LOCALIZE NOW: Don’t believe me? The Next Crisis Will be Worse

Economists: Another Financial Crisis on the Way

Nonpartisan Group Led by Nobel Winner Calls for Stronger Financial Reforms

By MATTHEW JAFFE

March 2, 2010 —

Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis one that will be even worse than the current one is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

In the report, the panel, which includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high-risk investing that precipitated the near-collapse of the U.S. economy in 2008.

The report warns that the country is now immersed in a “doomsday cycle” wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management  and when the risks go wrong, the banks receive taxpayer bailouts from the government.

Local Economy: The Path to Resilience

Bloomberg Businessweek has a story this week about the growing “buy local” movement. The article states that there are now 130 cities or regions that have “buy local” groups, up from 41 just 3 years ago. A lot of this is feel good stuff about supporting our friends and neighbors, as well as backlash against crap made in China and a growing resentment against the devastation that chain stores have wrought in our communities.

 

But to me the key point of the article is that buying local is actually the strongest economic development tool that we have these days. I know you all know this but it bears repeating:

• locally owned stores spend proportionately more on payroll than chains – better for humans

• for every $100 spent at a locally owned store, $45 remains in the local economy, compared with about $13 per $100 spent at a big box – that’s 3.5 TIMES more – I’m not a business person, but isn’t this better for us as a city? That money will get recirculated again and again rather than disappearing to Bentoville or whever…

The article offers a case study example: 

“…in 2007 booksellers in San Francisco asked Civic Economics to calculate what would happen if Bay Area consumers shifted 10% of their spending from chains. The forecast: $192 million in increased economic activity for the region and almost 1,300 new jobs. ‘If any single business promised that, the governor would be downtown handing out checks,’ says Dan Houston, co-founder of Civic Economics.” 

In Lexington our city government – the thing that provides all the services we enjoy – is enormously dependent on local income taxes. Wouldn’t it make sense to promote local as a way to grow jobs? Wouldn’t it make sense to make local the central element of every single thing we do? Yet what are our nominal “leaders” doing to truly build a local economy here? Not much. Like members of a cargo cult, they are looking to the skies for the plane loaded with goodies to arrive from heaven, or somewhere. 

Meanwhile, the real leaders in our community are just doing it. Thankfully, the folks who created and support LocalFirstLexington are leading the way.http://www.localfirstlexington.com/ - visit their site and support our local businesses!  

I’m sure you’ve heard of these local economy ideas: 

• Cinda Baxter asked readers to choose three local businesses and to spend $50 at each. Her 3/50 Project now has about 42,300 Facebook fans, and more than 265,000 people have visited its site http://www.the350project.net/home.html
• 10% Shift asks shoppers to shift 10% of their purchases to local stores; http://www.10percentshift.org/design/localshift.php
• Move Your Money wants you to move your bank account from a national outfit to a local bank or credit union. http://moveyourmoney.info/

You may not have heard of these:  

•  Utah Local First, with 2,500 members, gets funding from both Salt Lake City and the county.
• Grand Rapids Local First helped persuade its town to give a 1% bid preference to local businesses

Again, does our government do this here? 

Building a local economy is a huge part to adaptation and resilience in the face of what is coming (see post below, for example). “If there had been no oil crisis and no financial crisis,” says Michael Shuman, director of research and economic development for the nonprofit Business Alliance for Local Living Economies, “we’d be whistling in the wind.” I take this to mean that building a local economy is the ONLY way for communities to face realities. 

http://www.businessweek.com/magazine/content/10_09/b4168057813351.htm

Cleveland Leads in Re-Localizing Their Economy

“The Evergreen Cooperatives of Cleveland, Ohio are pioneering innovative models of job creation, wealth building, and sustainability. Evergreen’s employee-owned, for-profit companies are based locally and hire locally. We create meaningful green jobs and keep precious financial resources within our community. Our workers earn a living wage and build equity in their firms as owners of the business.”

Evergreen is a partnership between the residents of six of our city’s neighborhoods and some of Cleveland’s most important “anchor institutions” – the Cleveland Foundation, the City of Cleveland, Case Western Reserve University, the Cleveland Clinic, University Hospitals, and many others.”

The first Evergreen Cooperative businesses – Evergreen Cooperative Laundry, Ohio Cooperative Solar, and Green City Growers Cooperative – meet the needs of the community with employee owned, for-profit businesses.

Watch this great video!

visit their website:  http://www.evergreencoop.com/

This sure seems like something Lexington should be learning about.   This program links direct needs like laundering hospital linens and providing food for institutional cafeterias with local people not as workers but as business owners.  The program is helping to begin the transition to a different energy reality.  And the program links local food to personal and economic health.  These are jobs that can’t be outsourced, and they create wealth, not just pay a wage.

We spend far too much of our time looking to the skies for business to come here.  We have so many institutions, and so many good people, that we ought to be able to find a way to make a program like this work.   I will be following up on this – perhaps I’ll even take a visit up there.

Re-localization: Joel Salaltin

While I’ve got Joel’s message on my mind, listen to his comments from about 2 months ago – once he gets warmed up, he really nails it.

We cannot create a truly local economy until we reconnect to the world around us.   As Joel points out, now we are so disconnected.

Where does our water come from?  Where does our sewage go?  Our trash? Where does our food come from?  How was it produced? And, really provocatively, who do we work for?  This is the first part of a multi-part video – watch this one, and then make time for the others.

Getting A L.I.F.E.

Peak oil is not just a driving our butts around crisis – its more important than that.

Peak oil is a food crisis.

Fortunately, we have had people working without much general recognition for many many years to help us be prepared for this moment.

The Kentucky Community Farm Alliance is one such group.  check out thier web site:  http://www.communityfarmalliance.org/index.htm (Thanks Becca for the tip!)

Here is a sample of thier L.I.F.E. – local innovative food economies – philosophy:

“One way to bring together urban and rural people, to create economic and social empowerment, to preserve and enhance our farms and communities, lies in creating what Community Farm Alliance calls LIFE – local innovative food economies. LIFE has the power to enhance Kentucky’s fiscal and cultural vitality. A local food system allows Kentuckians to benefit by consuming most of their food from local farms, Kentucky farmers to make a living from their land and opens the door for a new generation of farmers to prosper.

What is LIFE?

The basic idea is to create a system where people grow and eat food closer to home. Jennifer Wilkins of Cornell University provides a more scholarly definition, stating that they are systems in which food production, processing, distribution, and consumption are integrated to enhance the environmental, economic, social, and nutritional health of a particular geographic location. We envision LIFE to include not just food, but also fiber, and other products such as soap, flowers, landscaping plants, agri-tourism, and more.

What are the Benefits of L.I.F.E.?

Locally innovative food economies are inherently more sustainable than an exclusive reliance on global food systems. LIFE supports more small and mid-sized, often low-input, family-owned farms. A greater percentage of the food dollar stays within the community, increasing local wealth through the multiplier effect. Transportation costs and related environmental consequences are likely reduced. In general, locally grown food is fresher and more nutritious than food shipped from long distances. By their decentralization and regional focus, these systems are more responsive to local needs. Finally, with LIFE customers and farmers can come to know one another, creating mutually supportive relationships, and raising citizens’ awareness of the many dimensions of their food choices.

What is the Potential for L.I.F.E.?

Local production and marketing keep a greater percentage of the food dollar within the community and increase regional wealth through the “multiplier effect.” As a result, 10 new farm jobs in Kentucky would generate three additional jobs in the farm service sector of the local economy, and 10 new local processing jobs would generate six additional jobs in the community. Every $1,000 increase in net farm income would generate an estimated $930 of income in the community, creating a total of $1930 of new wealth. 2004 estimates found that if Kentucky were to raise its per-farm average direct marketing sales to the national average, it would generate an additional farm-level income of $7.9 million and have an estimated statewide economic impact of $15.8 million.”

Localwashing: aren’t all businesses local?

Its only a matter of time before we hear this in Lexington:  the claim that all stores are local if they are physically located within the city…..that big box stores on the fringe of Lexington are the same as small shops on Southland Drive and Winchester Road and in Meadowthorpe etc….a new concept called locawashing….

From The Corporate Co-Opt of Local by Stacy Mitchell

“HSBC, one of the biggest banks on the planet, has taken to calling itself “the world’s local bank.” Starbucks is un-branding at least three of its Seattle outlets, the first of which just reopened as “15th Avenue Coffee and Tea.”  Winn-Dixie, a 500-outlet supermarket chain, recently launched a new ad campaign under the tagline, “Local flavor since 1956.” The International Council of Shopping Centers, a global consortium of mall owners and developers, is pouring millions of dollars into television ads urging people to “Shop Local” – at their nearest mall. Even Wal-Mart is getting in on the act, hanging bright green banners over its produce aisles that simply say, “Local.”

Hoping to capitalize on growing public enthusiasm for all things local, some of the world’s biggest corporations are brashly laying claim to the word “local.”

Read more:  http://www.newrules.org/node/2853/

Walmart Nation

Is it good for America if Walmart is the only store in town?

Walmart is hungry and, after a decade long loss of 25% of its stock value, ready to eat.   It is determined to eat everything and anything in its path.  Toy retailers, clothes sellers, grocers, auto servicers. Everything.