The Lure of Local: Q & A with Michael Shuman

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The Lure of Local: Q & A with Michael Shuman

Posted Feb 27, 2009 by Michael Shuman

Teaser:

Fellow Michael Shuman spoke with Carl Frankel of Chronogram Magazine about businesses going "small" and "local."

Fellow Michael Shuman spoke with Carl Frankel of Chronogram Magazine about businesses going "small" and "local." The first question only is excerpted here.

What’s the rationale for buying locally?
There are four strong arguments for why locally owned businesses contribute more to the economy than other businesses.

First, local businesses don’t move. They’re reliable generators of wealth for the local community. Local governments often focus on attracting or retaining big corporations, only to find that at some point down the road they flee. Local businesses stick around and generate income for years and often generations.

Second, local businesses have a higher economic multiplier. What this means is that a dollar spent at a local business tends to circulate in the local economy longer. About six years ago, a study was conducted of economic multipliers in Austin, Texas. When a person spent $100 at a Borders bookstore, $13 stayed in the local economy. When the books were purchased at a locally owned bookstore, $45 out of the $100 recirculated locally. Many similar studies have been conducted and they all point to the same conclusion.

Third, local businesses have a size and character that is consistent with leading theories of what makes a community flourish. People want walkable communities. Megamalls and industrial aren’t compatible with this, but small and home-based locally owned businesses are. Communities built around locally owned businesses are also more appealing to the so-called “creative class,” a term coined by the social scientist Richard Florida to describe knowledge workers and other “creatives.” These people are a key driving force of economic development, and they’re drawn to communities that are diverse, entrepreneurial, and fun to live in—in short, communities with lots of locally owned businesses. In addition, tourists tend to be drawn to local businesses.

Fourth, local businesses have a smaller carbon footprint because their inputs and their markets tend to be more local.

Read the full interview, The Lure of Local

Photo by Helene Smith

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