Читать книгу Open Capital Markets For Local Economies - William E. Scholz - Страница 2

Creating a new business is part of the American Dream, somewhere right inside the white picket fence, and leaning against the brick and mortar of a modest home. Incorporation asserts the right to advance a new solution or initiative, and most importantly, own private property. Ideally, the mission succeeds on its own merit and within the parameters of law. Starting a business requires no political approval, no allowance by a priest or king. Starting a business requires only the internal motivation and willpower to overcome obstacles and shoot an honest shot.

Like business ownership, shared ownership has come to play an important role in the American Dream as a bonus or amenity for hard work. Shared ownership is how we structure corporate ownership, the largest businesses that create wealth in the public interest. The growth of the public sector fuels retirement accounts or is shared directly with employees. If business ownership is the backyard of the American Dream, shared ownership has come to occupy the garden.

Exemplifying this powerful and profound right, to start a business, is New York City. New York City so embodies this ideal that poets and singers write their songs to New York as testament. Any individual from anywhere in the world can follow their dreams in New York City. Where there is a will or work there is a way in New York City. Individuals come from across the world to pursue commerce in a fair environment. New York City is where dreams are made of and the city’s identity reverberates across the world for decades if not centuries.

The skyline reflects New York’s ethic of commerce. Hard-work, talent, and aspiration can allow for a new liberty, to pursue greatness, flourish, self-actualize regardless of ethnicity, sexual orientation, or political affiliation. I am not schooled in Architecture or construction, but the towering landscape of New York City and now Brooklyn and Jersey City, exemplify this pursuit toward the higher imagination.

Underpinning the skyline is the marvel of machinery that supports so many individuals living in a small area, the mechanical operations that are required daily to facilitate civilization such as wastewater treatment, garbage pickup, electricity, natural gas provision. To somebody who did not grow up in a major metropolitan area, New York stands out in my own imagination, not as perfect or infallible, but ranking among historical sites across the world as a pinnacle of human achievement, civilization, and most importantly, liberty.

Merriam-Webster defines liberty as the power to do as one pleases, the power of choice, the positive enjoyment of various social, political, or economic rights and privileges, freedom from arbitrary or despotic control [1].

In New York, liberty is enshrined in the city’s great statue. The Statue of Liberty is a monument to this founding ideal of the United States. American civilization is not based on cultural or ethnic identity, but a belief in shared values namely liberty. Our ability to coordinate as a civilization is independent of race, religion, or political affiliation.

The construction of the Statue of Liberty mirrors the ideals in which it represents.

On a recent trip, I learned more about the Statue’s construction. I did not realize that the statue’s construction involved much more than a gift and symbol of bond and friendship from one young republic, France, to another [2].

The artist who designed the Statue of Liberty was Frederic-Auguste Bartholdi who sought to make his mark by creating colossal sculptures, inspired by the Sphinx in Egypt. However, fundraising proved challenging.

Bartholdi initially raised funds from wealthy patrons in France to support his effort. However, Bartholdi soon looked to average French citizens for support. In time, he attracted funds from 181 French municipalities.

Bartholdi finished the colossus, but still needed additional funding to construct the stone base. Since the base could not be transported overseas the project needed funding from residents of New York. The persistence and ingenuity to create the colossus speaks to the ability of Americans to come together to support an initiative.

The base received no financial support the Governor of New York, Grover Cleveland. In the absence of wealthy patrons, a unique initiative was led by Joseph Pulitzer, who at the time was a prominent newspaper publisher. Pulitzer was credited as launching one of the first crowdfunding campaigns. To construct the base, he accepted donations from anybody offering one key benefit. If an individual donated, they could see their name in print as a donor to the pedestal, a high honor of the era.

Pulitzer’s campaign raised money from 100,000 donors totaling over $100,000 [3]. The funding came in a significant amount from the people, both French and American. The act of participation fueled inspiration and civic pride, an expression of liberty.

Liberty is often associated with wealth creation and commercial success. A citizenry that starts new businesses, solves customer problems, and innovates will grow their economy. Innovation and commercial success stem from a diversity of perspectives, from new ideas brought forth by the commoner to established wisdom managed diligently by authority.

In many ways, New York City symbolizes our society’s ability to create wealth. The beautiful skyline is matched by a vibrant financial services economy, and other thriving sectors such as arts and culture, media, and technology. Wall Street fuels a trading platform that most Americans utilize on a monthly or quarterly basis as owners of mutual funds, stocks, and bonds. Wealth creation is shared by the masses who are investors in society’s most important firms. New York City remains a beacon of commercial success as evidenced by its skyline, its ability to wield capital, and its ability to create new and exciting industries.

Yet the collective will toward new initiative, realized through business ownership and aspiration, faces a roadblock. We can cite statistics, and will throughout this book, of the declining rates of entrepreneurship and regional economic divergence. The remarkable development of New York City’s economy is not being realized in smaller to medium sized cities across the United States.

Smaller to mid-size cities in America is by no means a sad story. In fact, many small cities are marked by their will and spirit towards building economies of the 21st century. Some of the most inspiring stories of grit and determination are occurring at the local level.

Additionally, many institutional anchors in these small towns such as foundations, corporations, and local Governments are contributing to their region’s revitalization. There is a growing sense that America’s small to mid-size cities are on the precipice of an extraordinary period of economic growth as local entrepreneurship and innovation are empowered in a globally connected, digital economy.

America’s Next Era of Economic Growth.

Understanding the context of the American Dream, in today’s world, is challenging. On one hand the global economic system is vastly complex and just a decade ago teetered on the verge of collapse. Many people across the world see their standard of living rising rapidly speed as they obtain access to necessities or new technologies such as the Internet, computers, and medicine. On the other hand, the divide between the haves and the have nots grows to historic levels [4]. Wealth inequality sours wealth creation in the post-war era.

Is the American Dream realized or fading?

For some, the American Dream is defined as a family sustaining wage and the opportunity to own land and property. Others who are more affluent might view the American Dream as the ability to establish residence in multiple locations, travel frequently, or own multiple houses and cars.

Today’s economy offers little understanding as to one of the most powerful forces in our lives, the global economy.

How do we create wealth in new ways, yet ensure that wealth inequality does not destroy the socio-economic fabric and order?

How do we develop a healthier relationship to capital, the lifeblood of our economy?

How do we help foster more small business development, entrepreneurship, and innovation to ensure stable and consistent economic growth?

These questions asked by workers is echoed by many policy leaders across the ideological spectrum. Even in a polarizing political environment, one consistent theme in local, State, and Federal legislation is to create an economic framework that increases investment and supports the job creator. Flying under the radar of what seems like national political dysfunction is a financial services agenda largely bi-partisan and positively received by voters.

What does a new era economic of economic growth entail?

A common thread runs through the needs of the local economy, the actions of regulators, and the innovations occurring in financial services technology. At all levels we are moving toward an economy that facilities open capital markets for local economies.

When we think of capital markets, we think of publicly traded equities and bonds. However, as innovation takes root across the United States, not just major metros, many regions are finding a greater need for access to capital through investment funds or incentives for individuals or corporations to reinvest. The need for capital accompanies technological innovation through Blockchain that allows for the immutable transfer of asset ownership.

The combination of the need for more local reinvestment, nationally, regionally, and locally and the increased ability for transparency, accountability, and technology-enabled transfer of ownership creates the opportunity to transform how we consider economic growth.

Ensuring access to capital for regions without investment is essential to sustaining economic growth in the future. But access to capital also reaffirms our concept of liberty.

In today’s hyper-competitive economy, obtaining resources to start a new business that are equal to the resources obtained by competitors can become a barrier to entry. Likewise, for cities, having enough re-investment annually to ensure healthy real-estate markets, arts and cultural amenities, and firm-level reinvestment is essential to prevent regional divergence.

As an investor, everyday citizens must be empowered to own and benefit from local wealth creation, and more importantly, contribute to their unique sense of place and belonging. The benefits of new economic liberty and more reinvestment locally and nationally enabled by new technologies and necessity can unlock America’s next era of economic growth. However, residents will assume more responsibility both to create and grow businesses, and as investors.

Local economies are only beginning to generate study, reflection, and data collection. One does not often think of their local economy beyond their hometown or the places they lived. One likely does not view local economies as an opportunity to contribute to economic growth.

We often think about programs and incentives to encourage small business activity. These programs may come from local, State, or Federal governments or they may be led by private sector initiatives. Yet we see resources into local infrastructure surging. Stakeholders are passionate about the prospect of revitalized local economies as an important hedge against regional divergence and as a fuel to American economic growth.

We also don’t think about local economies as marketplaces of capital investment. Local economies are viewed as operating independently from one another. We drive by beautiful and blighted infrastructure, but we do not think that we have a responsibility to reinvest. That is somebody else’s responsibility.

Perspectives surrounding local economies are changing. Local economies are reemerging on a national stage whereas investment is encouraged by bi-partisan national policy, regulatory changes, and incentives.

Our objectives in writing this book are fourfold:

1. Reposition local economies as open capital markets. The most important objective is to begin viewing local economies as driven by capital markets. Real estate and small business need access to healthy amounts of capital to become financially sustainable and to flourish. Healthy capital markets that are not extractive will utilize similar primary and secondary market frameworks as we currently see in public markets. New, local institutions and a culture of capital investment will build wealth locally.

We can no longer view the many separate aspects of local economies as operating as silos from one another. We often do this in the way policy, investment, and institutions shape the business landscape. For example, the manufacturing sector is viewed as separate from the technology or real estate sectors. Support organizations operate within their own fiefdoms or territories.

Open capital markets facilitates the breakdown of these silos by shining light on firm performance, investment volume, and economic data.

2. Explore the changing regulatory landscape, incentives, and technology facilitating the local economic transformation. Financial technology is driving massive regulatory changes related to how securities are packaged and sold. We are amid a financial regulatory overhaul that the world has not seen since the 1930s driven by a revolution in financial technology. In a global economy, countries cannot turn their back on these changes.

Our goal is to explore the change in regulation, incentives, and technology from a local perspective. Technology like Blockchain is a global phenomenon. The technology allows immutable transfer of ownership to facilitate trade across national boundaries. However, keep in mind that each global transaction is fundamentally rooted in the local economy. Global investors are investing in local assets such as a real estate parcel, small business, or startup.

The future of finance must acknowledge and respect the fragile and human local economies where assets reside. Local economies must begin to see their context in a global network of investment and trade.

3. Understand the benefits and challenges of open, capital markets for local economies. The world is moving quickly toward establishing primary and secondary trading for privately held assets. What are the benefits of this activity and what are the challenges?

Financial markets facilitate transparency, better governance, and access to firm and market level data. However, markets can be manipulated by bad actors who generate fraud. The financialization of assets that are currently held privately must be handled with care and responsibility, especially at the local level where integrity is essential to a healthy economy.

4. Describe new institutions and business models of vibrant local economies. New local institutions and business models are necessitated by open capital markets. Institutions must nurture local markets that in many cities have undergone decades of disinvestment.

The private sector must facilitate business models that can utilize capital in a healthy way to find their break-even point, even if that means scaling their product and services regionally. New information networks must also develop to support the interconnection of local assets receiving national or international investment.