The people’s bailout?

A friend of mine forwarded the following e-mail to me yesterday. I like the author’s willingness to shatter convention and expectation with a bold, creative solution to a problem that everybody else seems to be approaching with fear, bewilderment or knee-jerk certitude. We’ll never get out of the mess we’re in unless we get inventive first.

And I like the part about money to support entrepreneurs.

It isn’t clear if such a plan could really have the effect its author supposes, so, economists, please weigh in. But even if it couldn’t work, the plan makes a sharp political point:

 The Birk Economic Recovery Plan 

Really new ideas will save us

The blogosphere is buzzing about the vice-presidential debate last night. Somewhere in the District of Columbia, and among worried constituents at home, congressional legislators continue to agonize about the threat of another Depression. Like Cleveland’s Council of Smaller Enterprises, local chambers of commerce are probably polling their members to find out where they stand on propping up Wall Street when their own small businesses are teetering.

Let’s face it – no one really knows what to do. Our leaders and lawmakers and candidates and economists are guessing. Some people sound smarter than others and some have relevant experience with money, markets and the dismal science, but there are so many factors in play right now that no one can claim to have the solution to our financial crisis.

Talk about Hail Mary passes – the whole country is muttering a rosary’s-worth of oh pleases while waiting to see where the bailout ball, er, bill, lands.

As co-owner of one of the smallest small businesses in America and someone who will take creative risk-taking over conventional wisdom and stasis every single time, I have to say this:

It’s time to cut the crap and start using our brains here. No reflexive bailout is going to do any real good – the problems are too tangled and ingrown for a double-dip ice cream cone to make them all better. Not doing anything won’t work, either - that’d be like knowing you have an aggressive cancer, but deciding to sit still and just let it sort itself out.  

The fact is that the current administration isn’t smart enough or inventive enough or responsible enough to come up with the innovative strategies we need to rid ourselves of the rotten parts in our financial structure while saving what deserves saving. All we should do right now is help the banks just enough to keep them standing until the next president can collect the best creative brains in the country and start designing a real plan to change the way America’s money is handled. 

I’m not the only one who thinks so.

But I haven’t heard anyone else say that the plan the next administration and Congress devise needs to be  revolutionary. It needs to replace our corrupt and collapsing financial sector with a carefully structured, but imaginative framework of policies supporting not just institutions or the greedheads who run them but, most all, the regular citizens who depend on them.

It needs to create a banking culture that invests in community development by helping individuals, small businesses, neighborhoods and towns get on their feet and stay there. 

I’m not a money or a policy expert, but here are the needs I see:  

Jobs – There aren’t enough good ones. So small businesses, especially the creative kind, need to be encouraged as much as big businesses. Why not expand micro-loans into programs of graduated loans that lend entrepreneurs increasing amounts as they pass certain business-growth milestones? Like those combined college programs that invite a qualified student to earn a bachelor’s and an M.D. without having to go through the med-school application process, a graduated-loan program could select entrepreneurs in the idea stage and move them through growth stages with money and mentoring until their businesses reach pre-determined goals and can operate independently. Unlike venture-capital companies, these programs would aim to help start-ups that would probably always be small, but would also be stable local employers.

Homeownership – There’s nothing wrong with every American wanting to own his or her own home.  Homeowners create community stability, maintain their properties better than renters, have stakes in the future of their neighborhoods. The real-estate industry just got criminally greedy about making money off people’s housebuying impulses. So why not take a similar graduated approach to homeowning? Just as leaders in Paducah, Ky., did, local governments and banks all over the U.S. could offer rundown or foreclosed properties for free or very little to artists and other entrepreneurs who agree to make improvements in exchange for ownership. As these properties appreciated – and in Paducah, they have – whole neighborhoods would improve and become magnets for desirable economic activity such as shops, restaurants and small businesses that employ the residents. And along with creative approaches to bringing homeownership within reach of lower-income people, let’s make sure banks strictly observe the proper standards of income and collateral that regular home-loan applicants should have to meet before they get any money.

Education – We’re going to have to make sure that communities – and thus the larger economy – have the human capital they need to engender creative businesses and provide the skills, knowledge and ideas that all community activities and systems require. How do we make sure that all people get good higher schooling and training and the chance for productive, self-supporting lives?  Maybe financial institutions should offer student loans that don’t have to be paid off in cash. What if students got money for college or vocational training from the same banks that offer graduated loans to small businesses? The banks could let students work off their loans during or after college by serving as apprentices to those same small businesses. The businesses would get skilled, low-cost employees as part of their loan programs, students would repay loans with their labor while gaining hands-on experience and resume credits, and the banks would get an accelerated return on investment in the last phases of the graduated-loan program as the apprentices allow the small businesses to thrive and pay back the banks sooner.

Let’s not come out of this national financial disaster with only a patched-up system and the same old mindsets to show for it. Maybe my creative ideas won’t work. But somebody else’s will.

In and under the financial wagons

Investors had a big ol’ hootenanny at the end of last week. And when they finally woke up Monday, they had a collective hangover that looked a lot like the onset of clinical depression.

On Friday, they thought the cavalry had arrived to save them and all those sorry, overextended,  who-cares-make-hay hucksters who took over the banking and loan industries while the government winked and held the doors open. They saw charging horses and flashing weapons and cheered their own salvation with a whooping, hollering orgy of piling back into the wagons they’d just crawled under … only to realize when the dust cleared that it was merely George W. Custer in a cowboy hat, waving his fountain pen at the head of a tattered, debt-ridden regiment of federal spendthrifts.  

And even though they – and we – would like to believe that a couple of signatures can give this movie a happy ending, deep down we know that this is likely no summertime Hollywood western (“Buckaroo Bailout” ?), but a long, grim, anguishing Bergman flick the likes of “Autumn Sonata.”

When the economy tanks, entrepreneurs are often the ones sucked under with it, as a story in the small-business section of Monday’s New York Times points out. It figures: We’re smaller, with fewer clients or customers, fewer resources. Some are already facing reality, closing or selling their enterprises and going back to corporate life. It’s not a guarantee of safety, but at least the paychecks there are steadier and usually come with health insurance.

How do you know when it’s time to fold? When you’re out of money? Or when you’re out of hope? I’m a first-time entrepreneur and have no answer, but I can guess that the need to eat has a way of dissolving dreams quickly. Still, as long as the whole world doesn’t collapse, some of us will keep going, biding our time and winterizing our little companies so they’ll survive the coming harsh season somehow, while we take on second jobs.

Could the cavalry have a real leader in its ranks? Or will we have to hold out until one appears out of our own midst? I have no idea. But the real entrepreneurs among us may start raising chickens inside that circle of wagons.