 Michael Shuman, one of the co-founders of BALLE,
has written an excellent book diagnosing the reasons entrepreneurial
businesses face an uneven playing field and an unfair competitive
disadvantage versus the multinational corporatist oligopolies (MCOs).
This book, The Small-Mart Revolution,
also prescribes 95 ways we can help rectify this damaging distortion of
the 'market' economy -- as customers, investors, public policy-setters,
community members, citizens, and entrepreneurs ourselves.
Shuman
introduces a useful acronym to differentiate the types of
entrepreneurial business we need to encourage and support: LOIS (local
ownership & import substitution). Only when owners live and work
in the communities they operate in do they really care about the people
and environment in those communities, he argues. And only by replacing
shoddy products and services transported half way around the globe (at
enormous social and environmental cost) with goods and services produced right in the community can we hope to build strong, healthy and resilient local economies where people can both live and make a reasonable living.
The
first part of the book outlines the 13 market distortions that
multinational corporatist oligopolies (MCOs) have been able to create
and exploit to enormous advantage, to the great detriment of
entrepreneurs who actually add value to the communities in which they
operate -- and offer customers much greater value for their dollar:
- Government
Subsidies: More than $300B in corporate subsidies, almost all of which
go to MCOs, are paid by North American and European governments each
year to protect and incent these rich and powerful corporate goliaths.
These subsidies are 'purchased' with MCO campaign donations, junkets
and lobbying.
- Access to Cheap Capital: MCOs can borrow money
much cheaper and under much more favourable terms from the big
financial corporations than entrepreneurs can. These rates reflect
formulaic conventional lending wisdom and not actual risk.
- Labour
Negotiating Power: MCOs have the clout to smash unions and bully
employees into accepting lower wages and fewer benefits, with the
threat of outsourcing and offshoring jobs if the cuts are resisted.
- Supplier/Retailer
Negotiating Power: With their corner on the markets for supply
(oligopoly) and big box retail distribution (oligopsony), MCOs are in a
position to bully big, brand name suppliers into offering their
products exclusively through the MCOs, at hugely discounted prices.
These 'deals' force suppliers in turn to outsource and offshore their
operations to afford these prices, and often force these suppliers into
bankruptcy in the futile attempt to endlessly reduce costs.
- Subsidized
Transportation and Energy Infrastructure: Because the cost of gasoline
is suppressed by political deals with OPEC, and energy and highway
projects are heavily subsidized with tax dollars to favour
long-distance transportation carriers, the true cost of imports is
hugely distorted, to the advantage of MCOs.
- Undervaluing of
People's Time: Because we are too busy to find and visit small local
suppliers, and because we undervalue the time and energy it takes us to
drive to big box malls, we overvalue the 'savings' we supposedly
receive from MCOs.
- Deceptive Advertising: Huge MCO advertising
and PR campaigns delude us into believing we are getting value from
overpriced, poor-quality imported junk that MCOs sell us. And if you
try to get your money back, the armies of 'customer care' and the
armies of corporate lawyers are ready to dissuade you.
- Addiction
to Consumption and Debt: MCOs and their handmaidens in the lending
industry and in government spend a fortune to persuade you that
irresponsible spending and borrowing beyond your means is socially
necessary and good for 'the economy'. Once you're hooked, there's no
way out -- especially now bankruptcy laws have been tightened up.
- Lack
of Consumer Protection: Under the guise of 'deregulation' and blocking
'frivolous' litigation, consumer protection laws in many countries have
been weakened or gutted, encouraging poor quality production and
services and other irresponsible MCO practices.
- Naive Local
Planners and Zoners: Because they're unaware of the multiplier benefits
of LOIS enterprises, local zoners and planners often offer huge
incentives to attract MCOs that yield little local return on that
investment, and actually destroy local employment and manufacturing.
- Oligopoly
Network Power: MCOs, by striking exclusive deals with other MCOs, cut
LOIS enterprises out of the bidding for major supply contracts,
effectively starving them out of all distribution channels except local
independents'. You won't find small local food vendors' products in
large chain grocery stores, for example, because the Big Agribusiness
producer oligopolies won't let the chains carry small competitors'
products.
- Lack of Environmental Regulation: Thanks to heavy
'deregulation' lobbying by MCOs, environmental regulations in many
countries have been weakened, or are unenforced, allowing megapolluting
MCOs to 'externalize' (pass off to taxpayers and those who have to live
in the polluted communities) the heavy environmental costs of their
operations.
- Lack of Training in Entrepreneurship: As I have
been harping on in these pages for years, there is little or no
reasonably-priced training available to entrepreneurs on how to
establish and operate a responsible independent business effectively.
The consequence is huge entrepreneurial failure rates and millions of
enterprises that could easily, with a bit of coaching, be much more
effective, successful and happy places to work.
If these
distortions could be overcome, Shuman argues, we have a lot to gain
from an economy in which LOIS enterprises compete fairly and
effectively with MCOs:
- LOIS enterprises are closer to the
customer and hence better attuned to their needs, and able to be more
innovative and adaptable to meet those needs.
- LOIS enterprises are less vulnerable to spikes in energy and transportation costs, which are certainly on the horizon (though Grist argues that this is offset by the endemic lack of infrastructure that LOIS enterprises must live with).
- LOIS
enterprises are better able to customize products to meet the unique
needs and opportunities that are present in each local market (One size
never fits all).
- LOIS enterprises are better able to leverage
virtual and peer production and distribution networks because they are
less committed to and invested in older physical networks and
infrastructure.
- LOIS enterprises, thanks to the personal touch
and local ownership, generally have much lower turnover (and hence more
knowledgeable staff) and greater employee loyalty (and hence better
service) than MCOs.
- LOIS enterprises are less dependent on
corporate subsidies and low interest rates, and if, as many suspect,
the US dollar and economy soon tanks and interest rates spike, they
will have the resilience to continue to operate when many MCOs go under.
The balance of the book prescribes the 95 actions we can take to remedy the market distortions:
- As customers -- e.g. by buying local and creating local buying networks
- As investors -- e.g. by investing in local enterprises and creating local investment funds, networks and capacity
- As
public policy-setters -- e.g. by appreciating the economic advantages
of LOIS enterprises and leveling the playing field for them
- As community members -- e.g. by creating local community-based economies
- As
citizens -- e.g. by combating the wealth and power of MCOs politically
(e.g. by voting out corporatists) and economically (e.g. through
boycotts)
- As entrepreneurs ourselves -- e.g. by creating local Natural Enterprises and networking them with others
There are two disturbing and enduring myths about entrepreneurship:
- That franchises are a healthy form of local entrepreneurship; and
- That
entrepreneurs need to compete on price with MCOs by offering customers
the same imported, subsidized low-price crap as MCOs, instead of local,
high quality, non-mass-produced ('unaffordable') products
Shuman
tackles the first misconception well, but sidesteps the second. One of
the most frustrating experiences of enlightened customers is to go into
locally-owned retailers and discover everything on the shelves is
imported (mostly from China) when good local sources of similar goods are
available (just invisible). Or to hire a local service provider only to
discover that they buy all their supplies from a wholesaler's
catalogue, most of which is imported products that by-pass local
producers.
But we have to start somewhere, and this book provides a good blueprint on how to do so.
What will be even more essential than a grassroots buy local
movement will be entrepreneurs and local activists researching,
cataloguing and creating networks of LOIS enterprises, and acting as
organizers and intermediaries to help customers in local communities
become aware of, and arrange to buy from, LOIS enterprises.
Just
as important will be encouraging and coaching new LOIS enterprises to
get properly and sustainably established, and helping them appreciate
(and explain to their customers) the benefits and value of buying the
goods on their shelves, the service that support them, and replacement
and supply parts and accessories, from local suppliers.
This
book is the perfect antidote and response to the corporatist
apologists' argument that "no one is forcing you to buy from Wal-Mart".
It's time for responsible, enlightened LOIS entrepreneurs to break
ranks with the corporatists in chambers of commerce, the anti-Kyoto
forces, and the cynical 'deregulation' lobby, and realize that MCOs are
not their allies but their worst enemy. The Small-Mart Revolution is
long overdue, and needs our support and collaboration to make it happen.
Logo above is from the Bay Area Green Business Program. |
10:35:44 AM 
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