Investing in local economy to be focus of authorís talk
BAKER CITY — Michael Shuman, author of “Local Dollars, Local Sense,” is coming to Baker City’s Bull Ridge Brew Pub Monday.
Shuman will talk, starting at 5:30 p.m., about community capital and how investing in the local economy creates benefits for both the investor and regional businesses.
“Communities are more leery of the stock market and changes in the law around crowd funding is creating interesting things we can do right now,” Shuman said, who has made a name for himself encouraging people to shop and invest locally.
He said nearly 100 percent of investors have their long-term capital on Wall Street, which amounts to $30 trillion.
“If you believe, as I do, local businesses are entitled to half that money,” Shuman said.
He said one criteria an investor should ask is, “‘Is the company competitive?’ Local small businesses are markedly more competitive, despite the best efforts of policy makers.”
He said the market share of jobs in large, non-local businesses remained the same for more than 15 years despite all the hype around globalization.
“It is remarkable that local businesses have retained the job market share. Sole proprietorships are three times more profitable than C Corps, which most longer term investments are in,” said Shuman. “From an investment standpoint these businesses have higher rates of return.”
Shuman said three studies conducted in the last three years show that counties around the country with the highest density of local small business have the highest growth, the highest growth of income per capita, bring down levels of income inequality and bring down poverty.
What is lacking is a critical mass of businesses in which to invest to create portfolios for mutual and pension funds. “To make it easier and cheaper to issue stock or debt loads we need to create mechanisms to buy and sell them, like local stock markets. Then we need to create investment funds portfolios to bring down the risk,” Shuman said.
He said the Securities Exchange Commission created a new pathway for crowd funding. “This is the future of securities. What we are going to start seeing, as the number of stock issues expand, the rise of the local stock exchange.”
Shuman said local investment was the norm for most of human history. “A hundred years ago we had local stock markets, a fascinating history that is virtually unknown in more recent times. I honestly believe small town America is more significant in terms of getting the local economy right. We have now identified a bunch of tools to put local investors money in local business.”
Portland’s Springboard Innovation, headed by Amy Pearl, gives access to such tools online.
Pearl said, “Springboard Innovation is running ChangeXchange Northwest, providing tech training and assistance to change ways businesses are financed. Our goal is to have regular people invest in local businesses, either through loans or equity investments.”
Pearl said ChangeXChange is an initiative of Springboard designed to fill finance, knowledge and information gaps focused on Oregon and Washington.
“The the idea is for firms and individuals to focus on regional investing, by putting money where they live across the spectrum of finance. Changes in the law have given the economic climate nationally and globally new ways to take advantage of leveraging by using a technology platform,” said Pearl.
This new technology platform supports what Springboard is doing on the ground, she said, a strategic approach to disseminate information on different ways one can invest. She said general information about these concepts and links to training events and investment opportunities are available at www.springboardinnovation.org.
Lisa Dawson, Executive Director of Northeast Oregon Economic Development District said, “Locally we are going to be offering workshops and classes for both people interested in making local investments and what businesses need to do to connect with local investors.”