Your Leadership, Freedom & Independence this 4th July.
Dear Mr President,
Your leadership is needed in a matter which affects America and us all. A matter of removing an ongoing source of inequality which continues to disfigure both democracy and capitalism in America and worldwide. I believe it is in your gift to right an historic, and on-going, wrong and remove a barrier that has disenfranchised the many and favoured only the few. If I might explain…
In many ways Crowdfunding is the embodiment of ‘The American Dream’. A dream that has inspired many of us beyond the geographical boundaries of the United States as well as Americans everywhere,
A dream of independence, self-reliance and freedom for ourselves and our families. The dream of helping make the world a better place, being allowed to make a real contribution towards a better, fairer, society. The dream of a world without rules and regulations designed to keep people down and gatekeepers to keep people out. Where anyone with sufficient determination, energy and talent can ‘make it’ – and make their mark – pursuing their own passion, their own insights, their ideas and ideals.
This is the dream which inspires the global ‘Crowdfunding Nation’. It’s a dream that has taken hold worldwide and is growing faster than any other. Analysis of our own data which tracked almost 100,000 new ventures so far this year show a doubling of new starts in just 60 days worldwide, with contributions from around 200 million people.
It has brought hope at a time when capitalism has faltered, was almost derailed by the greed of the few. At a time that has brought into focus the increasing inequalities. Inequalities of opportunity as well as means, in all the major western democracies.
Crowdfunding’s potential is a re-birth of capitalism with democracy at it’s heart. Democracy not elitism, protectionism or the gatekeepers we’ve all grown used to seeking their unearned rents and their desire for the whip hand.
Crowdfunding is a cause worth championing and worth fighting for. But it needs true, brave, champions if it is to succeed in opening the gates and pegging back the gatekeepers. Not all of those who enjoy the privilege and wealth of being ‘at the top’ would oppose this – quite the contrary in many cases. But there’s no getting away from the fact that abolishing a privilege – a ‘private law’ that favours only the few – will erode, if only a little, the protection that those at the top of the pile have enjoyed.
Sir. You, as President, are often referred to the ‘leader of the free world’ and are a champion of global democracy. I believe we are at a crucial moment where such global leadership is badly needed.
In both the UK and the USA government has expressed it’s explicit approval and support for equity crowdfunding. That it should not just be allowed but should be wholeheartedly supported. Yet two years on, in each case, the financial regulator – your SEC and our FCA – have sought to veto the will of the legislature and the new freedoms this would bring – together with growth, innovation, new businesses and new jobs.
Except this is not – in reality – a new freedom at all. It is a form of financial apartheid conceived many decades ago with the original purpose of protecting a largely illiterate and unsavvy populate in the 1930s from the wild, unscrupulous, excesses of Wall Street.
After so many decades it’s clear that there are now better ways to deter and prevent the unscrupulous in a literate world with an open and free flow of information – in which it is very difficult if not actually impossible for such scams to operate. It’s equally clear that this exclusion of the many has been seized upon for the profit of the few who seek to extract large fees and other rents for operating in the way that they do, controlling and often distorting the flow of information, creating and preserving what has been called an ‘information asymmetry’ – those in the know and the rest of us out of the loop.
In short they operate to keep ordinary people out – to prevent them from participating at all – in the name of protection. A kind of protection that the majority neither need nor want. This is all at a terrible cost – economically, socially and in terms of talent and creativity. But most of all in terms of a basic freedom. The freedom to choose to support fellow citizens and their ventures and dreams, and how to support them. To share in their story – succeed or fail – and in the rewards.
Enough generations have passed that this terrible injustice has, until now, passed as normal – business-as-usual. Most people are not aware and do not notice what they’ve never had – even if they do chafe at modern life and the lack of freedom, openness and choice more generally.
But we can now see what happens when entrepreneurs, inventors, engineers and ordinary people do get a small glimpse of the possibility of this kind of freedom. Freedom to develop, to communicate to build a community and a business via ‘Rewards’ Crowdfunding (aka The KickStarter model). This works so superbly that it’s growing like wildfire around the world – proving what Crowdfunding can do and how it’s openness and transparency disables and deters the unscrupulous as a matter of course.
But this model of Crowdfunding can only do so much for startups and growing ventures. As can traditional funding . For the dream to be unleashed and fulfilled – both the Crowdfunding dream and the American Dream extended to the world – we need regulators to regulate what is there – not what is not. To regulate for 2014 and a future containing new, restored freedoms, not for the 1930s. To not just allow but encourage entrepreneurs and their ventures to engage with people and markets directly via equity Crowdfunding. We know how to do it – and we know how to do it safely.
We need to ensure that the vested interests who prefer the status quo step aside at last and allow ordinary people to participate. To create a truly level playing-field. One where whether it’s in Washington DC or Washington Lincolnshire, London, Idaho or anywhere else we can all aspire to our own version of the American Dream.
If there’s one thing we have learned from the brief history of the Internet it’s that it has the power to release the people’s creativity, to break the zero-sum game apart allowing us all to be a part of expanding the pie instead rather than squabbling over the existing prices.
It’s no secret that the world watches America. The lead you give matters. Whether this important freedom triumphs matters to us all – perhaps more than we can know until we have it restored to us. It matters too that what is for the good of the many is not frustrated by the few. Whether those few be those who’s wealth and power might be eroded a little – or the few, the regulators, who would veto the legislature because it does not fit into a structure made sacred by time but derived from a past that enshrined and blessed this glass-wall which ensures inequality.
When it comes to a competition between the convenience of the regulator – even combined with a ‘sacred’ agglomeration of regulation built up over decades – and the freedom of the many then I submit it is the duty of any regulator to put aside their own preferences and ignore the vested interests.
As Congressman McHenry introduces a second attempt to restore this freedom – fully hedged with all necessary protections and caveats, and then some – to your legislature I urge you on behalf of all those who dream this dream – in the USA and beyond – to lend your weight and support at a crucial moment on this crucial issue which could revitalise capitalism and restore this very important freedom to the people of America and the world. We are all watching and await your lead.
Barry James is the co-founder of TheCrowdfundingCentre and the Social Foundation. Founded in 2012, the organization was created to further research, education and policy initiatives into the new, post-crash economy and “Crowdnomics”. James also created “Crowdfunding: Deep Impact”, the UK’s first national conference held in February 2013 which led to the influential Westminister Crowdfunding Forum. James is a frequent speaker on crowdfunding, entrepreneurship and innovation.