Downtowns' Future: 'Shop Locally' Column & Dialogue

December 7, 9:00 a.m.

Making "Shop Locally" a Meaningful Suggestion
(bought to you by FromDC2Iowa.blogspot.com*)
Note: A couple of weeks ago, Nicholas Johnson, "'Buy Locally'? Good Luck," November 24, 2010, appeared here as a blog entry. Friday a version appeared in the Iowa City Press-Citizen as an op ed column. Although the Press-Citizen has a readership multiples of that of this blog, because the blog has readers throughout this and other countries that are not Press-Citizen readers, and the subject is one of interest to many communities, business people, and city planners elsewhere, I thought it worth reproducing here.

Moreover, it produced a significant (by Press-Citizen's standards) number of comments about the column in the newspaper's online edition. So some of my online responses to those comments are also included in this blog entry, below, following the column.

"Downtowns" in communities all around the world used to be city centers -- a place where citizens gathered to shop, meet, chat and eat. Increasingly, for a variety of reasons, as cities grow in size suburban shopping malls have assumed many of those functions.

Can old downtowns apply a fresh coat of paint and once again become the "malls" of their metropolitan areas? "Shop locally" campaigns are an effort in that direction. They encourage citizen shoppers to assume a patriotic obligation to shop downtown even though the products cost more than in the big box stories, the stores are not clustered in one place, and the absence of parking (or its provision in expensive parking "ramps") makes the experience less convenient and pleasant.

I argue (in one of the comments) that downtowns need to reinvent themselves, rather than try to recreate the economic and social role they played 80 years ago.

But even if a "shop locally" campaign is thought wise, we need to know what we're talking about. How much of the money we spend in local stores actually stays, and circulates, throughout the local economy? What do we need to do to keep more of it in our home towns?

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Making 'Shop Locally' a Meaningful Suggestion
Nicholas Johnson
Iowa City Press-Citizen
December 3, 2010, p. A9
Many local businesses become profitable, "go into the black," the day after Thanksgiving ("Black Friday"). If it weren't for our purchases from Thanksgiving through the end of the year, many wouldn't be around in 2011.

So the Press-Citizen Editorial Board is urging us to "shop locally."

But what does "buy local" mean?

To analyze in detail what happens to each portion of the dollars we spend in Johnson County establishments would require more data and degrees in economics than most of us would ever have or want.

• Raw materials. We cannot control the portion of what we pay that goes for raw materials, or where they come from -- such as iron or aluminum ore. (China controls over 90 percent of the rare earth minerals in cell phones and electronic products.) An exception would be locally produced foods at our farmers markets. (Although even farmers may import seeds or fertilizer.)

• Manufacturing. What portion of what we pay for products "bought locally" goes to manufacturers in the U.S., let alone Iowa City? Almost none, except for local artists and artisans -- who may use brushes and metals from elsewhere.

• Packaging, transportation and warehousing. What portion goes for packing and shipping? The worker who made your cold cereal box earned a larger share of what you paid than the farmer who grew the grain -- and neither of them lives here. That's true for most of the packaged products we "buy locally."

• Rent and utilities. A portion of what's embedded in the price we pay are things like rent and utilities. Last I knew MidAmerican Energy was owned in significant part by Warren Buffet. Mediacom is owned by some guy in New York. The portion of our "local purchase" that we, or a local business, promptly sends out of state does little for our local economy.

• Franchises; national chains. How large a portion of the price of anything at Best Buy stays in Coralville, rather than going to corporate headquarters? Why, and by how much, is that better than an online Best Buy purchase? How large a portion of our "buy local" money do other "local businesses" send to the remote corporate headquarters of national chain restaurants, retail outlets and motels?

• "Local" owners. Whether a stand-alone business, or a franchise, how "local" is the owner or manager? Do they spend the profits here -- or invest in a distant mutual fund? Or have they long since retired to Arizona or Florida, and spend there?

• Workers' pay and benefits. Finally, how much of what you're spending when you "buy local" is actually ending up in the pockets of the workers in that establishment? Does the owner pay a "livable wage"? If you want your money to circulate as fast as possible locally, giving more of it to local workers is the answer.

There also can be other-than-economic benefits of "buy local," in quality, environmentally, socially and healthier foods.

So, what should the Press-Citizen Editorial Board do if it's really serious about its "shop locally" campaign?

Get real. Get specific. Give us the information we need to fall in step, intelligently and meaningfully, behind its drum major. Do the research and give us the answers to the dozens of questions, such as, "what's the difference, in terms of what stays in the local economy, between buying a hamburger at Hamburg Inn No. 2 and at McDonalds?" Tell us how much of our merchants' rent money leaves town.

If the Press-Citizen would give us the tools -- the precision tools -- we need, I and a lot of other local citizens would be willing to do the job.

Without the tools, "shop locally" is just a rousing bumper sticker of a slogan, and, as Tom Joad says to the filling station attendant in "Grapes of Wrath": "You're jus' singin' a kinda song."
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Nicholas Johnson, a former FCC commissioner, teaches at the University of Iowa College of Law and maintains www.nicholasjohnson.org and FromDC2Iowa.blogspot.com.

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The Dialog

Note: Out of respect for the anonymous authors, their comments have not been reproduced here in full, nor have their identities been revealed when known. When my response does not clearly identify the points they made, they have been summarized in brackets. The dates and times are automatically inserted by the Press-Citizen when the comment is posted.

[1] Random responses:

1. dowell. (a) "It isn't where all the materials come from." Right. My point was an appeal for precision. When you give a local merchant $1000 for a product you haven't put $1000 into the local economy. So, how much does stay here? (b) "Makes shopping seem more fun." Agreed. As I say, "There also can be other-than-economic benefits of 'buy local'"

2. Nospinatall. "Shop geographically local [supports] local employment [and] our local economy." Absolutely. As I wrote, "If you want your money to circulate . . . locally, giving more of it to local workers is the answer."

3. haddonm. I like your three categories of "buy local" (and agree with your 1, 2, 3 ordering). ["1. Buying something produced locally from a person who is a local. . . . 2. Buying from a locally owned business that is not a franchise. . . . 3. Buying from a locally based owner operating a franchise. . . .."]

4. mariaconz. ["A lot of local employers don't pay a livable wage to their employees . . .."] Right. As I note, local owners' profits, if "invest[ed] in a distant mutual fund," don't do much for the Johnson County economy. Failure to provide workers the adequate pay that WOULD recirculate here is short sighted.

Thanks all, for reading column and for comments.

12/3/2010 11:25:20 AM


[2] My 10% "local bonus" rule.

Back in the days before computers, I could buy from afar with a catalog or newspaper ad, 800 number, credit card, and shipping. The prices were often less for me retail than local merchants could buy wholesale. My rule of thumb was a willingness to pay up to 10% more for a product locally than I could get it for elsewhere just to keep the money here. More than that I was unwilling to do.

Now, you see, I'm wondering how much of that money DID stay here.

This also raises another issue. With our easy access to a market that is now global, rather than limited to Eastern Iowa, it puts an even greater responsibility on our local merchants, of whatever stripe, to put extra effort into buying wisely for us -- with the maximum possible quality at the lowest possible cost. They have as much responsibility to "offer locally" as we have to "buy locally."
12/3/2010 11:32:04 AM


[3] "this_guy" (12/3/2010 3:23:23 PM) wonders "why the burden falls on the Press-Citizen to define and describe . . . what it means to 'shop locally' . . ." -- as I've suggested in this column.

Of course the local Chamber should contribute data. So could the Iowa Policy Project, League of Women Voters, College of Business, City planners, and numerous other citizens.

But the P-C believes in and practices "civic journalism" ("Attempting to situate newspapers and journalists as active participants in community life, rather than as detached spectators. Making a newspaper a forum for discussion of community issues." Wikipedia.org; and see Pew Center for Civic Journalism.)

Yesterday's (Dec. 4) example: Josh O'Leary's lengthy, excellent p. 1 spread ("Making Plans South of Town; Planners Outline Long-Term Expansion Goals for Iowa City").

I don't think the P-C considers civic journalism a "burden." But "this_guy" is right: it falls on all of us, not just the P-C's few remaining reporters.

12/5/2010 5:37:34 AM


[4] (1) of a multi-part reply to elliottb (12/3/2010 5:17:04 PM), capitalist-pig, OutlawThunder, haddonm, iowabridges, this_guy (12/4/2010 2:17:15 PM), elliottb (12/4/2010 4:43:24 PM), and haddonm (12/4/2010 6:01:51 PM):

All seem to recognize the fact that retail shoppers have moved from city centers to malls. haddonm considers his doing so worthy of confession. capitalist-pig says it's ideologically impure not to do so. Price seems to be a major motivation, but elliottb notes as well "one-stop shopping with much greater selection and . . . easy visible access to parking." haddonm wants to know "what would cause anyone living in Iowa City to drive to said mall," while iowabridges explains he's "not in the downtown area very often."

So urban sprawl, suburbanization, and Interstate highways combine to make increasing numbers of Americans closer to malls than downtown areas. There are limits to buy local.

The answer? Downtowns have to reinvent themselves (as ours is beginning to do).

12/5/2010 6:30:30 AM


[5] (2) of multi-part reply:

But 2010-11 is just a moment in time. Let's put this in a timeline perspective.

In the 1830s there was less trade in Johnson County. Folks grew and made much of what they needed. By the 1850s and '60s the RRs changed some of that. Recall Iowa doesn't just have 99 counties; each of those counties is filled with townships and small towns -- Lone Tree, Kalona, Hills and Joetown. They were the malls of their day.

By the 1930s and '40s, with the automobile and better roads, downtown Iowa City had become Johnson County's "mall" with the "one-stop shopping . . . selection . . . and easy visible parking" elliottb mentions. There were no parking meters or multi-level ramps. You parked in front of the stores; "double-parking" briefly if necessary. Downtown offered the 1930s version of the variety in today's Coral Ridge Mall -- barber shops, multiple movie theaters, Sears, Woolworths, hardware and clothing stores. IC had its impact on small town merchants.

12/5/2010 6:35:01 AM


[6] (3) of multi-part reply:

Today, of course, the world's people, including Americans, have access to a global mall that impacts on far more than our downtown. When downtown Iowa City was Johnson County's mall, the 140 million people living in the U.S. were American manufacturers' customer base. Competition was between American companies. Americans held jobs making stuff for other Americans.

No longer.

We're borrowing from China to buy products manufactured in China (and to provide tax breaks for the rich).

Creativity, coming up with "the next big thing" that works economically for America -- and for Iowa City's downtown -- is our challenge. Fortunately for us, the American communities best positioned to respond to that challenge born of necessity are college communities.

Because well up on that list is Iowa City.

Let's get on with it.
12/5/2010 6:41:11 AM

_______________

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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'Buy Locally'? Good Luck

November 24, 2010, 9:00 a.m.

"Buy Locally": Rousing Slogan, Largely Meaningless
(bought to you by FromDC2Iowa.blogspot.com*)
Many local businesses become profitable, "go into the black," the day after Thanksgiving ("black Friday"). If it weren't for our purchases from Thanksgiving through the end of the year many wouldn't be around in 2011.

So the Press-Citizen is urging us to "shop locally." Editorial, "Remember to Buy Locally This Holiday Season," Iowa City Press-Citizen, November 24, 2010, p. A11 ("The benefits of buying local have been touted -- by local businesses and by this editorial board -- repeatedly. By now everyone should know at least one simple fact of economics very well: Local dollars spent in locally owned stores stay in the community; local dollars spent in non-locally-owned stores leave the community for other regions, states or even nations.").

The holiday season does provide some seasonal, part-time, minimum wage (or slightly above) jobs in retail and related businesses. Even if such workers are only employed for a few weeks, and they're looking for work again come next January or February, better the jobs should be at the Coral Ridge Mall, going to our community's otherwise unemployed, rather than to Minneapolis' workers in the modestly named "Mall of America."

Unless, of course, one cares about all American workers, and businesses, and the mounting national and personal debt as we borrow money from China to buy goods from China.

So what does "buy local" mean?

To really analyze in detail what happens to the dollars we spend in Johnson County establishments would require more data and degrees in economics than most of us would ever have -- or want.

Raw materials. For the most part we cannot control where the raw materials come from; e.g., iron or aluminum ore. (China also controls over 90% of the rare earth minerals essential in the production of cell phones and other electronic products.) An exception would be locally produced foods at our Farmers' Market. (Although even they may also import seeds or fertilizer.)

Manufacturing. At the bottom of this blog entry I provide a shocking and depressing list of products, once America's pride, that are now imported. Few of the products you "buy local" were even made in the U.S. or Canada, let alone Iowa City. Again, an exception would be local artists and artisans. (Although even they may use paints and brushes, silver and gold, from elsewhere.)

Packaging, transportation and warehousing. I recall learning years ago that the worker who makes the box for your cold cereal in a matter of seconds (if that) earns a larger share of what you pay for that box than the farmer earns for the grain it contains. It's true for many of the packaged products we buy. Nor are transportation and warehousing a trivial portion of what we pay. We cannot "buy local" any of those costs; or, otherwise put, none of what we pay, as those costs are passed along to us, stays in our community.

Rent and utilities. When we "buy local" a part of what's passed along to us, and what we pay for, are things like rent and utilities. Last I knew MidAmerican Energy was owned in significant part by Warren Buffet. I have no idea who owns Qwest or ATT this week, but I know it's no neighbor of mine. Mediacom is owned by some guy in New York who's about to buy up the public shares so he'll own all of it again. When the rent comes due for our Coral Ridge Mall stores, where does it end up -- New York, London, who knows?

Franchises; national chains. The Press-Citizen says we should not buy from Internet Web sites. But how much of the price of anything you purchase at Best Buy stays in Coralville, rather than going to corporate headquarters or for other of the costs mentioned above? If it's a choice between (a) going out to the Mall to get something at the Best Buy store, or (b) ordering online from the Best Buy Web page, for delivery to the Coral Ridge Mall Best Buy store for you to pick up, or (c) delivery to your home, what, precisely, is the marginal benefit to our local economy of (a) over (b) and (c)? What are the economics for Johnson County of the other "local businesses" that send a share of their profits to the remote corporate headquarters of national chain restaurants, retail outlets, and motels?

"Local" owners. Whether a stand-alone business, or a franchised chain store, how "local" is the owner or manager? Are they actually living in Iowa City? Or is the largest share of the ownership held by someone who has long since retired to Arizona or Florida and spends the profits there, with only rare (if any) trips to Johnson County?

Workers' pay and benefits. Finally, how much of what you're spending when you "buy local" is actually ending up in the pockets of the workers in that establishment (individuals who will spend most to all of their wages locally)? Does the owner/manager pay a "livable wage," health and other benefits -- or as close to the minimum wage as s/he can get by with and still find employees? If you want money to stay at home and circulate throughout the economy as fast as possible, giving more of it to local workers is the way to do it.

So, what can we do? What can the Press-Citizen editorial board do if it's really serious about its "buy local" campaign?

Press-Citizen, give us the information we need to fall in step, intelligently, behind your drum major. Have your reporters dig. Do the research. What's the difference, in terms of how much stays in the local economy, between buying a hamburger at Hamburg Inn No. 2 and at McDonalds -- in terms of all the factors listed above? Who are the landlords who are getting the rent from our "local businesses"? How much of that money is going out of town? How much of the purchase price of various products actually stays in Iowa City and how much goes elsewhere? Give us a couple of dozen examples, broken down with some precise numbers and details. Don't just tell us the overall benefit to the owner if the store is here, or if it goes out of business. Tell us: What is the incremental benefit locally from the sale of one more item?

Give us the tools, the precision tools, we need and I, and I believe a lot of other local citizens, are willing to do the job. Without the tools, "buy local" is just a rousing slogan, and, as Tom Joad says of the filling station attendant in Grapes of Wrath, "you're jus' singin' a kinda song." [John Steinbeck, Grapes of Wrath, p. 128.]

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Now for "Buy American." (Which is the best "buy American" strategy when purchasing automobiles: to buy a Toyota made in Indiana, or a Ford made in Malaysia?)

Here's Arthur Frederick Ide's take (drawing on Anika Anand and Gus Lubin, "18 Iconic Products That America Doesn't Make Anymore," in "Investing, Products and Trends, Recession," Yahoo!.com, November 4, 2010, who in turn drew on Business Insider):

From shopping at WalMart to buying at Dollar Stores where more than 80% of all goods sold are foreign imports, to driving oriental made cars, the average American are buying these products that began in the USA and now made overseas:

Beer (Miller, Coors, and Budweiser are now owned by foreign companies; Anheuser-Busch, the St. Louis MO based company that has nearly 50% of all market shares int he USA was sold to Intel, a Belgium-based conglomerate run by Brasil). Corona and others are now totally owned by other nations.

Cellular phones (none made in the USA since 2007) all are made overseas: India, Finland, Sweden, etc.

Converse shoes (since 2001) are now made in Indonesia.

Dell computers (last made in North Carolina, closed in January 2010; its Round Rock TX “headquarters” is a front organization to hide the outsourcing of USA jobs). Today the computers are made in Asia.

Etch-a-Sketch (since 2000) made in Shenzhen, China.

Forks, spoons, and knives (last manufactured by Sherrill Manufacturing that had purchased Oneida Ltd in 2005, closed down all operations in June 2010).

Hathaway Dress shirts (since 2002) made in India, Philippines, etc.

Incandescent light bulbs (last made in September 2010 by a major industry, although Osram/Slavania Plant in St. Mary’s PA is still producing the light bulbs to fill old and international contracts; they will soon announce their closure), closed down operations after the GOP Congress of 2007 passed a measure banning incandescents by 2014, prompting GE to close its domestic operations.

Levi jeans (last made in Dec. 2003) now all made in Latin America and Asia.

Mattel toys (since 2002) the largest toy maker and seller, is made in China (costing 65% of all jobs in its plant in California)

Minivans including General Motors and Chrysler chassis used on Chevrolet Uplander, Pontiac Montana, Buick Terraza, Saturn Relay, Chrysler Town & Country, and Dodge Grand Caravan (since 2003) are all made abroad.

Pontiac cars. Stopped all production in May 2010–yet over 60% of its employees drove Asian made vehicles, and few Pontiac cars were in the main plant in Michigan.

Radio Flyer’s Red Wagon (stopped production in March 2004) at its Chicago plant and now has all products made in China.

Railroad parts (castings, guard bars, braces, etc), none made in the USA since 2008.

Sardines (canned; the last produced in April 2010 by Stinson Seafood in Maine) now are made in Peru and other Latin American nations, and in Japan.

Rawlings baseballs (since 1969, made first in Puerto Rico, later in Haiti, now made in Costa Rica).

Strawberries and fresh fruits and vegetables are imported from Mexico.

Televisions (the last made in October 2004, was Five Rivers Electronic Innovations, a Tennessee company). Today none are made in the USA.

Vending machines (last produced in 2003 in the USA)

Wine: most are imported from Chile, Italy, France, and other foreign nations.

Job outsourcing will increase.

In short, it's even harder to "buy American" than to "buy local."
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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