In the wake of crisis, two paths: more austerity or democratic reconstruction?

Today’s accelerating and intersecting crises are forcing a year of reckoning for Americans. The resurgence of Black Lives Matter protests after the murder of George Floyd has sparked a renewed interest in decarceration and policing alternatives. The pandemic has vindicated calls for a health care system that centers people over profits, as well as a deeper reflection on the meaning of work, family, and community. And in the background, as always, the climate crisis looms.

The federal policy responses to these crises have thus far repeated the mistakes of the 2008 financial crisis: the wealthy and overwhelmingly white-led corporations and banks get handouts, while the multiracial American working class receives meager relief and admonitions to “get back to work.” Given this federal failure, movements have shifted their focus to the state and local levels. Campaigns for rent and eviction moratoriums have popped up across the country. The #8toAbolition demands, centered on a push to defund police, have challenged mayors and city councils to reexamine their budget priorities and reimagine public safety.

However, this wave of engagement comes at the same time that the pandemic has decimated state and local budgets. Right when these green shoots are sprouting, other forces are using the pandemic as an excuse to deepen the austerity that had already been harming cities and states across the country (and has been shown to disproportionately disempower women and people of color). Two roads present themselves: more disastrous austerity, or a renewed effort at democratic reconstruction.

The way these crises — and their consequent movements and countermovements — unfold will depend in large part on what Milton Friedman once called “the ideas that are lying around” — the available policies that leaders see as actionable tools in their policy tool kit. We at the Democracy Policy Network are working to increase the number of “ideas that are lying around” by gathering, packaging, organizing, and championing ideas that deepen democracy. In the coming months, stay tuned to our platform as we roll out various policy kits on promising democratic ideas.

For now, here are twenty-five state-level policies from around the country that we believe could help meet this moment, pushing away from austerity and toward democratic reconstruction. Our policy kits on each item are currently in progress, but existing information from other organizations on each are linked to in each snippet below.

State policies toward a democratic economy:

1. Establish a state-owned public bank and authorize the creation of city-, county-, and region-owned public banks. A public bank is a banking institution managed by the government in the public interest that extends credit to state and local governments for public works and to the public at large for socially positive ventures such as cooperatives, minority-owned businesses, and social housing.

1. Establish a Community Innovation Network, based in part on Germany’s Mittelstand Competence Centres, to provide technical and financial assistance for small businesses and cooperatives. The CIN would consist of Local Innovation Hubs spread throughout the state that provide co-working spaces, mentors, resource facilitators, and fabrication laboratories (“fablabs”), utilizing modern technology to relocalize production and incubate local enterprises that meet communities’ basic needs.

1. Establish a state-owned social wealth fund, capitalized with revenue from externality taxes on carbon, coal, gas, timber, and oil, with the profit earned distributed to all residents as a basic income.

1. Establish a Local Economy Preservation Fund — a type of public holding company (recently popularized by The Democracy Collaborative) that buys equity in distressed businesses. These investments could keep these businesses afloat and allow economic activity to continue thriving in local communities. The LEPF could also align these distressed businesses with the public interest by turning its full or partial ownership stake over to either: (1) the employees (as a cooperative or Employee Stock Ownership Plan) or (2) community based non-profits — or (3) retain them for long-term public ownership.

1. Establish a publicly-administered digital payments platform with vertical and horizontal integration: Vertical integration meaning that every public authority in the state will be able to utilize this central channel to receive and disburse payments (which is especially important in times when you need to get public funds, like unemployment insurance, to residents fast); Horizontal integration meaning that the free digital wallet accounts provided to every resident will have peer-to-peer (P2P) functionality such that transfers can be made between residents as well as to and from businesses.

1. Adopt a “Comparative Resilience” and “triple bottom line” approach to public procurement by: (1) Creating a standard for the minimum percentage of a contract amount that must be re-spent in-state using evaluation tools like IMPLAN; (2) Creating a standard for the minimum percentage of total procurement from certified local enterprises (i.e., cooperatives, legacy businesses, farms, social enterprises and B-corporations, etc.); and (3) Utilizing the “Cleveland Model” by developing community-owned enterprises to meet the procurement and sustainability needs of anchor institutions throughout the state.

State policies toward more democratic housing:

1. Incubate Community Land Trusts (CLTs) by providing nonprofit and cooperative start-ups and local governments with technical assistance for development of community plans, governance, and acquisitions.

1. Facilitate the development of local land banks that acquire tax delinquent properties, clear back taxes and other liabilities, and resell them to CLTs, nonprofits, low-income community members, or into long-term public ownership.
2. Authorize local governments to enact land value returns (LVR) and split-rate property taxes (differentiating assessments between land value and property value), which would reduce sprawl and wealth inequality while increasing housing density and sustainability.
3. Partner with local governments and housing authorities to develop mixed-use and dense social housing.
4. Give tenants the right of first refusal: the first chance to purchase their home at fair market value when property owners decide to sell.
5. Create a strong tenant consumer protection law (“tenant bill of rights”) and enforce it with treble damages, such as is the case with Massachusetts’ MGL 93A. Provisions could include: (1) establishing a basic duty of care for landlords to keep a home habitable under a safety code and prevent landlords from contracting around that duty of care; (2) Strengthening tenants’ defense against eviction by guaranteeing the right to withhold rent until any damages to the property are remedied; (3) placing with property owners the liability to remedy properties in line with safety and building regulations; (4) providing tenant organizations the right to assembly in facilities’ common spaces; and (5) providing tenants the right to terminate a residential lease if they are the victim of stalking or domestic violence.

State policies toward more democratic utilities:

1. Provide technical and financial assistance to facilitate the development of municipally- and cooperatively-owned electric utilities and broadband networks.
2. Establish an Inclusive Clean Energy Credit: a renewable energy tax credit that is progressive towards smaller-scale projects to encourage distributed ownership by nonprofits, cooperatives, local businesses, and low-income community members.
3. Establish a Green Bank fund and office that provides technical and financial assistance to public and private clean energy projects.
4. Establish Citizens’ Utility Boards: independent consumer advocacy organizations formally incorporated into state government that represents utility customers.
5. Overturn existing overburdensome state regulations against municipal broadband, including competition prohibitions on municipalities, accounting for “phantom costs,” and unrealistic profitability standards.

State policies toward more democratic health systems:

1. Establish a public pharmaceutical manufacturing corporation to drive competition and lower prices.
2. Create pharmaceutical purchasing pools for public sector unions that can be opted into by a state’s citizens.
3. Develop a state-level single payer health care system blueprint, while pressuring Congress to pass Rep. Ro Khanna’s proposal to give state single-payer plans control over federal funds (Medicare, Medicaid, ACA marketplaces, Tricare).

State policies toward more democratic government:

1. Establish an ad hoc Office of a Just Recovery to watchdog recovery efforts for both corruption and issues of equity.
2. Establish Citizen Oversight Boards — elected bodies of citizens, corresponding to various state legislative committees, to watchdog and advise state governance.
3. Move to a full-time legislature and drastically increase legislative staff to ensure public officials, not lobbyists, control the legislative process.
4. Establish a citizenship news voucher system to provide direct public investment to local journalism outlets.
5. Incorporate multi-stakeholder representation in public administrative bodies, such as county and state boards of education, state university boards of regents, utility commissions, and more. For example, state boards of education should have designated representation by teachers, students, and parents.

Stay tuned for DPN policy kits on these areas (and more) in the coming months. For now, please reach out if you are interested in learning more and/or helping DPN gather, package, organize, and amplify policies like these. And if you know of a state policy that has been specifically promising in responding to this year’s crises, please let us know. DPN is a network, not a think tank — our model is based on your knowledge and participation, so please reach out if you have ideas to share.