In this special pre-publication excerpt, Korten summarizes his version of the economic address to the nation he wishes Barack Obama were able to deliver.
David Korten's new book: Agenda for a New Economy
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I suffer no illusion that he will deliver it. He has surrounded himself with advisers aligned with Wall Street interests in an effort to establish public confidence in his ability to restore order in the economy. Because there has been no discussion of any other option, to most people “restoring order” means restoring the status quo with the addition of a job-stimulus package, and that is most likely what he will try to do.
This speech presents the missing option—the program that a U.S. president must one day be able to announce and implement if there is to be any hope for our economic, social, and environmental future.
Here is the address:
My administration came to office with a mandate for bold action at a time when our most powerful economic institutions had clearly failed us. They crippled our economy; burdened governments with debilitating debts; corrupted our political institutions; and threatened the destruction of the natural environment on which our very lives depend.
The failure can be traced directly to an elitist economic ideology that says if government favors the financial interests of the rich to the disregard of all else, everyone will benefit and the nation will prosper. A thirty-year experiment with trickle-down economics that favored the interests of Wall Street speculators over the hardworking people and businesses of Main Street has proved it doesn’t work.
Corrective action begins with recognition that our economic crisis is, at its core, a moral crisis. Our economic institutions and rules, even the indicators by which we measure economic performance, consistently place financial values ahead of life values.
We have been measuring economic performance against GDP, or gross domestic product, which essentially measures the rate at which money and resources are flowing through the economy. Let us henceforth measure economic performance by the indicators of what we really want: the health and well-being of our children, families, communities, and the natural environment.
Like a healthy ecosystem, a healthy twenty-first-century economy must have strong local roots and maximize the beneficial capture, storage, sharing, and use of local energy, water, and mineral resources. That is what we must seek to achieve, community by community, all across this nation, by unleashing the creative energies of our people and our local governments, businesses, and civic organizations.
Previous administrations favored Wall Street, but the policies of this administration henceforth will favor the people and businesses of Main Street—people who are working to rebuild our local communities, restore the middle class, and bring our natural environment back to health.
- We will strive for local and national food independence by rebuilding our local food systems
based on family farms and environmentally friendly farming methods that
rebuild the soil, maximize yields per acre, minimize the use of toxic
chemicals, and create opportunities for the many young people who are
returning to the land.
- We will strive
for energy independence by supporting local entrepreneurs who are
creating local businesses to retrofit our buildings and develop and
apply renewable-energy technologies.
is a basic principle of market theory that trade relations between
nations should be balanced. So-called free trade agreements have
hollowed out our national industrial capacity, mortgaged our future to
foreign creditors, and created global financial instability. We will
take steps to assure that our future trade relations are balanced and
fair as we engage in the difficult but essential work of learning to
live within our own means.
- We will rebuild our national infrastructure around a model of walkable, bicycle-friendly communities
with efficient public transportation to conserve energy, nurture the
relationships of community, and recover our farm and forest lands.
strong middle-class society is an American ideal. Our past embodiment
of that ideal made us the envy of the world. We will act to restore
that ideal by rebalancing the distribution of wealth. Necessary and
appropriate steps will be taken to assure access by every person to quality health care,
education, and other essential services, and to restore progressive
taxation, as well as progressive wage and benefit rules, to protect
- We will seek to
create a true ownership society in which all people have the
opportunity to own their homes and to have an ownership stake in the
enterprise on which their livelihood depends. Our economic policies
will favor responsible local ownership of local enterprises
by people who have a stake in the health of their local communities and
economies. The possibilities include locally owned family businesses,
cooperatives, and the many other forms of community- or worker-owned
We will act to render Wall Street’s casino-like operations unprofitable. We will impose a transactions tax, require responsible capital ratios, and impose a surcharge on short-term capital gains. We will make it illegal for people and corporations to sell or insure assets that they do not own or in which they do not have a direct material interest.
To meet the financial needs of the new twenty-first-century Main Street economy, we will reverse the process of mergers and acquisitions that created the current concentration of banking power. We will restore the previous system of federally regulated community banks that are locally owned and managed and that fulfill the classic textbook banking function of serving as financial intermediaries between local people looking to secure a modest interest return on their savings and local people who need a loan to buy a home or finance a business.
And last, but not least, we will implement an orderly process of monetary reform. Most people believe that our government creates money. That is a fiction. Private banks create virtually all the money in circulation when they issue a loan at interest. The money is created by making a simple accounting entry with a few computer keystrokes. That is all money really is, an accounting entry.
My administration will act immediately to begin an orderly transition from our present system of bank-issued debt money to a system by which money is issued by the federal government. We will use the government-issued money to fund economic-stimulus projects that build the physical and social infrastructure of a twenty-first-century economy, being careful to remain consistent with our commitment to contain inflation.
To this end I have instructed the treasury secretary to take immediate action to assume control of the Federal Reserve and begin a process of monetizing the federal debt. He will have a mandate to stabilize the money supply, contain housing and stock market bubbles, discourage speculation, and assure the availability of credit on fair and affordable terms to eligible Main Street borrowers.
By recommitting ourselves to the founding ideals of this great nation, focusing on our possibilities, and liberating ourselves from failed ideas and institutions, together we can create a stronger, better nation. We can secure a fulfilling life for every person and honor the premise of the Declaration of Independence that every individual is endowed with an unalienable right to life, liberty, and the pursuit of happiness.
No government on its own can resolve the problems facing our nation, but together we can and will resolve them. I call on every American to join with me in rebuilding our nation by acting to strengthen our families, our communities, and our natural environment; to secure the future of our children; and to restore our leadership position and reputation in the community of nations.
This is an abridged excerpt from David Korten's new book, Agenda for a New Economy: From Phantom Wealth to Real Wealth, to be published by Berrett-Koehler, Feb 2009. This extract forms part of the YES! series, Path to a New Economy. An earlier version of this chapter first appeared as part of David's article in Tikkun, Nov/Dec 2008. David Korten is the author of the international bestseller When Corporations Rule the World and The Great Turning: From Empire to Earth Community. He is co-founder and board chair of YES! Magazine, and a board member of the Business Alliance for Local Living Economies.