July 2011


How far could we move toward strengthening our locally-owned businesses if we spent our local money locally. Or more narrowly, what if just our anchor institutions within our communities mostly bought local? How many farms would spring up if school cafeterias bought their produce from local grocers and farms? Or consider if our hospitals, jails, and colleges were added to the scenario. An article which appeared in the Michigan Citizen answers discusses these questions:

Far too much of our recent history has been shaped by efforts to recapture the giant industrial production of a century ago. These efforts dominate our public policies in spite of the fact that statistics demonstrate that small, community-based businesses drive economic and creative development.

Small businesses generated 64 percent of the net new jobs over the last 15 years, creating more than half of our GNP. The majority of these businesses are locally based, employing a range of skilled workers, including about 40 percent of all high tech workers in the country, and they produce 13 times the patents per employee of large firms.

Several anchor institutions have voluntarily committed to increasing local purchasing there in Detroit:

Fostering small cooperative businesses means redirecting our spending in ways that encourage local production. That is why we should all welcome the recent efforts by the Detroit Medical Center, Henry Ford Hospital and Wayne State University to increase their local purchasing. These are key anchor institutions in Detroit that could have a tremendous economic impact on the local business community. Currently the combined spending of these institutions is about $1.6 billion annually. Less than 10 percent of that is spent in Detroit.

The City of San Francisco has taken it one step further by enacting policies for all municipal agencies and municipally-owned anchor institutions:

The city of San Francisco has taken even more direct measures. In an effort to stimulate local employment, San Francisco passed a local hire ordinance that requires all county-funded projects worth $400,000 or more built within 70 miles of the county borders hire at least 20 percent of their people from the city by the end of this year. Over the next seven years, the goal will be to hire 50 percent of all workers from within the city limits.

The author encourages their municipal leadership to set minimum purchasing requirements:

There is no reason why our mayor and city council cannot begin to establish policies that direct local spending by all of our anchor institutions. A modest goal of increasing local spending by these institutions to 15 percent would more than double what they are currently spending, stimulating further activity.

Think of the economic impact if our anchor institutions: the Clay County Hospital, Southern Union University, and all public schools in Clay County for instance purchased just 15% of their food and needs from within 30 mile radius? As noted elsewhere before:

Each school, prison, and public hospital should purchase a percentage of its food from local farms and ranches. We could rapidly revitalize local, family farming if a percentage of every school lunch was grown within its county’s borders. Consider the impact on small farming operations if each prison purchased all its food from nearby.

A recent study from the University of Minnesota corroborates this policy direction (ht to my mom).  According to the study:  Filling school lunch trays with fresh, locally grown foods that are easy to incorporate into school menus can contribute as much as $430,000 annually to a regional economy, according to new research from University of Minnesota Extension.

The study focused on five rural counties with only 20,840 students and examined the potential economic impact of farm-to-school programs. According to the author, “a $400,000 annual impact could support two to three full-time farms.”

$400,000 could go a long way in east, central Alabama too. Combine this $400,000 with the monetary velocity of money spent locally, the impact multiplies to $1.6 million.

In the political environment of today (see here and here), talk like this, unfortunately, will fairly quickly draw claims of treason within the Republican Party. Former Utah Governor and current Presidential candidate hearkens back to TR and is reported as saying:

We will be judged by how well we were stewards of those (natural) resources,” said Huntsman, a veteran of three Republican administrations who until this spring was President Barack Obama’s ambassador to China.

Conservation is conservative. I’m not ashamed to be a conservationist. I also believe that science should be driving our discussions on climate change,” he added.

I agree.

I think him wrong to link conservation with “climate change”, tactically and philosophically, though. A person might deny “climate change” but still wholeheartedly agree for the need for environmental protection on respect-for-neighbor or basic common-good reasoning. I think those which favor supervision of pollution and our commons err when they exclusively declare “climate change”  as the raison d’être for environmental protection.

On a side note: I find it interesting that, formerly, consideration and contemplation of environmental protection was not seen as some radical leftist policy: Pawlenty, Romney, and Gingrich have all supported previously environmental protectionist policies.

Investment advisers have this explanation of possibilities of our situation:

In June, the debt o f the U.S. reached the ceiling, meaning no more could be issued. That’s bad news for a country that continuously spends more than it takes in. Thus the deadline imposed by the debt ceiling has brought the issue to the forefront. (If the debt limit was reached in June and we’ve continued to spend more than our revenues, how have we financed the shortfall? The federal government has borrowed from federal retirement funds; the courts ruled in the past that when we do this, it’s not an expansion of our net debt, since America is borrowing “from itself.” The well-known deadline of August 2 is the date on which the capacity for borrowing in this way is projected to be exhausted.)

If we reached the debt ceiling in June, why is August 2 so important?

If the debt ceiling isn’t raised, as I said, some people will have to go unpaid. Among the candidates are our nation’s creditors. Failure to pay creditors is called default. 

. . . Another thing I’m most sure of is that no one knows what the repercussions of default and downgrade would be.

Neither spending cuts nor tax increases would solve the immediate threat at issue.

When deficit spending is unavoidable, we have to borrow. Since we’re at the current debt ceiling, continuing to borrow requires that the ceiling be raised. If the ceiling isn’t raised and we can’t borrow, we won’t be able to make good on all of our obligations. Someone will have to go unpaid: employees, creditors, soldiers, retirees, vendors, etc. I don’t think anyone believes we can make good on all of our obligations without borrowing. Thus we have to solve this immediate problem. We can enact spending cuts and/or tax increases, but invariably these things will only take effect over the long run. In the short run we have no choice but to raise the debt ceiling and keep borrowing.

What are the obstacles to a solution?

It seems apparent that in recent decades, politics has become more partisan, and solving the nation’s problems has taken a back seat to adhering to ideology and getting re-elected. And what gets people elected? Promises of more: more benefits without increased taxation, and more take-home pay without reduced largesse.

The country is so thoroughly given up to the spirit of the party, that not to follow blindfolded the one or the other is an inexpiable offense. Between both, I see the impossibility of pursuing the dictates of my own conscience without sacrificing every prospect, not merely of advancement, but even of retaining that character and reputation that I have enjoyed. Yet my choice is made; I am at least determined to have the approbation of my own reflections.

– John Quincy Adams in his diary, on sticking to his principles and supporting the British embargo, knowing that it would harm his home state of Massachusetts and get him thrown out of the Federalist party.

A few weeks back, Huntsville talk show host, Dale Jackson, tweeted @DaleJackson:

Do Democrats and idiots like @leftinbama really believe that the GOP “stepped in it” on illegal immigration? It is a #alpolitics winner.

He is right, I think; the Anti-Immigrant Bill is a winner in Alabama politics for Republicans.  I really do not see much immediate political gain by opposing the anti-immigration bill. Sometimes though, you must throw out political strategems and advocate for the right. As President John Quincy Adams stated: Always stand on principle . . . even if you stand alone.” Or as Martin Luther King, Jr. expressed in his day:

On some positions, Cowardice asks the question, “Is it safe?” Expediency asks the question, “Is it politic?” And Vanity comes along and asks the question, “Is it popular?” But Conscience asks the question “Is it right?” And there comes a time when one must take a position that is neither safe, nor politic, nor popular, but he must do it because Conscience tells him it is right.

The Republicans will likely not see any electoral blow-back from their passage of Beason-Hammon. At this point in time, the majority of Alabamians probably support a “deport-’em all” policy. The last polling I saw revealed a visceral hostility towards immigration. I expect that similar polling drove Tim James to run his Gubernatorial ads last year in the gubernatorial primary and then Governor Bentley to follow suit during the run-off campaign.

Those Evangelical “conservatives” which have recently come out against the bill will not punish electorally the Republicans for this. It is so easy to justify the bill: “Well, something had to be done.” The unjustness of this bill will not overcome the decades-long repetition of propaganda about the moral evil of the Democrat Party. For evangelicals, this issue no way trumps abortion and homosexual marriage in priority.

And for the blue collar and rural whites, the “Mexicans are stealing our jobs” mantra is too potent to overcome unfortunately. The James ads were aimed at this audience and we saw how dramatically effective they proved to be.

This is the present reality of the situation in Alabama. Unlike in Arizona where the sponsor of that bill faces a recall election, Hammon, Beason, Hubbard, and Dial will face no electoral consequences to the terribly ineffective, poorly drafted, overly broad and fiscally indefensible piece of legislation. I expect vast portions of the legislation will struck down as unconstitutional with only certain parts standing like the E-verify mandates. (The Republicans will trumpet this as well as a badge of courage like George Wallace did.  Republican strategists will, in fact, use our opposition to the law against us if not expressly then in illicit whisper campaigns.

On top of that, the law will accomplish its purpose. By attacking every area of the undocumented immigrant, they and their documented and/or citizen family members will be driven away as we have already seen in Georgia. As a consequence, Alabama will be weakened as a society culturally, morally, and spiritually. As Martin Luther King, Jr. taught:

There’s another reason why you should love your enemies, and that is because hate distorts the personality of the hater. We usually think of what hate does for the individual hated or the individuals hated or the groups hated. But it is even more tragic, it is even more ruinous and injurious to the individual who hates. You just begin hating somebody, and you will begin to do irrational things. . . . He comes to the point that he becomes a pathological case. For the person who hates, you can stand up and see a person and that person can be beautiful, and you will call them ugly. For the person who hates, the beautiful becomes ugly and the ugly becomes beautiful. For the person who hates, the good becomes bad and the bad becomes good. For the person who hates, the true becomes false and the false becomes true. That’s what hate does. You can’t see right. The symbol of objectivity is lost. Hate destroys the very structure of the personality of the hater. . . . . But long before modern psychology came into being, the world’s greatest psychologist who walked around the hills of Galilee told us to love. He looked at men and said: “Love your enemies; don’t hate anybody.” It,s not enough for us to hate your friends because to “to love your friends” because when you start hating anybody, it destroys the very center of your creative response to life and the universe; so love everybody. Hate at any point is a cancer that gnaws away at the very vital center of your life and your existence. It is like eroding acid that eats away the best and the objective center of your life. So Jesus says love, because hate destroys the hater as well as the hated.

How irrational is this law, yet we don’t see? How blind are we to its consequences

Politically, we need to continually show the fiscal irresponsibility of bill becomes overwhelmingly apparent in all its forms (swelling rolls of immigrant children in foster care, overcrowded local jails with undocumented immigrant, overwhelmed staff at Homeland Security processing e-verify requests for the 91,000 small businesses, loss of tax revenue from immigrant leaving.

We need to identify the cause when local fruit and vegetable prices rise significantly because of unharvested fields, or enough farms go out of business.

We must identify the culprits when enough citizens are disqualified to work due to e-verify errors.

I am afraid that that large segments of Alabamians will not care about its unjustness of the law but they will care of their pocket books.

No matter how impolitic, we must continue to fight against this law; it is a major civil rights issue of our generation.  “As we look out across the years and across the generations, let us develop and move right here. We must discover the power of love, the power, the redemptive power of love. And when we discover that we will be able to make of this old world a new world. We will be able to make men better. Love is the only way. Jesus discovered that.” – Martin Luther King, Jr.

According to this international comparative study of small business policies:

The OECD data demonstrate that: The United States has the second lowest share of self-employed workers (7.2 percent) – only Luxembourg has a lower share (6.1 percent). France (9.0 percent), Sweden (10.6 percent), Germany (12.0 percent) the United Kingdom (13.8 percent), Italy (26.4 percent) and 14
other rich countries all have higher proportions of self-employment.

Not only do we lag in number of self-employed comparitvely but also are far behind in resilience based upon small-business employment:

The United States has among the lowest shares of employment in small businesses in
manufacturing. Only 11.1 percent of the U.S. manufacturing workforce is in enterprises with
fewer than 20 employees. Eighteen other rich countries have a higher share of
manufacturing employment in enterprises of this size, including Germany (13.0 percent),
Sweden (14.4 percent), France (18.0 percent), the United Kingdom (18.1 percent), and Italy
(30.9 percent). Only Ireland (9.6 percent) and Luxembourg (8.5 percent) have a lower share
of manufacturing employment in enterprises with fewer than 20 employees. (Raising the
cutoff for a small business to fewer than 500 employees does not significantly alter the
relative position of the United States.)

U.S. small businesses have a much lower share of employment than the comparison
economies do in the two high-tech fields for which the OECD publishes data: computerrelated
services and research and development.

The United States has the second lowest share of computer-related service employment in
firms with fewer than 100 employees (32.0 percent). . .

Similarly, the United States has the third lowest share of research and development related
employment in firms with fewer than 100 employees

This is not healthy for our economy nor our political institutions. (See here, here, herehere, here) Alabama is 47th in entrepreneurial activity. However, we need a change of mindset within our policy makers:

We know politicians love ribbon-cuttings; the bigger the better.  Politicians also crave the major industry and big plant opening. (Usually, the politician had nothing to do with the creation of the business; they are just stealing credit from the entrepreneur.)  However, real rural development believes “small is beautiful.”  As discussed in this article entitled There is Such a Thing as Rural Development by Larry Lee, “rural Alabama and statewide policymakers must look beyond our traditional manufacturing economy.”

“We need to devote far more energy and resources to helping entrepreneurs get their feet on the ground and to helping small business grow and succeed.  Alabama has known for many years that about 75 percent of all new jobs annually come from industry expansions. But there is nothing sexy when a cabinetmaker hires one or two people. There is not a groundbreaking or photo op for mayors, county commissioners and officials from Montgomery. We must recognize that, by and large, rural Alabama is the land of small businesses.  Census data shows that of the 25,000 businesses in rural communities, 96 percent of them have 49 or fewer employees.

 

The Alabama Anti-Immigrant Law is having more an impact than its supporter’s rhetoric suggests.

According to the Times-Daily,

Representatives of the Alabama Department of Agriculture, Alabama Farmer’s Federation and other groups that work with growers said some farmers have told them they’ve already lost half their workforce. The state doesn’t have official figures yet, however.

Everyone knew this was going to happen; it had already happened in Georgia. What Beason, Hammon, and Hubbard don’t want to admit is their overly broad and aggresive law is impacting an overly broad category of people.

“We want secure borders and we work to comply with the federal rules,” Cook said. “But this new immigration law is robbing us of the skilled labor we need in the hardest economic times most growers have ever faced.”

One problem in filling horticulture jobs is that they require a high degree of skill that many people don’t have, he said.

The legal people are apparently leaving along with the illegal people because they all want to stay together,” he said.

Why would a “legal” Hispanic-looking person want to stay in Alabama and continually be suspected of being “illegal?”

Proponents of the new law, including the primary sponsor, Rep. Micky Hammon, R-Decatur, said the law should open up jobs for Alabamians as illegal immigrants leave. People who work with the growers disagree.

When they say the unemployment is so high so the workers have got to be out there, they need to come walk a mile in our shoes,” Cook said.

He also debunks the claim that immigrant workers drive down wages or take jobs that U.S. workers could have.

“We’ve tried to do the right thing,” he said. “We hire people that have been through federal screening and they know how to do the job. Don’t take them away from us suddenly now.”

Doug Chapman, Alabama Cooperative Extension System regional agent for horticulture over 10 north Alabama counties, agrees growers aren’t paying workers wages that are below minimum wage.

“I can tell you that all of my growers are concerned,” said Chapman who is based in Athens. “The bottom line is there is no local labor, period. A lot of my growers say they never had a local person come by and apply for a job.”

What Americans see as backbreaking, sweaty, dirty labor, many immigrants see as a ticket out of overwhelming poverty in their home country, he said.

“They don’t want to go back to conditions that are frightening and unbearable at home, but they’re leaving Alabama for states with less restrictive laws,” he said.

Chapman said something is wrong with the system if growers can’t find people to get the job done.

“Some people here would rather sit at home and collect welfare, but these immigrants are eager to work long hard hours for a better life,” he said.

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