Shop Local; Buy Local Supports Your Community

By Tom Barrett

Over the last several years there has been a lot of discussion about the economic advantages of shopping and buying from local merchants as oppoosed to “Big Box” national retailers. The Lincoln Institute of Lands Policy released a report, Tax Breaks for Big Business is Bad Policy, that details why economic development in the form of tax breaks does not work.

From a consumer’s point of view, it is hard to resist the benefits provided by national retail chains. National chains have the marketing, the products, and in many cases, due to their purchasing power, much lower prices. 

Local merchants usually do not offer the selection of products or the lower price points of national chains. However, when all aspects are considered, as this info graphic illustrates, your local merchant contributes 3½ times more money to your community than does the national chains.

Local Merchants are at a Competitive Disadvantage Supported by Local Tax Payers

Additionally, with the economic incentives and infrastructure improvements provided by the local and state governments, the national retailers enjoy  an economic advantage over your local merchant. A friend of mine owns a small manufacturing firm on the East coast. The firm is opening a branch operation in Chicago. The City of Chicago is giving this firm an incentive in the form of an annual $15,000 tax abatement over the next ten years. The local businesses, who have been paying taxes for years, do not enjoy this economic benefit. The City of Chicago is helping to finance additional competition supported by the local tax payers. I am sure most of the local businesses are not truly aware of the impact on their business.

Focus on Real Estate or Focus on People

Too much economic development has focused on developing the real estate and not on developing people. True economic development focuses on building strong communities. Strong communities are developed with the support and participation of the local residents.

The New York Times recently published an excellent article on the failure of local movement incentives to create jobs or have any effect on the local economy other than to give away local tax dollars. $80 billion a year is given away to attrack or retain large companies. This amounts to $10,000 each year for the almost eight million firms in the United State with payroll. Here is an excerpt from the article:

The Times analyzed more than 150,000 awards and created a searchable database of incentive spending.

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.

As Companies Seek Tax Deals, Governments Pay High Price, New York Times, December 1, 2012.

As Companies Seek Tax Deals, Governments Pay High Price, New York Times, December 1, 2012.

There is much more to this discussion than presented here and I would love to hear your comments.

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Why Buying Local is Worth Every Cent Infographic by CustomMade