Friday, November 14, 2008

Credit should be a public utility

Electricity and water, roads and telecommunications -- all these are treated as public utilities in most countries. In some others like China and Vietnam , credit also counts as a public utility, and these countries’ national banking systems are built around it just as there are national agencies for their other public utilities. Few people in the Philippines , though, understand the credit system from this point of view, having gotten used to the institution of private banking patterned after the US that is run for profit instead of development. Verily, it is this same private banking system that has been indicted to have brought down the global financial and economic system over the past few months.

Now that a global discussion of a “new financial architecture” among G-20 countries (the G-7 industrialized economies plus other major economic powers China , India , Brazil and Russia ) is to commence, there will surely be a tug of war between the concepts held by western G-7 countries and others from the east and South America .

The Global Research website, headed by intellectuals like Michel Chussodovsky and William Engdahl, whose advocacies I subscribe to, launched on November 11 a signature campaign, “For a Monetary System That Puts People First.” As its opening salvo, it lifts a passage from Abraham Lincoln’s 1861 address to the US Congress as the rationale for its proposed new global architecture: “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed had not labor first existed. Labor is the superior of capital, and deserves much the higher consideration.”

The gist of such a petition, outlining the principles for reforming the global system, along with my comments in parentheses, spells out that:

“● Monetary systems should be controlled by sovereign national governments, not the central banks which mainly serve private finance. The main economic function of the monetary system should be to assure adequate purchasing power to consume an environmentally sustainable and optimal level of production whereby the basic needs of every person in the world community are satisfactorily met.” (The US Fed is not publicly accountable, as well as, our BSP -- see Sec. 20, Article on the National Economy.)

“● Income security, including a basic income guarantee and a national dividend, should be a primary responsibility of national governments in the economic sphere. A right to adequate purchasing power should be part of every national constitution.”

“● The primary function of international finance should be to assure fair transferability of value among national economic systems, utilizing, to the extent possible, fixed and transparent exchange rates. Speculative attacks on sovereign currencies should be outlawed.”

“● Private creation of credit for speculative purposes should be abolished, and capital markets should be regulated to assure fairness, openness, and freedom from predatory practices.”

“● Every national government should have the right to spend low cost credit directly into existence for public purposes -- including infrastructure, environmental protection, education, and health care―without incurring new debt.” (Unlike the Philippines today, where we borrow to finance everything.)

“● The physical backing for every currency in existence should be the actual production of national economies.” (Hence, encouraging production, not speculation…)

“● National governments should treat credit as a public utility -- like clean air, water, or electricity -- and should assure its availability to all citizens as their social heritage and as a basic human right.” (Not an object for profit…)

“● National credit policies should favor the development of sustainable local and regional economies, of small business, and of family farming.”

“● Credit should be regulated in order to encourage maximum ownership of property by individuals without artificially inflating its price.”

“● The private banking system should be utilized to provide liquidity for business operations but should not be needed in a properly constituted system to finance consumption or capital formation.”

“● There should be an immediate worldwide moratorium on home foreclosures and recognition of the right of each person to a secure home.”

“● An International Debt Settlement Commission should be formed and charged with producing a clean financial slate by reviewing all existing public and private debt and determining through due process what can reasonably be repaid, restructured, or forgiven.” (Particularly urgent for debt burdened RP…)

Then it ends with: “It is time to assure that the world financial system is no longer operated for the benefit of the few over the many, and that it reflects the spiritual principle that the natural resources of the Earth belong to all of humanity and must be rationally distributed to every individual, such that no one is left behind on the path of human progress. -- Initial Signers (a long list of academics, finance experts, journalists, advocates, NGO leaders from all continents)”

The petition in its entirety is already a short course on the socialized or nationalized credit and banking system that more Filipinos should learn about. This space will initiate a Philippine signing of this petition in coordination with other citizens’ movements. We will invite our readers as soon as it happens.

We have seen a number of Philippine local politicians count themselves among the hopefuls for the 2010 presidential race, but I have yet to hear anyone of them discuss genuine issues that can turn this nation’s dire straits around. They all think that showing a heap of wealth (that invariably comes from some form of graft anyway) already qualifies them for leadership. But we can only see them abuse the Constitution, as they use their offices as platforms and campaign way before the allowable period begins. All of them display ostentatious lifestyles alright, but few can account for their untainted sources of wealth.

What “transformational” leadership can there be if there are no “transformational ideas” emanating from any of these declared aspirants? If these are the ones presenting themselves, then let me propose Gen. Danilo Lim for the presidency too. He’s someone we can be certain to have never finagled a single centavo from public coffers, and has proven his dedication to the common and national good.