Take it from The Pack: think Local first

Let’s have a show of hands.  How many of you try to eat locally-grown food?   OK – that’s a pretty good number.  How many keep your money in local banks?   Hmmm – not too many.  Now – whose 401K is invested in local companies?    Anybody? …Anybody?

You must be like the folks in northern Virginia who invited economist/lawyer/wonk/author Michael Shuman to come and speak.  Shuman asked them the same questions and they answered the same way – and they call their group “Sustainable Reston”!

Well, it’s time to wake up and smell the money.

Shuman says dollars showered on local business grow the local economy. It’s like water runoff.  If rain falls on lawns and gardens, it soaks into the ground and is sucked up by thirsty plants. But the rain that falls on hard surfaces like sidewalks and streets, runs down the drain, is shunted away, and the plants don’t stand a chance.

In his book, The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition, Shuman has solid reasons why local business almost always spurs superior economic development.  For one thing, hometown businesses don’t pack up and move away.  They can be counted on to be there for the long term. Second, locally-run businesses spend more of their dollars locally.  A study done in Austin shows that if two bookstores each make $100 in profit, the national chain store returns $13 to the local economy, while $40 is churned back into the economy by the local shop. Local businesses are typically small and lean, so they have a healthy influence on the community. Because their facilities are usually more compact than sprawling factories, they enhance smaller, walkable, more livable communities.

A case in point, says Shuman, is the nation’s only non-profit, community-owned major league professional sports team.  The Green Bay Packers is actually owned by a bunch of Wisconsin Cheeseheads.  According to Aaron Popkey, Packers Manager of Corporate Communications, 112,120 people have shares in the team. Over half of them live in Wisconsin. The arrangement has paid off richly for what was once the obscure, out-of-the-way town of Green Bay. Training Camp alone nets the local economy $30 million a year. Because so many people have a vested interest in keeping the team at home, “there is very little chance we would move,” Popkey understates. The shareholders have to vote to send the Pack packing.

But how does the average town become more self-reliant?  The answer, says Shuman, is to come up with crafty ways to drum up business while maintaining positive cash flow.  In Bellingham, Washington, for instance, coupon books which give discounts at participating local merchants are wildly popular. Coupon holders save money and the merchants make more.  He says towns also need entrepreneurial business models, which include the ability to create local stock exchanges or community funds to buy and develop land, as hedges against Big Box pressure.

How can the average consumer make a difference? “It’s easy,” says Shuman. “Think local first.”  When you go out to eat – at least consider the home town restaurants along with the national chains.  When you need to buy something, remember the mom-and-pop store before automatically running to Target.

Who knows?  Besides saving money, you might even save the world. After all, Shuman says, the global financial crisis was “the result of a separation of money and place. Local self-reliance is a key piece of the world solving its own problems.”