I want to make two points in this blog. They are closely related.
The title of my blog is pro-commerce. Many think that this is a rather obvious position. I find the opposite. Virtually nobody defends the importance and centrality of commerce in our lives and in our survival. Virtually nobody.
The best example is the fact that almost no small business can get a business loan from a bank. The same is true for small business people trying to get a mortgage. It cannot be done.
The code name for this problem is Schedule C prejudice. Schedule C is the page on an income tax return that lists revenue and expenses from a small business or sole proprietorship.
A small business cannot borrow money to cover operating expenses, startup expenses or expansion expenses. A small business can only borrow money based on assets. Small business can borrow money for a truck, a refrigerator or a kitchen stove. Each of these has to be re-salable and the loan will only be for a modest proportion of the market value.
The reason is that lenders, in no case a banker, cannot read and understand the Schedule C.
This is really not bias, this is just the way our world works. Home lenders only look at salaries. Banks only look at assets that can be sold.
The point I want to make here in addition to the prejudice against Schedule C income is that banks existed long before the industrial revolution. Banks existed in the 14th century in Venice. They did not changed with the advent of the Industrial Revolution. Banks are vestiges of a pre-industrial era. So are unions.
We need to think differently about banks. There are dozens of intermediaries that provide money to business, but seldom banks. Their centrality to our society is an arcane hangover and a mistake.