Local Dollars, Local Sense : How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity--A Community Resilience Guide

The $15 Trillion Shiftby Michael Shuman probes the future of investing-making the case for investors to put their money into building local businesses and food and energy systems, and otherwise creating healthy regional economies that meet the stresses of a post-peak-oil world. The book tells readers how to find or develop opportunities for investing locally, explains the obstacles, and introduces readers to investors who have taken on the challenge and put their theories about local investing into action. Shuman builds upon a simple premise: America's investment system is broken-and not in the way most people think. Even though roughly half the jobs and the output in the economy come from local small business, almost none of our investment dollars go into the sector. All the production in the United States each year, the gross domestic product (GDP), currently totals about $13 trillion. But the overall wealth of the country is nearly $100 trillion. Some of this wealth is held in the form of land, buildings, and machinery- not very easy to convert into dollars. The most liquid assets are stocks, bonds, mutual funds, pension funds, and life insurance funds, and these total about $30 trillion. This is where most Americans place their life savings. And not even 1 percent of these savings touch local small business. Because local firms are often more profitable than larger corporations and their competitiveness is growing, says Shuman, this represents a huge market failure. It means that Americans are systematically overinvesting in global business and underinvesting in local business. Were these $30 trillion allocated more efficiently, Shuman writes, at least $15 trillion would move into the local economy. This, then, is the $15 trillion shift. To conceive what this money could do for communities, consider this: $15 trillion is nearly twenty times more than all the money the federal government allocated in the national stimulus program of 2009-2010. It also represents about $50,000 for every American. For even a small town of 5,000, it represents an investment pool of $250 million. What stands in the way of this shift, if local businesses are in fact competitive and profitable? The answer is that we have obsolete institutions and laws that make local investment extremely difficult and expensive. This book gives interested investors and community leaders a way to overcome such obstacles, and create funds and networks to generate sustainable, living economies.