Transnational Institute (TNI)
2019
Lavinia Steinfort, Mary Mellor, Stewart Lansley, and others
"Public Finance for the Future We Want" is a groundbreaking publication that addresses the urgent need for reform in public finance, particularly in the wake of the 2008 financial crisis. It challenges the notion that public sectors must rely on private finance to tackle pressing issues such as inequality and environmental degradation. The publication showcases that public funds, which account for 93% of global GDP, have immense potential for driving social and environmental change when utilized effectively. The book outlines the significant problems with the current financial system, highlighting how private finance has largely failed to address critical social issues and has exacerbated inequality. It reveals alarming statistics, such as the annual $650 billion loss from tax evasion by multinational corporations and the fact that private financing is often 40% more costly than public alternatives. By emphasizing alternative financial models, the authors illustrate how community-owned finance and public banks can effectively raise substantial funds for climate infrastructure without the need for private sector involvement. Key solutions proposed in the publication include the democratization of nationalized banks, the establishment of community-owned financial institutions, and the creation of citizen wealth funds. These strategies aim to transform public finance into a vehicle for social progress, prioritizing the needs of people and the planet over profit. Through practical examples and a comprehensive framework, "Public Finance for the Future We Want" offers a roadmap for reimagining public finance as a tool for equitable economic development and environmental sustainability.
"Public Finance for the Future We Want" is a collaborative publication by prominent organizations including the Transnational Institute (TNI), The Democracy Collaborative, and several other institutes focused on economic transformation and social justice.
Context
The book emerges from the aftermath of the 2008 financial crisis, challenging the prevailing narrative that public sectors must depend on private finance to address inequality and environmental challenges. It demonstrates that public funds, equivalent to 93% of global GDP, are substantially larger than commonly perceived and could be leveraged for significant social and environmental impact.
Key Findings
Current Financial System Problems
- Private finance has failed to address social and environmental issues and has intensified inequality
- Public money is being extracted to private sectors, benefiting primarily a small elite
- Private financing of public projects is typically 40% more expensive than public financing
- Tax evasion by multinational corporations costs the public sector approximately $650 billion annually
Alternative Financial Models
- Public banks possess sufficient resources to raise the required $90 trillion for climate infrastructure investments without private sector involvement
- Community-owned and controlled finance has proven more effective than traditional microcredit models in fostering equitable development
- Local saving banks in Germany, worker-owned Banco Popular in Costa Rica, and People's Credit Funds in Vietnam demonstrate successful alternative banking models
Available Public Resources
- There are 693 public banks worldwide with assets worth $37.72 trillion
- Total public finances, including central banks, multilaterals, pension and sovereign funds, amount to $73 trillion
- This equals 93% of global GDP, showing significant untapped potential for public investment
Housing and Community Development
- The MOBA Housing Network in Central and South-Eastern Europe showcases successful cooperative housing initiatives
- Community wealth building through anchor institutions like hospitals and universities can create more resilient local economies
- Kerala's cooperative model demonstrates how worker-run cooperatives can thrive despite neoliberal challenges
Public Finance Innovation
- Citizens' wealth funds, financed by increased taxation on private wealth, offer a progressive approach to maximizing social value from existing assets
- State investment banks have been underutilized, particularly within the EU's restrictive fiscal framework
- Public buyout of fossil fuel companies could effectively address climate change while dissolving industry opposition
Key Solutions Proposed
- Democratization of nationalized banks
- Development of social and solidarity economies
- Implementation of community-owned financial institutions
- Creation of public banking systems focused on climate infrastructure
- Establishment of citizen wealth funds
- Reform of EU fiscal rules to enable greater public investment
The book presents a comprehensive framework for transforming public finance into a tool for social and environmental progress, offering practical examples from around the world of successful alternative economic models that prioritize people and planet over profit.
The book "Public Finance for the Future We Want" was published in June 2019 by the Transnational Institute (TNI) and edited by Lavinia Steinfort and Satoko Kishimoto.
Authors:
- Lavinia Steinfort
- Mary Mellor
- Stewart Lansley
- Duncan McCann
- Milford Bateman
- Benny Kuruvilla
- Thomas M. Hanna
- Ana Álvaro
- Agnes Gagyi
- Frank Vanaerschot
- Thomas Marois
- Oscar Reyes
- Ludovic Suttor-Sorel
- Carla Santos Skandier