Eat Local Week: Q&A with Keynote Speaker Michael Shuman

Eat Local Week keynote speaker Michael Shuman.

Eat Local Week keynote speaker Michael Shuman.

Transition Sarasota's fourth annual Eat Local Week offers a tasty and hugely varied buffet of events for seven straight days starting this Friday, Food Day, with exhibitions and presentations, farm-to-fork meals, a "foodtrepreneur showcase," plant walks and a whole mess more. Visit transitionsrq.org/week to find out more about individual events.

Eat Local Week also coincides with Sarasota County's ninth annual Sustainable Communities Workshop, which takes place Wed., Oct. 29, and whose theme is "growing healthy, resilient and prosperous communities." The workshop - sponsored by Transition Sarasota and others, and MCed in part by yours truly - is a full day of talks and panel discussions covering everything from making fresh food more available to low-income residents to restoring Sarasota Bay.

The workshop's keynote speaker is Michael Shuman, a noted economist and author whose work has centered around how small, local businesses create more prosperity for cities and regions than global chains. He has also analyzed the challenges local businesses face when trying to find investment capital, and has worked for reforms that make it easier for small-scale investors to direct their money toward local companies. I spoke with him last week to find out more.


What have you been working on recently?

Securities laws, both at the national and state level, create a condition of what I call investment apartheid. Basically, if you are an accredited investor, in the top 1 percent of income earners or wealth holders, you can invest in anything, no questions asked. If you are of the other 99 percent, you cannot put a penny into a local business.

In 2012, President Obama signed what was called the JOBS Act, which basically legalized certain forms of crowdfunding that I believed would cut down on the cost of a business getting money from unaccredited investors.

What's happened is that the federal government left it to the Securities and Exchange Commission to implement the law and in 2013 they published preliminary rules and gave 60 days for comments. And they have done nothing and there is no indication they are ready to finalize their rules. Everything has gotten tangled up in this regulatory snafu.

So a number of states have said, "We're not going to wait for the SEC, because we have jurisdiction over instate investments." And there are now about 12 states that have passed laws like this: Alabama, Kansas, Georgia, Wisconsin and then there are a bunch of other states that have passed other kinds of SEC law changes and it's quite exciting. Vermont, for example, now allows all local companies to advertise freely within Vermont. Colorado raised the money that instate companies can raise from $1 million to $5 million, so thats pretty good. In Maryland, where I live, we now allow companies to take up to $100,000 in loans in $100 chunks from their customers without any legal documents whatsoever, and that's something I advocated for five years ago.

Is there a national network of activists pushing these measures?

It's not well organized. It's ad hoc, and it differs from state to state. But broadly speaking I would say that it is a coalition of aggressive locavores, tea party Republicans interested in deregulation and younger people with high-tech inventions and ambitions that understand the problems of securities law and want to change it.

You've also mentioned the role of "pollinators." What are those?

There are two features of a pollinator business. One feature is its mission is to help all local businesses, and the second is that it's self-financing. It doesn't depend on government grants or foundation support.

If you're interested in a buy local campaign, you can do a public education kind of thing, which costs a lot of money, or conferences or signage. But the other way you could do it is you could create a local loyaltry card. Every purchase that someone makes with the loyalty card leads to discounts with the purchashes you make with other local businesses. The advertising signage and everything else happens within the framework of the card, but the campaign has been taken out of the hands of government and becomes a private venture.

What kinds of success have other communities seen with programs like that?

I haven't totally finalized the number yet, but there are probably about 20 of them, and I would say all 20 are works in progress, which is to say that you would not be surprised if half of them don't exist in five years. But what you would likely see is someone else come along and do it better. I think it's just interesting to see the way that we can start to redefine economic development away from these really dumb and expensive attract-and-retain programs and toward these pollinator businesses that can be cost-neutral and can accomplish a lot more.

So the attract-and-retain grants local governments give out don't work?

I feel like the evidence is 110 percent in that that strategy of economic development is a total failure, a total dead end. To me, there's only one explanation for why these programs contine and it has to do with the media rather than economics, which is to say that an economic development official can say, "I brought in one company that brought in 1,000 jobs," rather than, "I worked with 100 companies who created 10 jobs each." The data and the academics who have studied this have shown pretty conclusively that these things don't pay for themselves, that the promises are always overinflated and the results are problematic. For example, 85 percent of the jobs that are created by a company coming in go to workers who move into the community, whereas if you nurture businesses, 100 percent go to your insiders.

I've read about localization also being a necessary tool to combat climate change.

Whether your fear is climate change or Ebola or global capital flight, there are some very good reasons you want to be working on resilience. Specifically on the climate change issue, there is a lot of garbage information out there about how distance doesn't make a difference in terms of the carbon footprint of a given purchase. If I could generalize, to me, it's a no-brainer that the farther you ship something the more carbon you're going to generate.

Are environmental activists joining that coalition of locavores and tea party Republicans pushing for better local business laws?

Totally. In fact, it's the rare envrionmentalist who dissents and thinks that localization has nothing to do with this. You can find them but they're pretty much on the fringe. Ten years ago, that was not the case. There was not a lot of discussion about localization in the environmental movement, but that's totally behind us.