Opinions Community Economy Local shift supports stability
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By Elissa S. Hillary
Executive Director, Local First
What would your ideal community look like? Would it have healthy people? Vibrant business districts full of restaurants and stores? What about libraries and parks? Would it have an engaged citizenry?
In 1946, the United States Senate commissioned a study on “Small Business and Civic Welfare.” They were concerned by the uneven gains made by big businesses during World War II. In fact, by 1944, “2 percent of the manufacturing concerns in the United States employed 60 percent of the industrial workers.” The Senate worried that such a concentration of economic power might inhibit the long-term health and well-being of American communities.
The results of the study were groundbreaking. James Murray, a Montana Senator and Chairman of the Special Committee to Study Problems of American Small Business summarized it best:
“It appears that in the small-business cities is found the most favorable environment for the development and growth of civic spirit. A more balanced economic life and greater industrial stability is provided in small-business cities. There the employment is more diversified, the home-owning middle class is larger, and the self-employment greater. Public health is better in the small-business communities investigated…public expenditures for such facilities as libraries and education are substantially above such expenditures in big cities. Where big business predominates slums are more prevalent. The small-business cities studied provide for their residents a more balanced economic and social life and, on the whole, a higher level of civic welfare than big business cities.”
In other words, the lower the concentration of industrial power, the more vibrant and healthy the study found a community to be.
And while we, 60 years later, do not regularly use the terms “small business city” and “big business city,” we understand exactly the kinds of communities that Senator Murray was referencing. At Local First, a regional hub network for the Business Alliance of Local Living Economies (BALLE), our mission is to support locally owned, independent businesses that together form the kind of local, living economies summarized by Murray as “small-business cities.” There is security in diversification and a heightened opportunity for community members to make an impact.
What do you think of when you hear the “Local First” movement discussed on the radio or see a “Buy Local” sticker on the car ahead of you?
Of course there are many answers to this question, but if you’re like most Americans, you probably believe that this movement toward local consumerism is new. The truth is, it’s not, and the 1946 report by the Special Committee to Study the Problems of American Small Business is some of the best evidence yet.
Think of it: more than 60 years ago, the United States Senate seemingly prophesied the results of Local First’s own 2008 economic impact study. Conducted by the nationally renowned firm Civic Economics, the study endorses the 1964 report’s conclusion that the nation’s small businesses provide “a more balanced economic life and greater industrial stability” than their non-locally owned, “big business” counterparts. According to Civic Economics, when consumers choose a locally owned business over its non-local competitor(s), approximately 73 percent more money stays in the West Michigan community.
In a time of profound economic uncertainty, we would be well served to consider the report’s caution in the face of “the trend toward industrial concentration, absentee ownership, the dominance of giant corporations.” Particularly in Michigan, where the unemployment rate ranks among the worst in the country, the question of “stability” is worth considering. Written in stronger economic times, the report nevertheless found a significant difference in fluctuation, or instability, in employment between “big business cities” and “small-business cities” between 1929 and 1935 — 64 percent compared to 27 percent, respectively. The report concludes: “If instability is a fault, economic and social — and few would contend otherwise — then it is certain that, when judged by this standard, the small-business cities are clearly the better communities.”
The report’s warnings regarding the influence of non-local, or “absentee,” ownership sound prophetic in the context of the outsourcing, closing factories, and corporate relocation that has dominated the recent news. Yet Local First has been working to promote exactly the type of self-reliant, “small-business” communities — local living economies — in West Michigan since 2003. With your help, we can protect our economy’s independence, create jobs, and strengthen communities. We must continue to shift our buying habits to support locally owned businesses — businesses that in turn will reinvest in West Michigan, and not simply leave town when the going gets tough.
Sometimes a shift is all it takes to find stability.