By Nancy Spannaus
Jan. 25, 2021—President Biden’s inaugural call for national unity, as the nation’s top priority, has been met with cynicism from all sides. Yet, his objective is not only correct, but urgent. The nation’s leadership must devise a pathway to national unity without delay.
But what is the content of that pathway? In my book Hamilton Versus Wall Street, issued almost two years ago, I devoted an entire chapter to the assertion that “Hamilton’s political economy is key to saving our Constitutional republic.” I then revisited the issue in two blog posts in the spring of 2019, when partisan warfare was already reaching a fever pitch. In all three, I drew on the lessons of American history to show how a Hamiltonian approach to economic policy, which would bring progress to all sections of society, could heal our national divide.
But how do we apply those lessons today?
What’s required, in my view, is the application of the key principles of the American System of Economics.
Principle No. 1: Rein in Wall Street
The first principle of the American System involves establishing national sovereignty over our currency and financial system. During the recent decades of increasing deregulation, and especially the abandonment of Glass-Steagall, this principle has been violated in the extreme. The Federal government, from the Fed to the Congress, has essentially turned control over the national financial system to Wall Street, which has obscenely lined its own pockets, at the expense of the general welfare.
Indeed, one of the major propaganda lines of Trump presidential campaigns has been that he is an opponent of, or opposed by, Wall Street. Yet, in practice, the Trump economic policy has served to dramatically boost Wall Street predatory practices, removing even the most rudimentary controls, and resulting in huge bonanzas for the wealthy while the nation as a whole suffers.
So, one of the first major steps must be to rein in Wall Street by re-imposing Glass-Steagall separation of commercial and investment banking, halting support for the stock market bubble, and promoting investment in the nation’s businesses and infrastructure.
Principle No. 2: Provide Credit to Rebuild
An American System approach calls for the Federal government to ensure affordable credit for the progress of the physical economy of the nation—especially its farms, industries, and infrastructure. This is the approach that will create jobs and improve living standards for the future. In past periods, this function was carried out by National Banks, Lincoln’s greenbacks, and FDR’s Reconstruction Finance Corporation. These institutions financed projects which led to expanding employment and technological progress throughout the country, establishing new ties between regions and great increases in productivity.
There are numerous ways this could be done, but the most practicable at present is the proposal for a National Infrastructure Bank which is included in H.R. 6422, a bill introduced during the last session of Congress. That proposal would use a portion of the $17 trillion in U.S. government debt to capitalize a bank dedicated to infrastructure alone, with the ability to lend up to $4 trillion. It is estimated that such an investment would employ in the range of 25 million people on projects such as high-speed rail, replacing decaying urban and rural water systems, and providing universal broadband access (a modernized Rural Electrification program).
Principle No. 3: Protect our Labor Force and Industry
It is the U.S. labor force, provided with a decent living standard, education, and support, which represents the indispensable source of our nation’s wealth. Yet a huge portion of this labor force has actually been thrown on the human scrap heap, as our economy has outsourced productive industries; slashed wages, pensions, and health care; and thus left millions to die of “diseases of despair” or other products of social disintegration.
To reverse this process will obviously take time, even as it was a long time in the making. But it must begin with raising wages, guaranteeing affordable health care, and expanding educational and training opportunities to those who have been denied. Reasonable tariffs and tax incentives for our vital industries will also be part of the package.
Principle No. 4: Defining Our National Goals
The American people have worked most in harmony when striving to achieve an overriding national goal. The last such serious effort was declared by President John Kennedy, when he set the goal of putting a man on the Moon, and bringing him back, 60 years ago this spring. That goal led him to push through an in-depth mobilization of our scientific and industrial resources, and led to the inspiration of a whole generation of scientists and engineers committed to using their creativity to meet the objective. The benefits have paid back the investment manyfold.
Today such a national goal must include vanquishing the pandemic with a comprehensive approach that includes: 1)rebuilding our medical supply industry; 2) expanding our hospital capacity; 3) training an adequate cadre of medical workers; 4) investing in public health measures that have been largely abandoned over recent decades; and 5) launching a scientific mobilization to understand such diseases.
None of this can be accomplished, of course, without dramatically upgrading our transportation, power, and water infrastructure to the next generations of technology.
Given the heat of the political moment, such actions cannot immediately bring our nation together. However, I am confident that the implementation of these programs will start to rebuild trust in our government once again, laying the basis for a revival of the spirit of collaboration in rebuilding our country and national life that has not been seen since the years of World War II.