In this complicated day and age, we often oversimplify complex topics by making them unidimensional. Marketers slot each of us into a category based on some of our shared characteristics. We vote for members of one or another political party as if one such dimension can possibly represent the richness of the human experience. And, we determine the health of the economy based on just the few variables of Gross Domestic Product Growth, unemployment, inflation, and an interest rate or two.
Yet, beyond such oversimplifications that somehow presume to gauge a measure of the human experience, we are all members of a local community and economy. These local phenomena are almost never measured, infrequently noted and rarely celebrated. It is within this realm that our true heroes of the modern economy, our local shops and entrepreneurs scratch out a living for themselves as the heart of the local economic circulatory system.
Just as the national economy is not nearly as strong as it would appear, the local economy is struggling too. We know that the sale of goods and services creates the income for people to spend. Henry Ford wisely raised the wages of his workers to a level sufficient for them to buy his cars. The lesson to be learned from that is the local economy cannot assure that supply creates its own demand. The local economic circulatory system depends on goods and services that are produced and sold, with revenues remaining in the local economy.
We are assured of such economic health of our local economy when we have a vibrant small business retail sector. We know that much of the revenue generated in the “Shop Small” movement circulates locally many times over, first in the purchases and then in the wages and rents these entrepreneurs pay, and finally in the profits, if any, remaining for the business owner. The recipients of these wages, rents and profits also spend a portion of this income locally to keep the local economic organ healthy.
Our human body is resilient. We can lose one kidney and our body can still thrive. If we suffer through illness or disease, our body has the miraculous ability to heal itself with the help of our local medical professionals. Stretching that analogy, our national economy is resilient too. Some small cities may become ghost towns, when once thriving economic activity goes elsewhere as the economy rebuilds itself. If you look closely, there are myriad examples of such economic births, deaths and rebirths. Government buildings become vacant and then become centers for the arts. Once thriving department stores become furniture stores. A razor blade factory is (hopefully) transformed into a location for a new urban housing facility that can revitalize our downtown.
Such transformation makes one key assumption. It depends critically on the ability of the local economy to embrace new enterprise.
Such embracing of the new, such a willingness to support the investment of money and effort, blood, sweat and tears and such an ability to either imagine the future or at least have faith in those with the vision, is not always easy. It is a leap of faith. It substitutes what we may want with someone else’s passion. By definition, it is imperfect as what someone else may invest in will invariably be a bit different than what we would do. But, this embracing of local energy allows us to harness the entrepreneurial spirit ultimately for the good of us all.
Every example of a thriving or surviving business is creating value for our local economy. The evolution of the local economy, with each small business contributing to the flow within our circulatory system, is our local lifeblood. Rejection of the need for local investment and entrepreneurship is the beginning of our end.
Each of us need not patronize every local business. After all, the economy evolves by the invention of better mousetraps. Economic births and deaths are part of that evolution. We only need to support or at least try out the wares of local businesses. And, we certainly need not put up artificial barriers to their success.
We can look around us for many examples of those better mousetraps. Some of them may be your favorite food stores, book shops or pet care shops. Some of them provide products that a monolithic national chain could also sell you, and maybe even at a slightly lower price. Others are prone to competition from online sellers. All of them have learned to adapt, to deliver, to have the product you want the next morning for pickup, or have done other things that make them better through competition.
All of them provide something that no online provider and few national chains can match. They can know you, can answer your questions with their expertise and, through your patronage, can ensure that they are there when you need them most. It’s like an insurance policy. Patronizing local establishments means we retain our option to buy local.
To see the importance of buying local, just look around you and imagine if that restaurant, that local health food store, that sporting goods store, or that local bank was not there. It’s like that scene near the end of “It’s a Wonderful Life” when Harry Bailey questions his worth. Without his Savings and Loan, there would be no local investment in housing, no livelihood for youth who wish to remain at home, no trusted local mechanic to fix our cars, and probably no doctors, pharmacists and even lawyers. Soon enough, Bedford Falls becomes Pottersville without a heart and local circulatory system, nothing at all.
I try to buy local when I can, and am willing to pay a bit higher price for local expertise and convenience. Local shops can’t compete just on price, especially for easily shipped commodities. But they can find their niche in sectors which are labor intensive, and for which expertise and product knowledge are important. That makes all the difference.
Dr. Colin Read is a professor of economics and finance at SUNY Plattsburgh’s School of Business & Economics.