Michael H. Shuman – economist, attorney, author, entrepreneur and a go-to person on local and community economics. Local, local, local. In everything he does Michael is focused on the little guy (or girl). And he firmly believes that a robust economy would not be so robust without all of those little main street businesses and startups.
Over the past 30 years, Michael has given, on average, more than one invited talk per week in nearly every state and in more than a dozen countries. He says, “I love public speaking, because it gives me an opportunity to explain difficult, arcane topics in simple, hopefully entertaining terms to people who care about their communities.” Michael has also been credited with being one of the architects of the 2012 JOBS Act and hence is one of the fathers of investment crowdfunding. Without him we wouldn’t have our crowdfunding platform, Small Change.
In addition to all his other outreach, Michael is the author, co-author, and editor of a number of books. His most recent is, Put Your Money Where Your Life Is: How to Invest Locally Using Solo 401ks and Self-Directed IRAs.
Insights and Inspirations
- Locally-owned businesses comprise 60 to 80 percent of the private marketplace in the average U.S. community. But economic developers and subsidies almost always overlook them.
- At the state and local level, it’s estimated that 100 billion dollars per year is spent on attracting big corporations. And this is a tiny fraction of what actually constitutes a community’s local economy. And that’s totally backwards.
- Communities with a higher density of locally-owned business have higher per capita job growth rate. They have less poverty. They have more civic engagement, higher voting participation, higher rates of volunteership.
- In four years of investment crowdfunding, 700,000 people have invested almost half a billion dollars into several thousand companies and projects – overwhelmingly, disproportionately companies led by women and people of color.
Information and Links
- Michael’s local investment handbook.
- A piece Michael wrote on crowdfunding for Nonprofit Quarterly.
- And a piece he wrote on decentralization for the Next System Project.
Read the podcast transcript here
Eve Picker: [00:00:09] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. Today, I’m talking with Michael Shuman, an economist, attorney, author, entrepreneur and a go-to person on local and community economics. Michael has been credited with being one of the architects of the 2012 Jobs Act. He’s one of the fathers of investment crowdfunding. Without him, I wouldn’t have my crowdfunding platform, Small Change. Michael’s given an average of more than one invited talk per week, mostly to local governments and universities for the past 30 years, in nearly every U.S. state and more than a dozen countries. He says, “I love public speaking because it gives me an opportunity to explain difficult, arcane topics in simple, hopefully entertaining terms to people who care about their communities.” Not being busy enough, Michael has also authored, co-authored and edited quite a few books, most recently ‘Put Your Money Where Your Life Is: How to Invest Locally Using Solo 401ks and Self-Directed IRAs.’ I’m going to learn a lot from Michael and so might you, so listen in. Be sure to go to EvePicker.com, to find out more on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.
Eve Picker: [00:01:58] Hello, Michael, I’m really delighted to have you on my show today.
Michael Shuman: [00:02:02] Great to be here.
Eve: [00:02:04] Put your money where your life is. That’s the title of your latest book. And it seemed like a really obvious statement. Why do you need to write a book about this?
Michael: [00:02:15] Well, maybe I’m just book-o-philic, that I tend to write a lot of books and that’s the way I express myself. But I did feel like there were two bodies of knowledge I was trying to bring together. One was a whole emerging body of knowledge around why local businesses and local economies are so important. And the other is this body of knowledge about how to use these somewhat obscure tax tools, the self-directed IRA and the solo 401k, For local investing. And so, bringing these two things together in a readable form, that was really the objective and I couldn’t see a way of doing that just as a pamphlet.
Eve: [00:03:05] But I suppose more than that, like why local? Who are you trying to reach with this book and why? Why do you think it’s important?
Michael: [00:03:12] Well, I would say for about 30 years, I have been on a campaign to remake economic development, and the reason is, is that I think there is a very impressive body of evidence that locally owned businesses are the key to community prosperity. They comprise 60 to 80 percent of the private marketplace in the average American community. They are highly profitable. They are highly competitive. They have done great despite the ways in which economic developers and subsidies have overlooked them. And yet, when it comes to economic development, when you talk with an economic developer for any length of time, they will tell you that their mission is to attract and retain business. And when you unpack that term, attract and retain, it’s really all about global companies. So a tiny fraction of what constitutes a community’s economy is what in fact is driving economic development. And it’s totally backwards. So, what I’ve been arguing is that we have to figure out ways of nurturing and strengthening and getting capital into local business. And if we do that and, we can really enhance jobs, income, wealth and tax receipts.
Eve: [00:04:49] We’ve got that backwards. Do we have it backwards at the local level, at the state level? What about the federal level?
Michael: [00:04:55] Every level conceivable has it backwards. At the state and local level, it’s estimated that something near 100 billion dollars per year is spent on attraction, corporate attraction. At the federal level, it’s not really corporate attraction, but what you see is all of these subsidies, which are largely going to larger businesses, big Ag, big cattle, big water, big coal, big oil and gas. I mean, you name it. And small businesses in the end are getting the crumbs. So, yeah, I think this is a systematic problem and requires some systematic solutions.
Eve: [00:05:43] How did you get interested in this?
Michael: [00:05:46] I became interested in this in a circuitous way, so I was graduated from law school in 1982 and really detested the idea of becoming a lawyer. So, I started a nonprofit in the field of peace and justice. It was called the Center for Innovative Diplomacy. And one of the things that we did in the ten or so years that this organization lasted, is we organized several thousand mayors and city council members across the United States to get involved in what we called municipal foreign policy. So, the involvement of cities and say in nuclear free zones or anti-apartheid campaigns or human rights initiatives. And I got very excited about this way of influencing international policy. But I started to think about how to get involved in economic development through these tools. And I had a partnership with an organization based in Europe that was then called Towns and Development. And you can think of Towns and Development as sort of sister cities with attitude. So, they had thousands of links between northern and southern cities built around economic development, and Towns and Development asked me to write a critique, a sort of retrospective of what at that point was more than a decade of work. And at the end of that critique, I said, you guys are doing marvelous work. You have great principles for economic development. The problem is, is that your practice of economic development has no relationship to the principles. That is, if the northern city sends a big company to the southern partner, you celebrate that as a big success. But in fact, success needed to be measured in greater self-reliance. And it was that moment that I realized I needed to pivot and start working on a whole different field. So, I wrote a book in the mid 90’s called ‘Going Local,’ and I thought it would be a one-off book. I would, you know, write it, be done. But it opened so many interesting doors that that’s really what I’ve been doing ever since.
Eve: [00:08:19] What would be good outcomes if we move towards more localized economies?
Michael: [00:08:26] If you look at the evidence out there of lots of different studies, we know that communities with a higher density of locally-owned business have higher per capita job growth rate. They have less poverty. They have more civic engagement, higher voting participation, higher rates of volunteership. We know from an EPA study that locally-owned smokestack businesses pollute about one tenth as much as their absentee-owned counterparts. We know that locally-owned businesses are the dynamism of what promotes entrepreneurship and what promotes people really being committed and excited about a stable city. So, I feel like the list is very long and compelling. And so, I really feel like if we had a world of more localized economies, we would be wealthier, we would be more equitable and we would be less likely to go to war with one another.
Eve: [00:09:37] I have to ask. Is there a gold standard city or community out there that you would point to for localized economies?
Michael: [00:09:45] I have become familiar through studies that I do with many local governments. I’ve become familiar with several hundred local governments. And honestly, there’s none that I would give better than a B or B minus to.
Eve: [00:10:03] Oh, OK.
Michael: [00:10:05] And I think part of the problem is the pernicious impact of these outdated ideas about economic development. And so what a typical city you look at, say, a Portland or a Seattle, which nominally seems like a very green kind of city. And they have all of these departments working on recycling and storm water management and energy efficiency. And by those criteria, these cities are looking really good. And then they have economic development departments that are filled with dinosaurs that all they want to do is spend vast amounts of public money to attract global companies.
Eve: [00:10:52] Yeah.
Michael: [00:10:53] And they systematically ignore their local businesses.
Eve: [00:10:56] Yeah, I live in a place like that.
Michael: [00:10:58] Pittsburgh. Yes. And, you know, in Pittsburgh has despite that, I think, become a more self reliant community. I mean, they turned, but …
Eve: [00:11:11] But you know, Michael, I think that’s because, isn’t Pittsburgh, the birthplace of community development corporations?
Michael: [00:11:18] Yes.
Eve: [00:11:20] Community development activity is very, very big here. And that’s almost like their own little localized economy. So, that may be part of the difference. Does that make sense?
Michael: [00:11:31] I think it does. And I think the other thing, I mean, I’m not intimately familiar with Pittsburgh, but one of the things as a visitor that I have noted about it is that it’s really a city of amazing neighborhoods.
Eve: [00:11:46] Yes, it is. Yep.
Michael: [00:11:47] And the definition of those neighborhoods.
Eve: [00:11:50] Physically quite distinct.
Michael: [00:11:52] Yes. I think that makes a difference, too, because people then self organize around that sense of neighborhood well-being.
Eve: [00:12:01] I think that’s right. It’s one of the things I’ve always thought about, like in when I go visit San Francisco, which is a beautiful city, one neighborhood bleeds into the other. And I’ve come to really love the very distinct neighborhood personalities here and the character, the buildings, and it’s really interesting. Yeah.
Michael: [00:12:20] I lived in San Francisco for about 10 years and I used to say to people, it’s a terrible place to visit because the only way you can enjoy San Francisco is by slowly taking it in, walking the streets, going from neighborhood to neighborhood. And there’s no way you can do justice to that as a tourist going to Alcatraz.
Eve: [00:12:47] Right. Yeah, well, that’s how I prefer to visit cities anyway. Would there be any bad outcomes if we move towards localized economies? Like what would we be missing?
Michael: [00:12:57] So, there are different conceptions of localization. And I believe that critics of localization have in their head what I would call a theory of ‘dumb localization.’ And what it is, is it, looks at, say, what Brazil did in the 1960s with the idea that, oh, we need to build up our internal economy, we’ll put up trade barriers, we’ll put up technology transfer limits, we’ll punish people for coming into the country with long visa processes. And by that process, we will build up more internal self-reliance. That’s the way globalization fanatics think about localization. And if we do that, we will become poorer, and countries will become backward, and we will miss out. So, I really think that localization has to be defined in more market terms, that localization means consumers freely finding great local deals and goods and services and freely choosing those. It means businesses expanding to meet local needs. It means governments getting rid of subsidies that are currently favoring global businesses.
Eve: [00:14:27] So, if you were the mayor of a city that was a D on your scale, what would you do to make it an A, an A local economy?
Michael: [00:14:38] The first thing I would do is I would announce that we were not giving a penny of subsidy to any business, so that automatically would save me a good deal of money that I could spend on other things. I would create a procurement system that really looked objectively at the impacts of local business when they were potential bidders versus non-local business. And I would realize that the local businesses pay more in taxes and therefore they deserve a boost in the procurement process that objectively reflects that. I would change my city’s investment policies so that rather than putting money out in the global economy, I would, like the cities of Tucson or Phoenix, put my money in local banks so it could be re-lent to support various economic development projects. I would think about how to use municipal bonds and municipal powers of creating investment funds in order to foster various kinds of economic development projects like affordable housing or local food projects. So, there’s a long list of things that cities could do that really is hard to find any city that’s doing that right now.
Eve: [00:16:03] I mean, honestly, one of my pet peeves is most cities look outside their borders for the best consultants, whereas they often have a lot of talent inside. And that’s also one way to increase the economy of a city. And it’s a very weird dynamic, but I think you’re probably right. There are tons of things you could do.
Michael: [00:16:23] I’ve experienced that here. I live in Montgomery County, Maryland, and I can’t tell you the number of times I have bid on Montgomery County contracts. And they go for some …
Eve: [00:16:35] Oh, yeah, I can imagine.
Michael: [00:16:37] … competitive person a hundred miles away, and they lose out on the tax benefits.
Eve: [00:16:42] Yeah, I may as well be invisible in Pittsburgh, I think.
Michael: [00:16:45] Well, you’re not invisible to me and to the rest of the country, so that’s the good news.
Eve: [00:16:49] That’s the problem, right? That we want to shift to local. So, OK. And how do you think the pandemic, I have to talk about this, might impact this trajectory? Because I have a feeling in some ways it might actually help.
Michael: [00:17:05] I think it has helped. And what I’ve noticed is that most of the cities that I’m working with have at least put the word resilience into their vocabulary and are thinking about how they can make their communities more resilient. What they haven’t realized yet is that resilience is the opposite of what David Ricardo advocated in ‘comparative advantage,’ and which is, it’s a subtlety, but at some point they’re going to realize, oh, yeah, resilience means more diversity of business. It means greater self-reliance. It means greater localization. It means what we’re doing in economic development is a little bit outdated. So, that’s going to take some time to work its way through the system. But ultimately, it will be a very good thing because we’ll be resilient not just against the next pandemic, but will be resilient on the next capital flight and the next climate catastrophe and so forth.
Eve: [00:18:11] Yeah, one of the things that’s been fascinating me about the pandemic, which I think feeds into this, is there’s definitely people moving out of cities. Not that I believe the cities will die. There’s always going to be room in Tokyo and Paris, okay, but there’s definitely a shift back to smaller places. And that means that there’ll be money in those places. And often there are main streets which are very underutilized. And I’m hopeful that those small local economies will be revitalized. That would be a good outcome in amongst this misery, right?
Michael: [00:18:44] Absolutely. I was in North Carolina. I shouldn’t have traveled there in the pandemic, but…
Eve: [00:18:51] No, that’s for sure.
Michael: [00:18:53] … I made the decision to go there when one of the curves was on the down slope. But it was a was a discussion with economic developers in the Charlotte area about how to heal the urban-rural divide. So, I did a lot of reading and thinking about this. And I actually agree with you that, I mean, if you look at the literature out there, there is an assumption that rural is dead and people are moving to the cities. And to some extent that has been true. But I think what you’re observing is really happening. That there is a turning point that has happened in rural America that a lot of people don’t appreciate. That Internet connectivity has come to much of rural America, not all of it, but much of it, that people of color, particularly immigrants are beginning to move there because it’s a cheaper place to live. And that’s diversifying rural America. We’re also seeing a lot of retirees going there and they bring Social Security and their pension savings, and that money drives the economy in different ways. So, yeah, and if you add resilience to the mix, you really see why for, not all Americans, and you’re right, you know, the great cities are still going to be great cities. But for some Americans, some fraction of millions of Americans, they will move into rural America.
Eve: [00:20:25] Yeah, we still have financing issues for investing in rural America. We have an offering on our platform right now that could not find a loan, and were told over and over again by banks that we don’t lend in rural areas. And so I think, you know, the whole financing system behind everything is also part of this story. Right?
Michael: [00:20:47] It’s another form of redlining, isn’t it?
Michael: [00:20:50] Yeah, it is. OK, well, I want to move on to regulation crowdfunding, which is the love of my life. And I know that you’ve been involved in it since day one, before I was. And I’d love you to tell us about that journey.
Michael: [00:21:04] Yeah. So. As I said earlier, one of the things that I have found fascinating in the whole discourse about local economy is that every answer to a question opens up new questions. And as I, in the 1990s and early 2000s was sort of thinking about how do we change economic development policy, I started to pay attention to the capital system and started to see how difficult it was for a small business to raise grassroots capital. And my very specific experience with this is, for about two years, and I think this was maybe 2001 to 2003, I tried to start a chicken company in the Eastern Shore of Maryland and it was going to be called Bay Friendly Chicken. It was to offer a greener alternative to what the bionic chicken that Tyson and Perdue were offering. And I started to think about ways of raising money. And I’d have meetings with securities attorneys and learn just how extraordinarily difficult …
Eve: [00:22:32] Ridiculous.
Michael: [00:22:32] And expensive it was to even get a penny of money from a grassroots investor.
Eve: [00:22:38] Yeh.
Michael: [00:22:38] And I started to think about what the rationale of this was. And they would say, well, you know, we don’t want grandma to be buying swampland in Florida. It’s always grandma. It’s always Florida. It’s always swampland. And look, I have a mother who is 97, 98 now. I don’t want her buying swampland in Florida. But what does my mother do with her money? My mother goes to the local casino. She lives in St. Louis. And when she goes to the casino, do they say to her, Mrs. Shuman, excuse me, but are you an accredited gambler? No. I mean, and she is not an accredited gambler. She is, you know, she is one of tens of millions of Americans who enter into thousands of casinos and they can lose everything independent of their income.
Eve: [00:23:40] Yes.
Michael: [00:23:41] And yet we never regulate that. And so that contradiction was like a chicken bone in my throat. And 2008 crisis came and I said, you know, I’m going to start writing about this. So, I wrote a piece for the Federal Reserve. They have a community journal.
Eve: [00:24:00] Okay.
Michael: [00:24:01] And basically made the suggestion that there should be a 100 dollar exemption in securities law, that any human being should be able to put 100 hundred dollars into a business with absolutely no legal work whatsoever. Lawyer Free Zone. And some friends of mine kind of got wind of this. They wrote a rule-making petition to the SEC, Securities and Exchange Commission, and hundreds of people wrote letters in support. So, that was sort of the beginning of a lot of conversations and there were other people who were simultaneously doing similar conversations. And then, I remember there was a hearing on Capitol Hill about a proposed crowdfunding bill introduced by Patrick McHenry, conservative of North Carolina. And I remember the head of the SEC was being grilled by Tea Party Republicans. And I was sitting in the room watching this. And they asked her, they said, you know, you’ve got a proposal in front of you for a one hundred dollar exemption. What have you done with it? And at this point, unemployment in the country was running at about 10 percent because of the Great Recession. And she responded with such condescension and contempt and said, look, we get these kinds of proposals all the time. And, yeah, you know, we’ll get around to them …
[00:25:47] … and the Congresspeople left and right, were, like, outraged. We have unprecedented unemployment. We know that local businesses can help fix this. And yet you in the SEC are systematically ignoring the simplest of reforms. That committee voted unanimously in favor of McHenry’s proposal and the House supermajority passed it. Now, where McHenry went with crowdfunding was not where I suggested. He actually originally suggested a ten thousand dollar exemption for people. And then it got whittled back to two thousand dollars. And all of these additional regulatory things got put on it. So, it was half a loaf, but it was something. And I think crowdfunding has been a qualified success. The bill was passed in 2012. It took four unnecessary years of haggling for the SEC and FINRA to put forward rules for implementation. But in the four years since, the data show 700,000 people putting in almost half a billion dollars into several thousand companies and projects, and that the beneficiaries have been overwhelmingly, disproportionately companies led by women and people of color. I think it’s doing some good things out there.
Eve: [00:27:26] Yeah, no, I agree. Well, this is what we use on our platform. And I think it also helps for us, those real estate developers who are doing really innovative and necessary projects, sometimes small, that most banks don’t want to deal with. And so, that also propels the economy forward. When you have someone thinking about how to deal with the affordable housing crisis and they can’t get a loan for their project idea, that’s a problem. So, there’s lots of ways that this has helped. It’s a fantastic rule, but it’s got a long way to go. What’s the silliest thing, do you think about this rule? I can probably give you a lot of those, but I’d like to know what you think.
Michael: [00:28:12] What’s the silliest thing about the rule? Well, the silliest thing is something they just fixed. And it wasn’t so much that it was implicit in this rule. It was a long standing piece of securities law. But they finally, in their discretion, got rid of it. And that was prohibiting businesses and grassroots investors, from having conversations before the formality of the issue was done. And this idea in securities law that communication will somehow pollute the marketplace has got it fundamentally backwards. Communication is what lays the foundation for a marketplace. And when there is a conversation between a real estate project and a grassroots investor before there is any formal transaction, it should be a moment of celebration, not a moment of repression. And when the SEC finally, finally, finally put in some rule changes in the first week of November, which most people overlooked because there was an election happening.
Eve: [00:29:25] Oh, I didn’t overlook it.
Michael: [00:29:27] Of course, what election?
Eve: [00:29:33] But I’m you know, I’m on the federal register every day looking for the thing to be posted.
Michael: [00:29:38] Right. Right. We’re still waiting, aren’t we?
Eve: [00:29:40] Yes. So, for people listening, you know, the rules are not implemented until 60 days after they’re posted on the federal register. And so while there was a vote, it’s still not moving along. Right, Michael?
Michael: [00:29:53] Right. Right. I think $2,200 per person is too low a number. I think it should be higher. I do think it’s getting the number that a company or a project can raise, from a little over a million dollars to five million is a very big step forward.
Eve: [00:30:13] I should probably, like, take a break and just explain to listeners who don’t know about regulation crowdfunding that this is really the first step towards democratizing investment. It’s a rule that permits everyday people, everyone, not just accredited investors, to invest in businesses or real estate projects that developers bring to them, and business owners bring to them. And they do that by requiring platforms, called funding portals, to be registered with the SEC and to be members of FINRA, the Financial Regulatory Agency, to sort of manage this business of putting everyday investors together with businesses. And the rule really started out as having a cap of 1.07 million that businesses could raise every year, and permitting everyone to invest 2,200 a year, not per project, a year. If they want to invest more than that there is a calculation around income and net worth, and it even capped what accredited investors could invest in. Even Warren Buffett is not currently permitted to invest more than 107,000 a year.
Eve: [00:31:24] So, these upgrades raise the cap that you can raise through an offering to five million dollars. And while they do not raise that $2,200 cap, they do raise what unaccredited investors can invest by changing the way the net worth and income calculation is made, which is a good thing. And they also permit accredited investors to invest as much as they want. So, these are pretty big steps forward, right, Michael? And then the thing that you care a lot about is the ‘test the water’ piece, which I agree with you on.
Michael: [00:31:57] Yeah, that’s a very good explanation. And one other thing I would just add for your listeners is that sometimes there’s confusion about donation crowdfunding with investment crowdfunding. And donation crowdfunding on sites like Kickstarter, Indiegogo, that has been always permitted because donations are not securities, and securities are what are heavily regulated and that’s, those regulations are what we are talking about.
Eve: [00:32:27] Right. If you go to Small Change or you go to Wefunder or any of those sites and you invest, you really become an investor in the capital stack of that business or that development project. And there’s an offering made, an offering of what the business owner might return to you because you invest in their projects.
Michael: [00:32:49] Yeah, and I think it’s worth saying to your listeners why this is so revolutionary. And for the last 10 years, at least when I was able to talk to audiences in person, which you can’t do now, still, I would I would ask them three questions. And the first question was, by show of hands, how many of you have mindfully bought something locally, maybe at a farmers market over the last week and almost all the hands go up. People love their local businesses and they love the things in their economy. And then I ask, well, OK, how many of you have a show of hands do your banking at a locally-owned bank or credit union. Half the hands go down. And then I say, those of you with pension funds, how many of you put at least one percent of your pension funds in these local businesses that are 60 to 80 percent of your economy, and all the hands go down. And suddenly people realize, oh, my god, why is that? Why is all of my money going to the global minority of businesses in the economy rather than supporting the projects and the businesses that I love? And it’s all about securities law. So, what this law represents is the beginning of a transformation, so that we are putting our money into the things that matter in our life.
Eve: [00:34:24] Yes, so you know the way I think that the SEC and FINRA missed the mark with this rule is, the amount of due diligence the platforms have to do is really burdensome. And you have to remember that these platforms are startup businesses. They’re small businesses trying to support other small businesses. And a small business can’t afford a full-time compliance officer. And essentially, that’s really what you need to be able to run one of these platforms. So, I think you’re right. If someone is going to invest $2,000 dollars, do you really need to have all of the burden of, I mean, the rule, that if I told you everything we have to do, it’s nuts. We do it because we have to, but it is a lot. So, that’s my pet peeve.
Michael: [00:35:13] Yeah, I think it’s a very important one. And I worry that your platform and many of the other platforms are going to have challenges long-term because the regulatory burdens are so high and that limits your ability to just pay the basic bills and keep the lights on.
Eve: [00:35:36] Oh, yeah. I mean, insurance for our platform is over $40,000 a year.
Michael: [00:35:41] Wow.
Eve: [00:35:42] That in itself is huge. I mean, the compliance piece of it, figured that out in the first few years and we have, come to a simplified and efficient system. So, that’s less of a problem for us now. It was excruciating in the early years, but there are expenses that just never go away and it’s hard to catch up with those. Insurance is a really big one because the insurance industry doesn’t understand this. This is a nascent industry that’s emerging and they are going to charge top dollar until there’s thousands of platforms like this.
Michael: [00:36:20] It’s outrageous. But let me just say, I love your platform. I love its personality. I love the things that you are putting on there. I think it’s unique and it’s mission-driven. And I think over time you will enjoy success that many of your competitors do not because they are not mission-driven or they are not distinguishable from one another in the same way yours is. And yours is after mission-oriented real estate. And I think now that the ceiling has been raised from one million to five million, I think a lot more projects are going to be coming on to your site. And that augurs well for your future.
Eve: [00:37:05] Yeah, I hope so. I think the missing piece still, and I’m going to keep that in mind in my dark moments when things are difficult as only they can be in a small business, I think still investor education is the most difficult piece. And there’s a lot for people to learn who’ve never been able to invest like this before. No matter what, they invest in, it’s a leap. And that’s really, I think, probably the hardest part of this. But what would the ultimate end goal be for this ruling in your mind? What should it be?
Michael: [00:37:41] I think currently Americans have about 56 trillion dollars invested in stocks, bonds, mutual funds, pension funds and insurance funds. So, those are all the long-term securities. And right now, about 99 percent of them are in global companies. I would like to see, say, 80 percent of that money in the locally owned businesses and real estate projects that they belong in. And when that happens, I will think we have achieved real success.
Eve: [00:38:20] Wow, that would be amazing.
Michael: [00:38:22] And, you know, it works out per capita. You know, earlier I said that the range, depending on how you define local business, is 60 to 80 percent of the private economy is local. So let’s take 60 percent. So 60 percent of 56 trillion dollars, you know, works out to 30 plus trillion dollars and dividing that by the number of Americans out there, 330 million. It’s about $100,000 per capita. So, I encourage listeners to think about your community, say you live in a 10,000 person community, multiply that number by 100,000 per capita. And that’s what the benefits of local investment could be for your community. It is hard to imagine a more significant stimulus that you could bring to your economy than bringing local investment in.
Eve: [00:39:21] Yeah, you’re right. So, you are a very busy guy. You’re a prolific author, prolific speaker. I think I read somewhere that you speak once a week. Professor, consultant. What do you love doing the most and why?
Michael: [00:39:38] Well, more and more, I love teaching. I mean, I’ve always loved teaching. I taught as a way of paying my bills at law school at Stanford. I taught a writing class. And I still teach now, and I have the privilege for the last four years of teaching at Bard Business School, which is a sustainability-oriented program. And the school is expanding and my course load is expanding. And I’m really, I’m liking that a lot because I think young people now are so much smarter than …
Eve: [00:40:15] Than we were?
Michael: [00:40:16] … the people I remember. I don’t want, Eve, you were very smart person, so I don’t want to say “we.” I’m going to only take this route myself. But when I was, when I was younger, the way that you changed the world was, And this is, again, from the law school perspective, that I would take a job for about $5,000 a year working for Ralph Nader as a Nader’s Raider. And that was doing good. And then, as I understood that world better, I realized, oh, what that world is all about is spending all of your time begging for money from rich people or rich foundations. And that’s how they made ends meet. And I did that for about 20 years and I was pretty good at that, but today’s young people have a different view of the world. They see the way to change the world is through mission-oriented business, and that by having great businesses out there doing great things, they can change the planet faster. And I think they’re right. And so, I love my role as a teacher to support them in that work.
Eve: [00:41:32] And so, like, my final big question is, this is the wrap up question. What’s next for you?
Michael: [00:41:39] So, what’s next for me is I am going to try to start soon a very simple newsletter that lists all of the local investment-oriented blogs, and all the local investment-oriented sites, and all the local investment-oriented people to try to get some glue, to hold all these various pieces together. Because I feel like there’s a proliferation of organizations, a proliferation of sites. But the big picture is still not quite there. So, I see a kind of a swan song act as I get into my mid-60s, a swan song act of really being a networker and bringing of people together for this larger cause. So, that’s that’s my next act.
Eve: [00:42:38] Well, I can’t wait to see the list, and I really enjoyed the conversation.
Michael: [00:42:43] I did as well. Thanks so much, Eve.
Eve: [00:42:45] Thank you.
Eve: [00:42:56] That was Michael Shuman. In everything he does, Michael is focused on the little guy or girl. He firmly believes that our robust economy would not be so robust without all of those little Main Street businesses and startups. And so he follows through on that belief every day, in his support of investment crowdfunding, in the lectures he gives, in his teachings, in the books he writes and in his consulting engagements with local governments. You can find out more about impact real estate investing and access to the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today. And thank you, Michael, for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.
Images courtesy of Michael H,. Shuman and Pexels