5 Reasons We Need a New Reconstruction Finance Corporation
This moment of disrupted supply chains and broken markets is laying bare the US’ weaknesses in economic management capacity.
The RFC is the most important government body you’ve likely never heard of. But almost every New Deal, World War II, and Korean War program that define the US’ national story ran through it, as @JWMason1 and @pigphilosophy recount. (rooseveltinstitute.org/public-role-in…) While the US closed down the RFC — effectively a national development bank — in the 1950s, other countries emulated the model to impressive developmental success, as Ernani Torres and @RodZeidan relate: (sciencedirect.com/science/articl…) Countries that maintained a governmental role in shaping and directing finance did better, as Svetlana Andrianova, @pdemetriades, and Anja Shortland show: (onlinelibrary.wiley.com/doi/abs/10.111…)
As PPE prices surge by over 1,000%, and we have an existential climate change threat just around the corner, there’s a role for an RFC 2.0 now. (mcknights.com/news/analysis-…)
Reason 1: It would improve and coordinate the administration’s haphazard use of the Defense Production Act, just as the RFC did for FDR’s use of the war powers acts. There’s lots more we could be doing with the DPA, properly managed. From @thenation (thenation.com/article/politi…)
(Here’s a very long thread on all the things the administration has been and has not been doing with the DPA, which I’m adding to daily):
Trump is increasingly invoking the Defense Production Act of 1950 (DPA).
But he’s leaving a lot of power on the table.
Reason 2: It’s a way to fund relief efforts even if Congress won’t. While there are downsides to standing by as Congress “submerges” itself and the state (see @seattlesquinn and @SuzanneMettler1), it’s better than letting the Senate veto needed relief $. (vox.com/2020/4/22/2123…)
Reason 3: if we’re going to go a financialized route, the RFC is a more accountable way to do so than relying on private markets or the Fed, which is resisting the transparency and accountability mechanisms that Congress has attached to other relief $. (washingtonpost.com/business/2020/…)
Reason 5: A pandemic-specific RFC could pave the way for a more permanent body to address the climate crisis. In recent years, @BernieSanders, @RepDannyDavis, and others have proposed issue-specific RFCs. This is a way to show proof of concept. (reuters.com/article/us-pue…)
(Adapted from this thread.)