The community’s cumulative wealth is like the water in a bucket. If you put more in than you take out, the bucket eventually overflows. Overflow = wealth. If you take out more than you put in, the bucket is soon empty. Empty = poor. Of course, you have upward & downward trends to those extremes, depending on the amount put in and taken out.
Keeping with this bucket analogy, if a community continuously buys products and services from outside the community, you have a drain to this figurative wealth bucket. So, despite people bringing in money from outside the community through employment, business transactions, or government payments, if the drain is larger than the intake, the bucket’s level declines and eventually is empty.
That is a dire situation, which needs resolving, so the trend can change. Every time a new, out-of-area owned franchise or business comes into a community, it drains money out. Large retailers, such as Wal-Mart, drain money out. Internet retailers drain money out. People travelling & spending in other communities drains money out. Each drain money on different levels, while some outside ownership even inflows some investment dollars in the beginning.
(However, in most cases, they have preferred vendors, supplies, and contractors that supply the bulk of what is needed. For example, when Wal-Mart builds a new store, it doesn’t hire the locals to put it up, but has a crew come in that it's typically worked with before.)
This is not to say there needs to be a total stoppage of outflows. In fact, some outside spending is necessary. Taxes must be paid, which sends money outside the community. Certain services and products are unattainable in areas. And I’m sure there are other examples. That’s okay, though, because some of this can be done and have the bucket’s level still rising. It’s having too large or too many drains that assures poverty in the community.
Focus should be placed on the trend and where it’s taking us.
So, where is Greene County with its wealth bucket, and what’s the trend of the level in the bucket?
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You suggest that Wal-mart and franchises drain money out of the community, but is that really the case? Doesn't Wal-Mart (like SAIC and other publicly owned or outside the county owned buisnesses) provide jobs, which can equate to wealth creation? Also, although they do need to pay a franchise fee, most franchises are locally owned -- which means the wealth builds here in part.
ReplyDeleteThat said, I do agree that when at all possible, we should buy locally to keep the money in the community. I also think the key is helping locally businesses learn how to best compete in the current economic climate.
Franchises and other businesses such as Walmart do not necessarily always contribute to the money drain within a county. They do add jobs, which add to the wealth of local residents. Many franchises are also locally owned. Walmart usually gets a bad rap, but what is the difference between the impact on jobs/wealth for Walmart versus other 'more accepted' publicly held companies in the area like SAIC? Are the businesses coming into the Westgate Tech Park locally owned? My guess is mostly not, but they still will contribute to the wealth of our community.
ReplyDeleteThat said, I do completely agree with the notion that we should try to buy locally within the county if at all possible. However, if any business wants to succeed (whether inside or outside the county), they need to learn how to adapt to the changes in the environment and competitive landscape in order to maintain their competitiveness. Perhaps that should be one of the roles of the local economic development organizations -- helping local firms keep up with the changing environment.
Good point, Stephanie. Thanks for the comment.
ReplyDeleteJobs are very important; however, if the business was locally owned, it would be even better. Jasper, Indiana was a great example of the community taking care of their own for years, but even they have allowed Wal-Mart & Home Depot into the community in recent years.
Now, local businesses will need to learn to concede a certain amount of business to them, while learning to capitalize on the traffic flow they create.
I would argue about putting SAIC & Wal-Mart in the same category. Wal-Mart purposely keeps their associates in part-time status and reportedly makes it tough on employees, who have stayed too long and are making too much. They also play with people's schedules like I've never seen a company do.