The return of local
Last week you may recall I mused about how we're in for some tectonic shifts before we discover what the new reality of American economic life is about. At the time, I didn't have any idea what those shifts might entail, but after pondering it for a week I think the phrase the return of local sums it up.
Many forces are at play which, I believe, will push the world economy--not just the U.S. economy--back towards a model that is more heavily dependent on local consumption of locally produced goods and services, away from the present model of ultra-distributed production and consumption. Let's look at a few:
Energy: Right now our world is largely run on fossil fuels. That's starting to change, but to a first approximation this is still true. Fossil fuel energy only works at massive scale, with wide distribution systems that can move that fuel from where it is dug up to where it is burned. You can't, as it were, do fossil fuels locally. I don't have a coal seam in my back yard.
I do, however, have a roof. And as pressure to go with green energy mounts, and as technology advances to catch up with the resulting demand, new forms of micro-generation are increasingly available. It's getting cheaper and cheaper to put solar or wind generation up on my roof. All the trends in energy point towards a future based on carbon-neutral energy and increasing requirements that the entire energy system--from individual buildings up to whole cities and regions--be efficient. And that means local.
Food: Walk into your supermarket today and you can probably find apples from New Zealand, mangoes from the Philippines, and strawberries from Mexico. Never mind that those things are either totally out of season for our region, or not endemic to the northwest at all. You can get cheese from France, lobster from Maine, and on and on. The world's menu can be had at the local Safeway.
But that comes at a cost: this is only possible because our food system is run on the back of a worldwide distribution system based on just-in-time inventory practices. It's hugely energy intensive, and exposes us to ridiculous dangers: Chinese melamine tainting, nationwide e-coli recalls, et cetera. On top of that, it's underwritten by the same economic forces that allow Wal*Mart to stock its shelves with cheap crap made overseas.
Take away the artificially low prices (which as last week's post discussed, will happen), and we won't be able to afford food from around the world. At least, not on a regular basis. As luxury items, French cheese and Italian balsamic vinegar will still be available, of course. It'll just cost a lot more. But, people still have to eat, so where's that food going to come from? Somewhere local. Expect a return to local farming and regional cuisine in the future.
Manufacturing: Again, Wal*Mart's low prices are purely a function of the weird global economic forces which have kept the dollar strong against foreign currencies for so long. Those same forces are what has caused companies to outsource manufacturing jobs overseas. It's exactly why China and India are full of low-wage factories that mass produce everything from socks to silverware.
That's all going to come to an end. But people still need socks, and they still need silverware. So if it's too expensive to get it from China, where's all that going to come from? Somewhere local. As the economics change, expect manufacturing jobs to return to the U.S. Locally produced goods for local consumption.
It's all about the local: Yesterday Governor Gregoire announced that she will be unveiling a jobs creation initiative of some kind next week. That's great. We certainly need it. I would encourage her to see the writing on the wall, and make policy decisions that support the inevitable return to a local economy. Decisions that make it easier for small businesses to compete locally, in the same markets as large national and international corporations.
Someday we will have a local economy again, one in which the majority of our consumable goods (food and energy) come from within our region, and where our household goods come from within our national borders. The more ephemeral something is, the more locally it will need to be produced.
People like Governor Gregoire are in a position to help that happen, through smart policy choices that bring us smoothly to that local future. I hope she has the wisdom to do it. The alternative is a jobs initiative that kicks the can down the road by applying short term band-aid solutions that do nothing but prop up existing systems that are now beginning to fail.
You can't fight the future, and the future is local.
Many forces are at play which, I believe, will push the world economy--not just the U.S. economy--back towards a model that is more heavily dependent on local consumption of locally produced goods and services, away from the present model of ultra-distributed production and consumption. Let's look at a few:
Energy: Right now our world is largely run on fossil fuels. That's starting to change, but to a first approximation this is still true. Fossil fuel energy only works at massive scale, with wide distribution systems that can move that fuel from where it is dug up to where it is burned. You can't, as it were, do fossil fuels locally. I don't have a coal seam in my back yard.
I do, however, have a roof. And as pressure to go with green energy mounts, and as technology advances to catch up with the resulting demand, new forms of micro-generation are increasingly available. It's getting cheaper and cheaper to put solar or wind generation up on my roof. All the trends in energy point towards a future based on carbon-neutral energy and increasing requirements that the entire energy system--from individual buildings up to whole cities and regions--be efficient. And that means local.
Food: Walk into your supermarket today and you can probably find apples from New Zealand, mangoes from the Philippines, and strawberries from Mexico. Never mind that those things are either totally out of season for our region, or not endemic to the northwest at all. You can get cheese from France, lobster from Maine, and on and on. The world's menu can be had at the local Safeway.
But that comes at a cost: this is only possible because our food system is run on the back of a worldwide distribution system based on just-in-time inventory practices. It's hugely energy intensive, and exposes us to ridiculous dangers: Chinese melamine tainting, nationwide e-coli recalls, et cetera. On top of that, it's underwritten by the same economic forces that allow Wal*Mart to stock its shelves with cheap crap made overseas.
Take away the artificially low prices (which as last week's post discussed, will happen), and we won't be able to afford food from around the world. At least, not on a regular basis. As luxury items, French cheese and Italian balsamic vinegar will still be available, of course. It'll just cost a lot more. But, people still have to eat, so where's that food going to come from? Somewhere local. Expect a return to local farming and regional cuisine in the future.
Manufacturing: Again, Wal*Mart's low prices are purely a function of the weird global economic forces which have kept the dollar strong against foreign currencies for so long. Those same forces are what has caused companies to outsource manufacturing jobs overseas. It's exactly why China and India are full of low-wage factories that mass produce everything from socks to silverware.
That's all going to come to an end. But people still need socks, and they still need silverware. So if it's too expensive to get it from China, where's all that going to come from? Somewhere local. As the economics change, expect manufacturing jobs to return to the U.S. Locally produced goods for local consumption.
It's all about the local: Yesterday Governor Gregoire announced that she will be unveiling a jobs creation initiative of some kind next week. That's great. We certainly need it. I would encourage her to see the writing on the wall, and make policy decisions that support the inevitable return to a local economy. Decisions that make it easier for small businesses to compete locally, in the same markets as large national and international corporations.
Someday we will have a local economy again, one in which the majority of our consumable goods (food and energy) come from within our region, and where our household goods come from within our national borders. The more ephemeral something is, the more locally it will need to be produced.
People like Governor Gregoire are in a position to help that happen, through smart policy choices that bring us smoothly to that local future. I hope she has the wisdom to do it. The alternative is a jobs initiative that kicks the can down the road by applying short term band-aid solutions that do nothing but prop up existing systems that are now beginning to fail.
You can't fight the future, and the future is local.
# Posted by Jason Black : 11:34 AM
Comments:
We need a State Bank of Washington, like the State Bank of North Dakota. The bank takes deposits of the state's funds (our money) and invests them in projects that will benefit the state. It functions as a commercial bank, making credit easier for local businesses. The lack of commercial credit is and will be the main thing holding us back for the next five years. Commercial banks have over-reacted and aren't extending or renewing lines of credit for even their good customers. Our recovery depends on jobs, and 70% of new jobs come from start-ups. We need to address the issues of entrepreneurship and credit expansion, and we need a state bank.
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