Public Finance for the Future We Want

"Public Finance for the Future We Want" is a collaborative publication released by the Transnational Institute (TNI) in June 2019, featuring contributions from notable authors including Lavinia Steinfort, Mary Mellor, and Stewart Lansley. The publication emerged in response to the 2008 financial crisis, challenging the notion that public sectors must rely solely on private finance to tackle social inequality and environmental challenges. It emphasizes that public funds, amounting to 93% of global GDP, are significantly larger than generally understood and can be harnessed for substantial social and environmental benefits.

The publication outlines critical issues within the current financial system, noting that private finance has largely failed to address pressing social and environmental concerns, instead exacerbating inequality. It highlights that public funds are often redirected to private sectors, benefiting a small elite. Additionally, financing public projects through private means is typically 40% more expensive than public financing. The report indicates that tax evasion by multinational corporations results in an annual loss of approximately $650 billion to the public sector, further complicating efforts to fund sustainable initiatives.

The publication proposes alternative financial models that leverage public resources more effectively. It asserts that public banks possess the capacity to generate the necessary $90 trillion for climate infrastructure investments without private sector involvement. Community-owned finance models, such as local saving banks in Germany and worker-owned Banco Popular in Costa Rica, have shown greater efficacy in promoting equitable development compared to traditional microcredit approaches.

The research highlights the existence of 693 public banks worldwide, with total assets amounting to $37.72 trillion. Furthermore, when incorporating central banks, multilaterals, pension, and sovereign funds, total public finances reach approximately $73 trillion. This figure underscores the significant untapped potential for public investment in sustainable housing and community development.

The MOBA Housing Network in Central and South-Eastern Europe serves as a case study for successful cooperative housing initiatives. The publication discusses how community wealth building through anchor institutions, such as hospitals and universities, can foster more resilient local economies. The cooperative model employed in Kerala illustrates how worker-run cooperatives can prosper even amidst neoliberal challenges.

The authors advocate for innovative public finance solutions, including citizens' wealth funds funded by increased taxation on private wealth, as a means to maximize social value from existing assets. It also points out that state investment banks are underutilized, especially within the restrictive fiscal framework of the European Union. The concept of publicly buying out fossil fuel companies is proposed as a viable strategy to address climate change while dismantling industry resistance.

The book concludes with a series of actionable recommendations aimed at transforming public finance into an instrument of social and environmental progress. These include the democratization of nationalized banks, the development of social and solidarity economies, the establishment of community-owned financial institutions, and the creation of robust public banking systems focused on climate infrastructure. Additionally, it calls for the establishment of citizen wealth funds and reforms to EU fiscal rules to enhance public investment capability.

In summary, "Public Finance for the Future We Want" presents a comprehensive framework advocating for a shift in how public finance is utilized, highlighting examples of successful alternative economic models that prioritize sustainability and equity.