Political Economics at the IGC Show?

The most thought-provoking topic so far has been the emphasis on "buy independent-buy local," Back-to-Main-Street initiatives that support the independent retailer.  Everyone knows how these small, local businesses have struggled to compete against big-box, mass market national chains.  Speakers Stacy Mitchell of the New Rules Project and Jeff Milchen of the American Independent Business Alliance each spoke at length about the power of buying local and some various ways to convince the customer to keep her money in the local community.

Some interesting facts:

• When a big-box retailers moves in, the local community typically sees a net loss of 150 jobs, not a net gain. (Here's the research)
• Because retail chains can often negotiate extremely favorable terms, local tax revenues can decline as smaller independents downsize or go under. (Here's the research)
• Municipal costs can be higher too, when police, fire protection and infrastructure costs are added to the mix. (Here's the research)
• Big-box retailers typically don't foster the growth of a middle-class economy the way independent sole proprietorships do -- their wage structure is more polarized, with large low-wage labor pool and a smaller, often remote executive workforce. (Here's the research)
• Retail chains don't spend nearly as much money with other local businesses.  They exploit their size to leverage relationships with national media companies, financial institutions, vendors and partners. (Here's the research)
• Finally, retail chains tend to shift their profit back to headquarters, rather than leaving it in the hands of local owners.

Where's the consumer in all this?  Let's put aside for a moment the fact that the many average Americans now own stock in these national and multi-national chains.  I'm not sure what to say right now about the middle-class independent business owner who invests his profit in the S&P500.

But here's another way to interpret the statistics above: Big-box retailers, by lowering labor costs, negotiating better tax terms, shifting costs onto municipalities and leveraging their national supplier relationships are removing cost from the product, lowering prices for the consumer, increasing sales and creating shareholder value (as compared to the typical independent business owner). 

There's the trade-off.  For the buy-local movement to truly make a difference, people must come to view their own self-interest as strongly linked to the health of the community.  They must begin to think as citizens, not consumers, when they engage in a retail transaction.  The equation must be explicit:

• I will pay more for this product at an independent retailers because my town's unemployment problem is my problem.
• I will pay more for this product because the tax revenues generated by this local business keep the library open.
• I will pay more for this product because I'd rather have a lot of middle-income people than a few extremely rich people and lots of low-income people.  Even if it means I stay a middle-income person.
• If I can't pay more for this product, I will accept a lower standard of living by doing without it until I can pay more for it.

I'm not quite ready to bet the farm that my friends and neighbors will follow through.  I've drunk the Kool-Aid -- it just hasn't kicked in yet.

Here's more information about the New Rules Project, the American Independent Business Alliance and an interesting "brick and mortar" local business campaign called the 3/50 Project.