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Dec. 28 2009 - 2:27 pm | 87 views | 0 recommendations | 10 comments

Boycott Local Business

The Borders Book and Music store at the Severa...

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The clarion call to “support local business” is one we’ve all heard many times. Proponents of the “support local” movement claim that local businesses build “local character and prosperity,” foster “community well-being,” and “keep dollars in the local economy.” Indeed, so ingrained is hostility to large, “big-box” retailers that some American communities have passed laws aimed at keeping conglomerates like Wal-Mart out.

But while this kind of localist activism is no doubt well-intentioned, it is nonetheless deeply destructive. For while large, publicly traded companies contribute to the prosperity of the whole country, local businesses serve only to enrich individual owners.

Take a hypothetical case: a Borders Books and Music competing against a locally owned bookstore.  Both stores are going to offer paltry wages to their entry-level employees, probably the rather insulting figure of around $10 an hour. Neither store is going to offer much in the way of benefits, either. So far, therefore, both stores are fairly equal in terms of the community well-being that they provide.

But here’s the rub: consider how the profits of each store are going to be distributed. Borders is a publicly-traded corporation: anyone can buy a share and get a piece of the action. The stock market is one of the great engines of American prosperity; the profits from publicly traded companies augment the incomes of millions of middle and working class people. When Borders thrives, the American middle class thrives. The profits of the locally owned store, on the other hand, will pad only the coffers of the store’s owner. (What’s more, there’s also the chance that the local store will be insufferably smug.)

There is certainly an argument to be made that local businesses are a part of the way that communities define themselves. (I’ve long lamented that the advent of the EU has led to the destruction of “independent” and individual cultures in Europe. Even if I am glad that England now has some palatable food.) And at the risk of hypocrisy, I will concede that I patronize many local businesses solely because I feel that they add a certain je ne sais quoi to their neighborhoods.

But is shopping locally really better for the community – or the world?

If you really want to do good, boycott your local business.


2 T/S Member Comments Called Out, 10 Total Comments
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  1. collapse expand

    Nope. I disagree. In my small town near NYC, almost every single shop-owner and service provider is single proprietor, some running a family business that goes back several generations.

    Many of these are also owned and run by immigrants who may well have been shut out of a fancier professional route (where they would have been buying shares, perhaps, at some point and maybe are now as it is): several restaurants, a diner, a shoe repair shop, a drugstore (sitting beside the CVS behemoth), several nail salons, a car wash, two gourmet food shops.

    I buy from them whenever possible. Their commitment to the town allows us a better quality of life, allows some of them to live here as well (further deepening their commitment to the place) and, most of all in my view, allows us to retain that most quaint factor of all — human social contact, people who know my name and work and care how I’m doing, and vice versa. No one at Borders or Stop ‘n Shop (Dutch owned) or any of the mall chainstores gives a rip about me or most of their customers — I get my car washed a lot more often than I buy some overpriced “designer” China-made crap at the mall. Nor, certainly, do their corporate masters care who buys their stuff, just as long as someone does – I just worked 2.5 years for one of those stores in a mall and know that world.

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    Yeah, I think this sets up too simple a dichotomy. Each business, whether local or national, is different and “gives back” to the community in different ways. A local business may profit a local business owner rather than lots of shareholders, but it may also donate to local charities more than the national corporation. Or it may use more local contractors. Since profits are kept in local areas, those profits are then more likely to be spent on other businesses and services within that community as well, thus distributing the wealth throughout the local area rather than really dispersing it into tiny particles of profit across the country. In that sense, local investment really does contribute more to the local economy.

    However, if prices are too high, then spending money buying a book from Amazon or shopping at Home Depot might keep more money in consumers pockets to then spend at other local businesses like restaurants and so forth. So there really is no magical ‘best’ answer here. The best policy is to keep sensible zoning laws in place so that big boxes can come to town but not to parts of your town where walkability or tourist attraction could be damaged. Preserving a town’s character and charm is important for that town as a brand, but allowing in cheap goods might be important for people who have less money as well.

    Balance in all things.

  3. collapse expand

    Local “rich” business owners [not the norm for small business, by any stretch] eat at local restaurants, buy local real estate, and pay local sales and property taxes. They even pay local traffic and parking violations. Most of them, as they get rich, invest in other local business ventures or contribute to local schools and charities.

    When local owners die [corporations never do], the local community often benefits from the estate. Local business owners even donate to local politicians who help bring back federal money to the area. Corporations lobby to get tax cuts in return for the “benefit” of moving their business into town, or lobby move their operations and assets out of the country entirely.

    Local owners use local businesses (not corporate home office) and contractors for construction, accounting, decoration, payroll, repairs, delivery, legal, consulting and logistics. In many cases, they also attempt to offer local goods or services where possible.

    Maybe you need to sharpen Epstein’s razor.

  4. collapse expand

    An interesting idea, definitely, but in my opinion a lot of questions come to mind that require solid answers before adopting this credo.

    Many of the larger chain retailers started out as local businesses and have been able to do their good because they found growing local support. Thus, your approach has a certain level of inherent presumption that no current local business will ever be in a position to grow and benefit the world at large.

    In addition, there is the clustering effect of neighborhoods versus chain stores, which tend to be located on highways and/or in strip malls, requiring automobiles to visit and often being inaccessible to mass transit. Neighborhood stores in areas more easily accessed by mass transit, bicycling or walking have a lot more to offer in terms of keeping pollution impact down, not to mention in being accessible to those who cannot afford cars.

    Lastly, there is the issue of customization. Local businesses tend to be able to offer more personal service at a level that I have never yet seen a chain touch. The guy that makes the sandwiches in the deli across the street from me has known me for nearly ten years. We both care about the town, and that sort of local close-knit approach is good for preventing crime, encouraging a high quality of life in the area, etc.

    Still, it is an interesting idea. Would love to see it explored in more depth. I certainly have some chain stores that I support because I genuinely like them (Barnes & Noble is an example).

  5. collapse expand

    Mr. Epstein,

    You have confused two entirely separate issues. “Buy Local” can indeed include “Big Box” operations, if they are locally based. The “Buy Local” push is usually lead by the local Chamber of Commerce or municipality. If you buy product X from a local store, the sales taxes remain local. This is true for Target or the mom and pop operation, it is all the same.

    Fighting Wal-Mart is quite different. Wal-Mart has historically come into a town, have driven out of the business locally based retailers through cut-throat pricing. Then, if the profits are not high enough, they close-up operations, leaving the municipality with a gutted business district and no sales tax revenue.

    “Buy-Local” is not the same thing as fighting the establishment of predatory retailers.

  6. collapse expand

    If Occam wasn’t already turning over in his grave from this post, you might have killed him. Being provocative simple for the sake of being provocative soon wears thin.

    For example, big box stores frequently demand, and get, tax breaks from local municipalities. The result? Money that should go into the local tax base for things like, well, schools and roads and fire protection and stuff like that instead goes to a multi-national corporation that feeds the investor class, not the neighborhood.

    Your argument is really baseless and should just be ignored. Buy local whenever possible.

  7. collapse expand

    I cannot possibly fathom what could have prompted you to write something like this. Do you actually get paid for this crap?

    So just to recap your reasoning: public companies have middle-class shareholders who will benefit when those companies make profits, but local businesses don’t. Therefore, supporting local companies hurts people saving for retirement, and the nation’s economy as a whole.

    Wow, no. Really, supremely wrong. Dumb at a level that’s sort of staggering, really. First, let’s take your argument that the big box stores are paying the same as the local stores. Here in town we have Powell’s, the nation’s largest independent book store, and of course we have all the big chains plus a handful of niche bookstores. Powell’s pays more to start, it pays more over time, it gives better benefits, and it gives profit sharing to its employees. Meanwhile, it has better selection, suffers less from the problem of publishers buying prominent displays and boom-and-bust national buying programs, and the decisions that it makes don’t make-or-break entire publishing companies. If it goes under, it won’t bankrupt half the publishing companies in the nation, or wind up shuttering 1/3 of the bookstores. The employees are not prevented from starting a union– in fact, the union they did create with the approval of management is heavily involved in company decisions. It is in all ways a superior company to work for or to buy from when compared with the big box stores. The money made by the owners contributes to property values in this city going up, not some other place. It contributes to our restaurants staying open. It contributes to our stores selling their wares. Yes, it goes to our BMW dealerships (raising their stock price, you’ll be happy to note), but it’s also going to our charities, and it’s being taxed by our government, not being dodged in some tax haven overseas. If it buys some family a big fancy house overlooking the city, at least it’s not buying a private island in the Bahamas or some mega-yacht to sail around the Mediterranean on.

    I want to touch on this tax thing. Very few public companies pay any taxes at all. They do this by operating at a scale that makes it profitable for them to use international accounting tricks to avoid taxes, to lobby the government to change laws in their favor, to bust unions, and generally act in clearly anti-social ways that endanger our essential freedoms. Simultaneously, the pressure to continually increase profits gives them incentives to commit accounting fraud, hiding their crimes amid the frequent leveraged buyouts that so characterize Wall St of the last three decades, making business decisions that actively harm consumer choice, taxpayers, shareholders, the environment, and the global economy at large. You buy and invest locally, you mostly avoid all that. Your state and local governments get the piece of the pie they deserve, and your kids’ education doesn’t suffer quite as much. The boom-and-bust cycle of fraudulent investments that wipe out the savings of millions of Americans and drive unemployment through the roof is thereby mitigated.

    It is readily evident that the American people need new methods for saving for retirement– Wall St is broken. But the lack of a meaningful alternative, one that doesn’t systematically rob America of its wealth for the benefit of a tiny elite, is no reason to continue to invest in the savage lies and global wreckage of international finance. In the meantime, my credit union’s offering 3%– and I’ll know my money’s going to help people in my community own their first home or expand their business, not line the pockets of some ridiculous treasury-raiding billionaire somewhere.

    You need to get your priorities straight, son. Someone ought to slap some sense into you. Next you’ll be telling us that war is good for the economy, or some similar half-truth horseshit.

  8. collapse expand

    I get it now. I couldn’t figure it out by simply reading last weeks story.

    You’re Ed Anger. Reborn. All hail the resurgence of the Weekly World News. Please let your next post be about aliens kidnapping Michael Jackson.

  9. collapse expand

    I’m one of the small businessmen that you claim is “enriching myself” at the expense of my employees, vendors and community.

    Yeah, we’re not a public company, so members of my community can’t invest in our stock and get “a piece of the action.” Perhaps we should issue stock. I could use a lot of help because for the past two calendar years a “piece of the action” of our business would involve an investment, not a dividend.

    We don’t live in a mansion. We haven’t taken a vacation in three years. Our cars are both over six years old. I don’t dress in Armani suits.

    We comply with the same local, state and Federal regulations that the big guys do, but it costs me a larger percentage of my budget to secure legal counsel, accountants and consultants to help us wade through the sea of regulation.

    Our employee compensation package is very competitive. Many of our employees have been with us for over ten years. We’ve made loans to them so that they can purchase cars, homes, and help their kids go to college.

    We contribute products, services and money to many local charities. We’re approached by charities on a near-weekly basis. Why? When the representatives of these charities approach large (publicly traded) companies, they’re refused, being told that the decision to give to charity is made by the home office. When charities approach me, they know that I have the power to say yes or no (and have said yes often in the past).

    What you’ve not mentioned is that the profits we may have earned in more prosperous years were earned by taking an enormous risk. Starting a business involved investing capital. Without that capital, employees can’t be paid. If I lose that capital whether by making poor business decisions or due to economic disaster, the employees will no longer have a job.

    You’re all about ensuring that no person “gets too much” and that no person misses out on his/her “fair share.” Okay, you advocate investing in stock corporations as a way for everyman to plan for their retirement. When hundreds of Microsoft’s investors became millionaires because the stock boomed, did they then become “too enriched?” Should they donate some of their capital gains to the less fortunate in their community?

    Mr. Epstein, your ideal world is also the ideal of communism. If you like it so much, why not move to Russia? Oh, I forgot. Communism failed there.

  10. collapse expand

    I’m not sure if I should feel empathy for such an ignorant and simplistic view of the big box vs local debate. There have been study after study that shows the redistribution of currency from both local and big box retailers, none show the national/international retailers providing more to a local economy. Certainly there needs to be a balance of both – I neither think fully restricting bog box’s from a large economic region nor allowing small businesses to fend for themselves healthy.

    Have you ever read the Austin study? Or the studies now highlighted at the AIBA? (www.ibuyaustin.com). To quote from their main page “A landmark study found that of $100 spent at a local business, $45 stays in the community. But that same $100 spent at a chain store would put only $13 in our local economy. ”

    Or what about Ithaca and their use of Ithaca Hours? Other cities in Wis and Ore use script as well.

    Absolutely big box retailers have their place in the local and national economy. The introduction of big retailers like Home Depot and KMark to the NYC/Manhattan market was revolutionary in creating competitive prices (as has Ikea’s free buses for Manhattanites).

    To suggest buying shares is buying a piece of their profits is also incorrect. Buying stock is speculative and based on opinions, not profits. If there was an investment structure that directly related to profits, then maybe we’d have something to discuss. But it’s a bit irresponsible to claim some simplistic logic that if the common American bought stock in Best Buy they’re sharing in their profits.

    If you’re going to write a position so brash, I think it’s only fair to put a lot more references and thought into it.

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    About Me

    I'm a writer based in Portland, Oregon. My work has appeared in the Weekly Standard, the American Spectator, the New York Press, The Big Money, sp!Ked online, the Epoch Times, the Daily NK, and others. From 2005 to 2007, I wrote a column on culture and politics for the (alas, now defunct) Seattle-based Internationalist Magazine. In so doing, I filed dispatches from Berlin, Seoul, Paris, New York, and, yes, Reno - among other places. In 2009, I reported on business from Shanghai. I attended Reed College, in Portland, Oregon.

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