Public Banking in Costa Rica: A Remarkable Little-known Model

In Costa Rica, publicly-owned banks have been available for so long and work so well that people take for granted that any country that knows how to run an economy has a public banking option. Costa Ricans are amazed to hear there is only one public depository bank in the United States (the Bank of North Dakota), and few people have private access to it.

So says political activist Scott Bidstrup, who writes:

For the last decade, I have resided in Costa Rica, where we have had a “Public Option” for the last 64 years.

There are 29 licensed banks, mutual associations and credit unions in Costa Rica, of which four were established as national, publicly-owned banks in 1949. They have remained open and in public hands ever since—in spite of enormous pressure by the I.M.F. [International Monetary Fund] and the U.S. to privatize them along with other public assets. The Costa Ricans have resisted that pressure—because the value of a public banking option has become abundantly clear to everyone in this country.

During the last three decades, countless private banks, mutual associations (a kind of Savings and Loan) and credit unions have come and gone, and depositors in them have inevitably lost most of the value of their accounts.

But the four state banks, which compete fiercely with each other, just go on and on. Because they are stable and none have failed in 31 years, most Costa Ricans have moved the bulk of their money into them.  Those four banks now account for fully 80% of all retail deposits in Costa Rica, and the 25 private institutions share among themselves the rest.

According to a 2003 report by the World Bank, the public sector banks dominating Costa Rica’s onshore banking system include three state-owned commercial banks (Banco Nacional, Banco de Costa Rica, and Banco Crédito Agrícola de Cartago) and a special-charter bank called Banco Popular,  which in principle is owned by all Costa Rican workers. These banks accounted for 75 percent of total banking deposits in 2003.

In Competition Policies in Emerging Economies: Lessons and Challenges from Central America and Mexico (2008), Claudia Schatan writes that Costa Rica nationalized all of its banks and imposed a monopoly on deposits in 1949. Effectively, only state-owned banks existed in the country after that.  The monopoly was loosened in the 1980s and was eliminated in 1995. But the extensive network of branches developed by the public banks and the existence of an unlimited state guarantee on their deposits has made Costa Rica the only country in the region in which public banking clearly predominates.

Scott Bidstrup comments:

By 1980, the Costa Rican economy had grown to the point where it was by far the richest nation in Latin America in per-capita terms. It was so much richer than its neighbors that Latin American economic statistics were routinely quoted with and without Costa Rica included. Growth rates were in the double digits for a generation and a half.  And the prosperity was broadly shared. Costa Rica’s middle class – nonexistent before 1949 – became the dominant part of the economy during this period.  Poverty was all but abolished, favelas [shanty towns] disappeared, and the economy was booming.

This was not because Costa Rica had natural resources or other natural advantages over its neighbors. To the contrary, says Bidstrup:

At the conclusion of the civil war of 1948 (which was brought on by the desperate social conditions of the masses), Costa Rica was desperately poor, the poorest nation in the hemisphere, as it had been since the Spanish Conquest.

The winner of the 1948 civil war, José “Pepe” Figueres, now a national hero, realized that it would happen again if nothing was done to relieve the crushing poverty and deprivation of the rural population.  He formulated a plan in which the public sector would be financed by profits from state-owned enterprises, and the private sector would be financed by state banking.

A large number of state-owned capitalist enterprises were founded. Their profits were returned to the national treasury, and they financed dozens of major infrastructure projects.  At one point, more than 240 state-owned corporations were providing so much money that Costa Rica was building infrastructure like mad and financing it largely with cash. Yet it still had the lowest taxes in the region, and it could still afford to spend 30% of its national income on health and education.

A provision of the Figueres constitution guaranteed a job to anyone who wanted one. At one point, 42% of the working population of Costa Rica was working for the government directly or in one of the state-owned corporations.  Most of the rest of the economy not involved in the coffee trade was working for small mom-and-pop companies that were suppliers to the larger state-owned firms—and it was state banking, offering credit on favorable terms, that made the founding and growth of those small firms possible.  Had they been forced to rely on private-sector banking, few of them would have been able to obtain the financing needed to become established and prosperous.  State banking was key to the private sector growth. Lending policy was government policy and was designed to facilitate national development, not bankers’ wallets.  Virtually everything the country needed was locally produced.  Toilets, window glass, cement, rebar, roofing materials, window and door joinery, wire and cable, all were made by state-owned capitalist enterprises, most of them quite profitable. Costa Rica was the dominant player regionally in most consumer products and was on the move internationally.

Needless to say, this good example did not sit well with foreign business interests. It earned Figueres two coup attempts and one attempted assassination.  He responded by abolishing the military (except for the Coast Guard), leaving even more revenues for social services and infrastructure.

When attempted coups and assassination failed, says Bidstrup, Costa Rica was brought down with a form of economic warfare called the “currency crisis” of 1982. Over just a few months, the cost of financing its external debt went from 3% to extremely high variable rates (27% at one point).  As a result, along with every other Latin American country, Costa Rica was facing default. Bidstrup writes:

That’s when the IMF and World Bank came to town.

Privatize everything in sight, we were told.  We had little choice, so we did.  End your employment guarantee, we were told.  So we did.  Open your markets to foreign competition, we were told.  So we did.  Most of the former state-owned firms were sold off, mostly to foreign corporations.  Many ended up shut down in a short time by foreigners who didn’t know how to run them, and unemployment appeared (and with it, poverty and crime) for the first time in a decade.  Many of the local firms went broke or sold out quickly in the face of ruinous foreign competition.  Very little of Costa Rica’s manufacturing economy is still locally owned. And so now, instead of earning forex [foreign exchange] through exporting locally produced goods and retaining profits locally, these firms are now forex liabilities, expatriating their profits and earning relatively little through exports.  Costa Ricans now darkly joke that their economy is a wholly-owned subsidiary of the United States.

The dire effects of the IMF’s austerity measures were confirmed in a 1993 book excerpt by Karen Hansen-Kuhn  titled “Structural Adjustment in Costa Rica: Sapping the Economy.” She noted that Costa Rica stood out in Central America because of its near half-century history of stable democracy and well-functioning government, featuring the region’s largest middle class and the absence of both an army and a guerrilla movement. Eliminating the military allowed the government to support a Scandinavian-type social-welfare system that still provides free health care and education, and has helped produce the lowest infant mortality rate and highest average life expectancy in all of Central America.

In the 1970s, however, the country fell into debt when coffee and other commodity prices suddenly fell, and oil prices shot up. To get the dollars to buy oil, Costa Rica had to resort to foreign borrowing; and in 1980, the U.S. Federal Reserve under Paul Volcker raised interest rates to unprecedented levels.

In The Gods of Money (2009), William Engdahl fills in the back story. In 1971, Richard Nixon took the U.S. dollar off the gold standard, causing it to drop precipitously in international markets. In 1972, US Secretary of State Henry Kissinger and President Nixon had a clandestine meeting with the Shah of Iran. In 1973, a group of powerful financiers and politicians met secretly in Sweden and discussed effectively “backing” the dollar with oil. An arrangement was then finalized in which the oil-producing countries of OPEC would sell their oil only in U.S. dollars.  The quid pro quo was military protection and a strategic boost in oil prices.  The dollars would wind up in Wall Street and London banks, where they would fund the burgeoning U.S. debt. In 1974, an oil embargo conveniently caused the price of oil to quadruple.  Countries without sufficient dollar reserves had to borrow from Wall Street and London banks to buy the oil they needed.  Increased costs then drove up prices worldwide.

By late 1981, says Hansen-Kuhn, Costa Rica had one of the world’s highest levels of debt per capita, with debt-service payments amounting to 60 percent of export earnings. When the government had to choose between defending its stellar social-service system or bowing to its creditors, it chose the social services. It suspended debt payments to nearly all its creditors, predominately commercial banks. But that left it without foreign exchange. That was when it resorted to borrowing from the World Bank and IMF, which imposed “austerity measures” as a required condition. The result was to increase poverty levels dramatically.

Bidstrup writes of subsequent developments:

Indebted to the IMF, the Costa Rican government had to sell off its state-owned enterprises, depriving it of most of its revenue, and the country has since been forced to eat its seed corn. No major infrastructure projects have been conceived and built to completion out of tax revenues, and maintenance of existing infrastructure built during that era must wait in line for funding, with predictable results.

About every year, there has been a closure of one of the private banks or major savings coöps.  In every case, there has been a corruption or embezzlement scandal, proving the old saying that the best way to rob a bank is to own one.  This is why about 80% of retail deposits in Costa Rica are now held by the four state banks.  They’re trusted.

Costa Rica still has a robust economy, and is much less affected by the vicissitudes of rising and falling international economic tides than enterprises in neighboring countries, because local businesses can get money when they need it.  During the credit freezeup of 2009, things went on in Costa Rica pretty much as normal. Yes, there was a contraction in the economy, mostly as a result of a huge drop in foreign tourism, but it would have been far worse if local business had not been able to obtain financing when it was needed.  It was available because most lending activity is set by government policy, not by a local banker’s fear index.

Stability of the local economy is one of the reasons that Costa Rica has never had much difficulty in attracting direct foreign investment, and is still the leader in the region in that regard.  And it is clear to me that state banking is one of the principal reasons why.

The value and importance of a public banking sector to the overall stability and health of an economy has been well proven by the Costa Rican experience.  Meanwhile, our neighbors, with their fully privatized banking systems have, de facto, encouraged people to keep their money in Mattress First National, and as a result, the financial sectors in neighboring countries have not prospered.  Here, they have—because most money is kept in banks that carry the full faith and credit of the Republic of Costa Rica, so the money is in the banks and available for lending.  While our neighbors’ financial systems lurch from crisis to crisis, and suffer frequent resulting bank failures, the Costa Rican public system just keeps chugging along.  And so does the Costa Rican economy.

He concludes:

My dream scenario for any third world country wishing to develop, is to do exactly what Costa Rica did so successfully for so many years. Invest in the Holy Trinity of national development—health, education and infrastructure.  Pay for it with the earnings of state capitalist enterprises that are profitable because they are protected from ruinous foreign competition; and help out local private enterprise get started and grow, and become major exporters, with stable state-owned banks that prioritize national development over making bankers rich.  It worked well for Costa Rica for a generation and a half.  It can work for any other country as well.  Including the United States.

The new Happy Planet Index, which rates countries based on how many long and happy lives they produce per unit of environmental output, has ranked Costa Rica #1 globally.  The Costa Rican model is particularly instructive at a time when US citizens are groaning under the twin burdens of taxes and increased health insurance costs. Like the Costa Ricans, we could reduce taxes while increasing social services and rebuilding infrastructure, if we were to allow the government to make some money itself; and a giant first step would be for it to establish some publicly-owned banks.

_______________________________

Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her blog articles are at EllenBrown.com.

51 Responses

  1. They put their trust in the political elite ?

    • hmmm, while it’s a choice between a political elite, or a corporate elite, we might hope politicians be more answerable to the people.
      When we no longer get a choice, things get worse.

      • Why trust either. People can now own their own money at the individual level. There’s no need to use debt now that bullion values float. Just send the right weight on the basis of the real-time value.

  2. Reblogged this on Spartan of Truth.

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  4. Greetings Ellen:
    I have no disagreement with your analysis of Costa Rica, but I do have another story to share – two if you like the first one. The story was told to me by Rodrigo Caruso Odio in around 1998 or thereabouts. He told the story of when Central America was having challenges from the Sandanistas – two things happened then – one – the country assimilated almost 750,000 of its neighbours. They sought refuge and were welcomed with open arms – and put to work and had all benefits of the Costa Rican Society. This was amazing considering the population at the time was between 3.5 and 4.5 million. The second important occurrence was the offer from the United States – MAdeline Albright I think, came to the Rodrigo and offered whatever he needed to fight the Sandanistas – Rodrigo said no thank you. MS Albright said – you are going to make the President of the US quite angry. That will be his problem not mine. If I take weapons and your economic support then my people will be angry and that will be my problem not his. Thank you very much but no thank you.
    I heard this story from Rodrigo in a discussion we had in Korea at the Institute for Peace Studies where we were both the guest of Dr. Young Seek Choue – but that is my second story and I can leave it for now.

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  7. Ms. Brown,
    New to the site. I am in Alaska. As I understand what you are saying a State Public Bank can use Fractional Reserve Banking. I want to make sure on my understanding. Does BND use it? Who regulates the reserve amount? Alaska has $40+ Billion in our Permanent Fund invested around the world. If this money was in our public State Bank the credit available would be astronomical. Seems so simple if my understanding is correct.
    Ray Southwell
    Alaska

    • The BND operates like other banks; it makes loans roughly equal to its deposits (which mainly come from the state and state agencies). So in effect it doubles its money, since the deposits are still there in the bank available for withdrawal as needed, though loaned out.

      If Alaska has $40 billion in its own capital — that is, capital available to invest in a bank (as opposed to deposits) — it could be leveraged at about 10 to 1 in loans = $400 billion in loans. Deposits would be needed to clear the checks, but again they can be borrowed if not immediately available in the bank. They can be borrowed from other banks or the money market or the Federal Reserve or the Federal Home Loan Bank (the BND uses the latter). Conservative banking principles say not to get too far out of line though; 1 to 1 is still considered prudent.

      • Thank you. I am going to run with this idea here in Alaska.

  8. I’m not sure what a “state owned capitalist enterprise” is and would appreciate some clarification on the term.
    Thank you.

    As an American, I am deeply suspicious of any corporate/government alliance as this model in the US enables America to bully and devour everything in sight (see the anecdote from Mitch Gold above on Albright’s veiled threat) and then proceeds to devour its own.
    I suppose that when someone speaks of the “Trinity” of health, education and infrastructure, it is essential to include the point that education must teach the student to be a vigilant citizen and one who intelligently keeps tab on any elected officials and non elected bureaucrats and swiftly deals with them appropriately when they violate the public trust.
    If you don’t have this vigilance as part of the national consciousness, entropy and sticky fingers will ultimately prevail….
    My second concern is the size of the government entity that legislates these matters. I will assert here that the larger the government, the more problematic it becomes.
    How do you keep a government accountable and honest?
    Has there ever been one in historical memory?
    What makes us think we can have one now….can anyone comment?

    • Scarlett,
      Systems of checks and balances. We must develop systems that reward good behavior and discourage bad behavior. In 1929 the banking system crashed. Bad behavior was accepted and investment banker made bad choices. Glass-Steagall Act was passed. It backed commercial bankers with the FDIC. The investment bankers were on their own. If they made bad choices they went under, no bail-out. In 1999 Clinton signed the abolishment of Glass-Steagall with the support of Congress. Bad behavior was rewarded and the system crashed. Here in Alaska the people feared the bad behavior potential of politicians. The people take a small percentage of our oil revenues and place them in what we call our “Permanent Fund.” Politicians cannot touch this money and we have $40+ billion invested around the world. Alaska has no income tax and each man woman and child received a check from the State each year. This year it was $900. Develop systems that reward good behavior. I am thinking about the growth potential here in Alaska if this untouchable money was placed in a State Bank.

      • Thank you Ray Southwell…
        That was a very interesting and motivational response.
        Yes, checks and balances…..

    • As the author of that comment about state owned capitalist enterprise, I define it thus: A for-profit enterprise operated with the intention of producing a return to its investor (the government, in this case) of original investment and subsequent investment capital, plus a profit – i.e., capitalism run by the state. The Bank of North Dakota is an example. This is to be distinguished from a state-owned public service enterprise, which is NOT operated with the intent to do anything other than cover costs.

      • That clarification helps me, Scott–thanks. I wouldn’t use the term, but see what you mean. To me “capitalist” denotes private. I think the Chinese characterize their economy as “socialist market,” which seems more apt to me. I see no conflict between “socialist” and “profit-seeking.” Nor is there a conflict between “socialist” and “entreprenerial” as is shown by Adam Hersch’s description of what is going on in China in one of the China chapters in Ellen Brown’s book The Public Bank Solution.

        • Ernie,
          Seems to me we get all wrapped up in words-Capitalism, Socialism. We think one delivers freedom and the other is something else. If we understand freedom as an individuals right of owning their productive power we can better develop systems for an economy for all people. The Federal Reserve Banks and the Income tax that supports it were both established in 1913. A system of slavery.

          • Agreed. We are enslaved to the unearned-wealth-extracting system.

    • Therooster,
      agreed. That is the importance of developing a system that rewards good behavior. If created credit was used for new asset structures, the credit would be turned into something of value. Today, debt is used for money making schemes. This behavior creates inflation or asset bubbles. Not to improve the economy. That is why we face another crash worse than the last.

    • Scarlett: You mention: “education must teach the student to be a vigilant citizen and one who intelligently keeps tab on any elected officials and non elected bureaucrats and swiftly deals with them appropriately when they violate the public trust.”

      If you have a citizenry that lives in stable, sustainable communities, where jobs are secure, services are adequate, and income/wealth is reasonably distributed, and with elected representation that is not too far distant (I mean that in geographically, but also – and most importantly – socially, politically and culturally) people don’t have to be taught to be involved citizens. They have the time to be involved, the desire to be active, the resources to facilitate participation. In other words, they become invested in the public life that supports their private life. It need not be taught.

      • Paul,
        People fear speaking out against the system. We are taught to go along with things or fear losing what we have. People will accept the bail-in plan. Banks through government will take only a portion of what we have worked so hard for. “The fear of loss is more powerful than the hope for gain.”

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  10. What a crock. I live here in Costa Rica.

    When I arrived in 1995, there existed only Public banks; private banks were illegal. One of those Public banks, Banco Anglo, was looted by it’s Directors and has gone bankrupt, so there are only four Public banks remaining. And yes, the surviving Public banks have never gone bankrupt.

    About ten years ago, the Costa Rican government caved in to public pressure and permitted private banks, but the government refuses to insure them; so sure, everyone keeps their savings with the Public banks and uses the private banks for day-to-day banking needs.

    Of the private banks, I can remember only one (out of 29?) that failed; it was called Banco Elca. So; Public bank failure rate, 20%’ private bank failure rate. 3.5%

    • Anthony … Bravo ! The culture of private banks and government banks have a structural commonality that seems to elude people’s “better consciousness” They are both structured by way of hierarchy (centralization) where there is a focal point for power. It’s the apex that seduces as the apex always creates a climate for massive temptation. This can also be said about all political ism’s of modern history, including representative democracy. In the grand scheme of things, you might say that we’ve been supply driven since the “apple was shoved in our faces” , top-down. It was in the beginning of civilizations that the structural die was cast. Structure, unbeknownst to almost all people, is the guiding principle by which power flows, not so much different from the effect that a prism has on the flow of light. This is why the ultimate structure for democratized power would feature decentralization. The paradox is that a debt currency, regardless of who the stewards are, cannot be decentralized. Debt currency, regardless of its interest rate, even if it’s zero, has a codependent relationship with consolidated power. It is only within the age of information that we have acquired the real-time tools whereby we could apply scalable liquidity to commodities for the sake of decentralizing currency systems that are based on real-wealth. An asset can be decentralized but rare monetary metals such as gold & silver have always had liquidity problems because of limited supply and/or FIXED trade value. Now that the value of these metals have been set free by way of real-time (floating) applications, liquidity is not solely tied to the available weight (supply) of monetary bullion. Bullion now has full scalable elasticity/liquidity that is relative to its trade value. This allows for full decentralization for people to own and distribute their own debt-free currency.

      You cannot pour new wine into old wineskins. Everything has its time.

    • On one point, I will concede: Banco Anglo was, indeed, a state bank. established in 1863, and which operated as the central bank before the BCCR was established. It was subsequently privatized. I had been under the false impression that it had been a private bank (which it was from the establishment of the central bank until the nationalization of 1949). So I went back and read the investigative report, and it turns out that it had invested in Venezuelan external debt, as well as the bonds of the JASEC electric cooperative in Cartago. In both cases, the bonds defaulted, and the losses amounted to $55 million, and became a major scandal, when it turned out the directors had been bribed to purchase the bonds in both cases. Efforts to collect on the bonds failed. The bank never failed outright; it was intentionally closed as part of president José Maria Figueres’ efforts to streamline and improve the public banking sector and reduce corruption in it.

      Regarding the government “caving to public pressure,” it wasn’t the public’s pressure; it was the IMF and Washington’s pressure. There was always an indifference by the Costa Rican public; I don’t know any Tico who was ever chomping at the bit to see the private banks open. Sure, there was curiosity (shortlived, as it turned out), but never an insistent demand. The public banks do everything that the private banks do, and in a lot of cases, do them better. I can go almost anywhere in Costa Rica and use my Servibanca card to get money or make a transaction. Can’t do that with Banco Lafite. In fact, among my neighbors, I have NEVER heard ANY of them mention a bank account other than in one of the state banks, nor have I ever been asked, in ten years of living here, to make a deposit to an account other than in a state bank. I can (and do) have my Social Security direct-deposited into my Banco Nacional account; the only other banking option where I can do that is Banco de Costa Rica, another state bank. None of the private banks have been approved for that by the Social Security Administration. An article in AM Costa Rica about a year ago stated that the four state banks hold 80% of retail deposits – and that’s up from 75% ten years ago. Sounds to me like the private banks aren’t making many inroads to the state banks’ market share with their supposed superior service. My impression of it is that the private banks continue to exist only on the severe allergy to state banking by the political right.

      Regarding private bank failures – you’re conveniently forgetting the several cases of failed cooperativas, the failure of Alajuela Mutual, and the forced supervision of HSCB and Scotia during the financial crisis. They were saved only by government directly running their show. And there have been innumerable cases of where private banks have been publicly admonished that they were facing supervision if they didn’t rebuild their reserves. Plug all those into your numbers, and the situation looks a whole lot different.

      • Therooster,
        Agreed. Smaller is better. Germany’s economy is the best in the European Union. According to economics professor Richard Werner, it is because the smaller banks help the local economy. What needs to be developed are banks whose purpose is to help the people be more productive. Credit/money creation is just a tool that should be converted into new assets that have value.

        • Therooster,
          Small is better. Creating credit/money has its problems. Many of my friends believe we should only have gold and silver as money to keep the Fed/Government from using it for the wrong purposes. I disagree. I also disagree with you premise of individual people becoming banks. Money/credit creation can be used for both good things for the people and bad. Created money/credit can be used for many things but it should be used as a tool to help people become more productive. Every Empire throughout history that has used fiat currency for non-productive use has lost their standing as a super-power. The USA is no exception. The boom-bust cycles is the result of money creation used for non-productive purposes. Asset bubbles.

          • Yes, bubbles mainly blown by banks using leverage. That’s what Nomi Prins said in her book It Takes a Pillage: the fraudulent MBSs were 90% fluff and 10% mortgage. But with the QEs the Fed has paid the banks cash for their trash, abetting the theft.

  11. This is a very informative and interesting article, but I disagree a bit with the conclusion. The conclusion suggests that the US should adopt public banking so that it has sufficient revenue to fund social spending. I think this is not even close to the best reason for public banking (even in this article), and it perpetuates a myth that is stifling progressive public initiative. The US, unlike Costa Rica in the 80s, does not have debt denominated in another currency. It has an independent, floating, fiat currency. The US does not need to generate revenues from taxes or from public-capitalist institutions or from successful investments to fund social spending. We could fund single payer health care right without any revenue from private citizens. There is no threat that another country or private actor could increase our interest rates on our “debt” like what happened to CR, because all of our debt is denominated in the currency that we print/allocate, and the interest rate is largely controlled by the US Fed. Individual states, like North Dakota, of course, do not have that ability. So, if the article is only talking about state-level public banking, then I agree about revenues. She seemed to be implying, however, that the US federal government spending is constrained by revenue shortfalls, which is not the case. The idea that federal government spending should be related to revenue allows conservatives to say that there is no alternative to the short-term cutting of benefits. The fact that there may be an alternative ignores that this is a false choice. The US should have public banking. The US must spend on social imperatives like health care. The US does not need the former for the latter. The CR situation was austerity and privatization forced from outside. The US is doing it to itself, because the populace does not understand the operational realities of the monetary system we have adopted.

    • Matt,
      I would suggest we drop the terms, social programs, conservative, progressive ideas and other divisiveness terms. Consider discussing what is freedom? It is about economics. A freeman owns his own productive power. A slave’s productive power is owned by someone or something else. We think we are free in this nation. We are not. Only different groups of slaves fighting each other for a bigger peace of the pie from the master. If we developed systems that promote freedom and quit fighting we could change things for the good.

      • I am not sure why those terms are divisive, or how your comment relates to my specific point of departure from the article at hand. Perhaps “conservative” could be considered pejorative, but I was trying to be descriptive. Progressivism should be about creating the means to true conditions of economic freedom. Knowing that the government is not revenue constrained should help to alleviate some of the infighting that you describe. For example, dispelling this myth could help people be aware that taking care of an aging population does not require heavy regressive taxation or cutting of other socio-economic programs. Anyway, I think I agree with your main point about infighting, but I think my comment is a substantive discussion of strategy towards that end.

        • Matt,
          You stated- “The idea that federal government spending should be related to revenue allows conservatives to say that there is no alternative to the short-term cutting of benefits.”

          You believe all conservatives think and believe the same. Too much time is spent placing people into certain groups and say they all think the same.

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  13. While I agree Credit Unions and ‘independent public depositories’ (as in S.Dakota) seem to be the best way for financial transactions, I dont
    agree with Mr. Bidstrup’s perception that corporate stimulus should be
    used in Costa Rica . When corporations rule a country, it’s
    called Fascism. President Arias second term, helped ram thru
    NAFTA/CAFTA (North America/Cent.American Free Trade Agreements).
    Costa Rican farmers I spoke with all were opposed. But many who worked under corporate bosses were ordered to vote FOR Free Trade
    ..or loose their jobs! Vibrant farmers markets are springing up all around San Jose, but the struggling farmers cant afford high interest loans, and the corporations resent their ‘ free market’ fresher, cheaper, more varied, sometimes organic…produce.
    Another problem is a bureaucratic government run by a Good Ole Boy system with back room payoffs. It appears all government departments are exploding with bureaucrats, inefficient, and unproductive. The customer is always wrong.
    C.R.’s vaunted health system is seriously over
    burdened while Big Pharma is alive and thriving. This small country is blessed with unimaginable biodiversity, bordered by two oceans, has 15different climate zones, It begs for strong, intelligent, honorable
    government for its people. but Corpratism is NOT the answer.

  14. […] Public Banking in Costa Rica: A Remarkable Little Known Model […]

  15. […] Public Banking in Costa Rica: A Remarkable Little-known Model […]

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  17. Does anyone know Ellen H. Brown’s opinion of Islamic Banking? No usury allowed in Islamic society so they view banking as a partnership between the bank and customer. Seems like the most common sense approach. Also micro-banking has a place in an civilized society, because in life we never get something for nothing unless we opt to use our “credit” in a charitable way. Always looking for the truth, and I would like to know if there is something more equitable than a Public Bank. For sure the US’s current banking system is the parasite that we are feeding.

    • I wrote about that some here — http://truth-out.org/news/item/18604-making-the-world-safe-for-banksters-syria-in-the-crosshairs — and in Web of Debt. I’ve spoken at two riba (usury)-free conferences in Malaysia, and I’ve heard from people there that there are problems with what passes as usury-free banking. It’s still private, and private banks have to make money, so they do what critics call “usury by other means.” They charge twice as much for the house if you buy it over 30 years than if you pay all cash. The partnership arrangement with businesses is also problematic, because it means the business has to share control with a stranger only interested in making money short-term, not necessarily in promoting the business over the long term. I think public banks actually satisfy the proscription against profiteering and exploitation better than what passes for usury-free banking. The public bank profits go back to the people. In the original Sumerian model (Sumeria was where Iraq is today), the bank was the temple and the interest went to support widows and orphans.

      • I found Syria in the Crosshairs earlier and it’s very informative. Thank you for your real-life insights into Islamic Banking. The subject of money is very interesting indeed. I’ve learned so much from your book Web of Debt which I’m half way thru, and the Public Bank book awaits me on my kindle! Thanks for all you do Ellen!

        • My pleasure!

  18. […] Go to Original – ellenbrown.com […]

  19. […] from Web of Debt. Photo credit: […]

  20. […] from Web of Debt. Photo credit: […]

  21. […] via Public Banking in Costa Rica: A Remarkable Little-known Model | WEB OF DEBT BLOG. […]

  22. […] Public Banking in Costa Rica: A Remarkable Little-Known Model […]

  23. […] idea that can energize myriad economic justice projects. We already know it works,in Germany, Costa Rica and, of course, North […]

  24. […] Costa Rica set another good precedent. Its public banking dates back to 1949. As of a decade ago, its four state banks held 75 percent or more of all individual deposits. […]

  25. […] By Ellen Brown, Web of Debt. This piece first appeared on Web of Debt. […]

  26. […] By Ellen Brown, Web of Debt. This piece first appeared on Web of Debt. […]

  27. […] Costa Rica set another good precedent. Its public banking dates back to 1949. As of a decade ago, its four state banks held 75 percent or more of all individual deposits. […]

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