Public Investment Bank for the Nation
We desperately need to invest in public goods like infrastructure and climate change response. We need a public option for investing in our nation’s future.
Enter a public investment bank.
The short-term models that Wall Street built fail to invest in necessary infrastructure that’s in the public interest, like bringing broadband internet to rural areas, replacing crumbling roads and bridges, and adapting to climate change on an appropriate scale.
America has an investment problem. That was true even before the Coronavirus crisis, and it’s more true after the pandemic has damaged the economy and made clear the need for large-scale efforts at rebuilding and adaptation. The institutions that are supposed to manage our investment decisions are failing to translate our national wealth into investment in sustainable, equitable, and environmentally responsible growth and the creation of good jobs for American communities.
Existing models of public support for investment are flawed in many ways. After several decades of neoliberal market ideology, public investment mechanisms often follow the lead of the private sector, effectively passing along public subsidies to private market investors who take the leadership role in shaping the investment. For years, too many public-private partnerships have left private actors in the driver’s seat, with risks borne by the public and rewards reserved for private investors.
A public investment authority can help shape markets, catalyze new industries, and raise environmental and labor standards at the leading edge of the economy. There has been a renewed interest in historical examples of public investment leadership like the Reconstruction Finance Corporation (RFC), and academics like Saule Omarova at Cornell and James K. Galbraith at the University of Texas have advocated for new public investment authorities.
A public investment bank must be large, autonomous, and have both a clear mandate and its own resource base with which to pursue public purposes could bring much more fundamental change to Wall Street investment practices.
Experts suggest the following design elements in support of an effective public investment authority:
- It should be made proactive and autonomous through an independent equity base.
- It should be general purpose, not single purpose
- It should be a hub to coordinate strategic investment planning and build capacity
- It should be a learning organization
- It should be empowered to take a leadership role in addressing economic crises.
“Policy Memo: Creating a Public Investment Bank,” by Americans for Financial Reform, October 14, 2020.
“White Paper: A National Investment Authority,” by Robert C. Hockett and Saule T. Omarova, Cornell Legal Studies Research Paper No. 18-10, February 21, 2018.
“The Macroeconomic Considerations of a Public Investment Strategy,” by James K. Galbraith, New America, November 8, 2007.