The Real American Economy

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Yesterday in The Gorrie Details, I talked about how the biggest threat to an American economic recovery was the changing political and economic culture in the country…

Because the spirit of American entrepreneurialism and risk taking is being replaced by dependence upon government handouts…

And American innovation and creativity are being strangled by high taxation and over regulation.

But I also said that Americans can and will find new solutions to new problems…

And they are, despite the massive intrusions of the feds.

We’ve all heard how tough it can be to get a bank loan to start a business these days…

Many banks prefer to lend to larger, established businesses—no mystery there…

Or to simply buy US Treasury bonds and get 2.5% on the 10-year bond…

Or even just collect interest on excess reserve interest payments from the Federal Reserve as banks hold “their” money in their electronic vaults…

So what is happening in response?

What are people doing about that lack of credit and liquidity?

Filling the void

Filling the void, of course.

I have written before about private lenders on the Internet—that is, small firms and individuals--providing private mortgage loans to folks with plenty of money to put down on a house and a stable income…

But without a high enough credit score to qualify for a mortgage from the usual sources.

Well, a similar thing is happening with funding small businesses and creative projects over the Internet…

Small Internet companies now showcase start up companies, creative projects, and other opportunities that are being funded by people like you and me.

Take Kickstarter.com for example.

This company connects people with money to invest with folks who have enterprises that need funding…

Typically, venture capital is what allows new ideas and innovations to take flight and hit the marketplace…

And even in the best of times, the venture capital world is a tough place to become noticed for most small business people with an idea or a product that needs funding…

But in this era of tight credit and falling consumer income, the odds of getting venture capital from established investment firms to fund a project are even less than they used to be.

But since its founding 3 years ago, Kickstarter.com has provided more than $200 million for about 20,000 business startups and creative projects…

And their success rate is staggering.

Of all the projects that seek funding on their site, a whopping 44% seeking financing receive it, and only funding candidates that meet their stated financing objectives receive their funds.

No lack of economic energy in US

What does that say about the American economy?

It tells me that there is no shortage of great ideas among us, no lack of creative energies in the country, and no federal or corporate program that has anywhere near the success rate as this “democratic” funding source…

It also tells me that when individual get together and make things happen with their own ingenuity and initiative, everyone benefits.

And it’s not just Kickstarter that is helping entrepreneurs get funded.

Facebook, the giant of social media, has people “friending” others for financial support of projects…

And YouTube is also a major way people are finding not only financing for their business startups and creative projects…

But they’re also finding markets for them.

The Internet’s impact on how business and banking works is huge and growing…

And has yet to be fully realized.

But what’s more, these activities demonstrate precisely why the US economy has been the largest and most successful and innovative economy the world has ever seen…

When people are allowed to think outside the box, collaborate, create, and produce without someone over them telling them what they can and cannot do…

The results are often amazing, sometimes path breaking, but more often than not, benefit society in many more ways than a welfare check ever did or can.

This, of course, is the political aspect to economics.

In the case of people-to-people business financing and marketing, it is at the grassroots level of the economy and society…

The incentives of wealth and self-satisfaction lead people to take risks, both in creating a new business and in writing checks to fund a new idea or project…

The only force that can stop this driving economic machine is…government.

Think about what is now being considered…

Regulating the Internet, which really means controlling what we see and read, as well as who we talk to and what about.

Why is such regulation necessary?

Because it is currently beyond the control of the federal government to tax and regulate what happens on the Internet.

Why does the federal government view this as a bad thing?

Because the modern American government is not really about jobs and the economy anymore…

That ideal has passed us by—at least for the time being.

The basic goal of our leaders today seems to be much more about control.

And really, if there’s one thing we all need more of from our favorite uncle; it’s more supervision, isn’t it?

After all, just look how well things work when they’re not taxed or regulated…

It’s enough to make you sick, isn’t it?

Just whom do we think we are anyway...creating, funding, and marketing our own projects without the say so of big banks and federal regulation?

It’s so wrong on so many levels.

And those are…The Gorrie Details.

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