The holiday season has many of us hyperaware of our spending habits. Using your dollars around town has become more and more meaningful as we’ve moved farther from the great recession of 2008. Reports on national economic activity have somewhat of a multiple personality disorder. While many of the macro measurements point towards healthy economic activity and a growing economy throughout the United States, the smaller local economies have not experienced as tremendous of strides. How can this be?
Money and finances generally flow in an upward mobility trend within the U.S. As an example, let’s take Jonny. Jonny buys an apple at his local grocery store in Texas. Even though his store is located in his town, the apple was imported from Massachusetts. The price of that apple contains the cost of transportation, packaging, and labor which leaves little profit for the supermarket to take advantage of after the sale. The farm that the apple came from has a contract with a large industrial agricultural company which locks in a set price and quantity of apple trees the farm buys each year, an industry standard. To cover that cost (no matter the harvest yields), the profits from the apple sales flow into the industrial agricultural company which increases their profitability and economic indicators. At the macro level, business is great. At the local level, Jonny’s dollar barely made a dent around town.
For the sake of the discussion let’s assume now everyone in Jonny’s town shops and buys locally, allowing money to flow in a localized distributed model. Jonny buys his apple from the same store, which purchases all their produce from a farm around 20 miles away. The store gets to keep a larger profit margin on the apple sold since they aren’t paying as much for transportation anymore. Jonny’s dollar moves into the local farm’s hands which is then spent on seeds from the local seed and nursery store in town. The seed store owner sees more business from local farmers which in turn allows the owner to have more disposable income to spend in Jonny’s town. The more local spending that occurs, the more economic activity begins to build resulting in a more resilient and robust local economy. Jonny in time can see the effects of his dollar being spread around his community instead of the community of the large industrial agro giants and big financiers.
This case has some shortfalls of course. Not everyone spends locally and it’s almost impossible in today’s interconnected financial world to keep all those dollars in and around town. Yet, small steps towards supporting local business owners, artists, farmers, and experiments do reap benefits for your community. It can be easy to side with the conveniences of big business to make life easier, but it’s easier for them to neglect investing in your local community. It can also feel discouraging trying to make a difference competing with large industry, but we should’t take for granted the most powerful vote we cast day to day-where we spend our dollars. Small, conscious, and educated spending decisions have the power to send a message and support whom we chose.
Of course not all big business is bad, or that small local business is always the right choice. It is however, up to each of us to decide where we spend our hard earned dollars. There is something to be said when spending your money within the community you interact with everyday and who also work as hard as you to keep your community running. The faces that you see everyday, the people you talk to are sometimes a better investment in the long run.