Nothing says “holidays” quite like revisiting the Goldschmidt Hypothesis at this time of year. At least that’s how you might see things unfolding this shopping season if you were a rural sociologist or economic anthropologist.
Harry Truman once said, “The only thing new in this world is the history that you don’t know.” And so it is with the current push to “shop local” that has been embraced by small retailers, the Occupy movement and progressive communities from Maine to California, including Boulder. But what is often missing from the discussion about how we spend our money is the history and research that supports the position that keeping dollars local is not only a good idea but may, in fact, be the largest single contributor to our quality of life. Enter Walter Goldschmidt.
The year was 1947, and anthropologist Walter Goldschmidt had just published his landmark research on the impacts of consolidation in his aptly titled paper “As You Sow.” The publication had been delayed for several years by the influence of the powerful companies whose actions Goldschmidt had documented critically. While the anthropologist’s findings were damning of the direction America was headed in the ’40s, they also offered a blueprint for a better way, a blueprint for keeping it small and local. Goldschmidt’s research told a tale of two cities.
Here’s the short version. For most of a century, there wasn’t much difference between the California communities of Dinuba and Arvin. The towns were similar in size, population, age, etc. But over time, agricultural consolidation began to impact Arvin, and not Dinuba. A few large industrial farms consumed all of the land around Arvin, whereas Dinuba held on to its many small family farms.
Goldschmidt found that this difference in agricultural structure expressed itself in startling ways, as the small farmers continued to plow their money back into the local Dinuba economy, as opposed to the fewer industrialized farmers of Arvin who either banked their profits or shipped them to a home office elsewhere.
As a result, Dinuba supported no fewer than twice as many businesses as the corporate-farming Arvin. Not only did Dinuba have twice the businesses, it had a 61 percent greater retail volume. Arvin residents were found to have an overall lower standard of living despite their commitment to technological advancements in agriculture. And the differences didn’t stop there.
Dinuba residents enjoyed more civic organizations, newspapers, recreation centers, parks, schools and churches. Even the style of government in the two towns evolved differently. Small-farming Dinuba commonly made town decisions through popular vote.
Arvin, on the other hand, had most of its decisions dictated to its residents by county and city officials. Arvin became a town of haves and have-nots with a nearly nonexistent middle class, whereas Dinuba maintained economic and social homogeneity throughout its entire population.
Goldschmidt’s revelations on the power of keeping things small and local should have made him the father of the shop local movement and a hero to Occupy Wall Street. But alas, he seems to have been so far ahead of his time that he was forgotten even before he was discovered. The anthropologist died in 2010 at the age of 97.
Goldschmidt’s research lives on in the work of his peers who have applied it to the community impacts of large box stores such as Walmart and Target, as well as to measuring what happens to towns when large corporations purchase water rights from small farmers. There are dozens of studies being conducted in cities and towns across America on the impact of shopping local, and all have confirmed at least the concepts of Goldschmidt to one degree or another.
So remember Walter Goldschmidt the next time you read something like this quote from the Occupy Denver website: “We are in the midst of this financial crisis largely because everything in our homes is currently manufactured overseas. This shift in manufacturing has deteriorated the United States labor market and eliminated our foothold as the most dominant economy in the world.”
Keep it small and local. Our future and quality of life depend on it.
Research that supports shopping locally
The following are findings from across the United States that examined the impact of spending money locally. This information was provided by “Buy Local Berkeley.” Links to the various studies can be found at www.buylocalberkeley.com/node/36#industry.
1. San Francisco: The San Francisco Retail Diversity Study, May 2007.
This study found that a slight shift in San Francisco consumer purchasing behavior — diverting just 10 percent of purchases from national chain stores to locally owned businesses — would, each year, create 1,300 new jobs and yield nearly $200 million in incremental economic activity. The reverse is also true — a 10 percent shift away from local merchants would have a negative impact of equal but opposite magnitude.
2. Austin: Economic Impact Analysis: Local merchants versus chain retailers, December 2002.
The key finding was that for every $100 in consumer spending at a national chain bookstore in Austin, Texas, the local economic impact was $13. The same amount spent at locally based bookstores yielded $45, or more than three times the local economic impact.
3. Chicago: Andersonville study of retail economics, October 2004.
This study found that every $100 spent with a local firm left $68 in the Chicago economy; $100 spent at a chain store left $43 in Chicago. For every square foot occupied by a local firm, the local economic impact was $179, versus $105 for a chain store.
4. Santa Fe: Santa Fe Independent Business Report, November 2003.
Research found that small businesses accounted for 90 percent of all businesses in Santa Fe and employed 30 percent of all private sector workers. Dollars spent at independent businesses delivered twice the economic impact of those spent at national chains. However, national chains in Santa Fe were growing 2.5 times faster than independents and bringing new competition and pressure to the small business community.
5. Midcoast Maine: The Economic Impact of Locally Owned Businesses vs. Chains, September 2003.
This study found that locally owned businesses spent 44.6 percent of their revenue within the surrounding two counties, and another 8.7 percent elsewhere in Maine, largely on wages and benefits paid to local employees, goods and services purchased from other local businesses, profits that accrued to local owners, and taxes paid to local and state government. Big-box retailers returned an estimated 14.1 percent of their revenue to the local economy, mostly as payroll. The rest left the state, flowing to out-of-state suppliers and back to corporate headquarters.