Don't cry too hard, kids. There are still plenty of places in the Sioux Empire where you can buy cheap plastic junk with lead paint from China. And more importantly, we don't have to look at this cancellation as a door closing on one big business. Instead, it could be a door opening for a dozen small businesses, local entrepreneurs, to step up and give their dreams a go. Kelly Edmiston, senior economist at the Federal Reserve Bank of Kansas City tells us that big firms may not be as good for the local economy as small firms:
Recent studies show the location of a new large firm can hinder the growth of existing enterprises or discourage others from locating there, especially if the large firm is given tax incentives and those costs are passed on to the public.
For example, the location of a new plant with 1,000 workers adds a net of only 285 workers, on average, during a five-year period. The other 715 jobs offset those not generated or retained by other firms as they would have been if the plant had not located there, according to Edmiston's research. Another study suggests the net employment impact of large firms may actually be close to zero.
"Locating a large firm isn't bad for a community," Edmiston says, "it just may not be as beneficial in terms of employment as the community thought. Communities generally don't get what they pay for when they lure a large company" [Brye Steeves, senior writer, "Homemade: Economic Development Efforts Focus on Locals" (PDF alert!), TEN (publication of the Federal Reserve Bank of Kansas City), Fall 2007].
Small firms, local businesses, economic independence -- one less Wal-Mart sounds like one more step toward a really free market of our own making.
Some body of retail outlets which really only move money from Peter to Paul's pocket with a healthy chunk removed with each transaction. Such retailers bring people to an area or make it possible for them to get food, etc.
ReplyDeleteBut, at some point there is an overload of retailers which really end up siphoning money out to Chicago, New York, Omaha, or Arkansas or China.
My guess is that anything that converts low-priced commodities into high-value products and thus brings more money into a community than it exports becomes very important...much more important than adding another large retailer.
While I am beating what is probably a dead horse..or maybe even just a dead fly.. it seems to me that building entertainment facilities to bring in celebrity performers who are there a few hours and in the process suck out large amounts of local money is not the way to build local economies.
They seem to be money sinks rather than money generators.