The Ecology of Economic Scales – Roles

I’ve noted that there are eight economic scales that I am a part of. Each of the economic scales have economic activity that is natural to that scale, and constitutes its health At each economic scale there are three modes of economic interaction: compulsory contribution, exchange/market, commonwealth.

Individual

My individual health is measured by my physical condition, free from disease, ability to function physically, clarity of mind. Economically, I require minmum necessities, some entertainment, some spiritual life, access to transportation and communications, interaction with family and friends, interaction with those I contract with and colleagues, sleep, leisure, good work to do.

Family (Witty’s)

My family’s health is measured by the composite of the individuals within my family (self, wife, children, mother). Within my family, there are some chores and contributions that are compulsory for each individual to contribute. I and my wife are responsible to contribute a minimum monthly amount towards minimum necessities. I and my wife must contribute some household maintenance effort, cleaning, paying bills, errands, shopping. There is an element of exchange in which compulsory efforts we will each do. We each have some self-assigned regular tasks.

Neighborhood (East of High Street, below the Rocky Mount ridge in
Greenfield, MA)

My neighborhood’s health is also measured by the composite of the individuals within the neighborhood. Our neighborhood really doesn’t have a coherent economy or society. I know my neighbors and look out for them a little, but we don’t have any property in common, nor really any exchange, nor any compulsory work.

The neighborhood though is the most intimate social network that is outside of one’s home. It is the area that MANY cooperative ownership efforts should occur. (Cars, leisure, food buying clubs, cooking groups, energy generation, community gardening, etc.)

Community (Greenfield, MA)

Once at the community level, 20,000 people in the case of Greenfield, we are passed the intimate scale, and into the mass, the statistical. Its really impossible to care for every individual (like it is possible to care for every individual within a neighborhood.) The community is still close, and most retailers will know their customers individually.

It is the scope for most retail, groceries, clothes, etc. The town government comprises the extent of actual commonwealth. There are a couple cooperatives, but they are mostly retail businesses, more than shared wealth. We pay compulsory taxes, and realize the collective benefits of schools, police, library, etc.

Micro-Region (Pioneer Valley – Northampton, MA to Brattleboro, VT including Amherst)

The Pioneer Valley microregion is the site of many intentional community linking norms. Years ago, we had a local currency that suggested serving the Valley micro-region. It could be revived or started anew. There is no formal micro-regional governmental entity (now that counties have been dismantled in Massachusetts), and there is no really micro-regional scale commonwealth (except what is under the state umbrella).

There is much more inter-regional trade occurring relative to the Valley, particularly in education, but also in manufacturing. Employees serve the institutions micro-regionally, via 20 or so town residences comprising bedroom communities. The majority of the region’s economy is constructed of these micro-regional inter-regional exchange.

Macro-Region (New England)

According to the best of regional economy theory, New England should be the scale size that serves the majority (literally) of the industrial needs of its residents. Cars, refrigerators, food, building materials, should be regionally supplied, resulting in functional regional economic independence. But that is a ruralist economic model, not the urban.

It is possible in New England. We have excellent farmland, suitable industrial building lots, well-educated populace.

Again, there is really no New England scale commonwealth, though the states may provide that macro-regional function.

Continent (North America)

Some needs can only be met at a continental scale. While the siting of manufacturing plants can be local, the siting of some industry must be continental, or maybe bi-continental (west coast and east coast). The national scale serves what would otherwise be continental in scope. It provides a globe-like marketplace. That the federal scale marketplace swamped regional even before globalism draws a parallel to continental great cities whether American or global.

As conservative as it may sound, we need protection from the mass national marketplaces, as much as we need protection from the mass global marketplaces. States don’t do it well. Federal law regarding interstate commerce, has stripped the ability of states to regulate. And, the giant scale of federal legislation and institutions, corrupt the processes that could otherwise result in universal regional health.

The continental scale say for agriculture should be a secondary insurance against local draught or blite, not the other way around. Similarly for manufacturing or materials availability.

Globe

Its too big for things, great for ideas. Lets leave it at that.

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Fully Occupy your HOME (s)

I haven’t been following the “Occupy Wall Street” movement very closely.

Nor have I been following the anti-occupy Wall Street denunciations at all. I saw some acknowledgment of the movement on the Sunday news shows this weekend, and the concensus of denunciation and/or dismissal by the talking heads.

I enjoyed the glee that Christiane Amanpour expressed in her sympathetic laughter at the occupy Wall Street’s representative’s comment that he was the only member of the actual working class to have historically appeared on her show.

The rational criticism that I have heard of the demonstrations is that they are only a beginning identification that something is wrong, but with limited credible framing of analysis and with limited framing of proposal for improvement.

I personally believe that the remedy for our long and short-term social ills rest in the discussion of social scales, that comprise an ecology of social scales with varying roles, possibility, importance.

Each social scale constitutes a setting for BOTH individual initiative AND for shared commonwealth.

There is sufficient commonwealth between all of the social scales (if given enough attention to be a healthy) to ensure that no individual is any irreconcilable fundamental risk (except perhaps personal health) and has a path for commerce and for principled contribution to the greater good.

The current framing of an individual’s economic and work like, is primarily, individual entity relative to “the economy”. “The economy” is global, and requires participation in the scope of institutions that can compete in the global economy. The global economy includes niches that are not of international/global scope, but over time the niches diminish, incorporated into the market of global institutions.

Globalism in that sense destroys the ecology of scales that comprise a healthy portfolio of solutions. If all of the regional solutions to food problems say are non-existent, that only the global specialized supply chain is in effect, dependent on fossil fuels in particular for transit, fertilizer and chemicals, then if there is a disruption to a primary commodity, there is then NO resilient response.

If our agricultural land is consumed by sprawl tract homes, if there is a real crisis in fossil fuel supply, if there is a new blight in mono-cropped corn fields, then we don’t have the flexibility to respond to external challenges.

If however, there is a viable and functional regional food distribution system, alongside a healthy global food distribution system, then an obstacle in one sector just diverts the supply path through a different channel. A blip rather than a catastrophe.

So, what is that we are, what is that we are part of? (to quote an Incredible String Band song from 1969).

We are part of:

Families (say the Witty’s)- With economies within families, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Neighborhoods (say precinct 5 in Greenfield, MA under Poet’s Seat)- With economies within neighborhoods, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Towns (say Greenfield, MA) – With economies within towns, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Micro-regions (say Franklin County or larger the Connecticut River Valley between Springfield and Northfield)- With economies within micro-regions, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Macro-regions (say New England) – With economies within macro-regions, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Continental (say North America) – With economies within North America, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Globe (say earth) – With economies within the globe, comprising BOTH a market exchange system AND a commonwealth that all members are shareholders

Right now some families function dually as both individual exchange systems and commonwealth. Some emphasize one over the other, even to the point of exclusion.

Fewer neighborhoods have really ANY organization or commonwealth or even exchange economy.

Towns have some markets, and some commonwealth in the form of municipalities, but MANY of the them are economically weak to the point of dysfunctionality, and don’t conceive of themselves as a commonwealth, but only limited constitutional obligations.

Micro-regions have some markets, but very very limited commonwealth that anyone can truly participate in. (In Massachusetts, the Boston-centric legislature determined that counties are archaic, unnecessary, an additional bureaucracy with fixed costs. That is well and good for Boston for which the suburban counties should be unified in a planning system with the Boston counties themselves. But, it does not serve Western Massachusetts well at all, for which counties are coherent governing and market scale entities.)

States are our current macro-regions, but they are residual of pre-constitutional literal states, 18th century British colonial residue.

A better form would be macro-regions. In any case, there is commonwealth and some distinct markets within states, but again, states are horridly stressed financially, and don’t often constitute a confident commonwealth, providing a safety net.

Similarly at the continental and global scale. There is some market function and some sense of commonwealth, whether distributed to individuals or universally providing capital in various forms to needed regions, communities, families.

There is a valid republican/ conservative criticism of national only setting of commonwealth and safety net. But, the criticism is only a only a partisan griping currently, and NOT a constructive proposal for an ecology of  universally healthy functioning families, communities, towns, micro-regions, macro-regions, globe.

Markets AND commonwealth at each scale.

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Seminars – Brattleboro Thrives

Cancelled, or at least postponed. I’m leaving it up as a good idea.

Beginning Monday, September 19th, a series of networking seminars will begin at the Hooker Dunham building conference (2nd fl), at 139 Main Street, in Brattleboro. (Continuing the first and third Monday’s of every month).

10:30 – 12:00 Entrepreneur’s Peer Support – (21st Century Business Roundtable) – Stay late and “don’t eat lunch alone”

12:00 – 1:00  Don’t Eat Lunch Alone (DELA)

1:00 – 2:30  Brattleboro Angel Investors Consortium – Come early and “don’t eat lunch alone”

6:00 – 7:30 Personal saving peer support group

We need to talk, imagine, organize, enterprise.

Brattleboro Vermont is a very interesting town, the site of my satelite accounting office.

Brattleboro faces some challenges, similar challenges to many towns in New England, and very similar to Greenfield, though different in ways.

Brattleboro has experienced the affects of a couple recent disasters. There was a major fire in town at the beginning of the summer that destroyed a downtown city block, stores, apartments. It is being repaired but very slowly. That there are still vacancies in offices and retail even with fire victims looking for alternatives, is a bad sign for the town.

Last week there was severe flooding from tropical storm Irene, which rendered another block of downtown unusable currently. Worse, flooding severely damaged east-west roads across Vermont, isolating “suburbs” and summer home towns from Brattleboro. A large part of their economy is disturbed.

Finally, there is the prospect that a major employer and property tax provider, Vermont Yankee Nuclear plant, will close. There is a raging legal fight between the plant’s owners Entergy and the state over whether the state has any jurisdiction over its relicensing permit, or if it is only a federal jurisdiction. I am opposed to nuclear energy, and every year that the aging plant remains open, it becomes more fragile in components that are impossible to replace or repair, increasing the risk of accident. (Nuclear accidents are severe, not minor. Even a moderate risk, rather than infinitesmal, is too much exposure to the town.)

This is a lot.

The common threads are that there is limited industry and limited even intra-regional value addition occurring.

Most of the commerce in town is conducted by large retail: grocery chains, office supply chains, tax preparation chains (my competitors). There is a thriving co-op, currently constructing a large retail store, and office complex downtown. There is some industry, some media, but also a great deal of “value-addition” in social services. Also, there is a very affluent group of urban professionals and wealthy with vacation homes in the area, that drive up the cost of housing, and do spend some money at local restaurants and retailers.

Unlike Greenfield, which is also a bedroom community to Amherst/Northampton and local private schools, Brattleboro doesn’t really have a big network of commutable employers close. Some commute to Keene,and there is some large food warehousing operations locally (but much of that has been off-sited.). There are a couple small colleges in the region, but nothing of the scale and affect of University of Massachusetts, Smith College, Amherst College.

Greenfield also has a thriving community college, which is absent in the Brattleboro area.

The community is a combination of long-term yankees (rich and poor) and now aging old ex-hippies (rich and poor). The “new ideas” that circulate are from the sixties and seventies. Vermont is further from “civilization” than Greenfield, and the cultural difference between the two communities is greater than the actual. Many that have settled in Brattleboro do so to “get away from it all”. (Still Brattleboro is closer to urban centers than the remote smaller towns, and many originate outside of Vermont, unlike in other cities like Rutland or Montpelier.) There is a rural “utopian” feel to the thinking. Sadly, among those that were the progressive utopians, there is a morphing also to stoic endurance (a Yankee virtue) and some hopelessness.

There is a feeling of distrust here, expressed in many ways, by many people. Innovation is not encouraged. Although one would think that there would be a vibrant entrepreneurial culture here, new ideas are distrusted. The wealthy with summer homes don’t tend to invest in any local efforts, and there really isn’t a forum for entrepreneurial brainstorming or mentoring.

I hope to contribute to changing that.

What does a community need to innovate, to thrive?

1. Capital

2. Skills – Direct trade skills and knowledge, administration, decision-making, customer service

3. Motivation and encouragement – Respect and active support of entrepreneurship

4. Communication path from provider to prospective customer

5. Good siting  and available office, manufacturing or warehouse space

6. Professional and surge labor support

The world is different than it was than when Brattleboro thrived as a downtown. Its even different than when Brattleboro sprawled.

It is possible for Brattleboro to be independently healthy economically, and have a complement of great services and culture to offer to part-year residents.

It won’t happen without work. And the work won’t happen without thinking and brainstorming.

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An Ecology of Currencies

I don’t know enough about the European Union to comment much. I rely on more knowledgeable people to explain what is going in Europe and in international banking.

I do know that Europe formerly had strong divided nation-states, that allied, warred, each with independent governments, tax and fiscal policies, currencies (and defined on very different bases).

Now, Europe has a single market, no customs restrictions, no immigration restrictions, functioning with a single currency. Some countries continue to use two currencies (England), but the Euro is legal tender in all of the European Union.

It is more confederated than the United States was before the US Constitution was drafted and ratified. But, each state’s role in the European Union is more independent and significant than states’ roles are in the US.

There are US states that have larger budgets than some even major European countries, and a default on a state’s debt would be devastating. Many states are stressed financially, and a default on some state’s debt is a strong possibility, especially in a localized or generalized double-dip to the current recession.

The combination of unified currency but independent governments is regarded as the cause of the current global banking crisis (that resulted in 14% drop in the global stock market valuation in 3 weeks, and that was without an actual default). European countries are known to have a strong social welfare orientation. There is some racial and regional division though, as the northern countries are regarded as fiscally confident siting the combination of “strong work ethic” with social welfare state, in contrast to the accusation of Greece, Italy, Spain, Portugal, Ireland, as not having a strong work ethic, but only the social welfare expectation.

I don’t know if it is true or not, or how anyone could assess even.

The accusation is that the south borrows without hope of repayment, without hope of working their way out of debt, while the north borrows with the hope of working their way out of debt.

Europe is in a state of tension now though. There are times when it looks like the whole European Union could devolve or even dissolve.

If each country reestablished their own national currencies, in addition to a strongly backed Euro that can be exchanged back and forth, that might be a good thing, even if the Euro is valued at a premium. (ie statutory 2 -3% exchange premium favoring the Euro over national currencies).

While the integration of Europe is a jewel (international travel is easy, work permission is easy, cosmopolitanism reigns), there are severe problems with the dominance of continental scale economy over an ecology of market scales that includes continental but also regional and local.

The United States is the teacher. When the US Constitution included the “commerce clause” permitting non-tariffed inter-state commerce, the scale of the US economy became continental (after completion of “manifest destiny”). The rationale of economic management determined the scale of market served by different organizations. When the costs of communication and transportation reduced significantly, all limitations to continental commerce disappeared.

There was a natural tendency towards economies of scale, which came to include all facets, not just siting and manufacturing economies of scale. With the implementation of continental media and advertising, economies of scale came to apply to manufacturing, logistics, marketing, ownership.

Now, the supply chains and markets are global. But, it took a long time to even extend continentally, and only culminated at the end of the 20th century, with the presence of ubiquitous global retail. Before then, regional retail was the largest scale.

The consequence was the demise of regional enterprise, regional retail, regional manufacturing. The social consequence of the demise of regional enterprise, is a dangerous economic fragility resulting from reliance on single or very few alternative paths. If there is a bankruptcy, a natural disaster, a war, that affects a fundamental commodity or supply chain, billions of people will go without.

In the finance world, so much is interdependent, multiplied by the valuation process of modern finance (a million dollars profit doesn’t add or subtract a million dollars to a company’s valuation, but ten million), and still reliant enormous leveraging (speculating using borrowed funds). So, the threat of default of one thousandth of the world’s debt, sends the valuation of all financial entities’ stock value down 10%, one tenth.

In contrast, a setting of ecology of currencies, currencies functioning at multiple social scales, encourages the development of intra-regional trade that gets very thick in value-addition and potentially universally.

In the states, that would work by the presence of the national currency – dollar, combined with say a New England currency, combined with a micro-regional currency (Pioneer Valley), combined with local currencies.

Banks would exchange currencies at a premium for the larger scale. For example, although the New England currency would be stated as NE$ and required to be accepted by retailers at the same valuation, it might be redeemed at .96/dollar. Similarly, the Pioneer Valley currency might be redeemable at .96/NE$ or .92/$. And, the Greenfield MA currency might be redeemable at .96/V$ or .88/$.

Banks could then profit on the issuance of local currency, but the local economy would be enhanced far beyond the loss in currency premium, by individuals exchanging very thickly locally and regionally, particularly on value-adding labor-intensive economy that results in enhanced employment.

Just a thought.

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What do we organize about?

We organize about what is important, and what we can effect positively.

My preference: social well-being. Individual/families/communities/regions/macro-regions.

As I’ve written previously, I’m a gadfly on two prominent modern socio-environmental concerns.

1. Global warming – My feeling is that it is obviously occurring, and human induced, but that there is literally nothing that I or even a globally consented movement can accomplish to eliminate the introduction of excessive carbons into the atmosphere currently, or in the time frame of even my children’s lifetimes. The most that we can do currently is assist in the response to its symptoms, to think ahead, to be of help.

2. Peak oil – My understanding is that current oil price hikes are entirely driven by a near-fully consumed supply chain for oil with bottlenecks in refining and transportation, and virtually no current limitations due to well-head supply relative to demand. In between 20 and 40 years, the wellhead supply limitations might periodically comprise a real bottleneck.

What is the solution to a problem that isn’t in fact relevant? Its not even a question.

And, if the focus of organizing efforts is misguided, then the solution to those stimuli will also be misguided. A difficult example for me is the advocacy of nuclear power by some environmentalists and intellectuals like Stewart Brand and colleagues. They conclude that carbon toxins in the atmosphere are a primary problem, and in putting their minds to solving the problems they come up with what they believe is the least-worst solution – nuclear power.

My own evolution of social-environmental consciousness included first as a late teenager a sense that we were spoiling our nest, that we had made a beautiful world into an ugly one. I joined utopian efforts (real ones) to make a better world. In an attempt to proceed to pragmatism, from a utopian fantasy approach (communes), I sought to learn skills and to articulate arguments against the status quo, to persuade others to participate in creating new institutions with a critical mass to sustain as institutions and systems.

It was ultimately not successful. The needs to continue in the rat race, with existing partially successful options, was a better individual choice than to invest in new principles of economy that were still gambles.

Then the concept of global warming came along. We had already concluded that the world was screwed up, but didn’t have a measurement, a scientifically authoritative declaration. I/we new that car emissions were horrid. The global warming thesis was a global phenomena, not just utopian. It required international policy decisions to implement solutions.

Global warming became the reasoning to support “the world as it is must change”.

I’ve come to feel that the thesis is of a religious nature. Individuals that would achieve a simple life by eating together, carpooling, sharing a large house for their own merits, have been asked to first reference global warming as a conditional credo, a prerequisite to eating together, carpooling, or sharing a house.

So, I prefer a different primary motivation for doing ecological good.

I believe that there are real goals in the world that require attention, summarized as the effort to improve social welfare within an ecology so social scales. (Person, family, community, region, macro-region)

The concentration of wealth in society is a real problem. It renders the marketplace less of a responsive mechanism for optimizing the utilization of scarce resources. It relies on the fancies of a few families to direct capital to provide for all of the “blood-flow” of the economy. As money chases after dependable profits, it tends to invest where services are already developed. The concentrated wealth system is structurally designed to neglect locales and communities where capital is needed. It devalues the contributions of nature to services that humans must benefit from in favor of human-created services, and thereby then devalues rural value addition and life.

The creation of increasing masses of unassimilable toxins in the environment is a real problem. There is no downstream ultimately. In many locales where toxic wastes have been “successfully” dumped, that is no longer feasible. In the oceans for example, toxins have circulated widely, and even in parts per million of some substances have hindered reproduction, caused species-wide dysfunctional mutations, disturbed the food chain, and created larger and larger pockets of dead zones at the mouths of major river systems particularly that affect regional ecologies and the people that rely on them.

We’ve used much of key materials and have not instituted the degree of recycling required to continue to benefit from the use of those materials. Such formerly common materials as copper and zinc, that are used WIDELY in our industrial society are now scarce.

We overconsume. We’ve depleted fisheries, land, water, forests.

We have high fixed costs of living, including high debt.

The solution to these problems resemble the solutions are also solutions to issues of global warming, but solutions to global warming are not solutions to these overarching social problems.

I suggest that we emphasize comprehensive social welfare as our rallying cry, with the spirit of “enough”. When we’re confident that we’ve achieved a critical human need, lets be content individually and socially with enough, and move on.

By “comprehensive social welfare”, I mean the measuring of a person’s/family’s/community’s/region’s well-being per one of the comprehensive assessments systems now “on the market”, and then committedly endeavoring to improve social welfare imaginatively and synergistically.

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The Future’s So Bright – I Gotta Wear Shades

Anybody remember Michael Dukakis theme song in his run for president in 1988 (from a song by “Timbuk3?”)

The Future’s So Bright, I Gotta Wear Shades.

What’s important?

• Surviving
• Relationships/friendships
• Accomplishment/respect
• Justice
• Ecology
• Spirituality

How’s your present? How’s your future look?

• Health
• Happiness
• Good work
• Relationships

Your family’s present? Your family’s future?

Your community’s present? Your community’s future?

• Participatory culture
• Public health
• Employment
• Ecology
• Governance

Your region’s present? Your region’s future?

• Integrated economy
• Ecology
• Governance

Our planet’s?

By how we live and the work that we do intentionally, we make a world in which “the future’s so bright, I gotta wear shades”.

We are  co-creators, the leading edge of all evolutionary and cultural tradition.

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What is a Local Product?

In the late 80’s and 90’s,  farmers, food manufacturers, distributors, retailers asserted that their products were “organic”. There were multiple standards that were voluntarily adopted and hopefully posted as the basis of assertions on product labeling (sometimes).

In the 90’s, the USDA finally realized that distinctly  “organic” food was desired, demanded, by many consumers, and that there was a great deal of doubt in consumers’ mind whether a particular product was in fact “organic”.

They organized stakeholder discussions to formalize a coherent standard. There was a great deal of argument, compromise, and now after the standards have been published and applied, there is a great deal of lobbying and fudging.

Does the term “organic” on a package mean the same thing to you as you imagine, that you desire as a standard. In the 70′ and early 80’s, the rage word was “natural”, and there even was some basis of standards for a time, based on the principles of accuracy in advertising. (“Natural” is no longer assessed. It is just an assertion at this point.) “Organic” assertion was considered special, an unusual degree of care in growing and processing, really natural.

That standard is dissolving as the standards are asked to be relaxed to accommodate industrial organic farming, industrial in method, industrial in supply path (not local), industrial in distribution, industrial in retailing and mass communications/branding.

Currently, there is a great deal of interest in local food (and even some interest in decentralizing economy as a whole, not just food). But, noone knows what the term “local” means.

In conducting test evaluations in preparation of the use of the “locus” designation, many have discovered that they do use a considerable amount of non-local ingredients and packaging to the extent that it is difficult to confidently state that the food is local, if 100% of inputs are incorporated into the assessment (especially if packaging is included in the assessment).

What do consumers think is meant by the term local? If a locally sited company making a corn salad uses locally grown sweet corn, locally grown peppers, imported salt, imported spices, glass packaging from China, lidseals from Chicago, and the non-local components comprise 45% of the cost, is that a “local product”?

If only the food components are considered, and the average sourcing of the product adds up to 100 miles away, is that a local product? If the most local 95% of ingredients adds up to 50 miles away, is that a local product?

Where is it a local product? If a product that is prepared and packaged in Northampton, MA and is a local product in Northampton, is sold in Philadelphia, is that a local product in Philadelphia? How about New Haven?

I want to know, and I’m hoping that other consumers want to know.

There is good reason to emphasize local food and local value addition. And, there is good reason for consumers to be aware of where their food and products/services come from.

The options for disclosure include “off/on” measurements like organic certification (though within three categories of what is “organic”). This product is either local or it is not. (That is misrepresentative to put on packaging as products are sold in other places than where they were prepared.)

Another option is to describe the geographic center of gravity of processing, but that leads to sometimes absurd and incomprehensible results. An example is a food product prepared in Brattleboro, VT with produce from various points in the Connecticut River Valley (near Brattleboro), but other ingredients from Oregon and California. The numeric computation adds up to somewhere in upstate New York, that doesn’t resemble anything coherent about the products. (its a hypothetical example, not real).

In contrast, the option that locus adopts is to define a region in which a product can be sold in which it complies with “100-mile” certification and another larger circle to comply with “500-mile” certification for general products.

If locally made is an important assertion for consumers to consider in their decisions, then the criteria should be clear to consumers, consistently assessed, and rigorously enforced. Otherwise the term “local” will go the way of “natural”, just an assertion, not something that can be relied on.

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Review of My Family’s Spending

Last weekend, I reviewed all of our spending for the past six months, identifying where the money went. I hoped that I would discover that my family’s spending was primarily local, but it wasn’t.

Less than 10% was spent within 5 miles. Less than 20% was spent within 25 miles (even as my mortgage is to a local bank). And just around 30% was within 100 miles.

This was an unusual six months, granted. I flew to Florida three times, spent a couple thousand dollars (on credit), to move my mother from Florida to Amherst, MA.

But still.

How did I conduct the survey you ask?

1. On a spreadsheet with six columns, date, payee, amount, latitude, longitude of zipcode paid to (company headquarters, not the PO box), distance in miles from my home. (There are web services to find the latitude and longitude of a zipcode, and other services to compute the distance from a point. It can be automated, as in the job search queries – “within 25 miles of…”, but I haven’t gotten there yet).

2. Construct a “pivot-table” (I can show you, call me if you know me), to compute the total paid to each vendor.

3. From the pivot-table results, compute the average latitude and longitude, proportional to spending by vendor.

Mine was somewhere in Pennsylvania, NOT even within 500 miles. I support a different economy on average than my local.

4. Then also from the pivot table results, other columns for “true/false” for less than 5 miles, less than 25 miles, less than 100 miles, less than 500 miles applied to each vendor.

That will give you the percentage of spending that occurs within 5 miles, within 25, 100, 500.

I’ll help you through it if you are interested. It is sobering.

And, from sober and collectively understood results, benign responses are possible.

The same analysis applies to companies.

There is in Western Mass a “local hero” campaign conducted for food, by CISA (communities INVOLVED in sustainable agriculture. They do some great things), but to be a designated “local hero” for them is a very very low bar. (Basically, anyone that applies.)

We need an objective measure.

At 5 miles (local), 25 miles (micro-region), 100 miles, and 500 miles. Green if 80% of spending is local, blue if 60%, orange if 40%, yellow if 20%, and red if less than 20%.

Any companies willing? Any courageous enough to see even?

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Simulation of Economic Scale

The title of this blog is “Loving Home in Practice: Person, Family, Community, Region, Macro-region, Planet”.

The determination of which scale is the primary fulcrum of economy, is an interesting one. The answer is that there is no single scale of economy that is THE fulcrum. The economic scales comprise an ecology.

I recently drafted a relatively simple simulation model of the trends of community wealth development, and discovered that the community development strategy of  emphasizing intra-regional business resulted in a significantly increased standard of living in locales compared to the sole emphasis on inter-regional business.

That was nearly entirely due to the extended “multiplier” effect of citizens spending within their communities, rather than anonymously outside of their communities, which is then spent within communities, which is then spent within communities.

There is no possibility of economic health without some, even considerable, inter-regional trade. However, inter-regional trade realizes less community wealth than a strategy of enhancing intra-regional trade.

To be successful, intra-regional trade must result from and support value-adding activity, not just a transfer or welfare (especially if they just go to Wal mart and have the funds just leave the community again).

So, the most effective community development is the old Jewish virtue of “it is better to help a neighbor become economically self-reliant than to give him/her charity”.

It was astounding to see it in black and white.

The vaguely stated results were that if within a community, individuals spent 40% of their spending intra-regionally, then 80% of jobs would be intra-regional, while only 20% of jobs need be for inter-regional trade.

So, in looking at our needs, what constitutes that shift from inter-regional to intra-regional?

1. Food – Grow your own, buy from local farmers. Support groceries that purchase more than 40% of their inventory from regional providers. (Don’t buy California lettuce, but Connecticut valley, ALWAYS)
2. Housing – Take out your mortgage from regional rather than national or international banks or lenders. The 1/8% difference in interest rate will come back to you.

Use regional suppliers for repair and renovation materials. Use regional contractors.

Use regional fuel suppliers for home heating fuel, insulate using locally produced insulation materials (cellulose).

3. Transportation – Minimize the number of cars that you own. (They are ALL imported from far away). Minimize the number of miles that you drive, particularly alone. (The fuel is ALL imported.)

Cooperate. Drive together. Take buses and trains. Bicycle. Own vehicles cooperatively (some great tax benefits believe it or not).

Buy vehicles that can be repaired locally, and from local parts. Get your repairs done by local rather than national shops.

There’s more. It makes a BIG difference in your community.

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Reviving an ecology of markets

I’ve written quite a bit about the stresses/demise of intermediate scale enterprises serving local, regional and macro-regional markets at the hands of global businesses.

The restoration of markets serving intermediate scales of community is the necessary remedy. In addition to being economically rational in an increasing number of cases, it restores the integrated health of the whole system, making it far far more resilient than the global-only scale.

In that effort, we are “blessed” by high energy costs. We are however, “cursed” by the concentration of capital in the hands of large urban banks and trusts, and the predatory dominance of many large corporations.

For one, high transportation costs it will affect the siting decisions of value-adding activity.

In the past, the siting of manufacture was driven by proximity to raw materials, in which finished goods could be justified in transportation long distances. Firms will hopefully now reassess the siting of manufacturing, to site closer to markets, reducing the bulky “second to last-mile” costs.

That in itself does not create an “ecology” of scales, as it still involves giant continental and global corporations, but it does shift some of the value-addition to more regional.

We are not currently prepared to accomplish that shift. With the loss of production to overseas outsourcing, we’ve lost the skillsets required to revive it. We essentially have to start from scratch, as if we never had the skills, and at every phase of the process.

That requires a conspicuous investment in education, and planned land use, especially outside of the sprawl zones in Texas for example.

Wall Street is still way overvalued relative to “Main Street”, encouraging money to flow to speculative efforts rather than productive.

Congress does not have the intelligence or will to even identify what features would encourage a shift to productive use of assets rather than speculative.

Specifically, the current tax law rewards speculation and punishes enterprise and work, and grossly. (As a CPA, I see carpenters that pay 45% federal tax rate, and I see speculators that pay 15%).

That intelligence and will is conspicuously needed.

There is MUCH that can be done at a grass-roots level. To the extent that we complain, rather than do, we are complicit in the negligence.

Specifically, at a grass-roots level, it is possible to create social and cooperative forms of investment capital funds, and social and cooperative ownership of assets and enterprise.

We don’t even meet to talk.

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