Emphasize Local Economic Development

Contents

Communities should meet basic needs as close to home as possible because:

  1. Transportation of goods and materials is fossil fuel dependent and adds to climate change
  2. Local supply chains are less easily disrupted by economic and climate crises
  3. Local small businesses and cooperatives are more responsive to community needs, more likely to respect the local environment, and more equitable in the distribution of resources.
  4. Corporate chains and big box stores siphon wealth out of the community, sending profits to corporate shareholders and global corporate entities.
  5. Local business keeps wealth in the community and recirculates it, adding multipliers to the community.
  6. Local storefronts create community hubs or centers for “third space” interaction building social capital.

 

Steps toward localizing:

Starts Give Away

Starts Give Away, Prout Institute

  1. Research the inventory of all our local businesses – including home based businesses.
    • Analyze these for opportunities, needs and clusters for collaboration
    • Create a local business association
    • Launch a “buy Local” campaign that promotes local businesses to the community
  2. Analyze local assets – expertise, labor, farm land and create avenues for building on these.
  3. Develop a local branding and place making campaign that are based on local, green, resilient values that we espouse. The 100 Mile Bakery in Springfield is an example. This strategy has supported entire regional development programs. See http://www.timbaktu.org as an example.
  4. Pass policy that limits the ability of chains and big box stores to operate in our neighborhood such as has been done in Corvallis. In Pennsylvania, localities ban corporate ownership of farmland and forestry and ban any corporation from doing local business if they have violated any laws. There are precedents for banning GMO, and mandating recycling and solar retrofits. Free legal support for these initiatives is offered by the Community Environmental Legal Defense Fund
  5. Investigate policy obstacles to small business development. Inflexible parking requirements are an example.
  6. Invest in business development – In Eugene, the Reginal Accelerator and Innovation Network and the Willamette Angel Conference help launch entrepreneurs. Focusing on developing cooperatives instead of sole proprietorships increases resilience. Recruit entrepreneurs that align with the branding vision of the community.
Old Goodwill Building

Old Goodwill Building

How to get started? The neighborhood and city could re-engage the businessman who has been considering opening a natural food store in the old “Goodwill” building. A natural food store would be a perfect catalyst to show potential investors and other potential businesses River Road is a place with great opportunity and the City can be a reliable partner to help bring about a new River Road corridor.

The argument for investing in local entrepreneurs over trying to attract corporations into the community is documented by Michael Shuman (2006) in “The Smallmart Revolution”. http://michaelhshuman.com.

Research on Lane County business incentive payments paid to external corporations showed a cost to community in lost taxes of $28,300 per job compared to $2100 per job for local firms. Register Guard 8/10/2003 “Small business the success story” and Eugene Weekly Jan 8, 2004.

“Leakage Analysis” can be conducted to determine how much local wealth is siphoned off that could be recaptured by local enterprise.

For research on economic returns, jobs, inequality, wages and benefits, and social and civic well-being see the Key Studies: Why Local Matters page on the Institute for Local Self-Reliance website. Here are some referenced highlights:

  • Local businesses recirculate a greater share of every dollar in the local economy, as they create locally owned supply chains and invest in their employees.
  • Locally owned businesses employ more people per unit of sales, and retain more employees during economic downturns, while big-box retailers decrease the number of retail jobs in a region.
  • Locally owned businesses are linked to higher income growth and lower levels of poverty, while big-box retailers, particularly Walmart, depress wages and benefits for retail employees. Studies in this section also quantify the costs of these big companies’ low wages to state healthcare programs and other forms of public assistance.
  • A community’s level of social capital, civic engagement, and well-being is positively related to the share of its economy held by local businesses, while the presence of mega-retailers like Walmart undermines social capital and civic participation.
  • The increasing size of corporations is driving inequality, while local and dispersed business ownership strengthens the middle class.

 


Graphic from: https://www.amiba.net/resources/multiplier-effect/
 

Big Retail is failing

The model of big retail that depends on global corporations and fossil fuels is waning in favor of localism. Resilient community economic development needs to anticipate failure of big box stores as a source of jobs and goods.

In 2017 Department stores lost an average of over 3 thousand jobs a month. Warehouse clubs and supercenters added jobs before between 2009 and 2016 but lost an average of 2.5 thousand jobs a month in 2017 (https://urbanismnext.uoregon.edu/2018/02/15/thriving-and-surviving-retail-sectors-during-a-retail-apocalypse/).

“Retail closures hit a record high in 2017, with nearly 7,000 stores disappearing. The trend is expected to continue in 2018.” (https://www.bankrate.com/lifestyle/major-retailers-shuttering-locations-in-2017/#slide=1)

Malls and big box stores are closing because online retailers offer better selection, prices and convenience. Forbes says, “Millennial and Gen Z consumers want products that are: Locally-sourced, Ethically made, with fair salaries paid to everyone in the supply chain, Environmentally friendly, Artisanal, Authentic, Experiential.” (https://www.forbes.com/sites/richardkestenbaum/2017/04/07/why-so-many-stores-are-closing-now/#3f6a190a4159).

These values align more closely with locally sourced and sold goods and services. How can our neighborhood accommodate internet and home-based business? What opportunities does this transition suggest? For example, shared office space and café offices are a growing trend.

 

Resources for local economic development

 

Develop worker and consumer cooperatives

  • Worker and consumer cooperatives are more resilient and equitable than traditional structures.
  • They bridge the organizational structure of individual proprietorship and corporations based on a cooperative models of management that distribute ownership.
  • Worker cooperatives are the basis for economic democracy.
  • Worker cooperatives develop the skill base and capacity of the community and young people coming up into trades and business.

Globally, networks of cooperatives have successfully developed the economic potential or localities. We can learn from the fascinating studies of successful cooperative development such as in Emilia Romagna. As the global corporate structures fail, this is the wave of the future.

 

Research and publications on cooperatives:

 

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