An FSOC for Continuous Public Investment: The National Reconstruction and Development Council

Abstract

The crisis our nation now faces does not stem from Covid alone. That is the ‘match.’ The kindling is simply our having forgotten for decades that ‘national development’ both (a) is perpetual, and (b) requires national action to guide it, facilitate it, and keep it inclusive. Hamilton and Gallatin, Wilson and Hoover and Roosevelt, … all ‘got’ this. They built institutions to operationalize it – imperfectly operated, but soundly conceived and designed. Our having abandoned these truths and these institutions these past fifty years has enabled not only our public health, but also our nation’s industrial and infrastructural muscle, to degenerate to a critical point. The same now increasingly holds of our social fabric. Full national regeneration – ‘Reconstruction’ in both the post- Civil War and the mid-20th century senses of the word – has thus become a matter of urgent, even ‘existential,’ necessity. And continuous ‘National Development,’ in the ‘perpetual renewal’ sense of the phrase, must follow that Reconstruction. This is what ‘Building Back Better’ must mean.Key to any such national project is how it is organized and then orchestrated. This Paper proposes means of both organizing and orchestrating. These means are simultaneously ‘incrementalist’ in their reliance upon existing institutions, while also ‘regenerative’ in enabling new synergies among those same institutions – much as our Financial Stability Oversight Council is meant to enable our post-Lehman financial regulators to develop. An FSOC for national reconstruction and development will better use what we already have, and augment it with a financing arm linked to the Fed and the Treasury.I call the resulting synthesis a National Reconstruction and Development Council (NRDC) and National Investment Council (NIC), which will both rebuild capacity now, and perpetually renew such capacity going forward, as knowledge and technology progress as they always do. ‘Building Back Better’ means Building Back Now and Forever.