Small-Mart Revolutionary
Michael Shuman sees another option in the global marketplace

Michael Shuman is the author of The Small Mart Revolution: How Local Businesses Are Beating the Global Competition (2007). He is also Vice President for Enterprise Development for the Training & Development Corporation, and is on the board of the Business Alliance for Local Living Economies (BALLE), which puts together coalitions of local business to promote local hiring, buying, investing, and other aspects of local-economy building. His office is in Takoma Park, right above Mark’s Kitchen. In the final days of 2007, Michael Shuman found the time to answer a few questions.

Interview by Eric Bond
January 28, 2007

Bond: Where do you see our local economy in 20 years?

Shuman: If we’re smart—as consumers, as investors, as entrepreneurs, and as policymakers—we’ll have a region that’s significantly more self-reliant than it is today. We produce a lot more of our basic commodities here, including food, energy, and materials.

We’ll use our cars a lot less, mass transit a lot more, and increasingly walk (or ride bikes) to school, to do shopping, or to go to work. Many more of us will work from home. We’ll invest our pension funds in local businesses, and refocus our economic development policies on them.
And we’ll use our new-found wealth to solve other perennial social challenges like poverty, illiteracy, and environmental degradation.

In your book, you write that a sign of a prosperous community is “how well it preserves its unique culture, foods, ecology, architecture, history, music, and art.” What can our readers do to identify those local touchstones and preserve them?

Beyond the usual agenda here of downtown renewal, historic preservation, protecting green spaces, and smart growth, I would prioritize buying local.

Ultimately, the unique features of our economy are its local businesses. The “local” Home Depot or “local” Red Lobster are complete oxymorons – they’re the antithesis of localization.

Consequently, more than 50 communities nationwide have “Think Local First” campaigns that encourage consumers to buy local whenever it’s affordable and reasonable.

You point out that small and local businesses are at a
disadvantage, in large part because “nearly all business subsidies in this country go to nonlocal firms.” This strikes me as a perversion of capitalism. Could you explain a bit more about the two visions of capitalism that you describe in your book?

In The Small-Mart Revolution, I describe the current philosophy of economic development as TINA, for Maggie Thatcher’s invocation that “there is no alternative” to the global economy.

The embrace of TINA has meant that economic developers – including those here in Maryland and Montgomery County – have focused on attracting or retaining nonlocal companies through “incentives,” which sometimes amount to hundreds of thousands of dollars per job.

Every year state and local governments give an estimated $50 billion for this purpose, and the feds probably kick in over $63 billion. That’s $113 billion of pork that is effectively making local, small business less competitive. It’s about as dumb and counterproductive an economic development strategy as you could come up with.

The TINA vision assumes that good jobs are cheaper to attract than to create, and that global-company jobs contribute more to the economy than homegrown businesses do. We now have two decades of experience and study that underscores both assumptions are wrong. TINA is a loser strategy.

The better approach to economic development —the one that delivers the most jobs, the best income and wealth effects, for the least dollars—is what I call LOIS. The emphasis should be on locally owned (LO) businesses that increase local self-reliance through import substitution.

How does the Small Mart revolution tie into big environmental concerns like climate change and regional degradation?

We’ve known for a long time that the vast majority of emissions of carbon dioxide and other pollutants come from burning fossil fuels. That has made a priority of the environmental movement to shrink energy use per person, and to generate energy through renewable sources. Because much of our energy use is directly involved in moving around people and products, localization is an essential part of the environmental agenda.

Helping people to live closer to their schools, their shopping, their workplaces, for example, reduces automobile emissions, as well as congestion, smog, noise, and traffic accidents. And helping consumers access local goods and services minimizes shipping and service-provider trips.

Housing has become an issue, increasingly, for many residents in lower Montgomery County. People are getting priced out. I know that this isn’t an issue that you address directly in your book, but I wonder if you have any thoughts on how to preserve that part of our
community, keep our community friendly to mixed incomes?

One idea worth looking at is to set up a land trust for low-income housing, as Burlington, Vermont, has done. People usually think of land trusts as contiguous parcels of land, like a big estate, but in fact a land trust can be a legal structure that holds multiple parcels of land spread. It could be used to protect many low-income properties throughout Montgomery County.

Pooling government, private, and foundation resources, the trust would buy up parcels and sell affordable equity stakes in houses to low-income residents. If these residents ever want to sell, they get back their accumulated equity payments, and any appreciation or depreciation goes back to the land trust. This makes mortgage loans less risky.

The biggest effect, of course, is that the community steadily builds a portfolio of affordable properties to promote mixed-income neighborhoods – a portfolio that is immune to gentrification.

How does the influx of immigrants to our area over the past 20 years factor into the Small Mart Revolution?

We need to recognize the critical role recent immigrants are playing as entrepreneurs in our society. Perhaps more than anywhere in the country, those of us living in the Washington region see the remarkably educated, savvy, and industrious immigrants who are driving cabs, working in restaurants, and -- once they amass a modest amount of capital -- starting their own small businesses.

The Small-Mart Revolution underscores that these and other homegrown entrepreneurs should be the focus of economic development, not outside corporations.

It’s worth noting that the BALLE networks in the DC area – in Washington and in Wheaton – have been led by Manny Hidalgo of the Latino Economic Development Corporation, based in the Adams-Morgan neighborhood of the District.

One of the most intriguing aspects of the Small Mart Revolution that you describe is that it cuts across other political differences. In other words, awareness and involvement in preserving and promoting locally owned businesses is neither a liberal nor a conservative
issue—or maybe it’s both. Can you explain how this ideas eludes the current high-stakes culture was between “red” and “blue”?

I’m proud to say that some of the warmest receptions to my ideas have come from the reddest states in the country like Wyoming, Idaho, and Utah, but frankly the Small-Mart Revolution appeals across the political spectrum. Conservatives are excited by the emphasis on freedom, small business, small government, and free markets. Progressives appreciate the linkages to community empowerment and sustainable business, and see networks of local businesses as the only realistic alternative to corporate globalization.

In fact, the only real opponents of the Small-Mart Revolution turn out to be mainstream economic developers, who often are old-style, left-leaning labor economists who believe in big business, big labor, and big government solutions to social problems. Even they, I’m pleased to say, are beginning to abandon the TINA model. A USA Today headline in August said: “Business Incentives Lose Luster for States,” with the subhead that “Some Question the Value to Local Economies.”

Another refreshing aspect to the movement you describe is that the main thrust of it is what it is for rather than what it is against. On the other hand, it seems that people are often more energized by what they dislike. And the “free market” forces that shut out the small mart seem so unstoppable. What are the benefits of keeping a positive vision?

A positive vision is essential for building a politically broad movement. Negative visions might bright quick results, but they divide and often backfire.
Last year, for example, a group of anti-Wal-Mart folks in Chicago tried to pass an ordinance that would require Big Box stores to pay a living wage. I’m all in favor of passing living wage laws, but targeting Big Boxes amounted to an attack on them.

The effort stumbled badly, with the embarrassing spectacle of black community groups demanding (however misguidedly) cheaper prices through box stores while white activists pushed for “progressive” wage reform. Mayor Daley vetoed the measure, and I believe the entire fight was an enormous waste of time, energy, and resources that can and should have been put into nurturing the competitiveness of local business.

And, by the way, the principal barriers to the Small-Mart Revolution are not free markets. To the contrary, the main obstacles are subsidies, tax breaks, and public policy preferences that are tilted like double-diamond ski slopes against small business. A truly free market would be the best thing to ever happen to local economies.

Finally, a revolution seems like a lot of work. And we all have a lot of other concerns. What can you tell our readers about how they can easily become conscious participants in the Small Mart Revolution?

BALLE encourages communities to start with “Local First” campaigns. Coalitions of local businesses and mindful citizens can educate consumers about what stores are locally owned, and what kinds of competitive goods and services they offer. They point out that every purchase is really an important act of voting that we all do almost daily, even many children. Getting people to vote more intelligently begins to get investors and policymakers to rethink their behavior as well.

“Local First” is easy and popular because it ultimately saves consumers money. For example, the single greatest expenditure of a typical American family is on housing. Moving your mortgage from a global bank to a local credit union typically cuts your interest charges and can save you thousands of dollars a year.
The Small-Mart Revolution is not about getting people to take morally sound acts that only the rich can afford. It’s about all of us taking advantage of the local bargains that inundate us, but have been obscured by the fog of corporate advertising, and then enjoying our new found wealth.

Visit:
Business Alliance for Local Living Economies (BALLE) www.livingeconomies.org