Asking the Most Indebted Entities to Lend
Does the capacity to have government do it — “it” being everything and anything — ever end? I ask in response to Brian Hull’s musings on small-businesses’ access to capital:
[Note: I think he means “incumbent upon government.”] Realizing that the money would have to come from somewhere, Brian lists all of the possibilities but those from a conspicuous category:
How do we solve the lending problem? One way to increase lending is for the state to do it directly. If banks are unwilling to lend, and lack of access to capital is stymieing growth in Rhode Island, then I would argue that it is contingent upon the government to assist. Rhode Island should establish a loan program targeted specifically for expanding access to capital for locally-owned and operated small businesses that wish to expand their business, but are unable to do so because of rigid lending practices.
There are a couple places to look, and each has benefits and challenges. The state could borrow the money from the federal government or from national lending institutions. The state could change its tax laws to generate more revenue in order to lend. The state could eliminate existing corporate subsidies that benefit large employers with no positive economic effect (the state should eliminate these anyway). The state could establish a state-run bank funded by the current deposits held by the state and its cities and towns (I’ll write more about the benefits of a state-run bank in another article).
Without even bothering to list the possibility that the funds to lend could be shifted from some other area of current spending, Brian suggests that the most deficit-ridden entity in the state of Rhode Island should put itself into further debt in order to lend. And one way it could do so entails asking to borrow from the most indebted entity in the world — the United States government!
As far as I can tell, the only advantage that a government entity has, in just about any capacity, is that it can take money by force. That shouldn’t be the first principle of economic recovery — especially for a small state that is easily left.