A Neighborhood Improvement Journal - Summer 2017

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Nurturing the Neighborhood Economy  -  or

Getting Off the Money Grid  -  Part I

 by Fred Gillette

 

In a period of economic turbulence, there’s more reason than ever for people to strive for a greater sense of control over their own financial lives.  The assumption that “the economy” can only exist as a giant, centrally controlled behemoth can, to an often surprising extent, be successfully challenged. 

 

Banking  

Probably at the heart of our current frustrations over job insecurity and the sense that we aren’t doing well, financially, looms the banking system.  Having witnessed a chaotic barrage of finger pointing, most people would be hard pressed to clearly define the exact scenario that got us to this point.  But the common threads seem to include a reckless disregard for prudence and a high regard for the process and products of greed.   Although many of us non-bankers did experience our share of irrational exuberance and irresponsible debt acquisition, our bankers ride very high on the list of chief characters in this drama.  These persons and their institutions have also been the major recipients of the Big Bail-Out, yet are sitting on their assets while receiving enormous doses of recompense.  Whether or not all accusations are fully valid, few would disagree with the premise that our financial system has been and probably still is dysfunctional. It is not serving enough individuals well enough, nor is it properly serving the best interests of our nation.  Our perceptions of the banking system fuel our feelings of impotence in the face of inequity.  Besides this, there is ever more discomfort at having the economic engines controlled by distant forces that have their energies focused far outside of the realm of our everyday lives.  Yet as it turns out, most people who prefer to give their deepest attention to their families and communities do, in fact, have potential power to bring the control of their economic lives closer to home. 

 

If you want to invest while simultaneously supporting the community, there’s probably no better way than employing experts in local investing.  Also, if you or your dream are in need of funding, there can be no better feeling than knowing that you’re getting it from people more likely to care about your well-being and success.  When one looks beyond the immense banks and their attractive, often melodic self-promotion, there lies an array of choices that is confounding in its relative invisibility and obscurity.  America’s credit unions generally offer higher interest rates on deposits, lower borrowing rates, and better service than do the large banks.  They also understand and are much more focused on the needs of smaller communities, be they geographic or special interest … or both.  Legally, a credit union may be formed around a variety of common bonds, such as employment with a particular company or members of associations and religious groups.  They are non-profit and have, as primary and clearly stated reasons for existence, the well-being of their clients, rather than that of share holders and executives.  Yet credit unions provide the same levels of federally-assured security of deposits as do the banks.  Many also belong to a network of credit unions providing surcharge-free access to over 800,000 ATMs throughout the world. The ultimate point in their favor is that credit unions are literally owned and controlled by their members … your neighbors and other community stake holders.

 

A search engine tasked to find “credit unions” will bring you a wealth of options.  You can further your research by inquiring into their individual ranges of services and assurances of deposit insurance. A further resource addressing the concern Americans have about entrusting their wealth to distant banking executives can be found at the site moveryourmoney.info.

Another source of loans, outside of the realm of traditional banks is grassroots financing, promoting “community supported enterprises”.  When starting or advancing an enterprise, people often go to friends and family for loans.  It’s not a giant leap to consider going to other local sources.  Why not ask for help from other members of the community?  In this way, entrepreneurs who are finding loan rates too high or qualification too difficult can be connected to investors who are dissatisfied with today’s low rates of return on traditional investments. An additional important advantage of local investing is that evaluation of return potential is more elemental.  You don’t have to predict the direction of world markets, only the likelihood of the local venture being well received by its neighbors.  The additional advantage to the borrowers is that the lenders have a high personal level of interest in their success, and they are likely to get involved in promoting the enterprise … informing friends and neighbors of its existence or giving business advice. 

There are a number of ways of soliciting such local support, including:  personal appeals to possible investors, emails to existing customers, selling gift cards that can be redeemed for a percentage beyond their cost, and notices in neighborhood online and print publications.  One caution that should be added is that soliciting a profit-producing investment can involve securities law considerations.  But as long as the solicitations are within a particular state, federal regulations do not apply.  And when you limit the offers to people you know, even casually, through neighborhood interactions, it becomes a relatively unregulated “friends and family” loan.

 

 

Social welfare - local style

Herbert Hoover has been rather thoroughly castigated over the past 80 years for his insistence that people could get through the difficult days of the Great Depression by helping one another out, rather than relying on government.  Of course, it is now widely agreed that President Hoover somewhat underestimated the utility of increased government involvement during such an economic calamity.  Perhaps not enough attention has been given to the non-government activity that that did exist then, and not only made life better, but probably prevented much greater suffering and loss. 

 

Most of the same organizations and institutions that supplemented what the government could do, even under the Roosevelt era, live on to this day, continuing to do an important job in helping those in need (not to mention the empathy and kindness of individuals who lend a hand without needing an organization or a database to know how to do the right thing). 

 

As it can be argued that our government has a duty to provide certain levels of care to its citizens, it should also be recognized that our non-government resources deserve credit as well.

At the neighborhood level, our local organizations - charitable, religious, educational and political - can provide valuable supplemental services to government assistance.  It could be by just providing better information about existing resources.  It could be specific welfare programs typically run by churches and neighborhood organizations.  Programs include counseling, health care, home care, child care, advice, job listing, job training, job fairs, food distribution, housing counseling and provision plus a myriad of others.

The more we can improve local caring and support networks the less we need to rely solely on the biggest money grids, be they private, state or federal.

 

 

 

Product and services exchanges

The primary purpose of product and service exchanges is facilitating the trading of goods and services while not (at least fully) entering the monetary grid.  This practice is at the foundation of cooperative society, dating back to the most primitive of transactions … such as trading a chicken for a tooth pulling, or a big rock for a pretty rock, or a tank of gas for the hauling of a sofa across town.  As we all well know, this sort of thing goes on informally all the time.  At a slightly higher level of organization, it is not difficult to find bartering fairs.  Some bartering also goes on at conventional flea markets.

 

There have also evolved highly formalized systems of exchanging goods and services.  There are electronically organized “time banks” in which a large group of people add their special talents or skills to a database accessible by all in the group.  If you give someone an hour of service, you acquire a “time hour” which you can then spend to acquire the services of some other member of the database.  Managed somewhat differently, yet with the same tools, is the exchange of physical goods.  Originally facilitated by the bartering fairs or similar events, this kind of exchange has also been enhanced by electronic databasing.  Of course Craig’s List is the ultimate medium for goods and services exchanges. Most of these exchanges, although not entirely off the money grid, are certainly on the edge.  Ads are free in nearly all categories and facilitate direct, low-cost transactions that bypass much of the traditional financial establishment.  Plus, there is a large amount of “free stuff” listed.  Although Craig’s List is international, most transactions occur within a narrow geographic range.  Other electronic systems further facilitate the distribution of free goods or trading of goods and services.

 

Resources:

http://moveyourmoney.info

http://www.timebanks.org/ 

http://www.craigslist.org 

 

In part II, we will cover other aspects of local, neighborhood economy, including flea markets, farmers markets, employment, local business nurturance, and the role of the neighborhood organization.

 

 

 

 

 

tip jarNeighborhood Life depends on your financial support.