The Local Economy Is The Richer Economy

I’ve been thinking about the above phrase for a while now. That the local economy is the richer economy. Or better said, the local community is the richer community. I’m not just referring to “richer” in the monetary sense, but also “richer” in relationships, spirituality, etc.

As I was driving out to shoot some photos this morning I passed a Home Depot, a Lowe’s, and a Wal-Mart, the pillars of American big business. For illustrative purposes I’ll contrast a big box store with a typical local hardware store. Say if in the course of a month we spend $100 on hardware related things such as light bulbs, insect spray, air filters, paint, flowers, mulch, bird seed, and pressure washer, to name but a few.

It is true that many of the products can be found in both stores and both stores carry similar if not identical brands. When a light bulb is purchased at the big box store, General Electric will still get the money for their merchandise that they sold to the big box store. When a light bulb is purchased at my locally owned hardware store, General Electric will still get the money for their merchandise that they sold to Ace Hardware. Both stores still have to pay for their mortgage costs, insurance, utilities, facility maintenance, and inventory. But the difference comes with the payroll. If on payday we took our checks and shopped at the locally owned store, the money would stay in the local economy for one more round. The owners of the store would find more money in their pockets, which would inevitably lead to more money in the pockets of their employees, via pay raises, benefits, or incentives to reward them. Or at the very least having to hire more employees.

Let’s contrast this with what happens when we take our paychecks and instead of spending it at a locally owned store, we buy products from the big box store. At the end of the day, that money gets immediately siphoned off to the corporate headquarters. Leaving the Eastern Shore, leaving the local community, and traveling to New York or Atlanta. This may not seem like a big deal and a rather small transaction at first. But when you think of how many of these transactions take place over the course of a day, a month, a year . . . it doesn’t take long to see what a drastic difference there is between the two. If you spend your money at the locally owned store, the money stays in the community. The money doesn’t go off to corporate headquarters thousands of miles away. The money doesn’t get spent on huge advertising campaigns. The money doesn’t end up buying company jets, steak dinners, and severance packages for executives. The money stays in the pockets of the local community.

In all fairness and likelihood, this is probably only a few cents on the dollar for each dollar spent at a locally owned store. But when you add up a few cents on every dollar spent in the course of a year at the big box stores, you can quickly see how that money would add up in a local economy. Even if it is only for a couple of extra cycles before it inevitably trickles out. The point though is that the more you shop and spend your money locally, the more money will stay cycling through the local community. This is not the case with Wal-Mart. It’s profits immediately get siphoned off to Bentonville, Arkansas. Which ironically enough sits in one of the poorest counties in Arkansas.

Think about Beverly Hills and Rodeo Drive. While I certainly don’t condone the ethics of the purchases or lifestyles there, the majority of the shops are local. Money gets spent in local clothing and retail stores as well as restaurants. This money when it makes its way to the owner in turn gets spent locally at a neighboring boutique or cafe. These store owners often lead a rather “rich” lifestyle. For the most part that is because they all shop within a close/closed circle of friends and shops. They may run an up-scale purse shop. Someone buys a purse from them and they in turn buy a necklace at another local store across the street. And both owners probably eat at the sandwich shop down the street. The money thus circulates twice as long within the community.

It is no wonder then why places like the Eastern Shore are so “well-off” in material things and in relational things. It is because we have a diverse and thriving small business community in places like Daphne, Fairhope, & Spanish Fort. We spend more of our money locally than say a suburb in Atlanta. But if we don’t want to end up like a homogenized suburb in Atlanta, we would be wise to remember the reason we are so blessed . . . and that is because we have a great history of shopping locally with friends.