Monthly Archives: June 2015

Going Local – Creating Self-Reliant Communities in a Global Age

Going-Local-Shuman-Michael-9780684830124Anyone who starts their book with a quote from Wendell Berry will get my attention.

But while Berry produces exquisite art that feeds the soul with inspiration and practical wisdom, Michael Shuman writes books for the “how to” of localisation. This one is filled with examples of what has and hasn’t worked – mainly from USA examples from the 1990’s but still highly relevant to our present time and place.

What I like about Shuman is the reasonableness of his position. For instance:

Going local does not mean walling off the outside world. It means nurturing locally owned businesses which use local resources sustainably, employ local workers at decent wages, and serve primarily local consumers. It means becoming  more self-sufficient, and less dependant on imports. Control moves from the boardrooms of  distant corporations and back to the community, where it belongs (p6)

He deconstructs the current narrative that cannot perceive prosperity and well-being outside of increased reliance on the global economy, where we are obsessed with attracting overseas investment as our only hope of economic salvation. He says:

The only way communities can ensure their economic well-being is to stop chasing multinational firms with no community loyalties, and start investing in community corporations. Prosperity follows when ownership, production, and consumption become intimately connected with place.  (p7)

He has some great examples of cities and regions abandoned by large industry who have faced social and economic disaster, but instead assessed what was left and found ways to recover a buoyant local economy.  His hypothesis is that the costs of courting large-scale overseas investment is too high. The advantages are temporary at best. A long-term, robust economy is founded instead on solid, locally owned sustainable businesses.

The final chapter in the book addresses ten steps toward community self-resilience. I want to explore how we could adapt these to Northland:

Step 1: A Community Bill of Rights

By this he means developing a shared vision of a better future, asking questions like: What do we want to produce? How? Where? What kinds of goods and services are necessities? What should be our standard of worker right and wages? What should be our stand on preserving our land, water and sea? What kind of ownership structures will best serve our community well-being? As he says:

A community bill of rights accomplishes several goals. It enables residents to assert, fundamentally, that ends come before means – that businesses are welcome if they serve the community. It creates a set of public norms about commercial behaviour that protects the public and provides fair notice to corporations. A business’s faithfulness to the Rights. while voluntary, carries consequences. Every time a citizen considers making a purchase…he or she will have the list of qualifying companies in mind.

This is what we have in mind through a our Localise Project – developing a set of voluntary standards around shared values and then identifying businesses that are on-board with these values that they may support one-another.

Step 2: The State of the Region Report

This is about taking stock of what our city, town or region is and has. Every community has resources, assets and culture that are capable being revived and empowered. Sometimes we forget how blessed we are in Northland in terms of climate, resources and history. Shuman recommends recording and publishing this to remind ourselves of who we are and what we have. This not only gives us a starting point for moving forward, but inspires a new sense of collective identity.

Virtually every community… has a gold mine which economists have yet to discover. Along its veins and other deposits may be found unemployed human resources, underused civic institutions, and discarded economic assets…. Many kinds of human assets now lie fallow…… the inventiveness of the young, the forgotten skills of retirees…tally the inanimate objects that have been all but written off: empty buildings, idle machinery, wasted energy. (p184)

This report would also include our local renewable resources, non-renewables, community organisations, measures of current exports and imports, indebtedness and investment on a region-wide basis and so on. This report is not so much about finding answers, but identifying where we are at – that in many ways we are richly resourced, but just need co-ordination and vision for that to be utilised in a sustainable and empowering way for the whole community. This requires research and coordination – an essential part of the process. The Ministry of Economic Development recently commissioned a report on Northland which has collected much data around the Northland economy. Many of the conclusions are framed in terms of a global/industrial narrative, but the information could provide a great resource for a State of the Region Report.

Step 3: Anchor Corporations

From this report, Shuman says, there will be obvious ripe business opportunities. Unmet needs suggest new markets for local businesses. Under-utilised or poorly utilised resources may then be matched with people with ideas but lacking capital or land – unused buildings or land for instance, discarded goods that may be recycled or up-cycled. Import replacing businesses will begin to emerge based on a joint commitment made at step one. This is where a few companies must step up to point the way forward. Shuman says:

The existence of one or two successful community corporations – using local inputs, producing quality goods, operating in harmony with the environment, selling to local consumers, treating workers well, delivering profit to local shareholders – should inspire others to follow… As they increase the demand for inputs to production, new firms will be motivated to set up shop. (p187-188)

In Northland we have at least one great example of a Social Enterprise that has lead the way in CBEC (Community, Business and Environment Centre) is based in Kaitaia but has ventures throughout Northland. With a focus on running community services (transport, home insulation, solar power, conservation and recycling) in a sustainable way they have proven the viability of the Social Enterprise model in Northland. The Akina Foundation is presently working in the Far North coaching a series of new social enterprises, for example AKĀU – a design and architecture studio in Kaikohe using local materials to make quality furniture and other locally designed products, providing training for local youth in association with Northtec.

Step 4: Community Friendly Business Schools

Most people who have been employed by large companies all their lives (or have been unemployed) haven’t had the opportunity to learn the skills of business ownership. The availability of coaching and mentoring around the values identified at step one has been rare in the past. Shuman says:

The transformation of business schools and university economics departments is another imperative. Lewis Mumford once observed that industrial society transformed all seven deadly sins except sloth “into a positive virtue. Greed, avarice, envy, gluttony, luxury, and pride [are] the driving forces of the new economy”.

Fortunately we have organisations like Akina who are leading the way in ethical Social Enterprise and locally Northtec is playing a significant part in sustainable development and training.  They have carried out some significant research including an extensive study of the impact of the Whangarei Growers Market. From my background as a Chartered Accountant I see the great disconnect between great people with exciting ideas and the realities of compliance with regulations and reporting requirements. I am still involved in informal business mentoring with a number of forming ventures and may formalise this in future as there is a great need for incubation of new ventures. We are also in the process of creating software tools to assist with compliance and governance.

Step 5: Community Finance

Shuman sees the development of sources of finance as essential for the starting of community organisation. Conventional sources of finance form a point of “leakage” from the local economy, reducing the “multiplier” effect of keeping funds in circulation.

As community corporations expand, so will the need for local investors. A concerted effort must be made to convince your neighbours to transfer their pensions and other assets from global stocks and bonds to local ones, and from mutual funds with no preference for place to local mutual funds targeting local businesses.

Many will of course argue that this may expose their retirement funds or their children’s inheritance to undue risk.  But are investments in the global economy actually that safe anyway? There are ways to invest locally in safe way – for instance investing in land or buildings that are made available for social enterprise or start-ups at an affordable rate as a way of promoting these ventures. Mechanisms already exist for protecting peer-to-peer lending. Simply using a local solicitor to draw up an agreement is the most simple way if there is already some kind of relationship between the borrower and potential investor. New peer-to-peer lending businesses like Harmoney allow lenders to choose who to invest in. So a local investor could go in there are choose from a range of local ventures.

Step 6: Community Currency

Community currency is a proven way to stimulate a local economy. As well as reducing leakage for multinational banks and credit card companies, it provides resilience in times of natural disaster, economic or political crisis. Shuman says that local currency systems:

…demonstrate that designing, managing and recruiting participants for community currency is a terrific organising project. It raises awareness  about who lives in the community which citizens are committed to self-reliance, and what and where goods are locally available. It strengthens relationships between local business and consumers. It heightens public appreciation that every purchase is a civic act.

Northland has had community currencies and time-banking in the past. Laurence Boomert,  a guru on alternative currencies did a great presentation on Complimentary Currencies at the Resilient Economies Conference in Kaitaia in 2014. As far as I know there are no current currency initiatives in Northland however there are tools to enable virtual local currencies available and once some of the other steps are more progressed this would be natural extension.

Step 7: Community-Friendly Local Councils

While all the above can be achieved without local government support, if the local councils do get on board, there are massive advantages. Shuman says:

It can make sure that the only beneficiaries of local investment, contracts, purchases and bond finance are community corporations. It can help to match local-input supplier and workers with local producers. It can set up scholarship funds… If your mayor or local city-council members  refuse to start making the kinds of economic stands that make difference, consider standing against them.

There are some encouraging signs for Northland in this arena. The Far North District Council hosted the Resilient Economies Conference in Kaitaia in 2014. They are supporting the Akina social enterprise work in the Far North. The Whangarei Council seems open to suggestions. We just need to keep working on them!

Step 8: Political Reform

This is where it can start to get messy. As Shuman says:

A community that begins the transformation to self-reliance will soon encounter powerful enemies. Multinational firms that find themselves losing local markets and special government privileges can be expected to retaliate… and continue to use trade treaties and friendly courtrooms, wherever possible, to circumvent the inconveniences of democracy… But their most likely – and dangerous -reaction will be to tighten their grip on local governments.

This is a challenge. Once we make a stand to take our independence back from the global economy there is likely to be opposition. Already the TPPA is a massive threat to a thriving local economy. The good thing about the Northland economy is that nobody outside of Northland really cares about us. Our production is insignificant in national terms and no-one in central government wants to tackle our social problems so hopefully we can “fly under the radar.”

Step 9: A Lobby for Localism

This is about pushing for policies that devolve power back to local communities and local councils.

Local elected officials have to steer the devolution revolution so that they are given real powers over the local economy, and not just more responsibilities without the revenue-raising capacity to pay for them. They need to push the national government to reorient the nation’s trade policies away from the centralised autocracy…

In New Zealand local government has less power and less resources than in most other countries – lots of responsibility but little real power. But once we have a working model of a truly resilient local vibrant economy that doesn’t keep begging for government handouts, is addressing it’s social problems in creative and compassionate ways and is reclaiming a truly local identity then hopefully we will have a great case for government to look seriously at making it easier for local communities to at least be on a level playing field with the corporations, and to trust local councils with more power to facilitate this.

Step 10: Inter-localism

Finally Shuman suggests a better way of forming global connections:

A more responsible course for a globally minded community is to move toward local self-reliance, and to help other communities worldwide do likewise. How? By transferring innovations in technology and policy that foster self-reliance, especially to the poorest communities in the world that desperately need a new approach to sustainable development.

In fact it is many of the “poorer” countries where social enterprise is thriving and we can learn from them. However the idea is sound, that we get our own house in order, care for our own people – our own “zombie towns” – then perhaps we will have learned some skills to help others.

 

Clive McKegg

harbour board building

Nurturing our local economy

 

Assessing our assets and our goals

We have extensive and diverse resources in Northland. These are our true capital assets. Our natural resources include our soil, our waterways and water reserves, our seas, our forests, our plants, animals and birds (both domestic and wild), our history, our skill-sets, our experience, our culture and our other raw materials. We also have existing infrastructure in terms of power reticulation, roading, harbours, and modes of transport (vehicles, boats, planes etc). We have the land-form and the climate to produce all of our basic necessities. Most importantly we also have our people.

Whether we use of misuse our assets depends on our goals. Our goals determine the ends to which we dedicate those assets. If for instance our goal is the maximisation of short-term wealth channelled into the hands of a few people it would make sense to sell off our capital assets, or to exploit them as quickly as possible – to run our economy, our people and environment, as they say “into the ground”. Then a few of us could retire rich to some safer place leaving the rest with very little.

If our goal on the other hand is the long-term well-being of our place and of our descendants we would do our best to preserve and build up our capital assets. We would ensure we maintained diversity of skill-sets, diversity of agriculture, horticulture and manufacturing. We would preserve our waterways, ground-water, air and soil. We would ensure our fishing supplies and native forests were harvested in a way that increased rather than decreased their long-term viability. We would retain local ownership of our lands and businesses. We would ensure that irreplaceable resources like minerals were only used in a way that ensured maximum value for generations to come for the wellbeing of our region. We would put great care into passing on values, culture and skills to our young people so that they – our greatest assets – would have a future in the place they sprang from. We would minimise the leakage of our assets and resources.

Leakage

Leakage occurs when resources from within a community are extracted out for less than fair value. Some would argue that exports of raw material are not leakage, as they allow us to import the goods that we need and cannot produce here. From an accounting perspective when we deplete our capital to gain depreciating assets or consumables we are going backwards. Say for example we sell a capital asset such as a house, and spend that money on say, a car or a holiday. In 10 years the car is probably worn out and the holiday is a distant memory and we have no house – even though the house and land is still there and probably has the same intrinsic worth. This is the story of Northland under our current economic thinking.

We are depleting our true assets, in exchange for consumables and depreciable assets. We are selling our land to investors who take most of the profits generated on that land out of the area and in some cases out of the country. We are losing the nutrition in our soils through exporting huge amounts of timber, meat and dairy. What do we get in return? Imported fertilisers and pesticides to pump out more and more production from our depleted soils. Our soils have become chemically dependant – a temporary fix at best that cannot replace years of depletion and exhaustion. True sustainable fertility and natural resistance can only be built up again through the long process of careful humus replacement and building up the depth of topsoil. Our human and animal waste pollutes our streams and harbours instead of those nutrients being carefully put back into the soil.

We import cars, tractors and machinery to run our farms – all depreciable. And we buy consumable goods – fuel to run our machines and the trinkets of consumer society. These end up in our landfills, in our oceans, in our waterways, in our atmosphere and in our soils making it harder and harder for future generations to survive in this place. Or we ship what waste we can overseas – some to be recycled but most ends up polluting some other unfortunate community. When we use credit from a overseas-owned bank we are effectively “importing” it – the profit derived from our fees and interest is going to the overseas owners.

We also deplete our assets when we fail to care for our young people. When they cannot find meaningful employment and caring, safe communities what future is there for them?

How do we reverse leakage?

Diversifying our production and moving back to more mixed-farming models is a way of reducing and reversing leakage. More raw materials processed locally will reduce leakage, along with a greater variety of goods produced locally. This production may be smaller-scale but higher-quality. Less reliance then needs to be placed on revenue from bulk exports as more goods are traded locally and what is exported is in a higher value state. More work is created locally through the diverse local industries required for the more complex and skilled economy that results. As a bonus, waste and pollution is reduced as transport needs are reduced, and a more diverse model uses “waste” from one industry as raw material for another (manure and animal bi-products as fertiliser for instance).

More diverse farming and horticulture is less intensive in terms of environmental impact. Sustainable forestry and dairying practices maintain and build up natural fertility, preserve soil and waterways, allow aquifers to rebuild, reduce the need for expensive imported chemical and mechanical interventions and work with the natural processes.

Reducing dependance on debt also reduces leakage. An internal economy is one where capital is supplied from within the region. Borrowing from outside of the region is leakage – overseas owned banks profiting when that could be retained in the local economy. Similarly investment that is sent onto the national or international stock market is leakage. Brokers and companies elsewhere benefit.

By moving to smaller-scale but more diverse and more value-added style businesses the need for the vast debt burden required by our current primary industries could be reduced. The costs of entry into farming and horticulture becomes affordable in smaller-scale operations. More people are employed in more diverse jobs.

Finding ways to link local investors with local borrowers vastly reduces leakage. With the development of local credit co-ops, peer-to-peer lending, local virtual-currencies and time-banks an internal economy can begin to thrive.

Finally, we reduce leakage when we care for our young people and for the most powerless members of society. The worst fallout of our global-industrial system is social. Our people who have been left without work and without hope as the global economy has gone into spasms is a terrible waste.

When our young people have gone to the big city, overseas or to prison what sort of legacy is left for future generations? If our goal is the long-term well-being of our place and of our descendants we have failed almost completely. Free higher education would be a great start, but it must lead into creative, fulfilling local jobs, business ownership and home ownership opportunities to create stable communities.

A well-functioning local economy cannot rely on “innovators, entrepreneurs and businesses taking a risk” unless those innovators and entrepreneurs are connected to the community and land and are passionate about the wellbeing of the community and the land – actively supporting social services and community welfare initiatives that empower those caught in the poverty trap. A profit motive alone will not care for the poor or for the young. The motive must instead be the long-term wellbeing of the community, and the creation of a sustainable economy to support that goal.

What are our choices?

What kind of community consensus do we need to create a system that is more that a vague hope that the most powerless are cared for through some sort of trickle-down from tourism or exporting of raw materials?

How do we make our foremost goal and the measure of our success to be the care of our people in empowering, dignified and culturally appropriate ways? Can this be left to the whims of a so-called market economy? Even when it is demonstrated that it makes no sense even just economically to leave people poor, uneducated and unemployed, the market economy alone has generally done nothing. It has left the job to “the government” or simply blamed the poor, uneducated and unemployed for their own plight then grumbled about having to pay tax for the social problems created.

The most obvious way to generate an internal local economy is of course to make a choice, wherever possible, to buy from local suppliers who also buy from, borrow from and employ other local people. The more local the supply chain the more leakage is plugged. The more leakage is plugged the more momentum is gained by the local internal economy.

Tourism may be a happy bi-product of a strong caring local economy, but to rely on this as our source of well-being is to make ourselves powerless victims of the international economy that really doesn’t care about us. But instead imagine focussing on a truly local sustainable culture, celebrating our uniqueness and sharing the good things we have with others in an attitude of hospitality and generosity. Imagine art and music made not for commercial gain but out of a flourishing of history and depth of community that has time and resources to celebrate together. Ironically that would be a great tourist attraction!

Imagine the wonderful unique goods we could make from our local materials – not just “crafts” for “tourists” but real food, clothing, utensils, furniture, tools and technology that has grown to meet our local needs using our local resources. With a thriving full-employment low-social-cost society we should be able to make an excess of goods that can provide an export income, but only after supplying local needs at fair prices. This would make our region a highly desirable place to live and to visit.

Would this kind of local economy provide us with not only basic economic resilience but also assist us in our goal for long-term well-being of our place and of our descendants – a meaningful sustainable community where there is a future for our young people? Could this model be the way to lift us out of our present health and social crises? Could this provide a basic level of provision in case of emergency or disaster?