Bringing Money Down to Earth
Air Date: Week of January 9, 2009
As public officials and individuals seek fast solutions to economic woes, sustainable investor Woody Tasch says now is the perfect time to pursue slow money. Tasch talks with host Steve Curwood about investing in businesses that are good for the planet but slow in financial returns, and about his new book "Inquiries into the Nature of Slow Money."
CURWOOD: As America considers ways to pick up the pieces of our smashed up economy, a former venture capitalist suggests that fast money helped to derail it. Woody Tasch says any fix must include slow money-- investments and returns at the pace of sustainable business development.
For slow money think slow food. The slow food movement pushes healthy, sustainable local food, in contrast to fast food that mostly comes frozen on a truck, and takes profits out of communities. Woody Tasch is chairman of Investor's Circle, a network of sustainable investors and author of the new book, "Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered”.
CURWOOD: How slow are we talking about here? I mean, what’s the rate of return on this kind of investment?
TASCH: Five percent. The approach here is to go squarely at the gap between philanthropy and venture capital, which is a gap which leaves tens of thousands of small local first sustainable enterprises without access to risk capital. And there are actually tens of thousands of these enterprises all across the United States, businesses like the White Dog café in Philadelphia or Butterworks Farm up in Vermont. Cow Girl Creamery in California. Wholesome Harvest in Iowa. So a whole host of small food enterprises that are not in business to try to become global corporations, but are in business to create thriving, profitable small enterprises that enrich their communities and leave the planet better for future generations.
CURWOOD: So, venture capital, and that’s the business that you used to be in, you would get –what, 20 or 30 percent return?
TASCH: Well, the venture capitalist shoots for you know five or ten times his or her money if a few years. So the actual rates of return are phenomenal when you do the arithmetic they can be 100 percent, 200 percent, 500 percent.
CURWOOD: There’s a point in your book when you talk about what venture capitalists told you in response to various sustainability proposals that you brought to them over the years. I’d like to tick off a few. “I have a moral obligation to my investors to minimize risk and maximize returns.” “It won’t be big enough.” There’s another that says, “I want to live in a community that has ten companies with a hundred employees each, but I want to invest in a company that has a thousand employees for that one company.” How do you change that way of thinking?
TASCH: It’s not easy. [Laugh] I sometimes ask investors to ponder the following question. What would the world be like if we invested 50 percent of our assets within 50 miles of where we lived? And when you say that to a group of investors, you get a blank look at first, and then maybe a chuckle or two, and then they say, “of course, that’s ridiculous, what a stupid question.” And then it starts percolating a little bit and they begin registering how profoundly disconnected their lives as citizens are from their lives as investors. Investing is all about sending your money into markets, into cyberspace, into complex intermediation. And the fact that at the same time, the places where we live are being degraded, this is a very basic disconnect.
TASCH: Sure, Steve. It is deeply disturbing to stand at the edges at such extreme wealth, such extreme speculation, even when it’s successful, and peer into the expanses of such unrelenting poverty. Poverty of abandoned building and abandoned village and field abandoned to mall. Poverty of slum and ghetto. Poverty of pollution. Poverty of congestion and sprawl. Poverty of cheapess and impermanence. Poverty of gated community and security system. Poverty as if ordained by an invisible hand. Poverty of the devalued and the overvalued. Poverty of entire populations who produce little but consume much. Poverty of the near and the real overtaken by the distant and the virtual. Poverty of empty calorie and long shelf life. Poverty of plastic. Poverty of divorce and displacement. Poverty of erosion. Poverty of proliferating portfolios. Poverty of market mania. Poverty of irrational exuberance. Poverty of affluence.
CURWOOD: Thank you.
TASCH: When I talk about the poverty of affluence, I don’t mean to say by any means that, you know, economic growth and financial wealth is quote “evil” unquote. I think a very strong case can be made that from 1900 to 2000, if we just take some arbitrary dates, technology and economic growth were drivers of tremendous progress and increased standards of living and longer life expectancy in many parts of the planet. However, we’re now not between 1900 and 2000. We are in a new century. And the problems we’re facing right now do require a much more nuanced approach to the issue of financial wealth. And we don’t have time to continue chasing maximum economic growth and assuming that all the other problems will be taken care of with the wealth that we’ve created. It’s that even in the midst of affluence – in the midst of the beneficiaries of the greatest legal accumulation of wealth in the history - those words came from a venture capitalist – in the midst of all that, there is tremendous social unease. So I would just keep repeating the mantra slow, small and local. That does not mean non urgent or trivial or parochial. It means things that make commonsense, that connect people in real and tangible and durable ways and create relationships that long-term wealth can be built on.
CURWOOD: Woody Tasch is the author of the new book “Inquiries into the Nature of Slow Money: Investing as if Food Farms and Fertility Mattered.” Thank you so much, Sir.
TASCH: My pleasure Steve, thanks.
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