John Brown on buying local in Worcester

posted by Mike on July 8th, 2009

John Brown is Professor of Economics at Clark University in Worcester, Massachusetts.

He was good enough to answer some of my questions for a recent article on “living locally.” I only quoted his answers briefly, and since I’ve been fretting about misrepresenting his views, I’m publishing his e-mailed answers here verbatim. I also conducted two phone interviews with him for the piece, which clarified some of what is written here.

Is there any reason for a consumer to, in general, patronize locally-owned businesses rather than chains?

I would say it is up to the consumer. Many locally-run retail operations would more likely offer more variety to match local tastes (for example, Golemo sausage or Ha Tien Asian food market on Main Street). They may also offer convenience to someone in Worcester, particularly if chains are found outside of the city (in shopping malls in Auburn or off of 146) and transportation is an issue. They may also have longer-term relationships with consumers. These are really demand-side considerations (what does the consumer want?). The other consideration is that there is pretty strong evidence a really big chain store such as Walmart actually forces down prices at neighboring stores by one or two percent, which actually benefits large numbers of consumers.

From the supply side (the side of the retailers), we can think of the idea of value-added. Wages are probably the same at local versus chain stores, except where they are reflecting the special skills of local stores. Again, Golemo Sausage may pay their workers a bit more because they can speak Polish (and communicate with some customers) and they may know the product better than someone hired randomly from the street. The other piece of value-added is profits. If a locally-owned businessperson actually lives in Worcester, than that may be some marginal increase in Worcester incomes. If he or she lives in Auburn or Paxton or Shrewsbury, the impact is not there.

Advocates of locally-owned stores argue that these businesses have more positive economic and environmental impact than chain stores. What do you think?

I think for the most part that is special-pleading by local store owners. In economies where local store owners have been successful at blocking the entrance of (larger) stores such as Italy or Japan, prices can be pushed up to higher levels. I do think that there is scope for helping to train local businesspeople or provide support services to make local shopping districts more attractive. But if it is a Borders versus a local bookseller in downtown Worcester is much less important than if there is a bookseller at all.

With the global economic crisis, there have been renewed calls for communities to become a little more self-reliant in regards to basics like food and energy. Even though this may be less efficient, the line of reasoning goes, it produces a more resilient, less brittle system. Do you agree with these sorts of arguments?

This really does not make sense to me in terms of making a more resilient economic system (less subject to swings in the business cycle). Worcester is such an open economy (it trades so much), that treating it like an island would I think make things worse. Imagine trying to depend upon Worcester county for more food during the rainiest June in years! If consumers want more variety from local producers (fresh strawberries compared to the California kinds), that is great. There are also very good reasons for consumers to in general reduce energy consumption, particularly because of global warming. But whether it is oil produced in Massachusetts or Alaska does not really matter.

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