Public Finance for the Future We Want

"Public Finance for the Future We Want" is a collaborative publication produced by the Transnational Institute (TNI), The Democracy Collaborative, and various other organizations focused on economic transformation and social justice. This book addresses the financial landscape following the 2008 financial crisis, challenging the narrative that public sectors must rely on private finance to tackle pressing issues of inequality and environmental degradation.

The publication outlines several critical failures of the current financial system. It highlights that private finance has not only failed to resolve social and environmental challenges but has also exacerbated inequality. Public funds are being siphoned off to benefit a small elite, while the costs associated with private financing for public projects are typically 40% higher than those of public financing. Furthermore, tax evasion by multinational corporations results in an annual loss of approximately $650 billion to public sectors.

The authors propose alternative financial models that could be more effective in addressing these issues. They assert that public banks could raise the necessary $90 trillion for climate infrastructure investments without needing private sector involvement. Examples of successful community-owned financial institutions, such as local savings banks in Germany and worker-owned Banco Popular in Costa Rica, demonstrate that equitable development is achievable through alternative models.

The book points out the vast resources available in public finance, noting that there are 693 public banks worldwide with assets totaling $37.72 trillion. When considering all public finances, including central banks, multilaterals, pension funds, and sovereign funds, the total amounts to $73 trillion, which is equivalent to 93% of global GDP. This figure reveals a significant untapped potential for public investment in social and environmental initiatives.

The publication includes case studies like the MOBA Housing Network in Central and South-Eastern Europe, which showcases successful cooperative housing initiatives. It discusses how community wealth building can be enhanced through anchor institutions such as hospitals and universities, thereby fostering more resilient local economies. Kerala's cooperative model serves as an example of how worker-run cooperatives can successfully navigate neoliberal challenges.

Innovative approaches to public finance are also examined, including the establishment of citizens' wealth funds funded by increased taxation on private wealth. The text emphasizes the underutilization of state investment banks, particularly within the EU's restrictive fiscal framework. It suggests that public buyouts of fossil fuel companies could effectively combat climate change while dismantling industry opposition.

The publication concludes with a series of key solutions aimed at transforming public finance into a driver of social and environmental progress. Recommended actions include the democratization of nationalized banks, the development of social and solidarity economies, the establishment of community-owned financial institutions, and the creation of public banking systems focused on climate infrastructure. Additionally, it advocates for the reform of EU fiscal rules to enable greater public investment.

In summary, "Public Finance for the Future We Want" presents a compelling framework for reimagining public finance as a tool for achieving sustainable and equitable development, backed by robust data and practical examples from around the globe.