Wednesday, September 17, 2014

How To Bring Greensboro Out Of Poverty: Part 3

As you read this series, How to Bring Greensboro Out Of Poverty keep in mind this is a bottom up solution to poverty instead of the usual top down, trickle down solutions that never make it to the bottom but instead end up providing incentives the rich.

Also keep in mind what I wrote in Part 2:

 "This entire series is to be considered an evolving plan and any post is subject to be edited with feedback from readers or as I gleen more information from other sources. After all, any economic plan so set in stone that it cannot change to reflect changes in markets and current economic conditions is doomed to failure from the onset."

And wonder why I added leaves, waste wood and duckweed to Part 2.

But first let's discuss how we pay for it all without incentives.

 The City of Greensboro currently has roughly $272 Million Dollars in a savings account commonly referred to as the City's rainy day fund. In reality the account isn't a savings account as the money is invested in stocks and bonds and isn't entirely liquid. If the City actually needed $272 Million Dollars tomorrow we couldn't get it because the investments are long term and cannot be cashed in all at once.

But from time to time parts of the fund matures, pays interest and is reinvested.

Other times the fund looses money. Last year the fund lost $1 Million Dollars proving it's not without fail. If the stock markets take a turn for the worse it could lose a whole lot more.

What is the City of Greensboro investing in? Municipal bonds from other cities and stocks issued by private corporations-- the same things institutional investors everywhere invest in.

But what if the City of Greensboro, instead of investing in other cities and in corporations around the world, took part of that $272 Million Dollars and invested it in buying stock in local start-ups and expansions of existing local businesses?

Yes, sometimes the City and the taxpayers would lose. We lost a Million bucks last year without investing locally. At least if the money was lost locally it would still, for the most part, remain in our local economy. There's no telling where in the world the Million went that the City lost last year-- China, Russia, Mexico, North Korea, terrorists... who knows?

And no, it's not an incentive plan. Unlike an incentive plan, if the business is successful the City gets paid back with interest plus dividends for as long as the City chooses to hold on to the stock. Only if the business fails is the money gone. When the City gives a $2 Million Dollar incentive grant to the Downtown Wyndham Hotel the money is gone from the start and the City never gets that money back.

And those increased tax revenues and jobs your City Council members like to talk about when they're making excuses for giving away incentives-- my plan brings them just the same but without the incentives.

To be continued in Part 4 after the Mayor picks her teeth up off the floor as I do in days what she and her entire Greensboro Partnership won't be able to do in the next 10 years.