What can communities do to come out of the economic crisis?

Today the BALLE networks participated in a conference call with Doug Hammond (the new E.D. of BALLE) and Michael H. Shuman, author of Going Local and The Small-mart Revolution. Here are some highlights/notes from the call:

There are four primary issues facing our communities and economy:

1. Rising oil / energy costs
2. Climate Change
3. Value of dollar decreasing
4. Recent Financial Crisis

A more localized economy has the ability to address all of these issues. For instance, small scale energy systems can address our need for energy production and the rising expense of oil. As oil becomes more expensive, so do imports; a locally rooted manufacturing sector will be necessary to produce the things we need at a cost we can afford.

We also discussed the recent financial crisis, and how some of the problem was caused by predatory loans from non-local financial institutions. Local banks and credit unions are better for our local economy for three primary reasons:

1. they have more information about the risks involved
2. money spent locally circulates more in the community, creating more positive economic activity
3. even when local loans go bad, there are still things to show for that investment - roads built, etc

Paul Krugman of the New York Times said in a recent Fresh Air Interview: 'the fed's response is like the fire dept. putting out the fire. Like it or not, It had to be done. But the next stage is creating fire prevention systems.'

So what's next? What kind of long term solutions are viable?

There are a variety of things we can start to do that will minimize the dangers:

1. Spread community banking and credit unions
2. Strengthen application of CRA for non-local banks
3. Begin CRA-type obligations on other finacial instutions, such as mutual funds, etc (reporting and incentives)
4. Alter co-ops to become local investment groups
5. Make it easier for local businesses to go public
6. Make it legal for states to create internet-based exchanges
7. Modest tax credit that rewards investors who put money into local business (In Maine, 40% tax credit for any resident who puts money into qualified Maine business (although, only for advanced global manufacturer or bank who has a branch in Maine) - also, look at Obama's white paper on small businesses; he's proposed 20% credit for rural businesses. We could implement a 5-10% tax credit across the board for investing in local businesses.

Compared to the $700B bailout plan, these types of reforms cost very little to implement, and create a positive seachange in the direction of supporting solid local businesses.

Those are just a few ideas about what we can be doing now to address some of the financial and other challenges facing our communities.