Practising place-based economics

By Leslie Campbell, April 2014

Another way the personal is political.

Call me retro but I’ve never been inside a Walmart or ordered from Amazon.com. I also avoid chain-filled malls, preferring the uniqueness of locally-owned shops and services—not just for their more individual character, but because I know shopping in them is a smart investment in my community.

I recognize we live in shifting times, where many see it as cool and contemporary to buy online from Amazon. And that some among us, earning a low wage, might need to seek out the “best deal” and that may occasionally lead them to Walmart, Target or Amazon. 

But the consequences of directing much of our income towards such players are dire—both for the local economy and ultimately for democracy. A 2013 study commissioned by the BC division of the Canadian Union of Public Employees found: “for every $1,000,000 in sales, independent retail stores generate $450,000 in local economic activity, compared to just $170,000 for chains. Among restaurants, the figures are $650,000 for independents and $300,000 for chains.” The union and others argue that even a 10 percent shift of spending towards locally-owned businesses gives a dramatic boost to local cashflow—meaning more jobs and more revenue for charities and government services here.

A US study found Amazon’s rise is hurting employment in general. Whereas brick-and-mortar retailers employ 47 people for every ten million dollars in revenue earned, Amazon employs 14 (and these are not local jobs, of course). “As Amazon grows and takes market share from other retailers, the result is a decline in jobs, not a gain. In 2012, Amazon expanded its share of retail spending in North America by $8 billion, which works out to a net loss of about 27,000 jobs,” according to the Institute for Local Self-Reliance. 

The apparent “deals” offered by the big-box stores and Amazon are only possible because they pay as low wages as possible—and force their suppliers to do likewise. Amazon’s treatment of book publishers is well documented. A recent New Yorker piece by George Packer lays out how Amazon turned the book publishing industry on its head by, among other things, demanding “ever-larger co-op fees and better shipping terms; publishers knew that they would stop being favoured by the site’s recommendation algorithms if they didn’t comply. Eventually, they all did.” 

Amazon now controls 90 percent of the e-book industry. And about half of all independent bookstores in the US have disappeared. Amazon is now using the same predatory pricing policies to keep other types of suppliers in check.

Packer also outlined how people who work in Amazon’s mammoth warehouses fare: “Amazon employs or subcontracts tens of thousands of warehouse workers, with seasonal variation, often building its fulfillment centers in areas with high unemployment and low wages. Accounts from inside the centers describe the work of picking, boxing, and shipping books and dog food and beard trimmers as a high-tech version of the dehumanized factory floor satirized in Chaplin’s Modern Times. Pickers holding computerized handsets are perpetually timed and measured as they fast-walk up to 11 miles per shift around a million-square-foot warehouse, expected to collect orders in as little as 33 seconds. After watching footage…a stress expert said, ‘The evidence shows increased risk of mental illness and physical illness.’”

It’s not good for communities either. Victoria dollars spent at Amazon leave the city permanently.

Contrast that with a locally-owned business that not only creates jobs here for people who spend most of their money in the Victoria area, renting and buying homes and other supplies from other businesses who in turn employ local citizens—who in turn spend their income getting hair cuts, taxes done, taking yoga classes, attending concerts and plays. Local companies are statistically more likely to give to charity too. Their money circulates, enlivening the whole community. When we interrupt this in-city circulation of money, we leak vitality from our own community.

That’s why buying from big-box and chain stores is almost as bad as purchasing from Amazon. While they employ some people locally, most of their receipts go to head offices elsewhere. The extreme example, of course, is Walmart. When you shop at Walmart you help support the wealthiest family in the world. Six members of the Walton family now have as much wealth as the bottom 40 percent of Americans. ($144 billion; Politifact) 

Besides increasing income inequality, the expanding wealth and power of these megastores also erodes democracy. These firms hire lobbyists and PR firms to influence politicians and voters, as well as teams of lawyers and accountants to help them avoid taxes.

If we want to live in a world that is one percent wealthy and 99 percent poor, we’re doing a lot of the right things.

Studies document the effects that Walmart has on a city as well as the environment. A US Sierra Club director reports, “The company’s carbon pollution is up 14 percent while it pours millions of dollars into a misleading PR campaign around sustainability and anti-environmental public officials who obstruct solutions to climate disruption.” 

Unfortunately, we cannot just shop our way to a healthier economy and community. As Stacy Mitchell, author of the Big Box Swindle, notes, public policy needs to change as well. She lists: “Subsidies and tax loopholes, land use rules that favour sprawling chains and undermine Main Street business districts, failure to enforce antitrust laws, a banking system that has dramatically reduced the availability of credit for small businesses.” Changing these demands collective action, which means pressuring the government—which, despite “celebrating” small business still favours big players through its policies.

In Victoria, 140 local businesses have formed a non-profit organization known as Think Local First which works to highlight the benefits of the locally-owned economy. 

On April 17 at 6pm, Think Local First is hosting guest speaker Katrino Scotto di Carlo, co-founder of Supportland and Portland Made at its AGM. For more information, see www.thinklocalvictoria.com.

Leslie Campbell is editor and co-owner of Focus, a local magazine and small business that depends on other local organizations and individuals. See www.ilsr.org for research on this topic.