Living In A Local Economy: Arguing The Merits Of Corporate America

I was watching “It’s a Wonderful Life” again this week and something struck me that most people miss in the movie. It was how badly living in a localized economy sucked.

You know there is a big movement this day to eat, shop, and buy locally for your products. The theory is that by doing so you are sticking it to large corporations, big box stores and agribusiness and thereby making it a better world. Main Street before Wall Street, that sort of thing.

I’m all for protecting our small business owners by “buying locally,” but it is only going to hurt your community in the long run if the local business is not offering quality goods at competitive prices.

There is a reason why “big box” stores are popular and have been so successful — they offer goods at lower prices. That’s capitalism dear readers and in almost every case, it works.

Take for example a local electronics store that offers a radio at $20. Now, compare it to the same radio that a big box store offers at $15. Ever wonder why that is? It’s not because the big box store has lower overhead costs; in fact, in most cases they have higher costs of shipping and running their store. It’s because they are buying 10 million of those things at a time, and passing those savings onto the consumer. So, if you buy locally, now the manufacturer can no longer make 10 million of them, they will make less because they will be selling less at the 20 dollar price. That either means layoffs for factory workers that are making that radio, or cost cutting on the quality of the radio.

Worse, now you have less buying power. If you are paying $20 instead of $15 for the radio, that’s $5 less you have to spend on other things that keep people employed, too. Maybe you skip eating out at the local diner. They lay off people, too. And with less businesses out there, that means fewer jobs and less movement in the economy.

Layoffs and fewer jobs also are a result of having the local hardware store selling you other things besides that radio. A big box store employs a lot of people and lot of other jobs that the little guy’s store doesn’t use. People like shippers and security personnel. Not to mention lighting and heating that big box store means utilities have more revenues to keep costs low and expand their power facilities and modernize them. The opposite argument on this suggests that more small mom and pop hardware stores would simply crop up to meet demand for those radios. But, ultimately, what happens when people spend more money on each purchase is that they simply make fewer purchases.

Another factor to consider is the taxation shift places a large burden on local governments. It’s much easier to zone and provide police, fire and sanitation coverage for a single big box store than it is for a zillion little hardware stores on every corner. That means tax dollars go further and the traffic patterns are more efficient.

A big box store can provide a wider variety of goods on its shelves in a single location, whereas the little guy has shelf space only for a limited item. This means you might have to drive further or make more stops to complete your shopping purchases. Years ago Christmas shopping meant spending days going all over to 100 different stores. Now, most of it can be done by going to the mall and maybe a few other stores. That’s called efficiency and it does wonders for the economy.

Even better, the internet can supply goods direct to your door. Less hassle means more time for you to spend doing other, more productive or pleasing things, which means a higher quality of life.

It’s not very efficient to spend a lot of time going to stores, and it’s more costly to the consumer. Again, as a result, you make fewer purchases if you have to spend more on each item in terms of prices and travel costs. There’s a reason department stores and big box stores are so successful; they can offer more goods and lower prices. That’s not a bad thing, that’s a good thing.

There’s another aspect to this argument that most people have forgotten, as well.

Company towns.

In the old days, before large corporate big box stores were all the rage, the local merchants gradually would get bought up or bought out by wealthy, local town lords. The guy that owned the hardware store also owned the supermarket and the bank. Guess who got rich and guess who took it in the shorts on their wallets? All across America in the 20s and 30s little towns were being gobbled up by the Mr. Potter’s and turning little Bedford Falls into Pottervilles. Local business lords owned the factories that made the radios and the stores that sold them. The employees were owned lock, stock and barrel.

What broke them was corporatization and big box stores.

It didn’t hurt the consumers’ pensions and retirements, either. Those big box stores are public entities. Imagine what your pension funds or 401k investments would look like if all those big box companies suddenly went bust. You can’t put your retirement into Moe’s Hardware, but Home Depot is a solid performer for not only you, but Americans all over this country.

Look there’s nothing wrong with supporting a local business, but don’t do it if they aren’t offering competitive products at competitive prices. Don’t buy local just to buy local.

That’s just playing into a return to local fiefdoms controlled typically by the government in cahoots with the Mr. Potters of this world.

Remember who George Bailey’s best friend was? It was Sam Wainwright, the big corporate plastics manufacturer who bails him out at the end.

Thomas Purcell is host of the Liberty Never Sleeps podcast show and more of his work can be read at libertyneversleeps.com.