Michael Green

Writer and producer

Q & A with Michael Shuman

In Community development, Social justice on

Earlier this year I interviewed American economist, lawyer and writer Michael Shuman. He’s the author of two books on re-localisation, Going local and The small-mart revolution and a founder of the Business Alliance for Local Living Economies.

Shuman writes about the economic benefits of buying from locally owned businesses, arguing that the money you spend has a much bigger economic multiplier effect. That is, it circulates more quickly and more often, and in doing so, it creates more jobs, income and wealth.

As an example, he refers to a 2003 study in Austin, Texas, where economists analysed the impact of a proposed Borders bookstore against two local bookstores. They found that $100 spent at Borders would circulate $13 in the local community, while $100 at the local stores would circulate $45.

When we spoke, he began by telling me that the localisation message is spreading fast.

MS: I’m very struck by the similarity of the consciousness about various crises that are hitting the world – in finance, peak oil and climate change – and equally struck by the similarity of the solutions that people are developing at the community level. Frankly, everywhere I go there are profound and growing localisation movements.

MG: What’s the main thrust of your message?

MS: First of all, every time you spend your money you are voting for the kind of economic future you want. And if you vote with your money more conscientiously for local businesses with high quality local goods and services, there are a whole bunch of wonderful things that can happen to your economy. If you don’t vote that way, you’re economy is going to become hollower and shallower, and your prosperity is going to be imperilled. And I think it’s even truer for investment, because right now we have an investment system where everyone under-invests in local business. I think if we can change that, we can dramatically increase the number of local businesses and prosperity will flow from that. The two critically important decisions to think about are your purchasing and how you invest your super.

MG: What do you mean by ‘local’?

MS: I define local as the smallest jurisdiction in which you live that has real political, economic or legal power. So if you live in Melbourne, the city would be the relevant area. If you lived in a remote rural region, you might think of a larger area. It’s necessarily a flexible term, but the point that I like to emphasise is that local ownership means that the people who own the business live in the immediate jurisdiction in which it operates.

MG: You wrote The small-mart revolution in 2007, arguing that small, local businesses contribute more to long-term economic prosperity and community wellbeing. The world seems to have changed a lot since then – has your thinking changed?

MS: In the book I lay out a dozen trends in the global economy that were accelerating localisation. All of the trends have moved faster than I anticipated. For example, I never expected oil to hit $150 a barrel so quickly. It didn’t stay there very long, but it won’t before we get there again. Also, when I wrote the book, I felt that the conventional understanding about the financial system would make it very difficult to convince people to move into local stock quickly. But the financial crisis has so changed people’s perceptions about the risks inherent in the current system that it has really opened their minds to localisation in a huge way. I think the shift in global consciousness is profound and has moved much more quickly than I thought it would.

MG: You write that smart localisation is about being self-reliant and exporting – not about limiting global trade. So are you saying the ideas we have about scarcity aren’t accurate, and there’s actually great scope for growth?

MS: That’s right. It’s not a new argument – for example, look at the writing of Frances Moore Lappé with Food First, thirty years ago. She made the argument that the planet has more than enough food to feed people, but our distribution systems are corrupt. As the years have gone by she has increasingly talked about the importance of local food systems that feed populations first and foremost, and then we build trading systems for more exotic foods on top of that. And I think that’s true in all kinds of goods out there.

It’s not to say there aren’t shortages or profound challenges in moving communities that are in very high levels of poverty into a place where they can be active participants in the global economy. But in my work in the US I’ve seen that the poorest economies are the ones that are most predisposed to try new approaches because they have been most readily left behind by the mainstream economy. And when you’ve got little or nothing and you change your approach, a little of something that’s better can actually generate a lot quickly.

MG: But in the short term, if I’m spending more money locally, then someone else will be missing out.

MS: I agree with that – for example, the argument is that in the US we import bananas from Guatemala so if we figure out ways of producing bananas in hydroponic greenhouses, the peasants who are producing those bananas in Guatemala are going to lose out. I think the weakness of the argument is that the peasant receives such a tiny fraction of the value-added of that banana – probably a fraction of one per cent – that it turns out to be an enormously inefficient mode of helping that peasant. And so both the promise that trade-as-usual helps the poor, and notion of the harm that comes from changing traditional trade, both of those things are a lot smaller than people assume.

But there is a short-term cost and there’s a transition in that. What I would add is that it is in the interests of communities to share their best practices for free with other communities worldwide. We should all become part of a kind of open-sourced world of information about the technology, business finance and public policies that support localisation. Every community that takes this seriously should try to share what’s working and what isn’t.

MG: But isn’t localisation a trend that will inherently disadvantage developing countries – if wealthy countries become more self-reliant, won’t that punish developing-country commodity producers?

MS: I think there is something to that argument, but again, it’s clear that the kind of development policies we’ve undertaken have been a dismal failure for most of the world. In the places where they have been successful, like the Asian tigers and China, they’ve come with grotesque costs to the environment, human rights, labour rights and equity. I just really feel that creating models of community self-reliance around basics and sharing them internationally is going to be much more important to poor communities than any of these other strategies.

MG: Is it implicit that a localised economy will produce a more egalitarian society?

MS: In the United States there is a sociology literature on this. Basically, communities that are largely made up of small businesses have higher measures of social equality and, in some cases, even lower levels of welfare dependency. I think part of the reason is that in a community of small businesses where there’s a lot of local commerce, it’s a relationship-based economy. That is, both the employer-employee and consumer-seller relationships are rooted in people who know each other. If you know each other you have to act more responsibly because you can’t just pick up leave and hide what you’ve done.

Towns in Transition

In Community development, Environment, The Big Issue on

Concern about the environment and climate has led people in communities across the globe to take matters into their own hands – and to enjoy themselves while they’re at it.

One blazing hot Saturday morning – the day that will later become known as Black Saturday – a dozen locals gather around the wooden bench in Mark Kilinski’s kitchen, in the Geelong suburb of Bell Post Hill. Under his instruction, they’re filling and shaping pierogi, Polish dumplings.

Everybody is talking or laughing, or doing both at once. It’s pure peaches-and-cream: people are making friends, their conversations almost too good-natured to be true. “It’s much more fun to cook together, isn’t it?” marvels Anne, who lives just across the road. “That’s the thing about community,” chimes Dee, a wide-eyed, rosy-cheeked librarian from the local school.

The activity has been organised by Transition Bell, a group of locals dedicated to transforming postcode 3215 to deal with the twin challenges of climate change and peak oil [see below]. They want to re-make their suburb into a food-producing, low-energy, low-emission, tight-knit neighbourhood.

For well over a year, the group has been an official member of the thriving international Transition Network. The first transition town – Totnes, in Devon, England – was launched in late 2006. Now there are over 200 worldwide. In Australia, there are 18 official transition initiatives and dozens more preparing to sign on.

The movement took-off last year, following the publication of The Transition Handbook by Rob Hopkins, cofounder of the Totnes project. Interest now extends well beyond the English-speaking world, to continental Europe, South America, Asia and South Africa.

An updated Australian and New Zealand edition of the book came out in March. Subtitled ‘Creating local sustainable communities beyond oil dependency’, it details a grassroots approach to sustainability, in which each group strives for change, aiming to live better with less.

Naresh Giangrande, another founder of the Totnes transition town, visited Australia recently as part of a six-country speaking and training tour. “Two years ago, if somebody had told me that I would be in Australia on a worldwide tour teaching people about transition towns I would have said to them, ‘You’re crazy, it will never happen that quickly’,” he says.

In Totnes, residents have started a slew of projects, from community gardens and a local food directory, to business swap meets and eco-makeovers. They’ve even created their own currency, the Totnes Pound, which can only be used in the town.

Giangrande says the biggest achievement so far has been to build broad support among the town’s 8000 residents, rather than just among the usual suspects. Given the gravity of the problem, he argues, it’s crucial to engage people from all walks of life.

“The fundamental message is that our system is unsustainable. It’s not really a question of should-we-or-shouldn’t-we [change]. We’re going to have to,” Giangrande says. “We’re not going to have any choice once peak oil and the effects of climate change become apparent. We’re going to have to make do with fewer resources and with less energy.

“It’s not just a bit of tinkering at the edges; we need to completely rethink just about every system that we depend on for life – for the food we eat, for the clothes we wear, for the buildings we live and work in, and for our transport.”

Despite the daunting change he envisages, Giangrande sees cause for both optimism and joy. “We’ve created the present system and we can create something else. Let’s harness the collective genius of our communities to create something even better than what we have now.

“For many people the environment is very scary because if you take a close look at it you realise that we’re in quite a deep hole. Transition is one of the few things that comes with a message of hope. We all can be involved and a whole bunch of small actions by people all over the world add up to something rather big and rather wonderful,” he says.

***

The Sunshine Coast was the first Australian community to become a part of the transition movement and, at about 300,000, the group caters to an unusually large population. For over two years, Sonya Wallace and others have been preparing an Energy Descent Action Plan to present to the Sunshine Coast council. It will be a blueprint for a regional makeover, from households “all the way up to legislative change, transport systems and all the big picture stuff that you can’t do as an individual or as a community.”

Beneath the broad Sunshine Coast group, small transition towns are sprouting. Wallace lives in Eudlo. Among other initiatives, her 850-strong community is starting a food coop, a seed bank and informal car-pooling, and running backyard permablitzes. “We’re trying to get people to talk to their neighbours and build some community resilience,” she says.

In mid-November, a storm walloped Brisbane’s northern suburbs, causing severe floods, structural damage to thousands of homes and even a Prime Ministerial visit. Amid the devastation, however, came an unexpected sense of community. “As this massive storm went through, people came out of their houses and started talking to their neighbours. They’d never spoken to their neighbours before,” Wallace says. “It generated street parties.”

A similar, though more dramatic story emerged following Black Saturday. In The Monthly, author Richard Flanagan wrote of his visit to Kinglake: “Beyond us the police teams were turning over tin, turning up more and more dead, yet everywhere I looked I saw only the living helping the living, people holding people, people giving to people. At the end of an era of greed, at a time when all around are crises beyond understanding and seemingly without end, here, in the heart of our apocalypse, I had not been ready for the shock of such goodness.”

Scientists predict that the climatic changes wrought by global warming will lead to more frequent extreme weather events, such as droughts, fires and floods. For Wallace, the transition project is partly about preparation. “We’re trying to get people to work together before a crisis hits, because then it’s a bit too late to work out who the workers are and who has the skills.”

Back in the Bell Post Hill kitchen, before the hot sky fills with smoke, Transition Bell’s founder, Andrew Lucas, is adamant that his group’s activities be enjoyable. “It is a really inclusive thing, not just a sustainability group filled with environmentalists. [The transition towns idea] doesn’t tend to alienate people because you’re talking about what we can do to look after each other. That sort of thing is missing in communities at the moment.”

The Bell area has a long-standing mix of residents from different backgrounds, especially Eastern Europe. Lucas says there’s an enormous amount of practical knowledge behind closed doors – like the recipe for pierogi. Among other things, he hopes neighbours will share their cooking, preserving and gardening know-how.

“We declared that this postcode will be the fruit tree capital of Geelong – pretty hilarious, because it’s not like we have anyone competing,” Lucas says. “There’s another postcode, Transition South Barwon, and they’re talking about becoming the shiitake mushroom capital.”

Last year, at Transition Bell’s request, a local nursery offered a 50 per cent discount. Residents cleared their stock in one weekend. Lucas wants to organise more bulk eco-buying deals with nearby businesses. “You can get people motivated to take action, you get much better discounts and you’re putting money back into local businesses as well, so it’s a win-win,” he says.

All up, today’s neighbours-cum-pastry-cooks make about 300 dumplings in just a few hours. Conversation whisks through organic gardening, household efficiency and renewable energy, as well as future activities for the community.

But as always, the proof is in the eating. Janine, a first time attendee, sits at the table, her plate already empty. “Delicious,” she says sweetly. “We want some more.”

Transition, peak oil and climate change

The transition concept is pushed along by twin threats: peak oil and climate change. Peak oil refers to the point in time when global oil production reaches its maximum rate, and afterwards, begins to fall. There is no agreement on its timing, but many observers argue that supply has passed its peak, or will soon do so.

In The Transition Handbook, Rob Hopkins writes that “the end of what we might call the Age of Cheap Oil (which lasted from 1859 until the present) is near at hand, and … for a society utterly dependent on it, this means enormous change.” Both peak oil and climate change, he continues, “are symptoms of a society hopelessly addicted to fossil fuels and the lifestyles they make possible.”

 Can I borrow a cup of sugar?

Saying hello to your neighbours is the new black. Here are some complementary getting-to-know-you schemes:

Started in Melbourne last year, The Sharehood is an ingenious website that, together with a simple letterbox drop, will help you to not only meet the family across the road, but also borrow their circular saw.

A basic training program in eco-living, Sustainability Street can work in your street, school or local sports club. It has been run in over 200 places across Australia since 2002.

A permablitz is a working bee with a veggie twist. Volunteers from a network of permaculture gardeners and your neighbours (if you can convince them) come to your house and work with you to transform your garden into an organic food producing Eden.

The Sharehood

In Community development on

Published in Adbusters #85, Thought Control in Economics

Debbie from two streets away is offering to teach cartwheels and handstands. She wants to plant a herb garden, starting with mint. I’m dying to cartwheel. I’ve wanted to learn for years. I imagine myself standing at the end of a clear supermarket aisle, and then cartwheeling all the way down – a life-affirming act in a lifeless store. I’m growing enough mint and other herbs to share.

Debbie and I are made to trade. But we would never have met if my next-door neighbour and I hadn’t started a Sharehood. We leafleted all the houses a few streets around ours, invited them to a community BBQ and directed them to the website, www.thesharehood.org.

The Sharehood was started by Theo Kitchener, a Melbourne web developer and activist, in 2008. “It’s all about sharing skills and resources within your neighbourhood,” he says. In his hood, neighbours are already trading garden produce for worm juice, babysitting each other’s kids, fixing cars, sharing compost heaps and chatting over tea.

The website helps neighbours meet face-to-face. It allows logged-in members to see profiles of other members who live within 400 metres. People post events, list things they can share and things they need. The site has its own trading system, a radical local currency to reward those who give to others. Everyone’s details are private.

We’re just starting out, but interest is high. There’s a supermarket not far away from where I live. Maybe when I can cartwheel and our Sharehood is strong, I’ll visit one last time and find a clear aisle. 

Does buy local mean bye local?

In Community development on

First published on ABC Unleashed

Prime Minister Kevin Rudd may have been lampooned for his Strine, but last week, in its budget, the NSW government fair dinkum went and put it into policy.

Under Local Jobs First, when state agencies and corporations buy their wares, they’ll factor in a 20 per cent discount on Australian manufacturers’ tenders.

Unions liked it. Trade experts, the European Union and the US government did not. The Age‘s diplomatic editor, Daniel Flitton, viewed the measure through the dark and troubling prism of nationalism.

The morning after the NSW budget, bright and early, Federal Trade Minister Simon Crean denounced the policy on Sky News. It would cost jobs, he warned, not save them, and could draw similar moves from other countries. It would threaten trade.

But must trade always be the last word?

Less than an hour after Crean spoke so unequivocally on Sky News, American economist and writer Michael Shuman spelt out a different kind of economic development on Radio National.

“Locally owned businesses that are focussed first and foremost on local markets,” he told Life Matters presenter Richard Aedy, “contribute substantially more to economic development than … schemes to attract or retain non-local businesses.”

Shuman’s two most recent books are Going Local: creating self-reliant communities in a global age, and The Small-Mart Revolution: how local businesses are beating the global competition. You get the idea.

On tour in Australia, he’s spruiking the myriad benefits to be had from boosting our local businesses – from better labour and environmental standards to stronger long-term wealth creation and higher, more resilient employment rates.

The crux of Shuman’s argument, in economic terms, is about the flow-on effect of our spending choices. “When you spend money locally you contribute to what economists call the economic multiplier,” he said on Radio National. “That is, when I spend a dollar, say at a local pharmacy, that pharmacist pays people, they then take their dollar to a local grocery store … you have a dollar that is circulating in the economy. The more times that dollar circulates and the faster that dollar circulates without leakage, the more income, wealth and jobs [it creates]. And it turns out that local businesses do this much better.”

He points to a 2003 study in Austin, Texas, where economists analysed the impact of a proposed Borders bookstore against two local bookstores. They found that $100 spent at Borders would circulate $13 in the local community, while $100 at the local stores would circulate $45.

Shuman draws a distinction between local and non-local ownership, not between domestic and foreign. In The Small-Mart Revolution, the economist criticises promotion of “America First-ism” at a cost to others. Instead, he envisages a future of growing trade and global engagement, albeit “in goods and services less and less vital to day-to-day today survival”.

So where does the buy-Aussie policy fit in?

Despite the fuss, it’s neither a breakthrough nor a break down, and it won’t start a trade war. The rule already existed – NSW just expanded its application. Other countries, state governments and local councils also have guidelines favouring local procurement. And, despite Crean’s protestations, the Australian Labor Party’s current platform includes an almost identical policy.

That’s not to say it will work. According to the localisation theory, an ideal government purchasing system wouldn’t target Australian-made. It would target the tenders that boast the highest multiplier – probably goods made and owned nearby, not nationally.

www.small-mart.org

Vegetable Power

In Community development, Environment, The Age on

Joining an organic produce co-op can get you not only cheaper and better vegies but an introduction to like-minded neighbours.

IT’S 7.30am on a Friday. A dozen people, mostly young mothers, crowd a corrugated-iron back garage in Footscray, sorting fruit and vegetables. They’re hunched over two long rows of waxed grocer’s boxes, sharing out lettuce, leeks, beans, beetroot and much more.

The Seddon Organic Collective is holding its first sorting day. The members, and their toddlers, are making friends. The SOC is made up of 25 local residents. From now on, every week, they’ll buy cheap organic produce from the Melbourne Wholesale Market on Footscray Road, split it up, and dine in on the benefits.

Ken Johnson, the clean-cut president, is puzzling over paperwork, trying to tally the boxes, the money and the orders. He believes organic produce is both healthier and better for the environment. “This is a way to access organic food more cheaply,” he says.

The key to cheap supply is bulk buying from the wholesale market, and for that, the group must be incorporated.

In less than 15 minutes all the boxes are sorted. Each is bursting with more than a dozen kinds of fruit and vegies. While Johnson keeps pondering his lists, the other members chat and sip tea.

Leah Avene is thrilled to be a part of the new co-op. “I’m from Tuvalu, in the Pacific. It’s sinking due to global warming so I made a decision a year ago to try to live more sustainably. The first thing that we did was go vegetarian and start eating organic.”

The 23-year-old journeyed to the wholesale market at 6am to buy the produce from the wholesalers, Biodynamic Marketing. “For $20, it’s amazing value. I used to get a seasonal box from a local place, which cost me $45 a week and it was probably a bit smaller.”Big savings aren’t the only plus. “There’s a real community buzz growing among us, which is really lovely,” she says. “When we established the group it wasn’t just about organic eating. We also wanted to build friendships with like-minded people.”

The Seddon group is following a model begun by the Western Organic Collective in 2001. The WOC, based in Footscray, usually has an extended waiting list.

Long-term member Nick Ray says the group formed out of a desire to buy good organic food cheaply and without too much trouble.

“The quality of the stuff is extreme. None of that wrinkled-up organic produce that some people say isn’t quite up to speed. It’s a feast.”

As well as the weekly veggie box, WOC members buy bread from Pure Bread and run quarterly bulk dry-goods purchases. They also meet socially for “Seasonal Celebrations”. “Once a quarter we have a meal together,” Ray says. “People bring food along, we share news and we often have a theme. We talked about food miles at the last one.”

By 8.15am contented SOC members are leaving the garage, lugging boxes for themselves and others for delivery. The co-op has only just begun and there are still some kinks to iron out — they made three boxes too many today. But already there’s someone on the waiting list. Cheap organic produce is in demand, says Johnson. “It would be great if this model could spread around the city.”

How does it work?

EVERY Friday morning, two people buy the fruit and vegies from the Melbourne Wholesale Market. They drop the produce off at a designated house, where four people sort it, then deliver a box to each house. Voila!

Every member must contribute to the running of the collective. The work is done by roster: sorters must help out for a couple of hours every four to six weeks. Other people take on committee roles or organise the money, rosters and buying.

“It’s not a system that would work for everyone,” warns Nick Ray, from the Western Organic Collective. “You can only forget (to show up) so many times before you’re blacklisted!”

From experience, the collective has found that about 25 members is the right number. Any higher and the quantity of food required becomes too large to manage.

To make sorting and delivery as easy as possible, it’s best if members live close to one another.

First published in The Age, Epicure