An Emerging Local Economy – what does that mean for cities like Detroit?

Our recent Triple Bottom Line (3BL) Forum, titled “The Power to Change Things,” highlighted many avenues our community can pursue to change the very nature of the businesses we own, work for, and aspire to be. One such theme that arose from several presentations discussed the rise of the emerging local economy here in the Detroit metro region.

In earlier articles, we discussed the concept of Localism and the notion of “human scale” economics. Michael H. Shuman, economist, attorney, entrepreneur, and author has become a leader of the local economy movement. He boils the discussion of local economy down to a simple notion, “relationship-driven economy as opposed to an anonymous-driven economy.” In other words, in the spirit of 3BL principles, a local economy cares about the social and environmental impact as well as the economic bottom line. Where we shop, who we support, and how, matters.

Shuman has written several books on the subject, including Going Local (2000), in which he explains what it means to embrace the concept of a local economy, “nurturing locally owned businesses which use local resources sustainably, employ local workers at decent wages and serve primarily local consumers. [Going Local] means becoming more self-sufficient and less dependent on imports. Control moves from the boardrooms of distant corporations and back into the community where it belongs.”

This idea sounds simple enough, but within cities like Detroit, there are challenges from the big box stores with lower prices and the convenience of online retailers. However, some of the key benefits of supporting local independent businesses include:

  • Job creation – independent local businesses employ more people per dollar in revenue.
  • Keeping money in the community – the tax you pay at a local business goes into the community to fund public services.
  • Community character – local independent businesses give each neighborhood a unique feel, many feature local artisans and other local goods, and some are generational businesses that have witnessed the growth of the area.
  • Reduce environmental impact – for one, buying locally grown or produced goods reduces the distance traveled to consumers, causing less traffic and air pollution.

As consumers, the movement toward a strong, local economy may be easy to conceive initially, especially as we consider where we purchase our goods and services. However, Shuman argues that the conversation has to go much further than this. Think about our homes, for example. Where does that rent payment go to? Is the mortgage holder an international bank or a local credit union? According to Shuman, by reinvesting this money in our community, first through buying locally than by saving locally, we would be able to address more social and environmental challenges in our community.

There has been a lot of change in Detroit over the last decade, yet this change has been largely concentrated in the Downtown and Midtown districts. While real estate investment in these districts has been significant and tends to garner quite a bit of attention, the effect has benefited a relatively narrow and affluent band of the population.

In a recent article by Laura Reese and Gary Sands, the authors point to something that has often been a critique of the redevelopment efforts in Detroit, “Invest in people, not just buildings.” Reese and Sands make it clear that for the revitalization of Detroit to be resilient, we need investment in “human capital,” which means local businesses that employ residents of the city. We have a way to go, but starting with people – independent business owners, artisans, producers, vendors, consumers – the relationships that Shuman speaks of, is a way for us to support our community and our local economy.

Stay tuned for future articles exploring leaders and businesses in our region that are growing our local economy. To learn more and network with local independent businesses, come to one of SMSBF’s upcoming events.

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