David Harvey: A National Reconstruction Corporation

Harvey bring this idea up in an interview with Amy Goodman. It is here around 3 minutes in or so. It's a bit different than the national reconstuction bank in important ways. He's basically talking about nationalizing the housing debt in a way that accrues to the homeowners. The corporation picks up the default housing stock but allows the current homeowners to remain as tenants. So you preserve the physical fabric of communities while restructuring the ownership. He takes a swipe at the Government bias towards home ownership and almost starts sounding like a Wall Street republican (after the crisis, not before).

Its interesting. We did nationalize the housing debt, but the way we did it, the benefits clearly accrue to large financial institutions because by guaranteeing their debt and recapitalizing them, we (the U.S. taxpayer) assumed their liability. It didn't cause the debt crisis we are in, but by dramatically increasing the liability column of the nations balance sheet, it accelerated it greatly.

In anyevent, David Harvey is an interesting and very likeable speaker. I like his analysis quite a bit, but I don't always agree with his conclusions. For example, while I think it is true that capitalism is prone to imabalances, it is not entirely clear to me why correction of the imbalance couldn't be done through market forces. It's one thing to dismantle the entire system, but it is not clear to me that this crisis is caused by capitalism functioning as it was supposed to- rather it seems to be that the system lost a lot of transparency, which might be a requirement of good markets, and therefore began to collapse inward. But I am not an economist.

He points out in another, quite good and succinct video that global crises just displace the problem from one locale to the next- but what it wrong with that? All systems are susceptible to changes that disrupt the equilibrium and take it out of balance. But if a process of rebalancing is allowed to proceed, surely that creates new opportunities for growth?

For example we have had quite a bit of investment in certain kinds of building stock in this country over the last 10 or 20 years. But what about the under-investment in infrastructure or non car based modes of transportation? Surely rebalancing that creates new potentials? Perhaps its the mode of that rebalancing that is under debate: how do we organize the process of rebalancing the national economy? Who are the stakeholders in that process and then to what extent would that have to reshuffle the market deck?