1. Introduction
   1. Policymakers, left and right, are committed to the following three-prong vision of economic development:
      • Get Toyota into the backyard.
      • Export globally as far and wide as possible.
      • Secure more than your fair share of federal pork
   2. All three are dead ends.
   3. Better principles are:
      • locally owned and operated firms
      • import-replacing development
      • securing more power from state and federal governments, not more pork
   4. Caveats:
      • going local does not mean becoming autarkic (absolutely independent - ed.)
      • going local reclaims devolution from conservatives and allows new political alliances

2. New Principles
   1. Ownership Matters
      1. Sustainable communities require a holistic vision of sustainable business, which includes attentiveness to the what, how, and where (ownership) of production.
      2. Few advocates of sustainability, like the PCSD (President's Committee on Sustainable Development - ed.), pay any attention to the "where."
      3. "Where" matters because every community worldwide is in a bidding war for a diminishing number of fewer, ever more powerful global corporations. Everything you do as a community to improve the quality of life has the potential of ruining the business climate, and vice-versa.
      4. Local ownership is the only solution. Locally owned firms tend:
         • to remain long-term assets for the community
         • to adapt to stronger labor and environmental standards rather than flee
         • to seek a positive rate of return on investment rather than a maximum rate
      5. There are many options for local ownership, including:
         • family-owned business
         • ESOP-owned business (Employee Stock Ownership Plans - ed.)
         • cooperatives
         • nonprofits
         • municipal/public onwership
         • residential restrictions on stock ownership of business (like Green Bay Packers)
   2. Self-Reliance
      1. Export-led development tends to be associated with:
         • high levels of vulnerability to things outside your control
         • a weaker economic multiplier (which means fewer jobs and less income)
         • a weaker tax base
      2. Import-replacing development tends:
         • to minimize vulnerabilities
         • to maximize the multiplier
         • to maximize local tax receipts
      3. Import-replacement works especially well wherever the economy of scale of production is community-sized. Fortunately, this is true for a growing number of basic-needs industries like food, energy, finance, materials, and services. Even manufacturing can become localized economically through flexible manufacturing networks.
   3. Power, Not Pork
      1. All three "homes" I've had in my life -- New York, California, D.C. -- have been the victim of dumb federal subsidies (respectively, for defense, water, and subways). Beware of Feds bearing gifts.
      2. It's better to gin up the local tax base to undertake local projects. Unfortunately, though, sensible local taxes (e.g., wealth, green, or split-level-property taxes) are often blocked by state home-rule laws, national proscriptions against limits on interstate commerce, and the World Trade Organization. Communities need to demand reform, not payoffs.
      3. Most communities have plenty of money for development, they're just spending it on the wrong things, like stadiums, casinos, highways, football teams, shopping malls, etc. None of these things are linked to local ownership or import replacement.
      4. In this light, hard questions should be asked of Lansing's recent deal with GM:
         1. Are luxury Cadillacs serving the needs of the people in the Lansing community most in need?
         2. Is GM an exemplary respecter of labor rights?
         3. Is the mass production of gas guzzlers good for the environment?
         4. What percentage of the plant will be owned locally?
         5. What guarantees are there that GM will not take the money, operate for two years, and then leave, as it did in Ypsilanti?
         6. What guarantees are there that GM will continue to produce Cadillacs if the price of oil suddenly rises?
         7. What guarantees are there that GM will stay in business at all, if it's falling behind the competition in producing high-efficiency supercars?
         8. How can Lansing possibly know what $100,000+ per job could have bought from local entrepreneurs?

3. Steps Toward Going Local
   1. Frame a community bill of rights outlining local expectations for socially responsible business and issue annual seals of approval to good performers. Encourage consumers and investors to favor those companies with seals.
   2. Prepare an annual State of the City Report, which outlines indicators (which suggest what kind of development would be helpful), unused assets (available for new business), import dependencies (i.e., market opportunities for new local business), and current state and local subsidies (which, if retargeted, could help form new business).
   3. Set up community-friendly-business schools at churches, community colleges, or nonprofits.
   4. Expand the availability of locally reinvesting banks and pension funds.
   5. Encourage local purchasing through local currencies or by brokering deals between in-state producers (like the Oregon Marketplace).
   6. Fight for real devolution through city-paid lobbying on Capital Hill. Demand radical revision of anti-community laws concerning corporate welfare, road building, business taxes, trade, insurance, banking, and so forth.

4. Conclusion
   1. Three final points:
      1. Municipal government participation is helpful for all six of the above but unnecessary.
      2. Examples of each of the above steps exist, and as Kenneth Boulding says, "Anything that exists is possible."
      3. What's needed is a small number of communities to put these things together into a coherent package. Otherwise, the impact WILL be trivial.
   2. Still, we should follow Gandhi's advice: "Everything you do will seem insignificant, and yet it's still very important that you do it."

Editor's Note: Many of the suggestions and ideas from Michael Shuman's talk are amplified in his recent book Going Local. He also has two articles forthcoming that extend the ideas further: one on community corporations will come out in the next issue of Amitai Etzioni's RESPONSIVE COMMUNITY; and one on diminishing economies of scale is in the works for THE ECONOMIC DEVELOPMENT QUARTERLY.

Send e-mail to: Information@UrbanOptions.org or shepard@msu.edu

Home/History/Principles/Forum/Partners/Posters/Indicators/Links

Return to Urban Options

© 2004  Urban Options, Inc. All rights reserved
405 Grove Street
East Lansing, Michigan 48823
517.337.0422

Information@UrbanOptions.org

Website comments and problems:
WebManagement@Urbanoptions.org.