Building an economic stimulus package from the ground up.
Thursday, November 20, 2008
This is not a joke: One of the ideas being debated in Congress this week as a remedy for the current economic crisis is for the federal treasury to lend $25B to the auto industry. On the heels of buying up AIG and Fannie May and Freddie Mac, the newest cure-all is for those with control of the purse strings to offer an unsecured loan to Ford, GM and Chrysler to keep them out of bankruptcy. The cynic in me sees it as another example of a reward to executives who made really poor business decisions. If the Big Three had invested in innovative designs and fuel-efficient technologies at a time when they were selling bucketloads of SUVs, they would now be making a smooth transition to their cars of the future. Instead this latest proposal reminds me precisely of the joke that says to remember the golden rule: He who has the gold makes the rules.
It is against this backdrop that I am happy to put forward a modest proposal for economic stimulus being launched by a large group of alternative newsweeklies across the country. Monterey County Weekly is joining this group of 72 other papers and asking each of its readers to pledge to spend $100 this holiday season at local and independent businesses.
Spearheaded by Jody Coley, the publisher of the Oakland paper, East Bay Express, the idea is beautiful for its simplicity and impressive for its scope. This proposal rests on two seemingly obvious premises. That consumer spending really is America’s greatest economic driver, that the feds are not going to appear anywhere in Monterey County and reassure nervous merchants that their business is too big to let fail. Instead, this proposal says in the clearest possible way that if we want to help Main Street, then we need to go spend money there. The data is startling.
A HUNDRED DOLLARS SPENT LOCALLY HAS A PRETTY AMAZING RE-GIFTING QUALITY.
One hundred dollars is not likely to bust anyone’s budget this holiday season, but a hundred dollars spent locally has a pretty amazing re-gifting quality. According to the Andersonville Study of Retail Economics, for every dollar spent at a local and independent business, 68 cents stays in the local economy. This is what economists call the multiplier effect – meaning that the money is then re-spent by the owners and employees of the first shop at other restaurants, clothing stores, rug vendors, aestheticians, pet stores, bars, spas, gift stores, dentists, computer stores, golf courses, auto mechanics and massage therapists. By contrast that same dollar spent at Target, Wal-Mart or Best Buy re-circulates only 43 cents. The difference between shopping locally and at a chain store is a 58 percent increase in the multiplier.
Readers familiar with the Weekly will notice that the vast majority of the advertisers in these pages are local and independently owned businesses. That same model holds true at the other 72 newspapers participating in this holiday pledge drive. By combining the Weekly’s print and online readership together with the other papers across the country, the total audience is 17.5 million readers. If you, and all the others reading this, spend just $100 each in the next five weeks, the total holiday spending will be $1.75 billion. That money spent at local retailers, restaurants and service providers multiplies into $2.9 billion – $437 million more than if the money went only to Amazon.com or Costco.
“This is an incredibly exciting and unprecedented effort by the press to reach out and work with the local economic development community,” says Erin Kilmer-Neel, of the American Independent Business Alliance. “This can be a perfect partnership – local, independently owned publications helping other local indie businesses in their community toward positive economic change.”
Adds Kilmer-Neel: “When people choose to shop at locally owned, independent businesses in their communities, they are re-circulating dollars in those communities, supporting more local jobs, keeping their neighborhoods interesting and unique and reducing their carbon footprints.
“People came out in the millions two weeks ago to make change by voting. Conscious shopping, like voting, is a powerful way to make change. Collectively, we will continue to spend billions and billions of dollars as we shop throughout our lives – imagine the power that this money can have if each one of us tries to be conscious about where it goes.”
The absence of publicly traded media corporations in this effort is no accident – the list does, however, provide a pretty good snapshot of America’s urban communities. I would urge that if you have family and friends in any of these cities, contact them and encourage them to participate in this grassroots economic stimulus package. It’s no $25 billion for auto executives. But to the owners and employees of the shops in these communities, it’s a lot more important.