A story in USA Today titled Oregon, N.D. able to spread their wealth across USA presents the paradox that while Oregon is an economic powerhouse producing with wealth-producing high tech industry, the billions of dollars they produce are going largely to investors around the world and retirees in places like Arizona while Oregon has an unemployment rate above the national average.
While communities welcome national and multi-national corporations that provide jobs, communities must have locally owned businesses. The numbers demonstrate why: If you spend a dollar at a locally-owned business – 67 cents stays in the community. If you spend a dollar at a non-locally owned business, this ratio is reversed –57 cents leaves the community.
This dynamic is explained by David Morris, Vice President of the Institute for Local Self-Reliance, a nonprofit economic research and development organization based in Minneapolis and Washington, D C. “If you’re buying local and not at a chain or branch store, chances are that store is not making a huge profit.” “That means more goes into input costs—supplies and upkeep, printing, advertising, paying employees—which puts that money right back in the community.”
David Boyle of the New Economic Foundation puts it more colorfully, “Money is like blood. It needs to keep moving around to keep the economy going,” he says, noting that when money is spent elsewhere—at big supermarkets, non-locally owned utilities and other services such as on-line retailers—”it flows out, like a wound.”
Even big businesses think well of localization. 65% of multinational enterprises believe localization is either important or very important for achieving higher company revenues, according to a 2007 study by California State University at Chico, 2007.
An additional factor is the velocity of money – the speed and number of times money passes from one person or business to another, each benefiting. Starting in the 1980’s velocity has decreased as more money has been diverted to the financial sector and it’s worsened in recent years. More money is being printed, but it’s not going into circulation.” Why? Wall Street found more profit in leveraging money than doing the business than in making and producing. The problem is moving money creates nothing.
To start and operate a locally-owned business not only can provide a sustainable livelihood for you, but it also benefits the community by generating money that helps nurture other locally-owned businesses, each providing one or more sustainable livelihoods. People like locally owned businesses – the popularity of locally grown food, local restaurants, your handyman and on and on.
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