The Case for Local
"True individual freedom cannot exist without economic security and independence."
– Franklin D. Roosevelt introducing his Second Bill of Rights in 1944.
A (simplistic-but-none-the-less-illustrative) Tale of Two Cities
Imagine two cities that are nearly identical by conventional economic measures. They are similar in size of population, size of economy, number of people employed, and average income. And yet in everything else that counts, they couldn't be more different:
Bummertown has high income disparity, apathetic citizens, toxic rivers and lakes, under-performing schools, dilapidated infrastructure, poor public health, weak leadership, and poor local pride.
Prideville has low income disparity, high civic engagement, a healthy environment, well-functioning schools and infrastructure, healthy people, respected leadership, and a strong sense of identity and local pride.
Why the difference?
Bummertown's economy (i.e., its jobs and transactions) is dominated by a handful of large global corporations, whose output is serving primarily distant markets, that are owned by distant and anonymous owners, and are managed to serve the financial interests of shareholders. Management decisions are made thousands of miles away and rarely take into account the needs and desires of the people and place of Bummertown. Multinational corporations fight against local initiatives that would improve community health and well-being if they might increase costs or set precedents for other localities. Local politicians, anxious to "keep the jobs we have," become weak or corrupted, community trust falters, and civic engagement drops ("Why bother?"). Profits on local transactions accrue to distant owners, so local wealth is stagnant. Lack of local capital means innovation and entrepreneurial activity lag. Locally based managers are well-paid to keep local discontent at a simmer, and income disparity increases.
Prideville's economy, on the other hand, is dominated by a large number of small and medium-sized local businesses, serving primarily regional markets, that are owned by a broad cross-section of people who live in-and-around Prideville, and are managed to serve the interests of owners (who live primarily in those communities). Management decisions take into account community impact in addition to shareholder financial value (in fact, positive community impact is an embedded part of shareholder value when owners are local). Business owners are engaged stakeholders in discussions around local community initiatives. Employees are customers, neighbors, and in some cases co-owners, so stakeholder interests are aligned. Profits accrue to local residents, who invest their capital into new innovations and enterprises, and into community well-being (non-profits, schools, and infrastructure). Everyone experiences the truism that we're all better off when we're all better off.
It turns out that how our economy operates can support and improve the well-being of our people and place, or undermine and degrade it. Study after study has shown that the more locally owned businesses per capita that a community has, the better off that place is on many of the other indicators of community health. The larger the share of transactions in our economy—buying, producing, investing—that involve a locally owned business, the more thriving, equitable, and resilient our economy and community can be.
Dollars spent with corporate chains quickly fly out of our local economy and don't come back. Buying locally—by consumers, businesses, and local government—grows our local economy because of the powerful local multiplier effect. When you spend $100 with a local, independent business, most of that money stays here, paying for local services, supplies, staff, and sometimes inventory. Those businesses then spend most of that money with other local businesses, and so on. Your $100 has just multiplied, each transaction creating on average three times more income, jobs, and wealth for your community. It not only makes intuitive sense, but study after study verifies this powerful contrast.
If what we buy locally isn't also produced locally when possible, we cut far short the positive local impact of our purchasing. Producing more here also creates a more diverse job base—after all, not all of us can or want to be software engineers or biotechs, and you can't feed a family pulling lattes. Plus, the more we provide for ourselves, the less reliant we’ll be on uncertain global systems, and the better buffered we'll be from the disruptions of climate change. From food and energy, to materials and consumer products, there are thousands of opportunities to responsibly produce more here, creating meaningful, durable livelihoods and a more resilient local economy. (Learn more about Seattle Made, our program to encourage local production.)
If we're buying and producing locally, but not investing in the stability and growth of those enterprises, we starve our economy and ourselves. Seattlites hold $70 billion in long term savings, almost none of which is invested in locally owned enterprises, despite the fact that those enterprises make up nearly 50% of our economy. Imagine the positive impact of shifting even a small percentage of that investment into the place we call home, rather than Wall Street. Community Capital is the growing movement to correct this imbalance, and to ensure that we all have the opportunity to be invested in our local economy.
The Institute for Local Self-Reliance has collected and indexed many of the studies that support the Case for Local: