I read yesterday an article on the DailyKos from a writer named Scribb. I have to say, amazingly, I fully agree with the opinion expressed by the DailyKos. This particular blog that I write for is suppose to counter the inane dribble that typifies their articles. But not this time. I have to say to blogger Scribb, I hear you brother, and if there is one person that can relate to what you are going through its me.
You see, a couple years ago I too started a company. A hardware products company, which turned out to be very hard, hence the name “hardware”. I have faced, as you say, the banking and investor usury, the issues with getting loans, spending every waking hour wondering how to make payroll, or how to pay the other creditors. Making phone calls to creditors asking for a little time to make ends meet, asking friends, family and fools to invest more money to keep the company going. I would describe the difficulty of starting a business similar to passing through the Eye of a Needle.
So, Scribb, I understand. I understand what family, especially wives, have to put up with in our quest for accomplishment. But I believe, both of us need to look at where the world is heading and what that means for us. As for myself, I believe there are a number of things that could change in this world of finance, which would greatly improve our position and the positions of other small businesses like ourselves. Bailing out Wall Street is not one of them.
The issue today with the current market collapse is the historical reverence to the keynesian model of government interference in the market. The collapse may have started as far back as the 30’s and some people argue it started even before that. What’s at issue is the governmental policies of interference to bring about market balance. Well the dilemma with that plan is the suspension of when and increased size of the collapse. So here we are today.
We need to reconsider how small business - the backbone of America - can get what it needs to survive and flourish. One thing it doesn’t need is a tax burden. Thank God, Obama is reconsidering that plan. One other thing small business needs is access to credit, as you point out quite well in your article. Here is where it really goes south for small business. You see, and Scribb I am sure you will understand this, you cannot have people invest in your company unless they qualify as “accredited investors”. Effectively this means the government has decided that the average person in America is too stupid to make a decision about investing in small businesses, therefore only qualified, rich people can. These rules, established by the SEC, protect the banks, venture capitalist and the rich. They get the freedom to invest in businesses and the rest of us get 401K’s.
As a colleague of mind pointed out, imagine if you will a scenario where anyone could invest in whatever they wanted. There is a store just down the street from me that has been there forever. It is well liked by the community and could do well in other communities if they could expand. But, you see, they make only the money they need to live on, much less grow. What if they could ask their loyal customers to invest in them, get them the money they need to open another store, hire more people. But we can’t. I am not allowed and they cannot offer it to me by law. What’s wrong with bartering, micro loans, and support for one’s community. Look at the Grameen Bank. They proved that non collateralized loans to small business (very small business) can work successfully if the credit is there for them to grow, even if that business is in the third world run by the poorest of the poor.
But again, the “system” here in America has been set up by the banks, the Federal Reserve, politicians and the large financial houses to control “how” money gets lent as credit. This needs to change, starting with the elimination of the Federal Reserve. Then any laws governing what would be called micro loans here in the states need to abolished. Yes it is true, there will always be the con artist waiting to take advantage of people, so education needs to change as well. People need to be taught finance in high school, but more importantly, they need to be taught basic Ludwig Von Mises Lassiez-Faire economics. We need to purge the concepts of socialism from the minds of the young. Real education in the true tenets of capitalism and the dominate power of the consumer to effect change, not the pseudo government controlled socio-capitalism we have been practicing.
This topic alone could fill many books, but in the end what this comes down to is the ability of people to interact in a free market where we can determine for ourselves what opportunities we wish to pursue. You Scribb might have a software product that I need and I might have a hardware product that would benefit you. But our ability to deal on terms for sale or barter has restrictive rules. Even more so, I may find that your product is really good and I would like to get in on the action because I might trust you to make your company a success, but I can’t. You and I cannot come together to help each other grow through investing and mutual concern for one another. That has been given to the financial institutions that have led us to where we are today. Maybe, just maybe, we can have Hope for Change, real change. Change that leads to a new world dominated by open and free capitalism.
In Response to: Killing the Soul of the American Dream