Michael H. Shuman said economic paternalism, or fiscal segregation, is unfairly blocking economic growth and opportunities.

The economist/author/lawyer, who will be in Powell Thursday and Friday for a two-day seminar sponsored by Powell Economic Partnership, Inc., said people of modest means have long been unfairly denied the opportunity to invest their money.

“My initial interest in local investing generally was when I tried to start a chicken company on the eastern shore of Maryland around 2000-2001,” Shuman said in a telephone interview last week. “That’s when I first learned about the unbelievably restrictive nature of American security laws.

“I basically learned we have a condition in this country of investment apartheid,” he said. “If you’re in the top 1 percent of wealth holders or income earners, you’re allowed to invest in anything anytime, no question asked.”

Shuman said during the PEP workshops he will explain how “modest shifts of money make big shifts in the economy.”

People can choose to deposit their money in banks that support local start-ups and businesses. They can shift pension funds and create a self-directed IRA that puts their money in a place to benefit the local community.

It could be as simple as investing in your neighbor’s house, he said.

“There’s interesting ideas on how to create little institutions, local institutions, to invest in one another’s property, one another’s mortgages, with tax-deferred money,” Shuman said. “I try to point out a lot of things people can do.”

Shuman said he will provide a “one-day workshop over two days” while in Powell this week. (See sidebar story for details.) Shuman has never been to Powell, but he said he has been talking and writing about it for a decade.

He wrote about the community effort to open The Powell Mercantile, aka “The Merc,” in his 2007 book, “The Small Mart Revolution: How Local Businesses Are Beating the Global Competition.”

Powell needed a clothing store but had no one willing to open one. Local residents sold shares in The Merc, raised more than $400,000 and opened the downtown business in 2002. Its doors are still open.

“That was an early and powerful story of this kind of work in action,” Shuman said. “They used the old system, and they made it work.”

More such projects are possible if laws are modified and the public is educated, in his view.

“We need a much better way to get money into businesses,” he said.

In 2009, Shuman proposed specific reforms in a journal published by the Federal Reserve in San Francisco to allow investors to put $100 or less — “basically dinner for two at Chinese restaurant” — into a business or a start-up “without putting lawyers in between.”

Attorneys he knew filed a rulemaking petition to the SEC, and hundreds of letters of support poured in. He said he was not surprised by the result.

“Predictably, the Securities and Exchange Commission did nothing with that,” Shuman said.

But others joined in the cause to promote crowdfunding and convinced Congress and President Barack Obama to support such a change.

But Shuman said the SEC is once again resisting the reform.

“More than two years have passed, and they still have not implemented it,” he said. “People are going nuts.”

However, about a dozen states have passed their own version of crowdfunding laws to allow people to make such small investments.

“I think this state-by-state strategy is going to move so fast, the JOBS Act will be irrelevant,” Shuman said. “Every state will figure out a better way to do it.”

This has left him with mixed feelings about the JOBS Act.

“It’s like a bastard child. I am glad it was born,” Shuman said. “As I celebrate its birth, I realize we need more children at the state level.”

Financial laws need updating, he says

In addition to the SEC and the investment community, lawyers “absolutely” hate these proposed reforms, he said. Shuman admits he can, in a way, understand their position.

“In their heart of hearts, they feel they are protecting people from buying swamp land in Florida,” he said. “They just all labor under a bunch of illusions over how Americans perceive risks.”

The nation’s financial laws were crafted from 1933-40 in the wake of the Great Depression, when hucksters and con men had fleeced thousands of people with bogus “investments.”

“To be sure, all of these protections made sense,” Shuman said. “What is unfortunately is not widely appreciated is, first of all, the technology that people use for information sharing is so different than the 1930s.”

“Now, much of the issuance of securities can be automated in seconds, and the public is used to transactions like this,” Shuman said. “The other change is the public’s perception of risk. There’s about 1,000 casinos in North American and the people the securities law are trying to protect can walk in and lose their life’s savings.”

It seems absurd to him to block people from investing in their communities — but allow them to throw money away gambling.

“A capital market failure is how economists would describe it,” he said.

Shuman said there is an untapped source that could fuel a dramatic economic growth spurt in the country with “huge impacts on jobs, wealth and taxes and so forth.”

Americans have $30 trillion in stocks, bonds, mutual funds, pension funds and insurance funds, he said. That’s nearly four times the $8 trillion held by the banking industry.

“We also know that half of our economy is small local business,” Shuman said. “Half the jobs. Half the output — we know that half is extremely competitive, highly profitable.”

He said the nation must “revamp security laws” to put money into local investments and businesses. Shuman said he envisions a “$15 trillion transfer from Wall Street to Main Street” that would dramatically improve the economy.

“Most folks on Wall Street view local investing as trivial and that nothing will ever come of it,” he said. “I encourage that view. It will in the long run serve to undermine Wall Street as we know it.”

On his website, Shuman describes himself as “an economist, attorney, author and entrepreneur, and a globally recognized expert on community economics.”

In addition to his work on behalf of crowdfunding, Shuman has written or co-written eight books and has another one in progress. He has written articles for a wide variety of publications, including The New York Times, Washington Post, Nation, Weekly Standard, Foreign Policy, Parade, and The Chronicle on Philanthropy and has appeared on “The Lehrer News Hour” on PBS and NPR’s “Talk of the Nation” and “All Things Considered.”

Suman, 58, lives in Silver Spring, Md. He earned degrees, including a law degree, from Stanford University and is also a member of both the State Bar of California and the District of Columbia Bar.

Shuman is the director of community portals for Mission Markets Inc. of New York City and a fellow at Cutting Edge Capital in Oakland, Calif., and Post-Carbon Institute in Sonoma County, Calif. He’s also a founding board member of the Business Alliance for Local Living Economies (BALLE).

He is also an adjunct instructor in community economic development for Simon Fraser University in Vancouver, B.C., Canada.

It’s called the The Local Crowd-Powell — and you’re welcome to join the crowd.

Powell Economic Partnership Inc. will launch its crowdfunding platform and projects Thursday.

Crowdfunding is a method, primarily through the Internet, of raising capital for entrepreneurs and community organizations. Hundreds, thousands and millions of dollars have been raised by individual projects, and The Local Crowd-Powell wants to bring that here.

Recently, Powell was selected to pilot a local crowdfunding platform in Wyoming. Two pre-launch webinars were held for local projects and team members, featuring staff and founders of Community Funded, a crowdfunding platform based in Fort Collins, Colo., who offered training and guidance.

Now, two days of workshops, webinars and a kickoff party are scheduled for Thursday and Friday.

These workshops will focus on local investing and digital media, with nationally recognized speakers and authors, Michael Shuman and Aliza Sherman.

Author and “web and social mobile pioneer” Aliza Sherman will speak and offer assistance during the two-day event.

Sherman is credited with having paved the way for women online and in the Internet industry. She has written 10 books, spoken at conferences across the globe and been a digital strategist since 1992.

Workshops will be held from 9 a.m. to 4:15 p.m. Thursday in the Northwest College Center for Training & Development Classroom at 1397 Fort Drum Drive.

Shuman, Sherman and McCabe Callahan, the CEO of Community Funded, will be on hand.

The “launch party” will begin at 5:15 p.m. Thursday at The Commons at Pond Park, 135 N. Bent St. The Willwood Gypsies will perform their “newgrass music,” pizza by Mr. D’s will be available and free beer by Powell brewmaster Tony Wickham will be served.

PEP Executive Director Christine Bekes will welcome people and explain the basics of crowdfunding, and Shuman will get the crowd “all jazzed up to invest locally and support local initiatives,” Bekes said.

More workshops will take place at the NWC Center for Training & Development Classroom on Friday morning and early afternoon.