The bodega is a colorful fixture of upper Manhattan, NY, the Bronx, Queens, Brooklyn, Brentwood, LI and of other immigrant communities located throughout the U.S.  As the demographics of NY change, as rents increase, and as chain stores move in the bodega is in danger of extinction. As those of modest means are removed and replaced with the wealthy, more than bodegas will die. The aspirations of immigrants to pursue happiness and to achieve wealth through entrepreneurship will die as well. The colorful and diverse complexion of NYC will undergo accelerated gentrification and urban removal. 

 

There is no question that the bodega serves the needs of the Hispanic and other cultures of the varied neighborhoods of NY. They dispense everything from credit to ethnic foods, to spiritual revival via votive candles with the image of the Virgin of Guadeloupe. 

 

The bodega represents the character of the neighborhoods of NY. It also represents the entrepreneurial ambitions of immigrant communities. 

 

Wall Street does not finance the bodega. Nor do commercial banks. 

The bodega as a model of economic development is flagging.

 

The Chinese model of economic development is flagging as well. Economists are calling for addition fiscal incentives to be provided Chinese small businesses. China's is a top down, state directed economic development model. Its already-weak manufacturing sector, a final measure of its factory sector, slumped to a two-year low in July. The reading on the Caixin China manufacturing purchasing managers index fell to 47.8 in July from 49.4 in June. A reading below 50 shows contraction from the previous month. According to today's WSJ, "Observers said that the steep slide in the country's stock market in late June and July probably had an impact on sentiment, adding to pressure from an already-weak property market and sluggish domestic and overseas demand. A steep sell off in China's stock market began in June and continued into July despite an aggressive government rescue program."

 

China has 2100 + platforms that facilitate peer-to-peer lending, catering to businesses ignored by banks. The biggest of these are Alibaba Group Holding and Tencent Holdings Ltd.

 

In the U.S., Lending Club and Prosper provide capital to entrepreneurs. While these are laudable endeavors, they do not as of yet embrace the political, commercial and cybersecurity risk mitigation  services that empower the entrepreneur to engage in significant exports of capital goods and in sustainable bilateral trade. I have already explained the necessity of engaging in bilateral trade in order to deal with foreign exchange risk by using natural means as opposed to using such artificial manipulations as QE, changing bank reserve requirements and cutting interest rates.

 

In the U.S., credit unions are allied with the SBA. The SBA provides guaranties by  which the risk of non-payment for political and commercial reasons that attend cross-border trade transactions are mitigated. 

 

Why have I conflated the needs of bodegas with those of the Chinese economy? Because they have the same needs. They need capital which empowers rather than restricts the entrepreneur. Peer-to-peer lending is not sufficient because it does not embrace the mitigation of risk. Peer-to-peer lending cannot then serve as a model for economic transformation and job creation. In the U.S. and China, this transformation requires empowering the entrepreneur. In the U.S., this requires credit unions. In China, there is no equivalent to faith-based or morally-motivated credit unions that lend to the financially underserved. Solutions will have to be provided and models will have to be created and adapted to suit the culture of China. Culture as Peter Drucker reminds us, "eats strategy for breakfast." Speaking of bodegas...what's for breakfast?