Banking and finance are essential to a modern economy, but they don't have to be privately owned to do it. The Federal Reserve must be transformed to create a system of publicly-owned banks. Gerald Epstein joins Paul Jay on theAnalysis.news podcast.

Transcript

Paul Jay

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In an article that appeared in the journal Catalyst, Gerald Epstein and Esra Nur Uğurlu wrote during the global financial crisis of 2007 through 2009, Lloyd Blankfein, then CEO of Goldman Sachs, famously said that it was unfair that people were so mad at him and other bankers for crashing the economy because contrary to common belief, they were "doing God's work." ["Are Bankers Essential Workers?" Catalyst 4:2, Summer 2020.]

God's work? Maybe so, but they were certainly not doing work for the economy, the taxpayers, or the people. Rather, it turns out we were all working for them. However preposterous Blankfein claim was, he went on to argue something that is contained in almost every money and banking textbook and which is constantly repeated by economists, politicians and bankers: "We're very important. We bankers help companies grow by helping them to raise capital and companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose." That's the way the bankers talk. In other words, bankers are essential workers. Well, that's the article that we're going to talk to one of the authors about today.

Now joining us to tell us whether bankers are essential workers is Gerald Epstein. He's the co-director of the PERI Institute. He's also a professor of economics. He received his PhD in economics from Princeton, and he has published widely on a variety of progressive economic policy issues, especially in the areas of central banking and international finance. He's the author most recently of The Political Economy of Central Banking: Contested Control and the Power of Finance.

Thanks for joining us, Gerry.

Gerald Epstein

Thanks a lot for having me, Paul.

Paul Jay

Talk a bit about this article, because what you get to pretty quickly is that what's essential is not the bankers. What's essential is the banking, meaning we do need banks, but they don't need to be private. Talk a bit about this idea that it's banks that actually are the creators of wealth, which is their big argument. And then we'll get into the public banking part of it.

Gerald Epstein

Right. Well, banks are essential for many activities, especially for activities under capitalism, but also in social-democratic countries as well. And the thing is, it's not that banks by themselves create wealth. Banks can only create wealth if they serve the economy and they serve society. When banks are just serving themselves, we argue that they don't create wealth, they extract wealth from the rest of society. And the problem that we've had in the last 30 or 40 years under this,