Sierra Mountain Times

I attended college in the late 1960’s and early 1970’s. Most everyone in the U.S. knows that this was a time of Populist uprising against the perceived injustices of government. We commonly recall the Vietnam War followed by unparalled inflation. Perhaps it was the latter circumstances that caused me to change my career direction from geosciences to economics. Or, perhaps it was my introduction to a book first published in 1841 by William MacKay titled “Extraordinary Popular Delusions or The Madness of Crowds”.

Before I go on, I would like to commend Mr. Segerstrom for having the courage to express in writing what many of us feel, namely, the need to get back to basics and to support our local economy. It is clear that we live in a unique place and it is difficult to see our community so dramatically impacted by events over which we have no control. To see family and friends lose jobs and to see the fabric of our community challenged by exogenous forces provides all of the frustration necessary to respond in a manner recommending that we seal ourselves off from the World. “Raise the drawbridge” or “erect the 40 foot high wall” and things will certainly get better.  Unfortunately, this isolationism needs to be tempered with the reality of our world and the knowledge that only through proactive participation locally and with the outside can we truly hope or expect to control our destiny.

Back to Mr. MacKay for a minute. I cannot, in my response, do justice to a review of MacKay’s treatise which is some 702 pages in length. By its title, however, you might gather that the circumstances that we face today have many parallels in history. A few chapter titles include: “The Mississippi Scheme” in 1720; “The South-Sea Bubble” in 1711; The Tulipmania” in 1636, and on and on it goes. My point, of course, is that human society repeats its mistakes and that the past is a guide to the present and most certainly will be a guide to the future. Our most recent speculation on real estate, oil, or whatever closely resembles many past bubbles and may, in its next manifestation, result in speculation on Bald Mountain Farm heirloom tomatoes or Diestel Turkeys. It does not require a New York Stock Exchange to create a false economy; in fact, the exchanges are the specific result of attempts to prevent speculation.  

I would also like to provide caution, through historical reference, to an implicit suggestion that Mr. Segerstrom makes in his article. Shinplasters – Owen implies that focusing on our local economy would be facilitated by abandoning current monetary instruments of the U.S. and instead adopting our own local currency or currencies. This concept is not new and is often suggested at times of national economic stress (I include in this the often voiced concept of readopting the gold standard. Appealing at some level but that ship has long ago sailed.) By now you are probably “Googling” the word Shinplaster to discover that it was a form of promissory note issued by businesses in the mid-19th century in the U.S. during a period known as the “free banking period”.  The term came about because the paper on which they were printed was of very poor quality. It seems that if one mixed the paper with water it could be plastered on your shins to provide warmth in the winter. Shinplasters were printed in all sorts of small denominations including five, ten, twenty-five and fifty cents. If anyone is interested in seeing one of these, I have several that were printed in my home town of Schenectady, New York, where one looks for warmth in the winter from any conceivable source (I hated using shinplasters thus prompting my move across the country to Tuolumne County). I even have a Shinplaster in the denomination of 12-1/2 cents. When local businesses printed them, they were used for purchasing things at the store or group of stores that issued them…a type of barter. Among their many problems was that they were not any good at a store down the street let alone a few miles away.

The use of Shinplasters issued by the U.S. Treasury proliferated during the Civil War when metal was in short supply. At first they were labeled ‘postage currency’ and later took on the term ‘fractional currency’. The Shinplaster, it seems, prevented people from hording stamps as money (a stamp bubble averted!). Imagine the confusion this created…no credible currency even from the government (one can’t help being a bit cynical regarding our currency today), no opportunity to save, and no way to accurately price merchandise and food. As a result, today, legal tender laws say that we must use dollars, but, of course laws cannot dictate value. That, however, is a digression for another day. Shinplasters were last issued in the U.S. in 1878. Perhaps they are best left as an artifact of another time.

Rather than go on to address the various problems with the specific argument presented by Mr. Segerstrom, I would instead like to focus on what I believe is his real intent…namely, combining the many resources that exist locally to provide alternatives and opportunity to our great community. I value anyone who has the courage to stand up and pose the problem and begin a healthy debate on how it can be resoled. Perhaps this publication is an opportunity for community participation in that debate. By this I do not mean to say that there are not well-conceived efforts underway to attack our local economic problems. Unfortunately, in my opinion, the forums in use are not widely known, are not well coordinated, and appear to rely to a large extent on concepts that have been tried and met with limited success in the past.

Before I unleash my ideas on you, let me first identify those organizations that I am aware of and I believe have active well-intentioned efforts underway to address the economic circumstances facing Tuolumne County: Sonora Area Foundation, Economic Development Company, Columbia College, Habitat for Humanity, Tuolumne County Chamber of Commerce, Tuolumne County Service Groups and The Green Conference.

This list may not, probably is not, all encompassing. Each of these efforts is in itself laudable and provides the potential for change. While each has attempted to be cooperative with the others, there is some indefinable force that appears to prevent a truly coordinated effort and in the end we are left thinking no one is serious about addressing the problem. I know from personal experience working with many of the people involved that they both recognize the need and are extremely sincere and motivated in trying to change the current economic direction of our community. One thing I can unequivocally say is that the people of Tuolumne County care about their neighbors and the County. Differences we may have but when it comes time to stand up and support a neighbor who is facing a critical illness or who has suffered a severe economic loss, the contributions flow in. I would rather live here than anywhere else under these circumstances. No, it is not a lack of caring or concern or even effort. Instead, I believe it is a lack of a single forum for coordinating efforts combined with the diversions that we all face due to the pressing circumstances of daily life that leave people feeling alienated or disenfranchised.  

OK, so what am I suggesting? I believe that what is necessary is a strategy to attack the recession, not just to respond to it. Innovation – in business, in our community, and in our public services – need to be at the heart of the attack. We should aim to emerge as a more innovative, more sustainable, and diversified economy. Many people that I have spoken with are in agreement that we will need new business sectors to make up for and supplement the dynamism that has been lost from our past resource based economy. The development of those sectors will require a mix of intelligent public investment, partnerships with business, and entrepreneurship.

Decisive government leadership and public investment will be critical to innovation in many parts of our economy. This means that our local government must become more transparent and stand at the same risk that the rest of our economy now faces. A clear lead from government across its range of functions, in a policy context supportive of innovation and local business, has enabled other economies to develop new, important business sectors while enhancing opportunities for existing business. Through this approach government can meet the social challenges that we face. It is imperative, however, that our local government become less insular, more transparent, and dispel the belief now prevalent that it is “anti-business”.

The strategy going forward should be focused on two major efforts. First, it should strive in the short term to address the most immediate needs of the community, drawing on the existing strengths and infrastructure of our community, such as filling recently vacated retail space with business compatible with our community and less subject to “Wall Street” investors. Yes…I believe that there are businesses that share the same values that we have that can occupy that space and be long-term contributors to our community. My understanding is that our new EDC Director, Larry Cope is already pursuing this goal.

Second, we should endeavor to develop a “Total Innovation Strategy” that draws together public, private, educational, social, and commercial innovation and entrepreneurship. The recession is creating a new platform of opportunity in new growth industries for entrepreneurs to address new social challenges of the future. We need to attract and cultivate this opportunity. 

Key to this will likely be the ability to share and mobilize resources through networks that can be divided into five categories.

- Networks will be critical to the way that companies respond, creating more open approaches to innovation which draw on ideas from consumers and suppliers.

- Networks will be critical to the way the diverse geographic areas of our community respond, drawing together public and private actors and even more importantly, stretching out of our local community to find new markets. It is critical that we have outward looking, entrepreneurial networks.

- Networks will be critical to new business creation: the role of business clubs and networks to help entrepreneurs create new businesses, especially in areas such as environmental and social services.

- Networks will be critical to how people keep in touch with work and job opportunities.

- Networks will be vital to make better use of shared resources, promote collaboration and creativity.

It is because networks are so vital that it is imperative that government commit to deliver universal, ultra-fast broadband across all parts of the County. That will enhance the opportunity for the development of entrepreneurial business, encourage “green” business to relocate here, provide business efficiency, community cohesion, and international links. It will also send a bold message that Tuolumne County intends to invest in the future through the recession to emerge stronger. This is an enormous challenge but it can begin in a modest way through the use of County owned or leased facilities that can serve as incubators. While I could comment further on this, I believe that it is important to first encourage public participation in the concept.

In summary, I am suggesting that Tuolumne County should attack the recession by using our existing economic base combined with innovation. Perhaps it is time to develop a “White Paper” that provides the format for continuing the debate in each of several broad thematic areas – companies, places, people, and public services. The focus of the paper should be to define actionable items that conform to a time line and that fit the culture and circumstances of our community. This should not be an academic exercise but instead have the financial support of government with a commitment to find a way to finance the defined action to be taken. The need exists, the resources can be found and mobilized, leadership is all that is lacking. It is time to change the complaint that I have heard since I became a resident of Tuolumne County nearly 30 years ago…”our children leave the community because there are no employment opportunities to keep them here.” Owen Segerstrom has posited the debate with his article. He has expressed the critical need that we do something to change the economic direction of the County. While I may not agree with some of his approach there is merit in his overall concept born by the frustration that we all feel. As appealing as it might first seem, I would, however, recommend that we avoid issuing Shinplasters in-lieu of other options for warmth, and prosperity.