Part 4 (1/2)

DAVID KORTEN

The Occupy Wall Street protests have achieved a reh They have penetrated the filter of the corporate ination of America and the world They have focused attention on Wall Street banks and corporations as the prilobal prosperity and security And they have sparked a much-needed conversation on the economy's values, purpose, and structure

It is now up to all of us to build on the opening this movement has created to liberate Main Street from Wall Street

Wall Street is the symbolic center of an economic system that works for the 1 at the expense of the 99 It uses its outsized financial and overnment and deepen the divide Over the past thirty years, virtually all the benefit of US econoone to the richest 1 of Americans Effective tax rates for the very rich are at historic lows and many of the most profitable corporations pay no taxes at all

Despite the crash of 2008, the financial assets of America's billionaires and the idle cash of the hs Forbes azine's list of the world's billionaires set two records in 2011: total number (1,210) and cogest challenge facing A out where to park all their cash

Most of the individuals and corporations that hold the cash have lost interest in long-ter enterprises Corporations are using their stores of cash pri Aenerous dividends to shareholders and exorbitant bonuses to ement The substantial h-speed computers in securities held for fractions of a second to manipulate the market and profit from minor variations in stock prices While business pundits refer to this trading as investment, it is not Investment puts people to work in productive enterprises that build a strong econo industry and corporations did not always behave this way

America is a tale of two economies The Wall Street economy is accountable only to faceless financial markets and devoted to financial deception, manipulation, and speculation to maximize financial returns to its most powerful players The Main Street economy is directly accountable to real people who have a natural interest in building healthy co local economies and natural environments

It Was Class Warfare, and Wall Street Won

After Wall Street drove the nation into the Great Depression of the 1930s, the Roosevelt adnificant financial refor, and invests and loans, and credit unions We had laws that prohibited one bank fro another and severely limited the number of branches a bank could operate These institutions provided loans to individuals and financial services to Main Street businesses that eoods and services in response to community needs and opportunities Corporate shares were held by individuals who knew the companies they owned

The Main Street economy, which Wall Street interests now dismiss as quaint and antiquated, financed US victory in World War II, the creation of a strong American middle class, an unprecedented period of economic stability and prosperity, and Ay It also made the American dream of a secure and co by the rules a reality for a substantial majority of Americans

In the 1970s, Wall Street interests mobilized to use their financial and media power to re-establish control of the economy It was class warfare, and Wall Street won

Their priulations that limited the size and function of banks and other financial institutions Step by step they transferred the power to create and allocate credit from locally owned, independent Main Street financial institutions-cos and loans, and credit unions-to Wall Street institutions that had no particular interest in investments that create community wealth

Wall Street institutions quickly developed a more profitable business model The model has come to feature excessive fees and usurious interest rates for ordinary custoes they cannot afford, bundling the resulting junk es into derivatives sold as triple-A securities, betting against the sure-to-fail derivative products so created, extracting subsidies and bailouts fro and ar profits to avoid taxes Much of what provides profits to Wall Street either is, or should be, illegal

Banking That Works for Everyone

The consequences of these activities are legion and have prompted hundreds of thousands of protesters to pour into the streets across the United States and the world The effects include the erosion of the middle class, an extreme concentration of wealth and power, a costly financial collapse, persistent high une environ out of US industrial, technological, and research capacity, huge public and international trade deficits, and the corruption of our political institutions Wall Street has profited at every step and declared its experireat success It argues that to fix the rant more of the same

Our economy depends on Wall Street institutions only because those institutions got the rules rewritten to give themselves control over much of the nation's money and productive resources Every needdepend on those institutions to fulfill can be better served by institutions with strong roots in Main Street

Here are six steps we can take to liberate Main Street from Wall Street and build a democratically accountable economy based on sound market principles

1 Reverse the process of bank consolidation and rebuild a national system of community-based, community-accountable financial institutions devoted to building coa-banks into independent, locally owned financial institutions backed by tax and regulatory policies that favor community financial institutions

2 Iulatory and fiscal rity of financialsystem Suchinstitutions to basic banking functions, and render financial speculation and other unproductive financial gaal and unprofitable

3 Create a state partnershi+p bank, modeled on the state Bank of North Dakota, in each of the fifty states to serve as a depository for state financial assets Such banks can use their funds to spur co with community financial institutions within the state on loans to local hoed in construction, agriculture, industry, and commerce

4 Restructure the Federal Reserve to li the ht and public accountability, and require that all newly created funds be applied to funding green public infrastructure assign what is currently the Fed's responsibility for the regulation of banks and so-called ”shadow banking” institutions to specialized regulatory agencies with clear public accountability

5 Create a Federal Recovery and Reconstruction Bank (FRRB) to finance critical green infrastructure projects designated by Congress Fund this bank with the money that the Federal Reserve creates when it determines a need to expand thethe new h Wall Street banks, as is currently the Fed's practice, introduce the h the FRRB to fund projects that directly and i available for critical projects without drawing on tax revenues

6 Rewrite international trade and investe national ownershi+p, self-reliance, and self-deternment with the foundational assumptions of trade theory that the ownershi+p of productive assets belongs to citizens of the country in which those assets are located and that trade between nations is balanced Hold corporations that operate in multiple countries accountable for compliance with the laws of each country of operation

Given the govern system, another financial crash is a near certainty That will be a defining moment We need to be prepared with a plan to transfor system from one that benefits only the 1 to one that benefits all

We need not, however, wait for the next crash Citizens of all walks of life can act i of the issues raised here, move accounts from Wall Street to Main Street financial institutions, promote cooperative or nonprofit ownershi+p of financial institutions, and advocate legislation to restructure the systeenda will be easy The forces aligned to maintain the status quo are formidable But Occupy Wall Street and the 99 movee with a speed and on a scale that previously seeinable

David Korten is co-founder and board chair of YES! Magazine and co-chair of the New Econoenda for a New Economy and the international best seller, When Corporations Rule the World This chapter is based on the report, ”How to Liberate America from Wall Street Rule,” which is available for free at newecono/report/how-liberate-america-wall-street-rule

CHAPTER 11

A FAIR TAX SYSTEM:

THREE PLACES TO START

CHUCK COLLINS

Over the last half-century, we've witnessed a dramatic shi+ft in who pays taxes The responsibility has moved off the very wealthy and onto the lobal corporations and onto sovern to a new report froanization that I co-founded, the wealthy have received e W Bush but for decades before his election The top 1 of taxpayers, those with incomes of 500,000 or more, have seen their share of income paid in federal taxes decline fro President Bush's eight years in office, Congress expanded tax cuts to A another 700 billion to the national debt

Meanwhile, the share of household income that middle-class households pay in federal taxes actually increased slightly, froress has failed to close tax loopholes for global corporations, allowing thousands of profitable US companies to pay no corporate income taxes-at all-between 1998 and 2008 For exaenerated 103 billion in pre-tax inco in US taxes