually feature in the book too that really just it blew my mind about about the history of neoliberalism and the role of school bonds in that. 

Anyway, you have these situations where if you have high property value, you can set a very low mill rate and get a lot of money. But next door you can have very low property value and have an exponentially higher mill rate to get much less. I think of this as super regressive taxes in my mind because there’s an added element of regression there that doesn’t typically get talked about. Like it’s not just the poor who pay more. It’s not just that. It’s actually that they also get less somehow. The reason I bring all that up is because it puts some context on tax revolt. So, when really wealthy areas with high property values say we pay so much in taxes, they’re talking about that in absolute terms, not relative terms. You know who pays the taxes in relative terms are the diverse working class people. People in places like Reading, Pennsylvania, who have to pay extremely high mill rates on extremely low property value to get a drip for their students in a context of a very ungenerous state government and a historically ungenerous federal government. But again, that’s all historically, all that stuff is contingent. It all changes.  We just have to figure out how.

Billy Saas

You said that school districts are sort of like fortresses, or that is sort of a catchphrase. From your study, from your close looking, from what you’re seeing, it seems like on one hand, as you note several times throughout the book, people are invested in their schools and people love, in many cases, their schools and want to see them be successful. To what extent do you understand the fortress-making of the school districts as a sort of a defense against a siege against their welfare from outside, and to what extent is it a fortress built to preserve the kind of neoliberal practices that we’re talking about? Can we think about the fortress in a couple of different ways as a metaphor?

David Backer

Yeah, that’s a great question. There’s a discourse that is obviously very old in terms of the American Revolution, but then gets taken up in a different way when the Bolshevik Revolution happened in the early 20th century. There’s a discourse of tyranny and totalitarianism that gets taken up around the issue of local control. The idea of local control is the idea that you’re kind of talking about. What are you controlling with local control? What is being controlled by local control? And who is doing that controlling? For who? It’s a very profound question. I thought of a couple things. 

That local control, again, manifests differently at different moments of history. In history, I don’t mean to even just say this sort of linear time, I also mean it in this sort of more uneven way of the present. There are places where the relationship of local control to the state government to the regional government to the federal government are different and differently  configured and are therefore subject to different forces or exert different forces. Also, what is being controlled and what that means to the people doing the controlling changes. 

In every place the story is just a little bit different. It’s just a little bit more complicated than you’d think, given the meta-narratives that we have about the country in terms of deindustrialization, segregation, white flight, these narratives that are helpful for condensing and reducing in some ways, but in other ways when you start to look at specific districts, and specific boundary lines and how those have changed and what those communities have been and who they are, the stories don’t necessarily all match up that way. 

Just as a sort of side point or method point, this is a point that Destin Jenkins makes really well in his work  on the municipal bond market in that book, The Bonds of Inequality, where he says the meta-narratives of urban segregation and de-industrialization actually don’t capture the work of municipal finance and the history of municipal finance. This is a thing that’s operating in its own temporality, in its own way, manifesting in different ways at different times. 

But you asked about the metaphysics of local control or the being of local control. I was gonna answer with this, because I never get to talk about this, the home voter hypothesis. I don’t know if you’ve ever heard of Fischel. This guy named Fischel has a book called The Home Voter Hypothesis, it’s cited widely in economics, in like sort of very straight-ahead economics on municipal finance, public finance type stuff. But when I read it for the first time it was sort of “Wow,” my mind was blown. He writes in a very conversational way. His home voter hypothesis is that, in any given situation where there is a local vote on something that will happen in the municipality, voters are voting as to whether or not the thing that’s being voted on increases or decreases their property value. That’s it. It doesn’t have to do with how wonderful this sewage project is, or how much you need a water treatment plant, or how much we need highways, or how much we need schools. People in the situation that we have now, the configuration that we have now, local control under the situation of local levy of property tax, state grants through sales tax, federal grants through income taxation and the like, what we have now is a situation where the home voters are going to be voting on the capitalization of their asset. 

It’s a very cynical thesis, but when you start to think about it and let it sort of take root, you start to understand perhaps some of the dynamics around local control. So if you have good schools in your school district, there might be higher demand to live within your school district. If there’s higher demand to live in your school district, there’s gonna be increased property values within your school district. If there’s increased property values, then the rich people live there and if the rich people live there, there’ll be businesses to serve those people, and politicians that listen to those people. Then those people in that district want to protect what’s theirs because there’s a wall around it in the form of the school district line. What is that? Racial capitalism. That’s what that is. That’s one of the clearest names that I’ve found for it, because essentially they just want to preserve what they do and what they have, what’s theirs. 

This then comes to bear on all kinds of things and it’s very difficult, although it’s not impossible to combat that redistributively through state courts, which is what the legacy of the civil rights movement has been. In the wake of 1973 court case: Rodriguez, and 1974 court case called Milligan that decided that because the word education isn’t written in the Constitution literally, then the federal government doesn’t really have any obligation to it. Ever since then there’s really been a sense that like “you get yours, I get mine. We’ll see how it all works out.” The communities that can work the system for their benefit do and sometimes that actually involves really high debt loads. You’ll see very wealthy districts with a lot of debt service obligations, because they can borrow and then they can repay it because they have high property values that they can tax. 

The only other way to answer your question to some degree is to think of this investment in schools, as you put it, as having a material aspect and a spiritual aspect. The material aspect is the home voter hypothesis, which is: a lot of a lot of homeowners out there and their biggest asset is their house and so school finance is ontologically tied to the capitalization of their biggest asset. But the other horn of this ontology is the spiritual, and that is their own children and their own children’s experience and what their kids have. Not only what their kids have, but also like what kids have in general. There’s a very deep interest that people have in social reproduction, which is to maintain the continuity of what we do around here. Wherever that “here” is and whoever that “we” is, there are strong spiritual investments in the maintenance and the continuity of that. Schools articulate all these things very tightly together. 

They articulate a desire to maintain the continuity of what we do with the capitalization of your biggest asset. Local control is about controlling all of that, holding on to all of that and not letting it go. I tell my students, who are largely superintendents and principals and people who want to be educational leaders, people will go to these school board meetings and they’re sounding off in the comments, and you’re thinking to yourself, “all I need to do is approve a bond so that we can fix our roof. I don’t know why these people are screaming at me.” They’re screaming at you because what you’re talking about is a threat, potentially, to the capitalization of their most valuable asset and their spiritual commitment to what they think of as being the best for their kids and kids in general in the future. That’s why I use this line in the book. 

I think that this school finance is the sort of weakest link in the chain of racial capitalism in the US. When you hit this link, other things are gonna shake. When you move this piece in the Jenga board of the United States, other pieces are gonna shake. We saw that in the civil rights movement and anytime these boundaries get challenged, it’s like a third rail. It’s like a vulnerable underbelly to this whole structure and I think it’s a big shame that people don’t understand it. But also I can understand because that vulnerability would want to be protected by a sort of broad ruling class who wouldn’t want it to be different.

Scott Ferguson

So, let’s pivot to the bomb market. How does the educational wing of the bond market work and how is it structurally designed to fail?

David Backer

The municipal bond market’s like the most powerful thing people don’t know anything about. James Carvel very famously said that when he was a kid he wanted to be reincarnated as Babe Ruth or the Pope or the Dalai Lama and now that he got state power with Bill Clinton he was like “now I want to be reincarnated as the bond market because you can intimidate everyone.” The thing about this bond market is that it is unique in the world. There’s no other municipal bond. There are municipal bonds in the world, so far as I understand, and this is something I want to study more internationally, but so far as I understand there is no market like the United States municipal bond market. 

According to the most recent estimates I’ve seen, twenty-seven percent of that market is devoted to education, which is the plurality. It’s higher than the category of general purpose. This bond market is devoted in its plurality to educational purposes. Now that’s higher education and Pre-K through twelve.These markets are huge markets. Municipal bond market is a four trillion dollar market. It has 1.5 million issuers which dwarfs the corporate bond market exponentially in its size. Since the Erie Canal, municipalities and state governments have financed their infrastructure through this market in some form or another and it’s been configured and reconfigured in different ways. 

There’s no history of the school bond, I don’t even think there’s a history of the municipal bond in the United States, which there really should be, but there’s certainly no history of this school bond. This is a very old structure. It’s not neoliberal.  It is as old as the Erie Canal and then the competition between state governments in the sort of post-revolutionary period to build themselves up infrastructurally using foreign credit. A lot of times English credit. So you know, the country fights this whole revolution and then finds itself several decades later essentially indebted to the imperial body from which it separated. 

Scott Ferguson

That’s how postcoloniality rolls. 

David Backer

That’s right. That’s how it rolls. The first school bond that I have found in history is in Kentucky in 1837. It’s the earliest date that I’ve found that a school district went into debt that it had to pay back with interest. But you know, the first municipal bond dates back to about 1647 outside of Utrecht, when a dike froze over and the municipality needed to go to a businessman and say, “hey, can you lend us money with interest to fix this dike,” and he was like, “yeah, sure.” It’s still paying out to this day. There’s a ceremony there on the River Lek where they roll out this bond statement from the 1640s. So this is a very old situation and philosophically I want to say that the reason why we have this situation is because of the very fundamental temporal differences in kinds of expenditure. 

This is a problem that I think anyone who is interested in creative financing needs to contend with and contend with seriously. There are different kinds of expenditures. They’re typically called operating expenditures and capital expenditures. The operating expenditure is the sort of regular yearly — in the case of school districts, but for us as individuals could be monthly — charges that we just budget for. So we get income and then we have to pay our rent and we have to pay food bills and we have to pay this and that and that’s a regular thing. Then for firms and for governments, there’s salaries and benefits to pay out yearly. 

But the operating expenditure that is in that regular temporal rotation is very different from the irregular needs of infrastructure and facilities of all kinds. The word that’s used sometimes in the literature is lumpy because the pattern of the need for this kind of project, if you’re thinking about a trend line, there’s a sudden bump and then it goes down, it’s lumpy, because you need a lot of money and a lot of resources up front to be able to complete this project that you might not need to do again for a hundred years in the case of a school building or you know in the case of  cybersecurity infrastructure that you need to put in place like in the case of Los Angeles where they had multiple cybersecurity attacks and they had to take out bonds to be able to finance a cybersecurity system. 

Or, also in the case of Los Angeles, when your state law changes and the statute of limitations on being able to seek relief and damages from sexual predators and sexual  violence is extended, your school district suddenly now is on the hook for upwards of 250  claimants going back in time to be able to pay out the court cases, that’s a huge expense, right? That’s not in your operating expenditures and so in the case of the Los Angeles School District, which I just read about recently, they issued something called a judgment obligation bond or a JOB. A JOB is a bond that is a loan that is taken out to pay judgment to claimants. They had to take out this big long-term bond, but they needed short-term financing for this bond to be able to pay out to the claimants so they got a non-revolving credit agreement with the RBC, the Royal Bank of Canada, to provide short-term liquidity for a longer-term liquidity need for the sexual violence cases. I try to bring in as many cases as I can, but the capital expenditure is a temporal problem. 

It’s a metaphysical problem, which is that things happen at different rhythms. The rhythm of my need for paying rent is different from the rhythm of my need to fix my HVAC system and I knew this too when I owned, quote unquote, a house, that is to say the bank owned it and I was paying the mortgage. That was a whole education too, by the way. The temporality of these needs are irreducibly different and you need to be able to have a financing arrangement that will provide the resources necessary at the right time to satisfy them. 

So if you need to build more schools because everyone’s moving to your school district, like in the case in some places in North Carolina, people are flocking to these certain districts of North Carolina and Virginia too, and they have these needs because so many of their enrollments are actually increasing. They have to build more capacity. How are they going to do that? Now, the cocktail of local property tax, state sales tax, and federal income tax does not come in at the right rhythm. Those are for the operating expenditures. So, what do you do? And I know that in MMT it’s sort of a faux pas to liken this to the individual, but I’ll do it anyway because I think it fits within the context of subnational government. 

If you need to buy a house, quote unquote, or if you need to go to school, you need to pay tuition, or you want to get married, or you want to get a car. These are big capital intensive expenditures that you need to engage in. So how do you do it? Well, in the United States, typically you get a loan and the loan, in this case, the credit that is extended to you, is a solution for the temporal problem of the capital expense. When you have this lumpy need and you need capital up front that is not part of your regular operating needs then you need to be able to get that liquidity from somewhere. The municipal bond market has been the country’s solution to the temporal problem of the capital expense in terms of infrastructure and school infrastructure in particular for 200 years and counting. 

Though they treat this capital problem as, number one: a credit problem, you don’t have to treat it like that as you could treat it as a grant problem, right? You could just say, “oh, you need this? We’ll give it to you.” That’s one way you could solve this problem. That’s why I like talking about it this way. Not only do they treat it as a credit problem, they treat it as a private credit problem. Where they think of the state — the subnational governments — as being like private firms that need liquidity to be able to deal with their capital expenditures. A school district has its page on the Bloomberg terminal and it has its credit rating and it has its yield calculations and its deal structures and the financial consultants and the bond lawyers and all of this stuff. It’s a whole regime that is set up to be able to meet its capital expense needs, which has sort of called forth into being this regime that has held on in one way or another for so long, it’s even survived the most recent Trump budget bill. There were people who were advocating for a law that was put into place that really solidified this situation in the early 20th century, which was under the federal income tax law that exempts interest payments on municipal bonds from taxation.

So if I invest in a municipal bond and then the municipality pays me back with interest, I don’t have to get taxed on that. That is the country’s infrastructure policy. So school districts are essentially competing and they’re under a constant threat of getting their credit ratings reduced, even though ultimately debt service ends up being about eight to ten percent of their yearly budget, which by the way is a lot.The budget officials and the superintendents are nervous that any given movement, anything could threaten the credit rating on the municipal bond market, which would increase borrowing costs, increase taxes, decrease property values, decrease trust in the government and so I think the municipal bond market is, as I say in the book, this hidden force of educational injustice, because a lot of the reasons why a movement will go into a school board meeting and they’ll demand XYZ and then the superintendent and the school board members all look to the CFO or or the budget official or whoever it is and they say, “Can we do this?” He’ll say “no, the credit rating.”  

That one little moment that just feels like, when you hear it, if you don’t know what it means, it feels like nothing. It feels like air or cardboard, something very ethereal, two-dimensional. Both somehow normal and incomprehensible at the same time, and you just sort of go, “okay, fine, let it go.” These are the structures that inhibit change and it’s a very deep problem. It’s a very old problem. It’s such a problem, in fact, it reminds me of that line from the usual suspects, Keyser Söze, “the thing that the devil did was convince everyone he didn’t exist.” It reminds me a bit of that. So yeah, that’s the bond market.

Scott Ferguson

Well, thank you. Obviously, from our point of view, we would want to maximize public credit facilitation in the form of granting that wherein the lumpy temporal horizon of all provisioning would be for public purposes. It would take political contestation and analysis. It wouldn’t be easily solved but we wouldn’t be dealing with this kind of straitjacket, but what you do in the book is you offer both historical and some of your own more contemporary examples of different strategies to put pressure on, or to ameliorate, or to partially overcome some of these obstacles. Maybe we can begin to talk about some of those. I know there’s been legislation, there’s been movements. Where should we start?

David Backer

Yeah. Well, I’m a big believer in — and I think this must come from my reading of Althusser — how you have to take up and take on the terrain as you find it in order to get the transformation that you want. The arrangement of forces that are in front of you are the things that you have to work with to get to where you want to get to. I think some of the policies and tactics or arrangements that I’ve proposed start from that premise. It’s not like what Aaron Benanav is doing now, which is fascinating, which is his work on the multi-criterial economy and the new left review,  communist economics and all this. It’s not that. This is sort of like “here’s how it works, here’s what we could do from within this thing to take it up.” We have to take it up first and then you can take it on. It’s not as though there’s gonna be some kind of revolutionary moon landing that’s just gonna smash everything and then you get to build whatever you want afterwards. The policies I’ve come up with are in that context. 

The first thing I always start with, because it still exists, are the financial disparities programs in the Twin Cities. This is a tax-based revenue sharing program that condenses the disparities between municipalities with differing revenue. It was created by a very plucky former bond salesman turned civil servant in Minnesota. He brought the idea in a briefcase to a pancake house in a meeting in 1968. The story of this program is one that I love telling, but basically what it does is it creates a regional sharing pool and a percentage of the growth in municipal tax bases from year to year — 40% — is put into a pot and then redistributed according to the changing revenues of the different municipalities, such that if you happen to have a bad year or your shopping mall closes down or your real estate, and properties go down, what you have is a pool at the regional level that will be able to compensate a little bit for it. The reason why this thing is kind of magical is it passed by like a single vote in 1971. It’s called the Minnesota Miracle and they called it Municipal Socialism and the like. But it’s decentralized collectivization at the regional level from within this system that we have and I think the more that we can talk about that kind of arrangement and try to adapt it for the different places and regions that we have in the country, the better. 

Which is why, in these different political projects I’ve been involved with, I always come in as this very specialized person to talk about school finance. But in the Green New Deal for Schools legislation that Jamaal Bowman introduced during that very exciting period between 2021 and 2022 in that budget reconciliation process. I consulted on  the white paper that the legislation was written around and one of my little suggestions was to create equity grants that incentivize tax-based sharing across racial and class lines, such that the federal government would be able to incentivize places that have this kind of tax-based sharing with further rewards, granting grants and loans for having that in place. 

Sarah Quinn in her book, American Bonds — that’s a great book too — provides a sort of a sociological history of the bond market in the US. Her finding is, essentially, that the way that you govern federally is through credit. The way to govern in a way decentralized in federalism through credit is to essentially find ways to try to get states and municipalities to do what you want them to do by making it easier for them to borrow. I think trying to encourage places to adopt fiscal disparities legislation like that and even in new and expanded ways, like maybe increase that 40% number. Maybe also do debt sharing, you know, which they don’t do in the Twin Cities. But what if what if you could do debt sharing in addition to tax-based sharing? Because there’s still actually a big difference in those municipalities and the Twin Cities in terms of their death service obligations. Okay, so that’s one thing that I like. 

Another thing that I like, which doesn’t exist anymore, but briefly did, was Vermont’s Act 60 in 1998. That policy is sort of a state level policy. Given the history, it’s sort of a throwback to the days when the state government would collect that property tax. But the state government in Vermont in the 90s didn’t collect the property tax and redistribute it. They did something even a bit smarter, dialectically. They took up and took on this system of local property taxation. Essentially, after there was a lawsuit that said the state was out of compliance with its education clause and its constitution, which is the legacy of the civil rights movement, which are still going today, these state court cases you sometimes read about, how the state is found to be out of compliance with its own constitution. 

That was the civil rights strategy after they lost at the Supreme Court in the 1970s, they had to bring it to every single state. The ways in which education funding has been compensated for across disparity has largely come from the yeoman’s work of lawyers on the ground over periods of decades going with the the the slow machinations of the repressive apparatus trying to get these judges to say that the government’s out of compliance with its constitution, which then pressures the governor and the state legislature to do something about it. There’s never any guarantee that they’re gonna do something about it, but like in Pennsylvania recently, Shapiro’s answer in 2024 to the Supreme Court case victory the previous year was to say, “oh, we’ll just publicly fund private schools more with vouchers.” 

In Vermont they came up with, what I think, is the best system which does the following. We talked about mill rates before, right? Now, the big problem is that some municipalities have a lot of municipal revenue and others don’t. Those municipalities that have a lot of revenue can set their mill rate really low and get a lot. Whereas the other ones can’t, the super regression, right? This policy took that up and took it on. What it said was the state is going to set a high minimum threshold for the mill rate across the board, relatively speaking. So every district has to have a high floor. You can’t just tax really low to get a lot anymore. But also for the districts that don’t have a lot, they only have to tax that level, they don’t have to go much beyond that. So for them it’s a low floor actually. But combine that high floor with a low ceiling for per pupil expenditure, which means that the state determines what the adequate per pupil expenditure is for students in your school district. So you can’t just be spending lavishly on your rich kids anymore. 

Scott Ferguson

No more observatories? 

David Backer

No more natatoriums and ceramic studios and the like. Actually, no, to educate your kids, you just need this and anything beyond that low ceiling goes to the state and is redistributed to the districts with the low municipal revenue. It really put the squeeze on the bourgeoisie there. Because it really puts the squeeze on the property owners with the high property values and redistributes it from within the system of taxation. It only existed for a couple years. The author, John Irving, was so upset by this system that he started his own private school for his kids because he didn’t want them to have trailer park envy, which is a quotation. I think he later felt bad about that, but every time I see John Irving I’m like “ugh.” 

Howard Dean, in the next cycle’s governor’s election, came out against this system. Even though it was actually yielding tons of great results, test scores were going up,  the disparities were being compensated for. In Vermont, the big problem was that you had wealthy ski towns where there were ski slopes and they had a lot of municipal revenue and then very poor farming towns that didn’t have the same property that they could get taxed. The research that I’ve read has shown that it was quite successful. But then they killed it and the conservative won the next governor’s race, basically a referendum on that policy, which the regional ruling class in Vermont came out in force against.  

One of the things that they did was that they started their own network of private donations for their local public schools, such that they went door to door and they asked people to make donations to this fund. The fund would go directly into the school budget, but it was not subject to the state’s limits of Act 60. So they created their own private funding streams for their public schools in order to circumvent this policy. They’ll go to any lengths to not redistribute so that was ended but I think that model creates this kind of imagination that we can work with where I really think it took up and took on the system. 

Another thing I bring up, which I think people are starting to disagree with me about, is Richard Nixon’s idea for a value added tax to fund schools. I just think that’s a cool story, but it’s also a way of thinking about how it might be different. I think maybe having a value-added tax at different levels of production rather than sales taxes, which are excise taxes, even though VATs sometimes happen at the point of sale, but I think that’s still an interesting story that gets us thinking creatively. When it comes to the bond market, there haven’t been a whole lot of alternatives that have existed in history. So we don’t have a lot to work with. I don’t talk about it in the book, but the Reconstruction Finance Corporation is definitely something to look at. Although some people argue it’s just state capitalism. 

James Olson in his history of the New Deal says that was saving capitalism. That informs people down the line, like Saule Omarova and the National Investment Authority, which would have a national investment bank, but I still think that’s a good idea so I try to talk that up as a solution. The Green New Deal for Schools legislation is another great resource. It provides just tons of grants and it expands our understanding from physical infrastructure to social infrastructure. So it starts to include labor costs in the costs of having functional buildings. The National Investment Authority has essentially found a third pillar of the federal financing apparatus. There’d be the Treasury, the Federal Reserve, and then this investment authority. 

From my understanding of it, the risk that’s created from the temporality of the lumpy capital needs across the spectrum of society, because there’s a risk inherent in that because you need to be able to front the capital to be able to pay for that but where’s that capital gonna come from and is it going to be able to be paid back? The more you pool that risk, the better. The National Investment Authority pools it at the federal level. Anytime you need a project, they’re going to deal with the financing, the borrowing, and the lending, and then there’ll be better technical service, pay as you go grants, low-cost grants, long-term grants that finance this stuff. My little contribution to this that I go around talking about a lot involves pensions. The whole last book, the last part of my book, is about pensions because I also think there’s a lot of stuff about school finance that’s taken up by pensions. 

Pensions are huge pools of capital and they serve a very important purpose of meeting the social risk of aging. There’s traditions that think about the pensions that actually have the pensions as the huge public pools of capital for the public’s infrastructure. There’s a story from Singapore where the pensions got involved in the mortgage business to be able to increase birth rates in the country. The pension is now underwriting mortgages and what did the pension decide to do? It started to host singles dating nights so that people could meet each other, have babies, and then buy houses and take out mortgages from the pension. The pension is a great big pool of the public’s money that’s meant to meet the risk of aging and death, which is essentially our encounter with death, writ finance. We can use our resources that we’ve built up to meet death, to fund our life. 

The sort of policy that I like to recommend it comes from something called fiscal mutualism, which is, in the case of schools, and I think it can be in the case of housing or water or other things it could be used similarly, but in the case of schools, the historians Mike Glass — who I talked about before — and Sean Vanatta — whose work on pensions is very good — they found that the teacher’s pension in New York was historically 10% invested in New York school bonds. They named this approach to pension investment, fiscal mutualism, which is the usage of the public’s money for the public’s infrastructure. If you position the pensions in a stronger way against the more traditional underwriters in the bond market, who are the underwriters? Who are the ones that confront that capital immediately? The big private banks and the big investment banks. They’re the ones that have all that capital and they’re the go-betweens between the bondholders and the municipalities and the borrowers.

If you can challenge and take up and take on those underwriters by exerting the force of the pension and trying to have a sort of more just usage of the public’s money, you can actually do that at the subnational level without relying on the federal government at all. Which is why I sort of talk about it more and more because of the fascism that we have. Like in the case of New York City, I’ve been pitching around the idea that the teacher’s retirement system could be an underwriter along with the green banks, de-risking school bonds that would fund green school infrastructure. I call that green fiscal mutualism, where the green bank becomes a dialectically very exciting institution. 

I think a lot of people on the left hear me talk about this stuff and they’re like, “what? Like that’s still capitalism.” I’m like, “well, I mean everything’s dialectical.” What the Green Bank does in my understanding is it’s a reverse charter school. So whereas the charter school is taking public money and putting it in the private sphere for the private provisioning of a public good, the Green Bank is actually wielding private money for the public good and funneling money from the private into the public for the public. I think if you could have green banks de-risking pension purchases, school bonds, then you’d be meeting this climate issue because school buildings emit a ton of carbon but school buildings have also been totally underfunded historically and they’re not safe and they’re not healthy. 

So these are some of the policies I like, some of the things some of the things Dave likes. The other last thing I’ll mention, which I haven’t mentioned in other places, but I hope people pick up on it in the book, is what the school district of Tredyffrin/Easttown, Pennsylvania did in the early 20th century. You had two municipalities: one predominantly white and the other predominantly black. They entered into a jointure to build an integrated high school in 1912. It survived multiple attempts at segregation but these communities got together across race and class lines and said, “we’re going to invest in one another. We’re going to take on this risk together through the jointure and we’re going to build this high school and we’re gonna take on this bond.” It’s a debt that they took on, but they took it on together across these very potent lines of the fortresses. When I tell people like, “well, what if you got what if you got people together across the school district lines in your region and said, let’s do jointures all together to finance each other’s infrastructure?” That would cause riots, right? The wealthy people don’t want to be financing the infrastructure for the non wealthy people that are even their neighbors. They might even be the same sports team fans. In the jointure, I think there’s a lot of possibility.

Billy Saas

Yeah, so this book’s coming out December 2nd, one day after the podcast. So listeners, go grab a copy. But there’s obviously a lot going on. I imagine some of this was on the horizon as you were putting finishing touches on it and in the introduction you addressed the second Trump term.  Also we have what you mentioned as the fortuitousness of your move to New York and, of course, you got Zoran Mamdani elected by moving there.

David Backer

I hate how my retelling of it lends itself to that.

Billy Saas

No, no, I think it’s awesome. It’s good storytelling. We like a little magical realism now and then. Obviously, it wasn’t just the Mandoni campaign. There were a series of wins across the Democratic Party and some are calling it-

David Backer

Katie Wilson in Seattle too.

Billy Saas

Right, right. Some are more exciting than others. Katie Wilson, Mamdani and then, you know, some former CIA people as well. Some are calling it a blue wave and we’ve heard it said that education — and I guess we should shout out Jennifer Berkshire’s post.

David Backer

Which everyone should read. Her substack is called “The Education Wars.” She wrote another book with Jack Schneider called The Wolf at the Schoolhouse Store. She’s great.

Billy Saas

Absolutely. Yeah, so a blog post recently or a substack post basically crediting education with this recent blue wave win. We wanted to just close out by letting you offer your two cents on that.

David Backer

Yeah. Well, I tend to agree with Jennifer. What Jennifer’s picking up on is the fact that this rush on the right to dismantle the public school system as I’ve described it is a threat to the local control that I described. These districts, and particularly in the wealthy areas, predominantly white areas, but not all white, but predominantly, have done generations of work to fortify their worlds, their schools. The fortresses are activated. The fortresses are there. The Trump administration and the voucher movement are coming for those fortress walls. They’re coming for the charter schools. People in these rural areas where there are no private schools want their public schools. They don’t want them to go away and these governments, in their rush to appease the leader, are dismantling the systems that their own constituencies hold very dear. I think she’s picking up on that. 

She has an ear to the ground across the country. I would just say that, if there was anything I was gonna add to that, we’re in a time of great uncertainty. It’s what Adam Tooze calls the polycrisis. While I don’t entirely agree with his conception of it, I do think that his remarks in a lecture last year are helpful, in that, all previous theorizations and concepts come from times of lower parts per million carbon in the atmosphere. Even the very idea that the new is struggling to be born while the old is dying, that idea is too optimistic for what we’re undergoing right now. You know, the time is greatly uncertain. It is very unstable. There are dislocations happening everywhere. I feel like this system that we’ve been talking about is some version of an ancien regime, thinking about the history of revolutions, like Mike Duncan’s podcast. 

We’re getting to that point where this thing is shaking and it’s definitely falling apart. What that presents is a danger and an opportunity. There’s also these other forces that we have to account for in that instability, in terms of inflation, supply shock, pandemic shock, artificial intelligence. These are exciting times. “May you live in exciting times.” The thing is, we have to get together, we have to understand the terrain, and we have to figure out what policies we want when our turn comes to try to steer the chaotic ship through the chaotic sea. I think it’s not just that education will sort of underwrite a blue wave, but actually the waves themselves are very chaotic and the old color schemes are all over the place. 

Zoran getting elected, and Katie Wilson and all these people doing things that you could never have imagined are all on the bingo card. The things that are not on your bingo card are on the bingo card. It’s all the more important to study this stuff very carefully to figure out what we can do to transform the structure and take advantage of the moment.

Scott Ferguson

Well, Dave Backer, thanks so much for joining us. Everybody go out and get the book As Public as Possible:Radical Finance for America’s Public Schools.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript.