The movement for local economies has grown dramatically over the last decade. We’ve attracted public support and engaged tens of thousands of entrepreneurs and community leaders. But I think we’ve reached a point where we can’t get much further solely with the strategies we’re using now. I want to suggest to you today that moving to a policy agenda is a key part of what we need to do.
What would be the primary components of a localist policy agenda? Let me suggest seven broad areas.
1. Stop Subsidising the Corporate Economy
We need a national campaign for a level playing field. Governments provide billions of dollars a year in subsidies and tax advantages for the biggest companies. Most people have only a dim idea of the degree to which this goes on. They assume that local businesses are failing because they can’t compete, but, to a large extent, it’s because the game is rigged.
2. Restructure the Financial System to Operate at a Community Scale
Right now, we have a banking system that operates at a giant global scale. Not surprisingly, it does a great job of financing giant global corporations, extracting wealth from local communities, and concentrating assets in the hands of a few. Our research also has shown that the optimal size for a bank, both in terms of efficiency and productive lending, is many times smaller than the giant banks that now dominate our economy.
At the local level, a growing number of people are beginning to talk about how to establish Local Economy Investment Pools that would allow cities, counties, and other institutions to invest a portion of their funds in financing local economy enterprises and infrastructure.
3. Adopt Planning Policies that Create Great Habitat for Local Businesses
Zoning is one of the most powerful tools communities have for shaping the built environment and nurturing the kind of economy they want to see. Indeed, it’s no coincidence that the US cities that have the highest concentrations of independent businesses have zoning rules that protect historic buildings, favour pedestrians and transit over cars, mandate multi-story mixed used buildings, and insist on humanly scaled development.
4. Enforce Strong Competition Policies
We need to stop allowing big companies to use their size and power to game the market and undermine their local competitors. At various points in our history, we have been called upon to break-up dangerous concentrations of market power, and we now find ourselves at another one of those moments.
5. Shift Spending by Public Institutions
The spending choices of our schools, city agencies, state governments, public universities, public hospitals, and so on should reflect our values and be guided by a principle of maximising economic outcomes for local communities. That can be accomplished in part by implementing a modest price preference for goods and services produced or provided by local businesses.
6. Make Targeted Local Economy Investments
There are areas of the country where wealth and resources have been so depleted that simply removing barriers and creating the right environment for local entrepreneurs is not enough. There are also sectors of the economy where key pieces of infrastructure for local production and distribution are missing. Both kinds of gaps need targeted intervention.
One example of how to do this is the Pennsylvania Fresh Food Financing Initiative in the USA. Seeded with $30 million in state money, this loan fund has raised more than $120 million in capital to finance over 80 locally owned grocery stores in low-income urban and rural communities that lacked stores selling fresh food and where conventional bank loans for start-up food retailers were hard to come by. All but one of the businesses financed by this program have been successful.
7. Collect Better Data and Set Benchmarks to Track Progress
Governments collect lots of data on the economy, but the information they gather and publish is not very useful for tracking the market share of place-based enterprises.
What are the steps we need to take to advance this agenda?
First, a shared narrative and policy statement that independent business networks and local economy groups can publicise and incorporate into their own activities and campaigns.
Second, we need to continue to build the empirical case for a decentralised economy.
Lastly, we need to build power and political capacity among independent business owners and advocates.
This post first appeared in the newsletter of the Sensible Centre in Australia.