What If Instead? Podcast
Diseconomies of Scale | Michael Shuman
Episode Summary
What begins as a playful debate about the nature of boredom—and whether it’s possible to avoid it in a world of endless distraction—quickly evolves into a hard-hitting critique of economic myths, myths are so pervasive they often look like facts. In this episode, Alejandro and Mim are joined by economist, author, and local economy advocate Michael Shuman to take apart the idea that bigger is always better. Shuman argues against what the hosts like to call "flat earth economics": the outdated belief that success only comes from global scale. He reveals that locally-owned small and medium-sized businesses already form the backbone of the economy and are becoming more competitive, not less. The conversation explores why the dominant narrative of "scaling" is flawed, how our investment systems are rigged to favor global corporations we distrust over the local businesses we love, and how new models like investment crowdfunding are beginning to level the playing field.
Episode Notes
Key Concepts & Themes:
- Pre-Copernican Economics: The central metaphor for the outdated, pre-Copernican economic models that insist on globalization and scale above all else, despite evidence that localized systems are often more resilient and competitive.
- The "Scale" Fallacy: The conversation challenges the common wisdom that to "scale" a business means to make it as big as possible. Instead, Moose argues for finding the right scale for the right mission.
- Investment Crowdfunding: A revolutionary shift in securities law that now allows everyday people to invest small amounts of money in the local businesses they love, historically a prohibitively expensive process. In just eight years, it has directed $2 billion to 7,000 companies.
- The Service Economy: The observation that modern economies have flipped from being goods-dominant to service-dominant (70% of expenditures). This inherently favors local, relationship-based businesses over distant corporations.
- Comparative Advantage Re-examined: The hosts and Shuman break down David Ricardo's foundational economic theory, pointing out its critical flaws in a world where capital, but not labor, is mobile.
- BIMBY ("Begin In My Backyard"): A positive reframing of the NIMBY concept, suggesting that global change and innovation are most powerful when they start with local action and problem-solving.
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