Reviving local economy? Don’t wait on the Chamber of Commerce

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Apples get a taste test at the farm of Bill Ensinger of Dayton, Tenn., as he lives out the local economy ideal. See our earlier story about the Ensingers.

“The best investment on earth is earth.”

— Louis Glickman, 1957

By Franklin Sanders

Lots of folks write about the need to revive local economies, but not many actually do it. To do it, you need to have some idea what you need to do. Not long ago a friend of mine called. He had somehow landed with the Chamber of Commerce in a sparsely populated county near us. Like most rural counties in the U.S., his local economy has been sucked dry; it’s dying. My friend said, “Put your money where your mouth is. We’re not talking generalities any more: what can we do to revive our local economy?”

Generalities anyway

But why revive local economies anyway? Isn’t the national — now global — economy doing just fine?

No. Here’s a little story that explains (if you need an explanation while watching the economic crisis du jour, raging inflation, environmental degradation, debt slavery, the exportation of American industry and agriculture, with widespread bankruptcies and falling living standards.)

In 1917 Ford Motor Co. introduced the Fordson tractor. At that time America (and the world) was made up of multitudes of self-sufficient farms feeding local economies.

Money passed from hand to hand in the local economy, farmer to craftsman to merchant and back to farmer. Motive power — mules and horses — were raised free on the farm. Fuel was grown at home, too. Very little money was spent off the farm since most everything was raised there, and the self-sufficient farmer needed little money.

The Fordson tractor, of course, could do more work than several teams of horses. It never tired, never needed to rest. Farmers bought tractors, and money left the local economy for Detroit, but the drain only began there. Fuel for tractors doesn’t grow on farms, so more money for fuel drained away to New York. Also, Mama and daughters wanted all the things they could buy in town now.

To earn more money, farmers planted more, fencerow to fencerow. Sometimes they even pulled up the fencerows and planted them, too. As long as World War I raged, commodities commanded high prices. When the war ended, demand disappeared and commodity prices plunged. Farmers responded by — increasing production. The bottom fell out of commodities, and farmers and the Americian economy have been trying to recover ever since.

To drain even more money out of local economies, the last 40 years has seen the rise of chain stores and franchises like Wal-Mart, Home Depot, McDonald’s and a hundred others. These all act as giant vacuum cleaners to suck money out of circulation in the local economy.

So in the abstract, reviving the local economy depends on one thing alone: more money. Here’s where the trouble starts, because it makes all the difference in the world whether the money comes from outside or inside the economy.

The Chamber of Commerce model

Around the country, the model followed by Chambers of Commerce and government development agencies is bring money from the outside. That always boils down to two things: bring in industry (“jobs”) or tourism. Outside money.

But humanitarians and philanthropists do not run industry. Rather, they follow the money. If the local economy is willing to give them money — in tax rebates and low wages — they’ll come in. And as soon as they can find somebody in Mexico or Sri Lanka who will work for a dime an hour, they’ll leave. Over the long term, the result is an unstable and unpredictable foundation for the local economy.

Chambers of Commerce recommend another magnet for outside money: tourism. This is where we try to get rich foreigners (anybody who lives more than 60 miles away) to come down here and buy chenille bedspreads from us (that we buy in China) and stay in our motels. Tourism generates loads of elevating jobs like changing bedsheets and bussing tables.

For the local economy, the most completely destructive and idiotic form of tourism is the casino. Ask anybody around Biloxi, Miss. The locals were promised that the casinos would attract armies of new tourists and huge new business for local motels and restaurants, not to mention jobs working in the casinos. In the event, the casinos undercut the prices of local restaurants and motels and brought in their own managers and dealers from New Jersey, leaving loads of sheet-changing and bussing jobs for the locals, once their own restaurants and motels had gone bankrupt. These great benefits are piled on top of the vast sucking sound that accompanies all the money in the community pulled out of the pockets of poor and rich alike.

About the invading Romans the Caledonian chief Calgacus said, “They make a desert, and call it peace.” Of the government and chamber of commerce model, we have to say, “They make a desert, and call it prosperity.”

So much for bringing in money from the outside.

Money from within

It never seems to occur to these thinkers to bring up money from the inside. Why, there’s no oney there to begin with, they would respond, oblivious to the truth: the wealth of the world comes from the things take out of the ground.

If your county had a gold or silver or phosphorus mine, everybody would grasp that there’s something in the ground you can dig out, and sell to the outside to bring money inside the county. What everyone misses, however, is the hidden gold mine they are all sitting on: agriculture.

As Charlie Walters said in his book Unforgiven, agriculture is the only human occupation where men get something for nothing. (See the December 2007 Moneychanger interview with Charlie Walters for a fuller explanation.) We throw a few seeds out into the field, and God sends water and sunlight to increase it sixty- or a hundredfold. We buy a sow and a boar and presto! for free, we get a dozen piglets. Or calves. Or lambs. Best of all, the people we sell our produce to will use it up so totally that they will have to buy more, and that right soon.

And every dollar of value created on farms, by processing and distribution and re-manufacture, become over six dollars of national income. So (as Charlie observed) if you want to know what’s wrong with the national (and global) economy, look at farms in the local economy. If they’re not prospering, nobody is.

There you have it. A vast, overlooked source of money for the local economy exists, one that comes from the inside, can never be re-located to Sri Lanka, and doesn’t need gamblers or tasteless tourists in shorts and black socks.

But wait

Sceptics might ask, “Well, if agriculture is such a great source of wealth inside the local economy, how come it isn’t working today? How come government has to pay farmers billions in subsidies?” The answer is, because a debt-driven, high-input, chemical form of farming has — by resolute government policy, action, and teaching — displaced responsible, sustainable, and profitable farming.

But all that is changing. If the rising price of fuel and fertilizer weren’t pushing modern chemical agriculture toward the abyss, the inevitabilities of age would. Average farmer age has topped 58, because sons and daughters won’t taking over. Age and rising costs are hitting at the same time a widespread revulsion against the produce of chemical farming is taking root in consumers. The whole food or clean food movement wants food that chemical farmers cannot produce: humanely raised, grass-fed, and grown without herbicides or pesticides or genetically modified organisms (GMO).

The whole food movement is exploding, and can only grow faster. People are discovering that many of their illnesses — allergies, diabetes, high-blood pressure, relentless weight gain — are caused by the chemically grown and processed food they eat. Once a young mother has fed her asthmatic or allergic child raw milk for a couple of months and seen symptoms disappear, she’s going to get that raw milk, come hell or high water. And like all whole food consumers, she will pay whatever she must to get the product, which guarantees good prices for the producer. Whole food eaters want food raised without chemicals, naturally, and locally, and they will pay the higher prices for it. More, they want to look in the eye the farmer who raises their vegetables, milk, and meat.

Within 25 years, the higher costs and dangers of chemical farming along with the lower costs and greater benefits of biological farming will make today’s chemical farming only a bad dream of the past.

So what?

How does all this help local economies? Simply this: demand for wholesome, profitable, locally grown produce offers local rural economies a chance to thrive and grow, supplying whole food consumers.

Initially, it will be hard to convince local consumers to pay prices higher than what they’re use to at Wal-Mart, even when it guarantees their neighbour’s success. But by opening and encouraging local farmers’ markets, farmers will reap for themselves the vertical profits that now go to processors and distributors, and local people will learn to do business with one another again.

In the next step, rural economies need to develop a consumer base inside urban markets, because those markets are loaded with consumers willing and able to pay. More than that, in an age when high oil prices will forbid shipping milk or tomatoes 1,500 miles to markets, those urban economies need local help, too.

In the June 2008 Chronicles article about food and national security (p. 16), Katherine Dalton studied Louisville, Ky. Looking at the productions statistics for the 12 surrounding counties, it’s hard not to conclude that Louisville lives on the edge of starvation.

Those 13 counties need to feed about 1.2 million people. But they raise only enough beef to feed 26% of the population; chickens to feed 35%; pork for 14%, eggs for 3%, wheat for 30%, and milk, butter, and cheese for only 15%. Those figures, which I suspect fairly accurately reflect most cities, plainly demonstrate how much cities depend on far-distant producers to survive. In the age of $130 a barrel oil, that can’t continue. No doubt about it, cities need rural local economies for food as badly as local economies need them for customers.

Other aids to local economy

Another tool for local economies is producing something unique. One of the most noticeable and most attractive facets of western North Carolina is the high level of craftsmanship visible everywhere. Hardly a garden or building doesn’t show the art of masons and carpenters. When an area pleases eyes that much, folks want to live there.

Likewise people want to be where something unique is going on. If they want to encourage tourism, local economies ought to encourage craftsmen and artists to move in. Yes, I fear that in utterly Philistine America, mentioning “art” is asking for a Thomas-Kinkade-Painter-of-LightTM franchise outlet in every hamlet, but let the weeds flourish with the grass. Painters, writers, potters, sculptors, musicians, and craftsmen of every sort — a locality encourages them by supporting them. In turn, they enrich local life while their uniqueness attracts visitors (with money) from outside.

Proof it works

Don’t bother telling me all this won’t work to revive local economies. It already is working from Vermont to Virginia to Oregon. Susan and I flew out to Seattle in May, and drove down to Portland, through the Willamette Valley, then over to the coast and back.

Oregon and Washington are loaded with wineries and dairies and cheese makers and local farms producing exceptional goods for a well-developed and sophisticated market. I concede that it takes years to develop a producer and consumer base like that, but everybody starts somewhere.

Or, we could all do nothing and wait to dry up and blow away.

Mr. Sanders published this essay in 2008 in The Moncychanger. Used by permission. Franklin Sanders is publisher of The Moneychanger, a privately circulated monthly newsletter that focus on gold and silver and the application of Christianity to economics, culture and family life. We have subscribed to this newsletter for more than 20 years, and consider it a must read. Franklin is an active trader in gold and silver (he’ll swap your green Federal Reserve rectangles and give you real money in return). He trades with savers and investors outside Tennessee. Subscribe to his daily price report and market commentary on the website.