Michael Shuman is an advocate of local business and a community economist.
He was in Brisbane this week to give a talk called Delicious Development that covered the reasons why local business is good for community and society as a whole.
He opposes some basic tenets of traditional economic development beginning his talk by saying the worst thing you can do for your local economy is spend money to attract and retain outside companies to invest locally. His talk sets out to prove that money is much better spent investing in local business.
Two of the stand out messages from the talk:
1/ The localization movement in the USA has shifted from a straightforward consumer movement to influence investment and other infrastructure issues.
2/ Despite the huge subsidies, tax breaks and other corporate welfare provided by governments to the big end of town, small business has maintained its share of revenue, employment and profit steadily over the last century and a half.
Most Westenders appreciate the value of a diverse ecosystem of small independent businesses. We know that every dollar spent in a locally owned business stays in the community two to four times longer than a dollar spent in a national or international company. We also know that locally owned businesses support the local community in a robust and direct way.
These facts are familiar to us from our personal experience and it is reassuring to see that hundreds of studies across North America reaffirm this. What has also emerged from those studies is that the resilience of communities with diverse small businesses is much stronger: they are better equipped to deal with major change, such as external shifts in the economy. They are also more coherent: people are less alienated, better connected and less likely to fall through the cracks.
These advantages lead to indirect benefits to the economy, primarily through lower welfare costs but also through lower crime rates.
Mr Shuman’s focus was largely on food. The globalization of food is one of the major challenges of our time, leading to reduced quality, poor nutrition, lower prices for growers and an increasing dependency on international infrastructure to maintain food supplies.
The indirect benefits of a healthy, resilient, local food supply extend to better health and nutrition and deepen the relationships in a community significantly.
On the flip-side, the collapse of food sovereignty is of major concern to growers, regional leaders and advocates of economic sustainability worried about the increasing cost of energy and transport and its impact on our lifestyle.
“Given the relatively high weight to price ratio of food, it is one of the most price sensitive goods as transport costs increase,” Shuman pointed out.
Of similar significance to his graph showing the resilience of small business in the face of government favouritism of corporations is his breakdown of food costs.
Over the last century the farmer’s share of the food dollar has fallen from around 40% to around 10%. The cost of packaging, transport, refrigeration and storage has risen from 30% to almost 70%. It is that cost that is being consumed by corporations and which is also most vulnerable to rising energy costs. It is that variable and vulnerable cost which leaves us all exposed to the collapse of our food supply networks.
While many small business owners are not overtly worried by the globalization of the economy, or particularly focused on food. The raft of statistics showing the benefit of local business in creating robust stable economies reinforces their instinctive preference for entrepreneurship. It should also make us all extremely wary of the attempts by government chambers of commerce and industry associations representing corporate interests to take over our small business lobby groups and local chambers of commerce.
Delicious Development was organised by local businesses, Food Connect and Energising Communities (the founders all live in West End) Michael Shuman is a fellow of the Post Carbon Institute and a founder of BALLE (Be a localist) http://bealocalist.org/