08121 Design for Regeneration

Earth teach me to forget myself as melted snow forgets its life. Earth teach me resignation as the leaves which die in the fall. Earth teach me courage as the tree which stands all alone. Earth teach me regeneration as the seed which rises in the spring. -- William Alexander

Regeneration (Renew, Reproduce, Reorganize)

Resourcefulness by itself is not enough. Thanks to the 2nd Law of Thermodynamics, every time we do something useful we lose some of the energy in the transaction. Over time, we lose it all. The mainstream economy finesses this with exploitation and extraction. We need something better. Thus we seek to strategies of regeneration to renew, reproduce, and reorganize so we keep things going over time.

With proper design, your life should produce a surplus as you journey along. This may be in the form of money, it may be production (food, goods, arts, crafts, makings, etc.), it may be ideas, action, organization, services, or other useful activities.

Everyone needs a surplus for two reasons.

First, you need a surplus so you have something to give away to others or invest in the community. Everyone should be part of the work of community organizations and charities, who depend upon the gifts of others for the funds they need to do their work. By investing in enterprise or community resources, you put surplus into circulation for the benefit of all while adding something to your own surplus, which allows you to do more.

Second, you need a surplus so you have something to save for your own future needs and purposes. You need a financial reserve to take care of future financial issues and present day emergencies.

Savings may be in money, or they may be in the form of goods saved for future use, such as food storage. Savings may be found in social or intellectual capital. The point about savings is that they are quickly accessible. They are “liquid” as they say. If you have food storage, and you need food, you can use some of your food storage for dinner. If you have money (or gold or silver) stashed somewhere, and you lose your job, or have an emergency that needs funds, you can use some of your saved money to take care of the present need.

Savings should be secure. Savings aren’t worth much if they can disappear overnight. While you may be able to earn some income from your savings, generally savings do not pay a high rate of return.

That’s OK, the purpose of your savings is to provide protection in a time of need and achieve future goals, not necessarily to earn money.

Investments are money, resources, or effort that you invest in an enterprise. Generally, invested funds have a higher rate of return, but this comes with (a) a lack of liquidity, and (b) a much higher risk of loss.

Depending on the structure of the investment, you may not be able to withdraw from it quickly if you need the money. Your investment could disappear overnight if the enterprise fails. This is the meaning of "lack of liquidity." Investments are a way to share surplus, as it puts your surplus into circulation where it can benefit others.

A good rule of thumb is that nobody should invest in anyone other than themselves until they have at least a year’s expenses in the locally owned bank or credit union and a significant amount of food storage. (In this context, "investment" is not the same as "gift.")

When people think of investments, the first thing that comes to mind is the stock market. That’s a bad idea from a sustainable living viewpoint, for several reasons, the first one being that investing in the stock market starves the local non-globalized economy for money.

That’s an easy thing to say. The problem is that there aren’t many vehicles for such investments. If you want to invest in the regular stock market, it is easy to do. If you want to invest in the local economy, it is not so easy to do. Chances are, you may have to be part of a process of inventing a way to invest in your local economy.

This isn’t an accident, it is the way the system is designed. Rent-seeking economic aristocrats who benefit from stock market investments want the system to work this way. The want the stock market to be the default choice for investment and to have an advantage over competing, localized investment choices.

One way avoid the stock market trap and to invest in your local economy is to start an investment club. This is a relatively non-complicated way for a small group of people to pool their money in order to make investments. Two things will keep you out of problems with compliance with various security laws — don’t solicit the general public to join via the internet or print publications and keep it to 12 people or fewer.

You need an investment structure, which can be an LLC (limited liability company).

Generally, the group decides on an amount that each person (or organization, as organizations can be part of these groups) will pay in each month. If 12 people each pitch in $100, that is $1200/month to invest. Individuals look around and find investment opportunities in the local economy. This could take the form of short-term loans to entrepreneurs, buying part of a business or shares of stock in a local enterprise, or bonds of a local enterprise. You may or may not meet every month, and may or may not use the internet to facilitate your activities. The members design how their club will work. If more people come along, the group could decide to split and then there would be two groups, which could eventually become four groups and so on and so forth.

As the number of people interested in such investment opportunities multiplies, it may be possible to organize a credit union, or to negotiate an agreement with an existing credit union that might be persuaded to add sustainable local enterprises to its loan portfolio. In the mean time, credit union accounts are great places to park investment funds while waiting/looking for the right local economy investment opportunities.

Generally, you can only increase the return on your investment by accepting more risk.

There is no such thing as a risk-free investment.

Three times I tell you — there is no such thing as a risk-free investment.

Beware of anyone touting a “risk-free investment”.

If you “must” invest in the stock market, the only places to put your money are in businesses or funds that besides financial return also offer some form of social good and avoidance of social harm. About this practice, often referred to as “socially responsible investing,”

Wikipedia says. . .

In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved in alcohol, tobacco, gambling, pornography, weapons, and/or the military. The areas of concern recognized by the SRI industry can be summarized as environment, social justice, and corporate governance — as in environmental social governance (ESG) issues. In addition to stock ownership either directly or through mutual funds, other key aspects of SRI include shareholder advocacy and community investing.

The term "socially responsible investing" sometimes narrowly refers to practices that seek to avoid harm by screening companies included in an investment portfolio. However, the term is used more broadly to include more proactive practices such as impact investing, shareholder advocacy and community investing. Amy Domini, a prominent member of the socially responsible investing community and the founder of Domini Social Investments, has stated that shareholder advocacy and community investing are pillars of socially responsible investing and that doing only negative screening is "not what I would consider adequate."

Investing in the stock market in non-socially responsible businesses or funds is always a Type 1 Error.

Designing for regeneration of our economy is a matter of both providing for yourself and your household, and accepting your share of responsibility for the community and its “commonwealth.” The third ethic — caring for the future, by understanding that there are limits and that surplus needs to circulate — is the essence of a regenerating economic system. All of this begins in your own individual life and household, as you make economic decisions formed by the ethics and principles of permaculture.