Caveat Emptor

A couple weeks before Christmas I participated in a panel discussion for Leadership Southern Indiana on local government. The organization seeks to foster leadership among its class members drawn from Clark and Floyd Counties, so Brad Striegel and I were the Floyd County representatives, and three people represented Clark County. It was largely a softball session answering questions about highs and lows of the office, why we had wanted to run, and what advice we'd give to potential office seekers.

The last question came from a class member whose job is in construction. He asked as best I recall, "Why doesn't local government do more to promote manufacturing? Parks and other 'quality of life' offerings are fine and good, but manufacturing builds the economic base for sustainable prosperity." Implicit in the question was the idea that local government has some tools at its disposal to incentivize manufacturers to come to our community-at-large.  Perhaps we do, and most of the panelists directed their answers at this angle of his question. (The massive, and largely still-blank slate of the River Ridge facility in Clark County, is certainly a focal point for opportunities in manufacturing.)

Manufacturing has such a preeminent position in wealth creation because it is the act of taking raw material and transforming it into valuable goods. Societally, it is crucial because it provides jobs within the community to allow the local economy to grow.  Absent those jobs, the economy stagnates. Surrounding the orgiastic spending at Christmas, breathless reporters cite the figure that the "consumer" drives 70% of the American economy.

My answer to the questioner was that local government certainly has a role to play incentivizing manufacturing, but a great cause of the decline of manufacturing rests with those of us in the room that morning. So many of us have passed by American-made products to buy  cheaper foreign replacements, that American manufacturers shut down. Local factories of major American companies have closed as the demand for their products ebbed. Big Box retailers drive smaller stores out of business and then, in "true" free-market fashion, dictate the prices they are willing to pay for the goods that, often, only they can sell, because the others have been driven off. In the early, arrival stages of this form of retailing, we were dazzled by the cornucopia of stuff we could buy at lower prices than we had been accustomed to. And now we must buy products at the cheaper prices because our wages have been hammered into  stagnation. As the big retailers have cleared the field of competition, they have reached the sweet spot Crazy Larry or Mad Max used to shill -- they sell it so cheap because they make it up in volume. Not only are fewer U.S. workers needed to bring goods to market, but also there is such dominance in most cities that only the muscle retailers remain.

What can local government do to incentivize manufacturing? It could establish a buy-local point system for its own purchases, so that local producers play on a more even field. A New Albany company would get more points than a Louisville company, a Louisville company would get more points than an Atlanta company and all would get more points than a foreign company. When purchases (primarily of goods, but also some service contracts) are made, the best price would be determined not solely by the price tag, but by including the point system into a calculation to determine the true price. For example, a local hardware store may make a sale that on price alone would go to a big box store. While this fits a model to benefit local retailers, we must also push local government to purchase bigger ticket items with a priority given to U.S. made goods over the foreign-made, and perhaps cheaper version. Until we insist on buying local -- whatever local means in terms of availability -- we will be ceding wealth to those without a stake in our community, our city or our country.

As we look truly locally, New Albany's government can and should establish a small business incubator program with a focus on manufacturing. Our downtown is doing well relative to recent years, and many of the goods sold in shops are locally produced.  All across the country,  local artisan shops are operating, and, we hope, profitably.  These efforts are welcomed and seen as signs of growth and vitality within communities like  New Albany. But, now we need to create a supportive environment for those members of our community who have ideas on how to produce new or better products of a more utilitarian, less artistic nature, in order to broaden the power of buying local. And, when those entrepreneurs bring useful manufactured goods to market we, government and citizens alike, need to support their efforts, buy their wares, when we can.

As a nation and, of course, locally we are also seeing the effects of the entrenched practices brought about by the North American Free Trade Act, NAFTA, some twenty years ago, and those have been responsible for a general weakening of our manufacturing base. Just around the bend, if we are not vigilant, waits the threat of what has been called NAFTA-on-steroids, the Trans Pacific Partnership (TPP) If that agreement becomes policy, we may all find ourselves living in trailers, subsisting on beef jerky a  ordered on line from some TPP slaughterhouse. In all our dealings in the marketplace we must consider costs as well as price.