Shop Local!! What about economic self-interest?

There was a presentation at our last meeting of the Hickman County Chamber of Commerce where the speaker encouraged people to spend $20 or so more at local businesses. From the article about this presentation in the local newspaper, there were people who took that to mean one should spend as charity to a mean old local business whose prices might be higher than at the benevolent, out-of-town big box retailer.

If you are more concerned about your family’s budget than with the profitability of a local business, I’m down with that. I find it hard not to be a hard-nosed capitalist looking out for my own economic self-interest. However, economic self-interest is a bear to quantify over time… does cheap Chinese drywall ring a bell? (OMG, I’m having flashbacks of the horrors of grad school micro- and macro-economics!) First, all products just aren’t cheaper out of town. Sure, a lot are, but toss out the loss leaders that skew perceptions and you’ll find some competitive pricing. Second, there may be a value add that more than makes up for a higher cost. For example, better service and more convenience should be offered by local merchants. Third, economic self-interest isn’t reliant on one transaction; it’s a part of a big picture. What if all the local grocery stores lose the competition – then where can one buy that forgotten ingredient 30 minutes before dinner? What about a place to purchase that forgotten faucet fitting to finish the job? Not to mention – think about whose economic self-interest will win when those out-of-town big box retailers are the only game around.

Add to this, the contribution to the local tax base impacts economic self-interest. Local sales tax you pay to your local government instead of someone else’s local government is the most obvious contribution. Let’s not forget the contribution made by businesses property tax. If local consumers will support a widget store, someone buys an vacant lot and builds a widget store. That lot becomes commercial and instead of the tax assessment being 25% of assessed value, the tax assessment is now 40% of assessed value. Plus, the widget store owner pays property tax on 40% of the assessed value of the building she builds. All to the local government to pay for schools, roads, and the stuff local communities need. If that widget store is somewhere else, those schools, roads, and the stuff local communities need — well, it is still needed. Whether those needs are met or not, one’s economic self-interest is affected. Throw in some intangibles like who sponsors the little league, buys the ads in the school newspaper, hires a few people, supports the good causes, etc. and pretty soon it adds up to some real economic self-interest.

But then that’s just my opinion.

About Daryl Phillips, CEcD

I am a professional economic developer. I presently work for communities and companies in developing and implementing workforce and economic development solutions as CEO of Phillips Economic Development Solutions (Phi EDS). Prior to September 2017, I was the economic development professional who served a community team of elected officials, business people, community leaders and dedicated stakeholders for economic development in Cheatham County, Tennessee (pop. 39,880) and its four towns. During my five-year tenure, I served the team as Cheatham County grew over 1,700 jobs, turned around population declines at the start of this decade into healthy population growth, increased tourism expenditures 20.3% and local tax revenue from tourism 25.4%, grew sales tax revenue 36%, focused on developing the local workforce and was recognized by SmartAsset as having the 9th highest Incoming Investment Index of all the 95 counties in Tennessee. I am a member of International Economic Development Council, Southern Economic Development Council, Tennessee Economic Development Council and International Council of Shopping Centers. I have earned the designation of Certified Economic Developer (CEcD) from International Economic Development Council (IEDC), the Economic Development Finance Professional (EDFP) certification from National Development Council and hold a Master of Business Administration from Tennessee Technological University.
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