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An urgent call to 'buy local'

Job developer Michael Shuman seeks to rebuild struggling communities with home-grown businesses.

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In 2006, New Mexico's Los Alamos National Bank began issuing local "community care" debit cards good only at participating local businesses. Cardholder purchases rack up "community points" good toward additional purchases at local businesses; a portion of their purchases goes to a nonprofit of their choice. The idea has proven popular: One out of every 10 Santa Fe residents uses the cards, according to bank officials.

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These and other promotions are being spread around the country through the Business Alliance For Local Living Economies. Founded seven years ago by Philadelphia restaurant owner Judy Wicks and Laury Hammel, a Boston health-club owner, BALLE has grown to include some 60 small business networks in the US and Canada. Shuman was involved in BALLE's formative stages, providing the organization with its intellectual underpinnings. In the next few months, he'll be joining BALLE to work full-time on economic development and public policy initiatives.

The organization is still experimenting with what works for small businesses. "We're a young movement," says Mr. Hammel, noting that it's only been five years since BALLE launched its first "buy local" campaigns.

These grass-roots efforts are a good start, Shuman feels, but he also thinks it's necessary to change "fundamentally misguided" government policies that favor nonlocal businesses. By Shuman's estimate, some $113 billion in tax dollars is spent each year to lure companies into a community, only to have many of them take the money and run in a few years. Why not put the money instead, he says, into building business networks like BALLE and into technical assistance for local entrepreneurs who are much more likely to stay around?

Shuman's "small business is beautiful" campaign has few detractors. After all, the small grocer who knows his customers' names, the hardware store owner who can find just the right widget for you, are icons of retail Americana.

But traditional economic thinking embraces the value of big business, the notion that large concentrations of capital and labor are necessary if consumers want inexpensive cars, refrigerators, and computers.

Large "exporting" businesses, with their broad geographical base of customers, bring in untapped consumer dollars to a local economy, notes Tim Bartik, a senior economist and job development researcher at the Upjohn Institute in Michigan, a nonprofit think tank founded by the pharmaceutical giant. And they often pay higher wages.

But Mr. Bartik is quick to admit that local and state governments don't always spend tax revenues wisely, don't always do the homework necessary to determine if a big, out-of-state corporation will actually pay higher wages, hire local residents, or buy from local suppliers. Too often, he says, these companies are lured for their headline-grabbing, "ribbon-cutting" luster, when the same tax dollars might be better spent training budding entrepreneurs at a small business development center.

It's here that Shuman and mainstream economists find common ground. Shuman, for his part, agrees that "export" businesses add to the economic health of a community, but argues that locally owned businesses can bring in export dollars just as well as the big guys, whether it's from sales of maple syrup or financial services.

The effort to revive local economies is occurring for the most part outside the media spotlight, in Shuman's countless trips to struggling communities, in the growing number of small-business associations sprouting up around the country.

It's a slow process. But Shuman, a born salesman, is optimistic about the movement's future: "In the current economic downturn, Americans are beginning to understand that their future prosperity lies in the community businesses down the street that employ their neighbors, pay the taxes, and promote local relationships and trust."