Originally advanced in 2018, the NIA proposal has become particularly salient in the context of the current intersecting public health, economic, and climate crises. Drawing on the experience of the New Deal era’s Reconstruction Finance Corporation (RFC), the NIA offers a concrete institutional solution to multiple organizational, financial, and operational challenges associated with the long-term climate agenda. The NIA would operate alongside the Treasury and the Federal Reserve and directly allocate both public and private capital to clean infrastructure projects that currently do not get funded in private markets on the necessary scale. It will actively participate in financial markets not only as a lender, guarantor, and market-maker, but also as an active asset manager and venture capital investor. By doing so, the NIA will serve as a permanent institutional platform for mobilizing and directing the nation’s financial, technological, and human resources to where they are needed the most in our battle against climate change.
THE NIA MODEL OFFERS SEVERAL KEY BENEFITS:
Bringing private investment into clean energy and environmentally sustainable public infrastructure is a fundamentally efficient public policy that will amplify the impact of federal funding and reduce public costs.
A hybrid, market-actor NIA will not be directly subject to politically determined federal budget constraints, which will enable it to pursue a bolder and more ambitious agenda.
By offering an attractive new “safe” asset class to institutional investors, the NIA will drain private capital away from speculative assets and high-risk activities, which will enhance financial market stability.
Raising money from pension funds, insurance companies, and other institutional investors will provide the NIA with an important market feedback and signaling mechanism. These dynamics of market competition will serve as an important safeguard against cronyism and excessive political interference in the NIA’s operations.
By providing a ready source of patient capital dedicated to environmental and social justice, the NIA will encourage the emergence of new forms of mutual and employee-owned investment vehicles, thus democratizing ownership of financial assets.
The NIA will use its power as a shareholder and creditor to improve labor conditions and democratize industrial relations within firms.
The NIA will offer many Americans a chance to invest more of their personal savings in clean infrastructure, combining the financial benefit of adding a “safe” asset to their portfolios with the sense of moral satisfaction. This will enhance the public’s understanding of finance as a fundamentally public resource and a legitimate arena of direct public action—a critical step toward a deeper democratization of finance.
