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.