The opposing force which I've already mentioned in this course is the democratization of finance. And another one- I've read a lot of books so I have a book called "Finance and the good society." And talking about how finance has been increasingly democratized over the centuries and stands to gain if it's further democratized. But what I mean by democratization again, is that it should benefit real people. Everyone, not just the rich. It shouldn't be a plot to preserve the riches of the already rich. It should be something that manages risks for everyone. Risk management should reduce inequality. So, one example of what's happening these days in democratization of finance is Crowdfunding. So I have a picture here of the homepage of one crowdfunding company called Crowdcube, that if you can read the statistics they claim to have raised 158 billion pounds` in their history with 277,000 investors and 393 companies. So what is crowdcube? It's a website where people with business ideas that need funding can take their ideas directly to the public and they can raise money online. What they also have on crowdfunding websites is chat rooms where people discuss the investment. So this is something that you could take up. You go on to a site like crowdcube and look at what's being proposed. One of them was a home ultrasound kit so a woman can look at her unborn, pregnant women can look at their unborn baby whenever they like. Right now they'll go into the hospital and do the ultrasound, look at a photograph. Have you seen any of these photographs? They are kind of weird that you can see the fetus inside and see what the baby looks like. Well they thought "Hey, women they want to look at their baby all the time so let's just make a home version of it". That's a neat idea. I'm not sure it's a good idea to be under ultrasound every day. I would have some health concerns but that's a creative idea that might not be funded. You walk into an investment bank with that idea and they might laugh you out of it but maybe not. I think crowdfunding does have the potential to tap the creativity of people in more intense ways. I know I have my own experience of raising money with my student Alan Weiss. This is a long time ago when he actually set up the company and I was partner and we went to investment bankers and tried to raise money for a company that was ultimately a success but they didn't seem to get it. You know, I think it's just not everyone gets innovative ideas. I guess we were right after all. So the idea of crowdfunding is to involve everyone, the same way you involve everyone in the Internet. Now you notice this is a UK company not a US company. That's because British regulators seem to be more open to experimentation and the U.S. regulators are more worried about abuse. What they are worried about in the United States is that crowdfunding sites could bilk people. And first they will bilk people. This is human nature. History shows that in the old days, before you go back to the early days of telephone, there were all kinds of investment schemes that were pushed off on the public via telephone calls. And a lot of them were just fraudulent and manipulative. People don't know how to evaluate, most people don't know how to evaluate investments. So the United States adopted crowdfunding rules just very recently that try to allow crowdfunding to happen in the United States but limit it so that it can't drive anyone to bankruptcy. So what they said a company in the United States can raise money on a crowdfunding site but only one million dollars in a 12 month period. Now that might sound like a lot of money to you. But for corporate finance one million dollars a year is not a lot of money. It's like five percent of your CEO's salary for the year, it's not a lot of money. So they have limited it to make it tiny. On top of that they can't invest more than, if your annual income is less than $100,000, more than $2000 or 5% of your annual income or net worth and the aggregate amount of security sold to an investor through all crowdfunding offerings may not exceed $100,000. But anyway this is nice, we're starting to experiment with something that's already going in the rest of the world. I think the U.S. should get involved but this is a limited involvement. So I've mentioned other ideas for it earlier in this course, for democratizing finance, like things that would help people insure against their labor income or against their houses which are issues that matter to individuals. But democratization of finance also I think entails somehow dealing with issues that people really care about that are kind of abstract issues like fraud issues of society and the environment. Despite all the criticism of the size of the financial market, it's also true that access to savings vehicles and access to financing helps people. I mean as far as people, the general public, is has enabled women to save money and move forward and build companies and in a way that, you know, you used to have to have your husband sign off to get your money out of a checking account. I'm kind of going off on a tangent but isn't it, hasn't the growth of the financial industry itself actually improved the situation for the common man, if the common man is the one we are looking for. Yes, I think so and we live in a better world than before and that involves things like pension plans, health plans, insurance. The other thing is that as it gets more and more, it always impresses me how complicated the financial world really is. So Jamilla and I were talking about SEC. We need to expand that organization because there's so much more to do in that. I was impressed looking at the proposed rules for crowdfunding that the SEC just issued and it was so long and there were thousands of pages and I thought, can it be that complicated? I started trying to read it and decided that maybe this is awfully complicated. I think it it, I think it is with everybody's different views and again the public really not understanding the impact of what that regulation could mean. The pages are trying to kind of muddle through all of that and get opinions like yours and other industry players to kind of help us make the decision. I almost sent an opinion in. We need that, please do. But I didn't because I thought there's thousands of them. We get sometimes in millions, I mean of opinions on things and we appreciate them all though because they help drive kind of the decision making of the five commissioners. It's a hard decision to make, to actually do something like that. And usually any regulation, any change that involves progress has downsides and the downsides are multitude like there's different tricks somebody can play to take advantage of it in an unfriendly way. You have to think of all those tricks that might or might not happen. And you have to listen to thousands of people who reply to comments. So yeah, I just think that the world may seem simple but it's not. And the financial world is really the infrastructure for making decisions about what we'll be doing with our lives and our resources. So it's going to be a complicated thing that requires lots of people and even more people I think relative to GDP in the future.
