Going Local: Just Makes Sense

After being in Oberlin for a full school year now, I’ve been fascinated by the local businesses and restaurants in town. All offer many goods and services at reasonable prices and still do very well, despite a Wal-Mart and several fast food restaurants located less than two miles away from downtown Oberlin. Sometimes, however, I wonder why I don’t just go down to Wal-Mart for convenience or their “low low prices.” And now, after listening to Michael Shuman’s passionate elegy for local investment, I no longer have that question to answer. And if I were a business owner, I’d listen up too. On April 10th, Michael Shuman, economist and prize-winning author, spoke at Oberlin College with the purpose of debunking myths about investing in your local community and promoting ways that Oberlin can get in on the action of supporting local business.

These myths actually seem credible at first glance. For example, one popular myth is that local businesses are not as profitable as their larger counterparts. As Shuman stated, “If it were true that local, small businesses were less competitive. . .then we would have seen a dramatic drop in the small business economy.” In fact, there has been no drop in the economy of home-based and local business compared to larger corporations. As Peter Buffett writes in the introduction to Shuman’s latest book, locally owned businesses have “maintained their share of the US GDP since 1990”. Another myth is that local businesses lack a competitive edge, which, again, is false. This can easily be seen with a concern for everyone: oil prices. Rising oil prices means that local production of oil for consumption in the immediate area will become more competitive as foreign imports become more expensive. Shuman argues similar consequences with durable products as well. And one just has to walk down Main Street of Oberlin to see local competitiveness in action.

Now, if these supposed cons are actually wrong, what are the pros of such an investment in local business? The first is more money in the community. An example of that was illustrated by comparing a local bookstore in Texas to Borders, a national chain bookstore. Shuman showed that in spending $100 at both of these establishments, the local bookstore would return $30 more dollars than Borders to the local community. Secondly, we would see an explosion of jobs in the community. Lorain County currently has approximately 13,800 people who are unemployed. Smart local economic growth through using leakage analysis, forming purchasing co-ops, eliminating policymaking with big business biases, and connecting people with local investment opportunities has the potential to create four times this number of new jobs.

So, now that those myths have been erased and you can see the possible benefits, you’re probably wondering (whether as a consumer or business owner) how you start the local investing process? Shuman said, “I would say that as I talk to communities around the country. . .the biggest issue that comes up again and again is the capital issue. The money issue.” As an illustration, let me ask you a question he asked the audience. Do you use a local bank for your day-to-day banking needs such as checking and/or savings? The answer is probably yes. Now, do you place long-term investments into local businesses or the local economy? If you were like the audience, the answer is probably no. Shuman states that where our capital goes is what really matters and the shift from Wall St. to Main St. must begin now. If just half of the money from Wall St. went to local business and the local economy, that would be a $15 trillion dollar shift. That’s $50,000 per capita! Just imagine, even if just a small percentage of this shift was made, the consequences not just for Oberlin, or even Lorain County, but for the entire state of Ohio!

But what about those pesky security laws? How can I, as a business owner, accept or, as a consumer, invest locally without violating these laws? Shuman gives a handful of ways that we can still go through with these investments. This can be accomplished through sponsorships (through sites like www.kickstarter.com or www.indiegogo.com) or interest-free lending (with programs similar to www.kiva.org), both of which are not considered securities. For businesses, pre-selling is a viable option where large quantities are sold upfront (like in an example from Shuman, a café in California pre-selling $1,200 worth of “future” coffee for $1,000). Local currencies, much like Oberlin College’s “ObieDollars” are also excellent ways of stimulating local businesses and earning rewards.

And these are just a few of many ways that we can begin local investing. Other intriguing options include working with local banks to issue specialty certificates of deposit that fund local ventures, creating a local stock market, and taking advantage of the newly signed JOBS act which pushes back some security laws. As Shuman said, “the treasure is in our backyards.” This is not a discussion that will die down, as could be seen by the full room in attendance at the talk. The only question remaining isn’t “Are we going to start investing locally?” The real question is “What are you going to do to start putting money into our local economy?”

Want more information or still want to get a better grasp of local spending? Check out Michael Shuman’s book Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity for sale at your local bookstore. Or watch his talk online!

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My name is Gabriel Moore and I'm a first-year from South Carolina, hoping to become a double major in Biology and Musical Studies (Trombone performance). I have loved the Oberlin campus and people ever since being a Prospie and it's great to be able to be here in this nice, small town. I'm very excited to be able to work with the Oberlin Project as a Bonner Scholar. I believe this is an excellent organization and love being able to help with the changes and progress that we're planning to make. On the side, I am pretty involved with the Oberlin Christian Fellowship, enjoy jamming out on various instruments, going on walks and runs, and just enjoying the company of others.

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Gabriel Moore
My name is Gabriel Moore and I'm a first-year from South Carolina, hoping to bec
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