Public Banking: A Saving Grace?

In a recent article published in Asia Times Ellen Brown characterizes as “a saving grace” the Japanese government’s resistance to privatizing its public bank.  If public banking is a saving grace, presumably we, who affirm that grace is saving, ought to support it. In doing theology we will perhaps also want to ask whether or not we concur with this (or any) spiritual characterization of a secular public policy.

What is public banking?

The Public Banking Institute (PBI) web site notes that the Quakers in the colony of Pennsylvania first introduced public banking, and other colonial governments also established public banks. Today only the state of North Dakota has its own bank. Noteworthy, perhaps, North Dakota is the only state with a significant budget surplus. It also has the lowest unemployment and default rates in the country. These facts support the inference that having a state-owned bank does not impede economic wellbeing and may even help to sustain a healthy economy during a time of general recession.

A public bank may be established by the representative government of a state or nation and thus is owned by the people it serves.

“Public banking is distinguished from private banking in that its mandate begins with the public's interest. Privately-owned banks, by contrast, have shareholders who generally seek short-term profits as their highest priority. Public banks are able to reduce taxes within their jurisdictions, because their profits are returned to the general fund of the public entity. The costs of public projects undertaken by governmental bodies are also greatly reduced, because public banks do not need to charge interest to themselves. Eliminating interest has been shown to reduce the cost of such projects, on average, by 50%.” 

In North Dakota, for instance, the assets of the state are used to capitalize the Bank of North Dakota, and the revenues of the state are deposited in the Bank.

The Bank of North Dakota, because it is a public bank, pays its dividend to the people of the state, who are its only shareholder. Although North Dakota has a small population and therefore only a modest economy, the Bank of North Dakota has in the past decade returned to the state’s general fund over $300 million, which has provided the state with annual surpluses and helped it avoid tax increases or spending reductions for public services.

How is this different for states using private banks?

Other states deposit their tax revenues in private Wall Street banks, which not surprisingly use these deposits of the public’s money for their own profit. With a public bank, however, this money can be deposited in the state's own bank and can then be used to fund activities that benefit the public.

In Australia, for example, the publicly-owned Commonwealth Bank of Australia was the nation’s central bank for most of the twentieth century. In Alberta, Canada, the Alberta Treasury Branches, which are publicly-owned, provide a shared system of credit for most communities in the province of Alberta. In many countries, including Brazil, Germany, India, Japan, and Switzerland, public and private banks continue to operate effectively together.

What about Japan’s enormous debt?

Japan’s debt is over 200% of gross domestic product (GDP), which is the highest debt to GDP ratio in the world. This is not, however, the huge problem it would be, if the debt were privately held. Brown argues that Japan “can afford its debt because the interest it pays is extremely low.” If, however, the government were to privatize Japan’s public Post Bank by selling it off to private investors, interest rates would likely rise, “plunging the government into the debt trap it has so far largely escaped.”

In addition, unlike the US, Japan’s public debt is not owed to private creditors, other nations, or an international fund, but only to its people. In fact, a “large public debt owed to the Japanese people means Japanese industries have the money to rebuild.”  With a public bank, a public debt is not a drain on a state’s resources, but is money invested in the community.

What might this mean for doing theology?

The phrase “saving grace” has a secular as well as a religious meaning. In Christian theology saving grace may mean “a state of sanctification by God” or “the state of one who is under such divine influence,” a conception of grace that historically “developed alongside the conception of sin." As a secular phrase it may mean “a redeeming quality or characteristic,” as in "her sense of humor has to be a saving grace," or "the saving grace for both developments is that they are creating jobs." 

This last example seems the closest to Brown’s use of the phrase. Brown seems to be asserting that the activity of banks may have a “redeeming” quality – to use another word with both sacred and secular connotations – rather than simply being necessary for a society or even detrimental to the common good.
Phrases, such as “a saving grace” and “a redeeming quality,” suggest a dynamic relationship between the sacred and the secular, at least in everyday speech. Might we infer from these examples that the sacred and secular realms meet (and even overlap) in our discourse about what is right or better?

In moral philosophy, an action may be defended as ethical on the grounds that it is our rational duty or right, or because the action will have better consequences. The first way of reasoning uses deontological arguments to justify rules, reasoning that also characterizes the theological defense of divine commands.

The second way of reasoning, which emphasizes results rather than rules, was developed by utilitarian philosophers over against the claim that some rules are commands from God and thus are right even when it seems likely that new rules will yield better outcomes. We should recognize here the ethical argument, supporting a democracy of citizens, made over against the assertion that kings have a divine right to rule their subjects, a self-serving claim long defended as biblical by church leaders and royal families.

Utilitarian reasoning does not recognize any rules as intrinsically right, but instead argues that rules should be based on foreseeable results. Stop signs, liquor laws, the clean air act, and many other public policies are justified with evidence that, over a period of time, the consequences have been better than was the case without such limitations on our personal freedom. In theory, decision-makers rely on the social and natural sciences to predict the public policies most likely to generate beneficial outcomes for the society as a whole.

In practice, of course, such policies may result in largely benefiting those with greater power.

In discussing banking and money, I think we are in the realm of language, activity and reality concerning rules based on consequential reasoning. Less helpful, from this perspective, in deciding what we should actually do are clichés – often stated as ethical or theological principles – such as: “The love of money is the root of all evil,” or “Render unto Caesar what is Caesar’s and unto God what is God’s,” or “You cannot serve both God and money.” These assertions of what is intrinsically right are true in a sense, but do not offer practical guidance for public policy concerning the economy and other complex social issues.

Brown relies on consequential reasoning to assert that public banking is the right choice, because it produces economic results that are better for the society as a whole. Some may argue that Brown errs in her description of public banking as “a saving grace,” because this (and any?) secular policy does not concern divine justice or spiritual well-being. Yet, public banking seems to be effective in constraining banking practices that I would characterize as more sinful than redeeming, which is no small gain.

Therefore, as people of faith, shouldn’t we join with those who, for secular reasons, support public banking? And might we dare to hope that public banking will be “a saving grace” for us, too?

Selling or Sharing Kidneys?

The ethical debate over whether US law should allow a healthy person to “sell” a kidney illustrates how health care debates may involve only consequential reasoning.

Those in favor of a law that would permit a market in kidneys for transplantation offer the following consequential arguments. First, the demand for kidneys now so greatly exceeds the supply that many persons on the list to receive a donated kidney will die before a kidney is available for them. Second, a greater supply of kidneys would enable doctors to choose the healthiest donors, which is better both for donors as well as for recipients. Third, the cost of maintaining people on dialysis is greater than the cost of kidney transplantation. And fourth, the growing demand for kidneys is stimulating a black market that not only encourages illegal activity, but also increases the risk that a patient will receive a kidney not properly screened to prevent the transmission of an infectious disease.

Those opposed to allowing the sale of kidneys also rely on consequential reasoning, but emphasize negative rather than positive outcomes. First, such a market would necessarily be global and thus could not be properly regulated. Second, without regulation the risks of transmitting diseases would increase. And third, such a market would likely increase unethical practices, such as exploiting poor persons and harvesting kidneys from unwilling “donors” who are not legally protected against such a theft.

An article appropriately entitled “The consequences of a donor kidney market” in the Los Angeles Times (http://www.latimes.com/health/la-he-pro-con-kidney-donors-20110328,0,4492170.story) presents these arguments. In this article the health professional who opposes an open market does support removing financial “disincentives” from the present system of kidney donations by providing health and life insurance to living donors who do not have this coverage. 

It is worth noting that this debate often ignores arguments for intrinsic values. In the Times article there is no consideration of the ethical argument for the intrinsic value of encouraging persons to allow their kidneys to be harvested after their death. This argument values the character of a giving person and also resists the notion that our organs are “ours” even after we die. It urges us to see our organs as gifts that should be shared when we are no longer able to live and make use of them. 

This sort of ethical argument may be raised to support changing US law that now presumes the healthy kidneys of a deceased person cannot be harvested unless the person has indicated in writing that she wishes to make such a donation. Viewing organs as gifts to be shared, rather than as rightful possessions or as commodities that may be sold, would be reflected in changing our legal presumption to allow the harvesting of any usable organ from the body of a deceased person, unless he has explicitly rejected organ harvesting.

With hope . . . Bob

Carpool lane fees?

The Los Angeles Times supports permitting a single person driving a car to use carpool lanes, if the driver pays a fee.

The Times offers three arguments in favor of this policy change. First, it would bring in revenue for the government, which is badly needed. Second, “the new system would not only speed up commutes for the people paying to get into the carpool lanes but would ease traffic for those remaining in the other lanes as well (because the tollpayers wouldn't be there)." Third, “the money from the fees must be spent, by law, on transit or carpool improvements in the same corridor where the funds were generated . . . . And those improvements will benefit not only the people driving in the fast lanes, but those in the other lanes as well.” (http://www.latimes.com/news/opinion/editorials/la-ed-carpool-20110317,0,15024.story)

These are consequential arguments that the change is justified because the likely benefits outweigh any possible detrimental outcomes, such as being unfair to people with low incomes and setting a precedent of imposing fees for services the government has a duty to provide equitably. 

One way to analyze this conflict in moral reasoning is to first define the ethical presumption at stake, which in this instance is the duty of government to provide roads for travel that may be used equitably, and then ask: Should this ethical presumption be ignored by allowing a driver alone in his car, who does not qualify to use a carpool lane, to do so by paying a fee?

Reasonable persons might come to different conclusions. Yet, if we agree that a government has a duty not only to act equitably, but also to provide for the common good, then allowing carpool use for a fee seems more reasonable. For in "selling" a benefit the government also creates, without any additional cost, another benefit for those unable to pay the carpool use fee, in that an increase of cars in the carpool lane reduces congestion in the other lanes.

With hope . . . Bob

Environmental Justice

The Los Angeles Times reports: "A San Francisco superior court judge has put California's sweeping plan to curb greenhouse gas pollution on hold, saying the state did not adequately evaluate alternatives to its cap and trade program." Specifically, "the judge noted, officials gave short shrift to analyzing a carbon fee, or carbon tax . . . to a market-based trading system in their December 2008 plan."

The California lawsuit, which was filed by environmental groups representing low-income communities, asserts that: "a cap-and-trade program would allow refineries, power plants and other big facilities in poor neighborhoods to avoid cutting emissions of both greenhouse gases and traditional air pollutants." (See http://latimesblogs.latimes.com/greenspace/2011/03/california-global-warming-program-put-on-hold.html.)

This dispute involves a conflict of ethical arguments. The argument supporting California's cap and trade plan is consequential. Imposing the plan on industrial facilities emitting greenhouse gases would reduce these emissions. The argument for environmental justice also involves consequential reasoning, as it points to the likely consequences of such a plan for low-income communities. But its main ethical assertion is about the government's duty to act with justice, because the rule of law requires that the rights of citizens be given equal protection.

In the Times article Bill Gallegos, executive director of Communities for a Better Environment, defends the court decision because: “It means that oil refineries, which emit enormous amounts of greenhouse gases and contribute to big health problems, cannot simply keep polluting by purchasing pollution credits, or doing out of state projects.”

The consequential argument for a cap and trade program rests on the prediction that overall there will be reduction in greenhouse gas emissions. The environmental justice argument affirms duties that must be fulfilled and rights that must be protected, and also weighs the overall estimate of greenhouse gas reduction against the likely deleterious consequences for low-income communities.

With hope . . . Bob Traer

Just Wars?

The basic idea of a just war is very simple and ancient.  If a community is attacked, fighting to defend the community is just.  It is, however, more difficult to justify initiating a war.  Yet, the religious traditions of Judaism, Christianity and Islam have each offered reasons for doing so. 

In the Torah God tells the ancient Israelites to fight the peoples of Canaan, because God is giving the land to the people he has chosen.  Deuteronomy presents a long sermon, attributed to Moses, which includes this passage: “When the LORD your God brings you into the land that you are abaout to enter and occupy, and he clears away many nations before you — the Hittites, the Girgashites, the Amorites, the Canaanites, the Perizzites, the Hivites, and the Jebusites, seven nations mightier and more numerous than you — and when the LORD your God gives them over to you and you defeat them, then you must utterly destroy them.” (Dt. 7:1-2)

This “holy war” is just, the Torah claims, because God is just, and God commands that the war be fought.  At the end of the New Testament the Revelation to John ends with a vision of a battle between the forces of evil and the forces of good, which is assumed to be a just war because it is the will of God. 

Nonetheless, Christians were pacifists until in the fourth century Emperor Constantine converted and made defending the Roman Empire not only a just cause, but also a Christian duty.

Islam teaches that Muslims have a duty to embrace jihad, which means defending the truth.  In a time of peace, and within the Muslim community, this involves a quest for spiritual and moral purification.  In a world of war, it means fighting for Islam against its enemies.  As with Jewish and Christian notions of holy war, jihad is assumed to be just because it is God’s revealed will.

To check the dangers of holy war, theologians in the West developed a more philosophical understanding of what constitutes a just war.  The principles of the just war tradition rely on ethical presumptions, rather than assertions of divine authority.  In the thirteenth century Thomas Aquinas formulated these principles, and European political writers applied these principles to judge the wars of the sixteenth and seventeenth centuries. 

The following moral presumptions sum up the duty of a government, as it contemplates war.  To be justifiable, a war must:

•  Have a just cause.
•  Be declared by a proper authority.
•  Be based on a right intention.
•  Use just means.
•  Have a reasonable chance of success.
•  Result in more good than harm.
•  Be a last resort.

At the end of the eighteenth century revolutionary wars were fought in what would become the United States and in France.  The British government certainly did not consider the American revolt to be justified, but instead asserted that British authority over the colonies was lawful.  Likewise, the king of France did not believe the French rebels had any legitimacy. 

Yet, the American and French uprisings in pursuit of new forms of representative government were successful, not only on the battlefield, but also in securing public support for the rights that each uprising affirmed.  Both of these revolutions justified war in order to assert civil and political rights and democratic government. 

Today, rather than relying on the just war tradition, Western nations evoke the revolutionary understanding of a just war to defend their military intervention in Libya.

With hope . . . Bob Traer

Arguments Against Torture

What are the rules?

The Convention against Torture states more precisely the rights and duties set forth in Articles 7 and 10 of the International Covenant on Civil and Political Rights.  Very clearly the Convention declares the moral presumption that torture is wrong, that governments have a duty to prevent it, and that there are to be no exceptions made to this moral and legal duty.

The United States has incorporated this presumption into its domestic laws and also into the Uniform Code of Military Justice (UCMJ, Articles 77-134).  The McCain amendment to the defense spending bill, which was passed at the end of 2005, clearly prohibits “cruel, inhuman or degrading treatment of punishment” of anyone in U. S. government custody anywhere in the world.  This amendment also requires that procedures in the Army Field Manual be followed in interrogating prisoners.

Consequential Reasoning

It would seem that nothing could be clearer than the moral and legal presumption not to torture.  Yet, when President George W. Bush signed the bill that included the McCain amendment, he attached a signing statement affirming his right, as Commander in Chief, to bypass the law if he felt enforcing the prohibition against torture would jeopardize national security.

This statement by the President plus the treatment of prisoners in Abu Ghraib and the U. S. prison at Guantánamo Bay are evidence that consequence arguments are being used to try to justify torture.  There are, however, strong consequence arguments against the use of torture.

Burton J. Lee III, a doctor in the Army Medical Corps who served as physician to President George H. W. Bush, writes: “The military ethics that I know absolutely prohibit anything resembling torture….Discipline and order in the military ranks depend to a large extend on compliance with the prohibition of torture….In addition, military leaders have long been aware that torture inflicts lasting damage on both the victim and the torturer.  The systematic infliction of torture engenders deep hatred and hostility that transcends generations.  And it perverts the role of medical personnel from healers to instruments of abuse.”

Lee argues that: “reports of torture by U. S. forces have been accompanied by evidence that military medical personnel have played a role in this abuse and by new military ethical guidelines that in effect authorize complicity by health professionals in ill-treatment of detainees.  These new guidelines distort traditional ethical rules beyond recognition to serve the interests of interrogators, not doctors and detainees.”

Character Argument

To these consequence arguments, Lee adds an appeal to character: “Torture demonstrates weakness, not strength.  It does not show understanding, power or magnanimity.  It is not leadership.  It is a reaction of government officials overwhelmed by fear who succumb to conduct unworthy of them and of the citizens of the United States.”

With hope . . . Bob Traer

What Should We Do?

“What should we do?” All philosophical and religious traditions affirm that there are right actions and ways of being good persons that have intrinsic worth. The prohibition against murder and being the kind of person who offers hospitality are cross-cultural examples. Each of these ethical imperatives may be justified by reasoning that is not utilitarian, and may also be defended with religious arguments.

Alternatively, consequential reasoning does not presume there are any intrinsically right actions or ways of being, but instead asserts that we should do whatever we think will probably have the best consequences. When stated as utilitarian ethics, the answer as to what we should do is whatever will likely result in “the greatest good for the greatest number.”

Problems with consequential reasoning include the limitations on our ability to predict the future, the difficulties of measuring and comparing happiness, suffering, loss of ecosystems, financial gain, etc., and the potential use of this reasoning to disregard the rights and welfare of those in the minority. We see consequential reasoning at its worst in trickle-down economic arguments for cutting taxes for the rich and in removing governmental regulations on corporate energy production as a way of realizing greater efficiency and lower consumer costs.

Yet, consequential reasoning also has practical benefits, as we all know. There are significant risks of acting only on our good intentions. Utilitarian reasoning supports democracy by valuing the happiness or suffering of everyone (at least in principle) who might be affected by an action. Jeremy Bentham and John Stuart Mill relied on utilitarian reasoning to justify social movements for prison and educational reforms. More recently, Peter Singer has made utilitarian reasoning popular by emphasizing the suffering of animals in his assessment of the consequences of the consumer lifestyle we enjoy and recommend for the world. 

My approach in “doing ethics” is pluralist and pragmatic. It is pluralist, because I assess deontological and teleological arguments about what is intrinsically right and good, as well as consequential reasoning. It is pragmatic, because I recommend constructing an ethical presumption from the deontological and teleological arguments, and then testing this presumption by consequential reasoning. 

Doing Ethics in a Diverse World applies this approach to issues such as health care, capital punishment, terrorism, economic justice, AIDS, and sexual conduct. Doing Environmental Ethics asks what we should do about air and water pollution, the preservation of wild places and endangered species, factory farming, economic development, and climate change. 

With hope . . . Bob