Banks do not exist without the support of the government, and in exchange for that support banks have served the financial needs of people. But this social contract with banks has been dismantled. Giant financial institutions reap incredible private gains, but the burdens of those gains are absorbed by the public through neighborhoods abandoned by financial institutions, people who can’t afford a “free” checking account, and, of course, the occasional major bailout. And while all of this poses an incredible problem for our economic well-being, I despair even more about what it means for our democratic well-being.

Reason for hope: I’ve been advocating for a several years that one of the best ways for us to level the playing field in credit allocation is to re-enlist the post office to offer financial services. A few years ago, this idea was a possibility only to a handful of academics and policy makers, but I’ve become hopeful as I’ve seen the momentum build, as more people understand the scale of the problem and the logic of the solution. In the last few years, there's been a simultaneous refutation of a dominant ideology that banks operate without government intervention as well as a renaissance of books, studies, and ideas about banking history that have reawakened a somewhat dormant dialogue about reform. It gives me hope that so many people are digging up the words of Hamilton, Jefferson, Brandeis, Wilson, Roosevelt, and other reformers to revitalize an important historic struggle. It is exactly through learning about history, paying attention to present dynamics, and working toward making reforms achievable that the public can counter the growing reliance on payday lenders and the like. Postal banking is just such an innovation that has a vibrant history here in the U.S. and is a major contributor to financial inclusion abroad.

David Blanchflower, professor of economics at Dartmouth College

Reason for despair: Politicians, central bankers, and most economists seem to not to have adapted their thinking to the new economic realities. For example, the unemployment rate used to be the best single indicator of how much slack there was in the labor market, but no longer. As the downturn hit, there was a big rise in underemployment, where workers’ hours are constrained and many are stuck in part-time jobs but would like to be full-time. Too little new thinking is going on.

Reason for hope: The Swedish central bank, the Riksbank, funds the Nobel Prize in Economics. It is a young prize and for many years was given to economists who made fundamental and mostly methodological contributions. In recent years lots of the prizes were given for contributions in theory, which were untested in the data, which may or may not even turn out to be true. At long last we are starting to see the economics prize being given to economists who have actually found things about the real world. Rather than assuming we know how people behave, we are now observing and measuring what they do. Jim Heckman and Angus Deaton are good examples. It gives me hope that at long last the economics profession is moving to becoming an observational discipline rather than simply a branch of mathematics. Data matters. Nobel prizes in economics should be for finding stuff about the real world rather than for writing down elegant mathematical twiddles. Thankfully that is beginning to be the case.