Shop Downtown to Build our Local Economy

The other day Joe Borgstrom (of Michigan's Main Street program, and the first director of the Shiawassee Economic Development Program) reminded me of the leaky bucket and its role in the economic health of our community. He also shared some data that reminds us of why we need to shop locally to get our economy going strong and employment as full as possible.

Our community, like all places, has a local economy where people buy goods and services from one another. Money comes into our community (the faucet) from a variety of sources: most importantly are the wages and other earnings from companies that make things here and sell them nationally or internationally; but money also flows into individuals and businesses that provide services to other outside the community; crops grown here and sold on the market also bring income; transfer payments (e.g. private pensions, Medicare, and other government aid) are also a major inflow.

When money comes into the community, it gets spent at the grocery store or other shops, at restaurants, for services like accountants or house cleaners, in buying supplies to run other businesses, to get healthcare, and in the form of donations to local charities or to pay local taxes. And of course when the local shopowner makes a sale, then he or she uses that income to buys goods and services. This is called the multiplier effect and has long been the subject of study by academics and the focus of economic development efforts.

Of course, not all the money that flows into the economy stays here. We make purchases at stores outside our community, we buy services from national companies, we shop online, and we pay taxes to the federal government. All of these outflows are the holes in the bucket. Typically, new dollars turn over several times in the local economy, thus filling the bucket, but they eventually seep out to other places as near as the regional shopping mall and as far as China for that new celphone or other electronic gadget.

The traditional approach of many economic development efforts is to increase the flows into the bucket, and Shiawassee County has done a relatively good job in recent years in supporting the growth of income-generating manufacturing companies; we need to do more, especially supporting entrepreneurs. However, we can also promote the local economy by seeking to plug the holes in the bucket of our local economy.

At this time of year, we can plug some holes and support our local economy by shopping downtown, eating at local restaurants, and making donations to local charities. A study from West Michigan found that when a dollar was spent at a locally-owned business, 68 cents of that dollar recirculated through the local economy. For every dollar spent at a national chain store in the local market, 43 cents stayed locally. These figures vary somewhat from business to business, but several other studies from other communities confirm the economic benefit of shopping locally. What is clear is that when we shop in other counties very little economic gain accrues locally. Online shopping is the worst for the local economy, with only a penny or two coming back to the community in the wages of postal or delivery workers.

After the holidays are over, we need to take a look at our local economy and figure out what other holes we can plug by identifying what retail, entertainment, services, business support, and supplier businesses our community is lacking. When we identify the outflows in our local economy we will be identifying economic opportunities for a local entrepreneur to fill, and if we grow our local businesses, we will grow our local economy.

In the meantime, as you do your holiday shopping, take a stroll downtown, check out our local businesses before getting in your car or online, take someone out for a meal, buy a local gift certificate, or swing by the Shiawassee Arts Center or the Four Seasons gift shop at the hospital or the Steam Railroading Institute. Think too about making a donation to a local charity as a meaningful way to show someone you care (for instance you can participate in Operation Friendship at Arc Shiawassee or buy a theater seat from the Owosso Community Players). When you shop locally, not only will you be supporting the local economy, you might run into an old or new friend out and about. And relationships, whether personal or economic, are what really make our community special. Happy Holidays!

Local Democracy is the Answer

The mid-term election is over; now what? The Republicans, conservatives, and tea party activists are happy; the Democrats, liberals, and progressives are disappointed. However, if either side thinks there will be major change, for either good or bad, in Washington they are wrong. Whether your side “won” or “lost” in this election, you will not be successful in promoting your ideology unless you become active on the local level. It is time for all of us to get busy in our community.

Republican leader John Boehner said on Tuesday night that his party’s task will be “leading the drive for a smaller, less costly, and more accountable government here in Washington DC.” While voter dissatisfaction gave Republicans more seats in Congress, the federal bureaucracy will persist unless conservatives can show Americans how to get by without it.

Americans have shown repeatedly, as they did just two years ago in the Presidential election, that they want a better country. If the Republican party desires to rule in 2012 and beyond, they need to provide a way for Americans to work together for positive change. The tea party reminds us that the Constitution limits the federal government, but that document was written in an era where people banded together in their communities to help one another and looked to state government to regulate commerce. Times have changed in two hundred years, and if we want to return to a federal government envisioned by our founding fathers, we need to increase the capacity of cities, counties and states to solve the problems of today.

The Democrats were beaten in this election, but they are not going away because what motivates them transcends any particular vote. Their commitment to public education, helping those in need, protecting the environment, or other causes gives liberals the drive to create change. Democrats are successful when they show voters how government can effectively address these big issues. They did not make that case on Tuesday.

If Democrats want to regain power, they need to convince more people of the importance of their causes. More importantly, they need to show that government has some ability to solve problems. That is not going to happen at the federal level in the next two years. Progressive-minded activists need to work in their community so that more people understand and come to share their passion for change.

The electorate is angry, cynical and increasingly non-participatory. Less than half of the registered voters in Shiawassee County chose to exercise their constitutional right to vote last week. If either Democrats, Republicans, or independents hope that our democracy will continue to be an effective form of government, we all need to work to restore faith in government and the elected officials who represent us. “All politics are local” said the late congressman Tip O’Neil; thus the best place to start to re-engage voters is at the local level.

So, if you are either celebrating or bemoaning the election, its time to go work in your community. You can take action at the personal, organizational, and/or governmental levels. Personally, we should all try to live out in both word and action our convictions. If you feel like the federal government has failed to stimulate the economy, then think hard about how you might start a business, become involved in the work of the Chamber of Commerce, or at least shop locally. Or if you are frustrated that Congress failed to enact climate change legislation, then commit more fully to a green lifestyle, both as a way to reduce energy use and as an example others.

American history has shown that when people come together they can accomplish great things. Our voluntary sector is better organized than any other country, but they need to step up to the real issues facing the country. If you are opposed to Obama-care, then go to work to start a free clinic for those in our community who are uninsured, or volunteer for Respite or take time off work to help your elderly neighbor who needs help. If you support the health care reform efforts, then go to work to support Memorial Healthcare as a donor or volunteer. The key to health care in our community will be our local hospital, and its independence will be challenged by the health care reforms coming down the road.

Finally, get involved with your school, township, city or county government. That can mean service in an elected or appointed capacity, or it can just mean a willingness to work on making local government more effective. I have come to learn on the Owosso City Council that seven elected officials do not create change in our community; we can only help open doors so that the community can come together to support new businesses, build a new theater, or develop a dog park. Perhaps the best opportunity locally right now is for people to become active in one of the several planning efforts underway that will help chart the future of our community.

Democracy is a participation sport, and neither Democrats nor Republicans, nor any other party, will be successful at governance unless citizens feel like they can participate effectively in government, create positive change in their community, and thus make this a better country. Get involved.

A shorter version of this appeared in the Argus Press on November 6, 2010