Keeping Austin Weird with the Multiplier Effect Episode 4

[verybadgnome]

"When residents of the Midcoast region spend $100 at a big box retailer, their purchase generates $14 in local spending by the retailer. That same $100 spent at a locally owned business generates $45 in local spending, or three times as much. Dollars spent at a local retailer support not only that store, but a variety of other local businesses, including local banks, accountants, printers, and internet service providers."

[Silvertrine]

Its marginally better and local governments shouldnt give incentives to big corporations to move in on local businesses. However having said that its not like the local owners are showering their profits back onto the employees. Maybe they pay a little better maybe they dont.

[verybadgnome]

@Silvertrine

It's not that the employees are necessarily paid any better but at least the decision-makers at the company have direct contact with those they employ. So an employee can go right to his boss if there is a concern about the health plan rather than send an email to HR headquartered in some other state. Also there is a benefit in that profits from the company are not dividends distributed internationally but are rather spent locally since that is where the owners live.

[verybadgnome]

One final point and that is when you invest in your community you build a local culture of people who want to interact and be involved you reap benefits that are hard to quantify. I have lived in DC suburbs where just the opposite is the case and a very sterile, homogenous environment develops. We do have big box stores in Austin but they are mostly in the suburbs meaning we have actual choice in the type of consumption we have available. Choice is good no?

[verybadgnome]

Third is ownership. The local owners not only keep a lot of their profits local but since they have a stake in their community they will be more benevolent and less indifferent towards it. Borders is owned by stockholders who couldn't give a damn about Austin and its quality of life even if they knew something about the city in the first place.

[verybadgnome]

First of all it is not a form of protectionism b/c no one is forced to buy local. Two if we compare Borders to Book People they are about equal in price so there is no "pocketed money" on the part of consumers. Third the vid wasn't clear but what it was trying to say there is no outside HQ for a local company. Borders will have professional marketers, HR people, accountants etc. in another location drawing money out of Austin while Book People will have those folks local.

[nikanj]

This is merely a form of protectionism. If everyone in the world recieves their services from those who can deliver it most efficiently then everbody wins.

[livingcommunities]

@nikanj it isn't protectionism. It would be protectionism if you have no choice but buy from a local shop...but you don't. If a community chooses to buy local then that's the free market telling you 'consumers' prefer local.

[nikanj]

@livingcommunities

You're right.

Even so, the cartoon was frustratingly shallow and does not tell the full story. What if all communities decided to operate completely independently? We would be far worse off.

Maybe I should reverse my argument and say that when the all economies decide to exclusively consume locally they acting somewhat irrationally (but not strictly irrationally).

It is a coordination game.

[livingcommunities]

@nikanj If all communities aimed for complete self-sufficiency they would fail, as we will fail if we choose to rely totally on corporations for our every need. The message I got from the video was that they were trying to rebalance the situation, especially the one that sees economic development practitioners offering incentives and subsidies for corporations and nothing for local businesses.

[DreamTerrorist]

Am I correct in understanding that the local Austin gov't was planning to subsidize Borders? We must fight this corporatism!

That being said, if Borders simply wished to open up shop without subsidy there is no reason to suggest that it would make the local economy poorer. If they offered cheaper products, residents would have the same book + more money on hand to invest in other producers in the town (the difference between bookland's and borders price for the same book).

[evangrogers]

If borders hires people for their book store in Austin... then accd'ing to this video, they are flown in from france and then every night they get flown back to france and every morning they are flown back to austin. This way their money can never actually be spent in Austin.

...ugh... If Borders can deliver the same product cheaper, then it's a better producer.

I agree that the government shouldn't be involved at all. So, it should give no benefits to anyone.