Punchinello’s Chronicles

October 4, 2008

The Coming “Buy Local” Revolution

For the past 30 years, outside the United States, the developing economies of the world have been planned around exports. Increasing exports to other countries brings in a great deal of money, produces jobs, and keeps a trade surplus on the books. These can be called export-led economies. With China’s entry into the global markets, also with an export-led strategy, we have a big problem. Who is buying all those exports?

A friend of mine makes crafts with various fabrics. Over the course of the past few years, she’s noticed a decreasing level of quality in those bolts of fabric. Starting out in Wal-Mart, that came to an end with Wal-Mart’s decision to exit the fabric business. Moving to Joann fabric, the same poor quality caused problems.

All I want is to walk into a store, buy what I need and to know that it’s going to work. I’m tired of getting cheap crap that falls apart, isn’t built right, and has so many damn problems and flaws I may as well just throw it right in the garbage.” — a typical American consumer

Now imagine an area of the country where there’s a well-populated urban city surrounded by farms and a few small towns. At first, many people leave the farms and towns to move into the city. Jobs pay more, there’s more action, lots to do, and an argument could be made for more convenience.

These people used to plow fields, fix tractors, work on cars, make furniture, cook food, sew clothes, and do all sorts of self-sufficient work. They made little money, but built and created many items. Now they can work a regular job, get a salary, and buy the things that used to be such a pain to make.

After a time, the people moving into the city slow down, leaving behind the people who really want to stay in the surrounding farms and towns. Gradually, companies and businesses in the city find they can get cheaper labor if they outsource the simple work to the folks out on the farms. The farmers decide to grow less crops in favor of getting easy money putting together kits and sending them back to the city.

What would happen if those people begin to develop an economy where all they do is sell to the city folks, and don’t really build much for themselves anymore?

When a country only sells products it assembles, or sells inexpensive resources (wood, coal, minerals), they’re dominated by exports. As money comes in from those sales, the people in the country can either save it and use it to put together railroads, highways, factories, communications systems, schools, and whatnot. Or, they can just buy what they want from other countries.

All this worked fairly well when it was mostly small countries that exported cheap labor and imported classy goods. Then China came on the market. With a billion people, they could undercut the labor prices, and it looked as if they had a huge population just waiting to buy McDonald’s hamburgers and Levi blue jeans.

The other countries are still trying to stay on track with exports, but who’s going to buy all those exports? At what point does the American market for cheap goods run out? What happens when an increasing number of people like my friend begin to get totally and completely fed up with crap?

It’s already starting. The world economy has for a long time been growing on the basis of multinational corporations and large-scale enterprise systems. That’s led to a cynicism about job security, outsourcing more and more of the basic necessities, and a huge trade imbalance.

And then along came the cottage industry, the world of microbusiness startups and entrepreneurs. These are businesses that often grow to be small businesses, and are now producing half of the gross domestic product of the US! They’re run by individuals, focused on the match between that business owner’s sense of quality and justice, and connecting via customer service and social networks.

It’s just starting, but the growing movement toward directories of these local and microbusinesses is introducing an new form of competition. Online retailing (e-commerce and the Internet) provides a distribution channel to anywhere in the civilized world. But although many of these small businesses do sell internationally, there’s a growing sense of community.

“Buy local” is starting to become a rallying call, quiet, to be sure, but not just a fad. People in America are fed up with no customer service, shoddy products, unsafe products, and the ever-present threat of being sidelined by their corporate employers. More people are leaving the “fast track” and starting their own business.

Owning your own business is very hard, takes a lot of time and energy, and often fails to provide more than a basic living. However; aside from the personal satisfaction, owning your own business protects you from the seemingly random decisions to lay off employees, close out jobs, and send everything overseas.

Two things descend from the Baby Boom generation. The one is a fundamental value toward personal satisfaction rather than social obligation. The other is a childhood founded on security. Economic security is always the leading driver in a society, but for the Baby Boomers that security is even more powerful.

Taken together, it’s driving the voluntary exit from the corporate ladder and fueling the cottage industry. With the growing volatility of the financial markets and social programs bankrupting the rest of the economy, the following generations are seeing that lifetime employment until retirement doesn’t exist anymore.

Younger generations are looking for the American Dream, seeing that self-employment and small business is a viable way to go. All that’s needed is a social consciousness, where supporting John and Mary down the block is better than buying cheap crap from somewhere in China.

What happens when Americans not only can’t afford to buy the volume of imports flooding the market anymore, but also decides they don’t even like the quality of those imports? What happens to countries who’ve spent no effort to build their own internal economies? Who will buy crap when Americans no longer need or want that crap?



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