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In my experience it’s pricier to shop at locally owned businesses than at big-box stores and other national enterprises. Does this put a ceiling on the potential of the buy-local movement because it will only attract people with greater discretionary income?
The argument that nonlocal stores have cheaper prices is a total myth. It’s true that big-box stores have some great prices some of the time. However, it’s not the case that across the board, non-local stores always have lower prices. Annual studies of prescription drug prices in Maine find that chain drugstores charge more for drugs than local drugstores. And who would argue that Starbucks doesn’t carry a price premium?
When people learn about the true value of buying locally; that inevitably leads to increased consumption of local goods and services. Once people take into account things like the quality of the product, the reliability of the service, and the tenor of the sales transaction, they start to realize what a poor bargain many of the so-called deals at the chain stores really are.
We’re moving into a period of hard times that could rival the Great Depression. What will be the effect on the Buy Local movement?
Paradoxically, it will have a positive effect. An important philosophical premise underlies the buy-local movement—that people can do more with less inside their own communities. The economic crisis will bring the truth of this into sharp relief, and this in turn will fuel support for the local-economy movement.
Another factor is that over the next years, we’ll see hundreds of chain store companies and large banks go out of business. Local entrepreneurs will step into the vacuum these departures create.
It used to be that economies of scale favored the big players. Now that’s changing. Economies of scale are shrinking in the global economy, in large measure due to the rising costs of transportation. It’s becoming more cost-effective to source locally rather than ship something halfway around the world.
And then there’s the Internet, which enables people in the Hudson Valley and elsewhere to serve customers anywhere on the planet. The horizon of small-business opportunities, even in remote communities, is expanding tremendously.
It is also becoming increasingly expensive for people to travel a great deal. This, too, will accelerate the transition to local economies.
The New York Times recently ran a glowing article about the greening of Walmart. It used to be the company people loved to hate. Now its image is changing. As corporate sustainability reputations improve, will that undermine the Buy Local movement?
These are completely separate issues. I’ve never hung my argument on villainizing Walmart or any big corporation. Every business—big and small—contributes positively to the economy, and there are opportunities for more sustainable behavior at all scales of business. However, the fundamental arguments in favor of locally owned business are not altered by the somewhat better behavior of a large player. The Walmarts of the world will always have a lower economic multiplier. They will not have a positive effect on tourism, nor they will not create more livable communities. They will not support smart growth or creativity or entrepreneurship. They will not have a lower carbon footprint than similar locally owned businesses.
What impact will the Obama administration have on the Buy Local movement?
While the Obama administration will heighten interest and activity in localization, the impact will probably not be as great as people think. The administration is open to new ways of promoting local business, and it’s also receptive to socially responsible corporate forms. However, at the end of the day, it seems committed to continuing many of the big-business subsidization policies that have been relied on by previous administrations. The stimulus package and bank-bailout packages are greatly increasing the level of dollars going to large non-local companies and institutions.
Can the administration be pressured to transfer its support from big banks to smaller ones, from big-energy projects to smaller energy projects, from big farms to family farms, and from traditional economic development policies to supporting local entrepreneurship? We don’t know yet. At this point, the Obama administration seems to be stuck in the old “big” paradigm.
What are the most important changes in our macroeconomic system that we need to accelerate the transition to a locally focused economic system?