It would be a tragic mistake to assume that passing a public-banking law amounts to 'mission accomplished'. The mission has only just begun.
Three decades after the fall of the Berlin Wall, the United States is finally embracing public banking. In the summer of 1989, political theorist Francis Fukuyama famously suggested that American-style free-market capitalism would become the default mode for organising economies around the world. But now, policymakers in that model's very heartland are looking for alternatives.
Unlike many other countries around the world, the US has never had a sizeable public-banking sector. But as of October 2019, public banks are legal in California, making it the second (after North Dakota) and largest state to have embraced the idea. California lawmakers recently enacted legislation that officially authorises "public ownership of public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities".
Judging by the text of the law, California's public banks will be more limited in scope than public-banking sectors elsewhere. They will be local, not-for-profit entities with a designated public purpose. Some may operate as commercial banks, accepting deposits and making loans; and others may...