Going Local: Creating Self Reliant Communities Now
An Interview with Michael Shuman

Michael Shuman is the author of six books including Going Local: Creating Self Reliant Communities in a Global Age. He is also a frequent lecturer on the benefits of supporting locally-owned businesses. We spoke to him at the 2005 Bioneers conference in San Rafael, California. (See below for more information about Mr. Shuman).

Q: So Michael, what are you up to these days?
MS: Between now and the end of the year I have two big projects. One is finishing a new book called Small-Mart: How Local Business is Beating the Global Competition. The other is to finish the stock offering on my chicken company Bay Friendly Chicken. We’re nearing the end of a USDA grant. I want to have the stock offering ready for people to buy into by the end of December.

Q: So what is the new book going to be about?
MS: The book makes the case for local ownership and self reliance as critical parts of building a prosperous local economy. But the emphasis in this book is really on three things. One is trying to explain why LOIS (locally owned import substitution) is better than TINA (“There is no alternative,” a phrase coined by British Prime Minister Margaret Thatcher regarding free trade and globalization, the globally mobile companies). The second is to lay the case for why LOIS businesses are becoming more competitive. And third, there are several strategies that we review for transforming the community from TINA to LOIS. One strategy is the “local first” campaign; another is “global community capital.”

Q: You talk a lot about how buying local keeps money in the community. Are people receptive to these types of arguments?
MS: I think so. What has happened in the last few years is that finally LOIS advocates have done some good studies that have demonstrated that relative to TINA, a LOIS investment is going to get you that much more multiplier. So for example, there was an impressive study done by Civic Economics in Austin, Texas, which showed $100 spent at a Borders bookstore leaves $13 in the local economy, while $100 spent at one of the two local bookstores in Austin leaves $45 in the local economy. So roughly speaking, for every dollar you spend, you get three times as much from this multiplier if you spend it locally. Three times as many jobs, three times as much wealth, three times as many tax dollars.

Q: OK, but are statistics like these really going to influence where consumers shop?
MS: People are already preferring locally-owned goods and services. I guess more accurately, some people are neutral about whether a company is locally-owned or not. But a growing number of people are not. And that is why we are seeing a lot more banks, restaurants, and credit unions saying we are locally-owned. Because they know that once they hang their local flag, it’s going to attract people, and people will be willing to spend a little more money in order to get local services.

Q: Are there certain products which consumers should worry less about buying locally, for example some of the products that are mass-produced and might be cheaper at a chain store?
MS: The way I look at it, there are two kinds of analyses I would perform as I do my purchasing. The first rough rule of thumb is that local first demands that we create a kind of purchasing hierarchy in our heads. And that purchasing hierarchy says first and foremost that I don’t think we should buy anything that is unnecessary. Over-consumption has resource and environmental implications that the planet cannot afford. When I must buy an item or service, I look for three kinds of local characteristics: it will use local inputs, it will be produced locally, and you can buy it from a local retailer. And if you’re missing any one of those attributes, say an auto dealer who happens to be local, that’s probably the next best thing. Then I go down that list and look at regional relationships to a seller or producer to see if there’s still some multiplier impact. Then I would go to fair trade, and everything else falls in after that. That’s one way of looking at it. Another way of looking at a product is realizing that there are certain things we spend our money on in particularly large sums, and these are important things to localize. The most significant thing we all spend our money on is housing, so we should focus on taking out a mortgage from a local bank or renting from a local landlord.

Q: You’ve been doing some consulting work in Maine with communities trying to revitalize their economies. Can you talk about that?
MS: There are really two Maines. One Maine is Portland, which is really an extension of the Boston metro area. I have not worked in that part of the state. The other Maine is really the rest of the state, a vast land mass that is rooted in natural resource industries such as hydroelectric, timber, paper, and fishing. All of those industries have been in serious trouble over the last generation. The paper mills in particular have really been a problem because most are not locally-owned and so as the economics of the global paper industry shifted, they have seen it to their advantage to relocate their factories to low-cost countries. And so, one-by-one the big mills in Maine have been shut down. The rate of increased unemployment in Maine has been just about the highest of any state in the country and there has been a spectacular growth in poverty as a result.

The place where I’ve been working is called Milinocket, where a big paper mill shut down three years ago. The last 1,400 people there were thrown out of work. We did a variety of interventions to try to bring diversity back to that economy, some of which were short-term, some of which are still underway.

Q: You mentioned Bay Friendly Chicken, what are you trying to accomplish there?
MS: Bay Friendly Chicken is an effort to compete against Tyson and Perdue in the Washington-Baltimore regional market with a poultry product that is unlike Tyson and Perdue: antibiotic free and air-chilled. It turns out that most chickens are stuck into chlorinated water. When you buy a chicken and you see a cloth at the bottom with discoloration, that’s not blood, that is chlorinated water. We believe it is much more safe and contributes to the tastiness of the product if we chill the birds with cold air rather than chlorinated water. This is a process widely used in Europe and Canada, but there are only two companies doing it in the U.S. We will be employing the highest labor and environmental standards of any poultry company we’re aware of. And we also are going to make it a locally-owned company. We have a slogan: “chicken stock is good for you.” I’m thinking of getting a picture of my grandmother saying that. Our goal is to sell ten thousand shares of $100 stock in order to get the million dollars to capitalize this thing.

Q: You’ve talked about “local first” being a free-market system that provides maximum information to consumers. Can you explain what you mean by that?
MS: Local first ideally is a system that would provide consumers with information about all the places they can buy cost-effective goods and services. So for example, every year in Maine there is a survey of prescription drugs. And one would guess that the cheapest prescription drugs are sold at box stores like Wal-Mart, but that’s not true. The local drug stores turn out to be selling the cheapest drugs. And so a local first campaign ought to provide consumers with this information so they don’t mistakenly believe they’re getting the cheapest drugs at the box stores. The more goods and services you can provide that information on, the more probable it is that consumers will buy local.

Q: In many cases, government officials will talk about how they support small business in the abstract, but in practice, subsidies usually go towards attracting corporations. Is it possible to change that equation?
MS: There are one of two approaches that will work for getting rid of subsidies. Either a libertarian approach or a green approach. The libertarian approach would be, let’s get rid of all business incentives at all levels of government irrespective of the recipients. And I think there is emerging support for this concept. The latest estimate is that there are $58 billion of subsidies at the federal level. And we know that state and local governments are also spending about $50 billion on incentives each year. Just putting those numbers together you have $108 billion that is tilting the playing field against locally-owned business. Another way to proceed would be to tinker with the incentive system to make it more fair for local business. One way of doing that might be to have a bidding process. Before any subsidy is given to any business, you would have a cooling-off period where local businesses can step forward and see if they can beat the outside company, and the community can weigh what’s going to be the best option.

Michael Shuman, an attorney and economist, is Vice President for Enterprise Development for the Training & Development Corporation (TDC) of Bucksport, Maine. He has written The Washington Post, the Weekly Standard, Foreign Policy, Parade, New York Times, and The Nation. Shuman also has appeared on numerous television and radio shows, such as the Lehrer News Hour and NPR’s “Talk of the Nation.” He has given an average of a talk a week for 20 years. In recent years Shuman has been promoting the concepts in Going Local through a variety of projects, including: creating a small-business venture capital fund in New Mexico; launching a community-owned company in Salisbury (MD) called Bay Friendly Chicken; preparing a buy-local guide and coupon book for Annapolis (MD); developing a website (CommunityFood.com) to support marketing by family farmers; and building the Business Alliance for Local Living Economies (BALLE) [see the film “Independent America” which we are screening on January 28th].