In our history, beginning with President George Washington and Treasury Secretary Alexander Hamilton, the US has created four National Infrastructure Banks (NIB). Under Presidents Washington, John Quincy Adams, Abraham Lincoln, Herbert Hoover, and Franklin Roosevelt, National Infrastructure Banks built and upgraded infrastructure across the country from roads, damns and bridges to health clinics, schools and the national parks; provided productive work and good pay for thousands if not millions of Americans; increased production and manufacturing capacity nationwide; and created economic vitality.
Known as a “Hamiltonian Bank” or “The American System,” a federal infrastructure bank is a proven way not only to build massive public works projects and put people to work, it is a proven way to jumpstart the economy during or after a major national crisis — like the Revolutionary War, the Civil War, the Great Depression … or the COVID19 pandemic.
When the Rural Electrification Administration (REA) was created, 90% of rural America was living in the dark. The REA, under Roosevelt’s Reconstruction Finance Corporation, electrified rural America and, with that, increased commerce, the standard of living and wealth in those areas. Today, much rural America is “in the dark” when it comes to reliable Internet. The next National Infrastructure Bank could bring broadband to rural America. That is just one example of how big public projects can solve big public problems and create wealth and stability in parts of the country that have lacked resources and investment.
It’s time for a fifth National Infrastructure Bank in the United States. Across the globe, countries are using The American System to build massive nationwide and sometimes international/regional infrastructure projects. We invented this financial system. Why aren’t we using it?
The US is losing global competitiveness by not investing in infrastructure nationwide. For decades, we have been watching our roads, damns and school buildings crumble and our bridges collapse. We collectively shrug our shoulders because we’ve gotten used to political excuses for inaction. Politicians either ignore the problem, fight against investment (AKA Spending!), or provide underfunded responses that pretty much always have some corporate giveaways tucked neatly inside.
Even Build Back Better wasn’t ambitious enough to build or fix the infrastructure we need and to provide a sufficient economic boost to the country. Through their National Infrastructure Banks, the Chinese invest 8% of their GDP in infrastructure, and Europe invests 4%. With no National Infrastructure Bank, the US must rely on Congressional appropriations for infrastructure investment; consequently, we are far behind other countries with only a dismal 2.4% of GDP investment in infrastructure. The Chinese are building a nationwide water grid and have increased their water supply by 20%. Under the auspices of Arizona’s new water initiative, a group of Governor Doug Ducey’s Republican cronies will be doling out taxpayer dollars to new water projects with little or no oversight and no monitoring of aquifer health. Personally, I would feel much more confident about Arizona’s future water supply if a fully transparent National Infrastructure Bank was vetting the water augmentation and conservation projects and loaning the funds — rather than relying on cronies to choose projects without any thought to how they will affect our long-term water supply or the price of water provided by public private partnerships (P3s). My podcast guests and I discuss Arizona’s water initiative and how an NIB would grow our water supply differently.
World financial markets and supply chains were disrupted during the COVID-19 pandemic when the we all sheltered in place. Two years later, we have a life-saving vaccine, multiple COVID variants as the disease becomes endemic, major changes in work life, high employment, creeping inflation, threats of war, and threats of more contagious global infections.
That is a maelstrom of financial and societal uncertainty. That is why this is the perfect time to establish a National Infrastructure Bank to provide no-cost loans for infrastructure investment, to create productive jobs and to rebuild our manufacturing base. You can read the text of HR3339, which is currently in the US House of Representatives.
Before you look away and say, “This is socialism!” OR “We can’t afford this!” Let me remind you: the first US Secretary of the Treasury invented this economic development system and used it to transform the 13 colonies into the United States of America by financing roads and bridges and building manufacturing capacity in the new country. There are NO new taxes or deficit spending attached to this proposal.
My guests for Season 2, Episode 13 of A View from the Left Side are a group of monetary policy and public banking experts who provide a wealth of information on infrastructure banking worldwide as well as the history of infrastructure banks in the US. Alphecca Muttardy is a professional macroeconomist. She is a former Senior Economist at the International Monetary Fund, where she worked for 25 years. She is on the Board of the Coalition for a National Infrastructure Bank (NIB). Ellen Brown is the founder and chair of the Public Banking Institute (PBI). She is the author of 13 books including Web of Debt. (I highly recommend Web of Debt for banking and finance wonks.) She is a columnist for Scheer Post, and hosts a regular podcast, It’s Your Money. Professor Robert Hockett is Edward Cornell Professor of Law and Finance at Cornell University School of Law. He is on the Board of the Public Banking Institute. He regularly advises federal and state legislators on monetary and other financial initiatives. He has previously worked at the Federal Reserve Bank of New York and the International Monetary Fund.
Previous government infrastructure proposals have not included enough funds to rebuild our country after years of infrastructure neglect — not to mention building new capacity for the future. The National Infrastructure Bank would really help us build back better.
To learn how you can support creation of a National Infrastructure Bank, go to the coalition’s website here and listen to my podcast below.
You can click on the link below to hear the podcast, and you can also subscribe to A View from the Left Side on multiple podcasting services such as Apple Podcasts on iTunes, Spotify, Stitcher Radio, I Heart Radio and others.
Time Stamps …
Season 2 Spisode 13 Introduction by Rep. PPH 0:44
The US Has Had Four National Infrastructure Banks … Begining with Washington and Hamilton 1:17
Allowing Our Infrastruture to Age and Crumble Hurts Our Global Competitiveness 2:30
Rep. PPH Interview with Economics Experts on the Proposal for a National Infrastructure Bank (NIB) 4:24
Alphecca Muttardy, Board Member Coalition for the NIB 4:53 What Is a National Infrastructure Bank and Why Do We Need One? 5:00
Projects that Could Be Funded by the NIB 5:19
Infrastructure Investments Are Good for the Economy 8:48
Roosevelt’s Reconstruction Finance Corporation Was an Infrastructure Bank 11:28
Nationwide Rural Broadband Funded by the NIB Is the Modern REA 11:36
Muttardy on the Scope of NIB Projects 12:27 The Scope of the REA and Its Impact on Rural America 13:01
‘It Is a Disgrace that We Have Houses in America with No Running Water’ 13:35
Chinese Are Building a Nationwide ‘Water Grid’ with NIB. They Increased their Water Supply by 20%. 13:49
NIB Projects Could Help Arizona Farmers 14:12
Public Private Partnerships (P3s) vs National Infrastructure Bank 14:29
Arizona Water Initiative Allocates $750 million for ‘Water Augmentation’ 14:37
We Want to Keep Public Infrastructure in Public Hands. Water Is a Public Good. 15:09
Ellen Brown, Founder and President of the Public Banking Institute and Author 15:52
‘P3s Want Profits. The NIB Is Basically a Bank at Cost.’ 15:56
Who Can Invest in the NIB? 16:40 Muttardy: How the NIB Would Be Capitalized. [No New Taxes!] 17:08
Brown: Individuals Can Invest in the NIB and Help Rebuild the Country’s Infrastructure 18:37
US Infrastructure Investment Is Woefully Behind that of Our Competitors 18:57
China Invests 8% of GDP in Infrastructure. US Invests 2.4%. We Are Falling Behind. 19:35
Putting People to Work Building Infrastructure Will Rebuild the Middle Class 20:00
Given Current Economic Uncertainties, How Would Our Strategies Change if We Had NIB Now? 20:36
Dr. Robert Hockett, Edward Cornell Professor of Law and Finance at Cornell University 21:45
The US Relies Too Much on Private Sector Initiative 21:51
If Your Motive Is Profit Maximization, It Is Not in Your Interest to Prioritize the Public Good 22:15
Brown on Inflation: Shortages Are to Blame 23:28
COVID Relief Money that Was Sent to the Banks Is Just Sitting There Unspent 24:05
COVID Relief Money that Went to People Is Long Gone 24:28
‘People Are Spending Now But They Have Less Money than Before COVID’ 24:52
‘There’s Not a Lot of Demand Competing for the Goods. The Problem Is Shortages.’ 25:11
The American System Model of Building Infrastructure to Promote Growth & Production 25:19
Keep the Farmers and Small Businesses in Business 25:30
Hamilton: ‘This Bank Is to Be Used for Infrastructure, Manufacturing and Development of the Economy’ 25:56
‘We’ve Had an Infrastructure Bank Before. The Problem Is Political.’ 26:33
‘If the Money Goes to Productive Purposes — Things that Do Pay Back — then You Have a Sustainable System.’ 27:06
Muttardy: ‘Policy Banks’ Are Investing Money in the Most Productive Place 27:52
The US Needs a Long-Term Infrastructure Plan and a Long-Term Source of Sustainable Funding 28:29
What Are Common Objections to NIB? How Do We Keep Political Corruption Out? 29:31
Muttardy: The NIB Has Checks and Balances as Well as Transparency 29:59
NIB Will Have Engineers to Help States, Counties and Cities Design Efficient Systems 30:37
All NIB Loans Would Be Recorded and Transparent for the Public to See 31:42
Who Owns the Infrastructure Built with NIB Loans? 32:02
Hockett: Who Owns the Infrastructure Depends Upon the Project 32:41
Muttardy: Most NIB Loans Will Go to Public Entities who Own Their Infrastructure 34:03
To Relieve Economic Bottlenecks, the NIB Can Make Private Sector Loans 34:30
The NIB’s Role in Affordable Housing 35:35 Hockett: Historical Perspective on Housing in the US 36:19
The Housing Market Changed when Wall Street Got Involved 36:49
Home Ownership Was Low in the US Before the Depression and FDR’s Housing Programs 37:55
Homeownership Increased to Two-Thirds of Americans with FHA and Other Federal Programs 38:25
‘Over the Course of the 1990s, We Basically Privatized All of That.’ 39:51
Investors Are Cornering the Housing Market and Keeping Prices High 40:30
Predatory and Speculative Institutions Should Be Banned from the Housing Market 41:36
Roosevelt’s Reconstruction Finance Corporation Built Affordable Housing and Health Clinics 42:11
Muttardy: the NIB’s Role in Affordable Housing 43:39
Brown to Hockett: How Do We Regulate the Banks’ Manipulation of the Market? 44:52
Hockett: Potential Congressional Legislation 45:05
‘Certain Realms of Human Life that Should Not Be Subject to the Profit Motive’ 46:06
Parting Thoughts 47:38
Muttardy: How You Can Help Create a National Infrastructure Bank 47:54
Hockett: Hamiltonian National Infrastructure Banks Represent ‘The American System’ 48:33