The Squad Meets Wendell Berry: A Localist Defense of the AOC/Tlaib Public Banking Act

Medicare-for-All, Green New Deal, Free Public College — these are the slogans percolating on leftist social media accounts. They’re also the basis for Republican attack after attack, even if at their core, the end goals themselves aren’t terribly unpopular. Beyond the bumper sticker slogans associated (for better or worse) with large, centralized government programs, the left’s best ideas often promote subsidiarity. Think of Senator Bernie Sanders’ campaign-trail crusade to save minor-league baseball teams in small towns like the one he was once Mayor of, Burlington, Vermont. Sanders did not frame this in the lens of a revolution, but as protecting “the national pastime”. Mutual aid societies have helped raise money for those struggling in the COVID-included recession. Community Land Trusts involve local residents in the push for affordable housing.

In this line, Rashida Tlaib and Alexandria Ocasio-Cortez, both of whom I sometimes criticize, recently introduced the Public Banking Act, an amazing measure that allows state and local governments to set up public banks. These would be depository institutions for public funds, offer basic lending, and invest in local priorities. The bill also provides a regulatory framework for postal banking or FedAccounts, the latter of which is useful for UBI or a virtual currency in the future. Crucially, the bill does not establish these institutions from the top-down. Instead, it allows the Fed to charter public banks and enables the Treasury Department to help set them up. It also instructs the SEC and FDIC to regulate these new institutions.

Flickr Creative Commons https://flic.kr/p/2ixq95a

I’m not going to focus much on the economic reasoning behind my support for this bill, but rather on the social aspects. Public banks have been criticized before on issues like corruption, but I’m not planning to wade deep into that debate. Regulatory safeguards can go a long way. On economics, the Bank of North Dakota, a legacy of the populist Non-Partisan League, has fostered low-interest rate loans, strengthened community banking, and boosted rural capital access. During COVID-19, this bank helped North Dakota businesses access the Paycheck Protection Program. It hasn’t saved all of its communities from the forces that undermine rural life, but it has made a positive difference. Its President has sounded a nuanced note, stating that “it is an issue for each individual state or municipality”, which the AOC/Tlaib bill recognizes. Therefore, I seek to emphasize the promise locally established, federally backed public banks have to rebuild communities hollowed out by disinvestment, capital extraction, and brain drain through the “educational equivalent of strip mining”, as Patrick Deneen puts it.

Importantly, this bill advances both “left” and “right” ends. For instance, it holds promise for fighting racial injustice, one of the left’s most pressing issues. The Movement for Black Lives in its platform calls for funding restorative justice, employment programs, and community well-being. Those institutions who proclaim that Black Lives Matter often don’t put their money where their mouth is. Therefore, investment needs community buy-in. Representative Alexandria Ocasio-Cortez gets this, hailing her measure as “uniquely able to address the economic inequality and structural racism exacerbated by the banking industry’s discriminatory policies and predatory practices”. Indeed, these practices have left longstanding pernicious effects on cities. Many redlined areas remain racially segregated and they tend to be significantly poorer and face higher crime rates. Affected areas are also beset by an affordable housing crisis, one that government action can and should help resolve. Where residential segregation creates pockets of poverty, it also lowers investment and suppresses social mobility, creating a massive opportunity gap. The data is clear: location matters for wealth, education, transportation, employment, and more.

Environmental concerns play in as well. For instance, redlined neighborhoods lack trees even today, leading to urban heat islands that exacerbate health issues. In our own backyards, toxic waste, flooding, and air pollution disproportionately impact diverse working-class and poor communities. These social determinants of health implicate the intersections of race, class, and gender, exemplified by Cancer Alley in rural Louisiana. Climate change too poses the greatest risk for the populations who benefit the least from the activities fueling it, in the US and globally.

Progressives already recognize that financial regulation can combat these ills. For instance, the Community Reinvestment Act, a 1977 law meant to spur investment in disadvantaged areas, has (despite mixed results in some realms), increased lending to low and moderate-income areas. Moreover, the left recognizes the importance of capital in the fight against the impacts of entrenched prejudice. Democrats pushed back against Trump administration efforts to undermine the CRA’s anti-redlining provisions and support Jim Clyburn’s 10–20–30 formula for government-funded projects. Therefore, increased access to capital can support sustainability and racial justice.

In my view, the lasting investment discrepancies and the differential impacts of environmental degradation represent “structures of sin”, a concept that appeared in Pope John Paul II’s 1987 Encyclical, Sollicitudo Rei Socialis. Systemic sin requires systemic change, which the American left-wing recognizes. However, this bill shows how that change can go hand in hand with a localist strain of conservatism. This strain is epitomized by people like Wendell Berry, who promotes pluralism between rooted communities (George Hawley, Right-Wing Critics of American Conservatism, 81–82). Berry opposes the centripetal forces of modern militarism and commercialization, recognizing that the “homeplace remains central to any possibility of a good life” (Look Homeward, America, 95). While backed up by the FDIC and the Federal Reserve for stability purposes, these public banks would be formed and run by localities, empowering the community-focused forms central to a localist-right vision.

Wendell Berry, Flickr Creative Commons, https://flic.kr/p/65NX2k

A sort of Burkean conservative can find solace in localism’s rejection of a faraway government blob. Indeed, many conservatives bemoan the tension between the central government and civil society. Perhaps I betray my leftish upbringing by not seeing all government as trading off with associative life, but I view local forms of governance as far less antithetical to a flourishing civil society. As Robert Nisbet argued, a militaristic bureaucracy is predominant in the higher levels of government, but not nearly as much social realms closer to the individual. The Catholic idea of subsidiarity recognizes that local problems are often best solved by lower-order societies, without rejecting a role for higher-order ones where needed (think healthcare). Therefore, local self-reliance builds moral predicates for truly free markets such as a dual sense of responsibility and familiarity. Plus, by keeping capital native, cities and towns can achieve more buy-in; this is possibly why credit unions enjoy more trust from the public than banks. If correctly designed, public financial institutions, as in North Dakota, can be guided by incentives aimed at cautious fiscal conservativism, eschewing profligate over-speculation and modeling a profitable means of addressing local concerns.

On a cultural front, they can help address economic manifestations of atomization. By reinfusing the oikonomia with the oikos, to paraphrase Roger Scruton, localism can provide a “we” to rally around and preserve a “common dwelling place” (How to be a Conservative, 182). This is the start of revitalizing family life and the social capital that promotes mobility and belonging. William Leach, a student of Christopher Lasch, wrote that “there can be no culture built under unstable protean conditions” (Country of Exiles, 176). Indeed, maybe a new sense of localism is a salve for the anomie afflicting Gen Z. Learning to love our street corners and blocks teaches us how to depend on one another and look past labels.

On the political front, these local banks can also bolster a democratic pluralism like the one Michael Lind proposes. Their reflection of small-d democratic politics and accountability to a defined polis allows them to reflect local values. The bill as proposed proscribes investment by these institutions in the fossil fuel industry. Therefore, these lenders could support certain priorities. Don’t want your local bank to invest in exploitative industries like porn, private prisons, alcohol, or drugs? You can write that into the charter! A heavily Muslim community like Dearborn, Michigan, or a very Orthodox Jewish area like Kiryas Joel can establish a public bank guided by its own community values. So too can traditional Christian communities embodying Rod Dreher’s Benedict Option with socially responsible investment. Now, there are probably Establishment Clause issues to navigate, but a religiously influenced moral ethos is different from a theocratic bent or the establishment of any one religion, something Accomodationists recognize. Outside of a faith realm, this allows municipal experimentation. Jackson, Mississippi’s unashamedly radical Mayor Choke Lumumba can follow his own vision for “the city us[ing] its bully pulpit to encourage the development of cooperative businesses” and undoing the impacts of systemic racism. I can see the Working Families Party pushing its own priorities in cities where they are gaining ground.

Of course, this all raises criticism of tyranny of the majority, but within smaller circles. Moreover, some deplore the ‘legislation of morality’, nevermind that their hands-off approach inherently reflects its own moral judgments. I can envision situations where communities make choices I don’t agree with or perhaps even exclusionary ones. We need guardrails to ensure universal access to capital and serve a greater common good of equality. Localism must find ways to avoid gratifying the prejudices such as the ones that politicians like John C. Calhoun once justified under the guise of “states’ rights”. On this topic, Gracy Olmstead provides insightful commentary in a piece where she writes that “Localism must never become an excuse to dislike or judge the ‘other.’ That’s why it is so important that localism not be a rural or Republican or nationalistic movement, but rather a principle of charity and empowerment applied to all peoples and places”. Therefore, a new localism needs proponents across the political spectrum. Democratic pluralism requires a fundamentally pluralistic conception of democracy, a “homely republican vision of America in which equal democratic citizens of every gender, color, and creed can vote their way to a system that gives everybody a fair shot . . . without becoming indentured to creditors or wrecked by the vicissitudes of capitalist dislocation”. Advocacy efforts must reflect the diverse communities such a proposal can benefit.

When established with local goals in mind, institutions can become a well-loved part of the regional fabric. In North Dakota, the state bank remains popular among Democrats and Republicans alike, perhaps because it was “founded by radicals but now run (and defended) by conservatives”. The left can expand its political influence by building locally. The localist right can achieve the same.

Locally run public banks aren’t a panacea for our societal problems and face numerous hurdles. But as Dorothy Day once remarked, “People say, ‘What is the sense of our small effort?’ They cannot see that we must lay one brick at a time, take one step at a time”. Let’s take a step towards inclusive localism by supporting the AOC/Tlaib bill.