Anniversary Issue: The money at home

A sustainable local economy starts with small business — and the public sector

"You need to shrink the distance between the people who visit the private economy and the people who run it."

David Morris. Institute for Local Self-Reliance

Back in the early 1980s, when the word "sustainable" was barely a blip in the environmental vocabulary, the mayor of Saint Paul, Minn. brought in a consultant named David Morris to help him figure out how to revive the city's economy.

Saint Paul was facing the same challenges as many other northern cities — old industry was dying, the downtown was decaying, and population was declining as more affluent residents moved to the suburbs. Mayor George Latimer didn't want to do what some of the other cities were doing and beg companies to move into town: he wanted to see what could be done with the resources the city already had.

Morris, who now runs the Institute for Local Self-Reliance, started by contacting the US Patent Office and getting a list of everyone in Saint Paul with a recent patent. He eliminated corporations and universities and wound up with a list of a few hundred people — inventors, thinkers, folks who had come up with something new. About two dozen had created gizmos or technologies that solved a real problem. Most of the stuff was sitting in basements and in old notebooks.

"Latimer called them all together," Morris recalled, "and he said, 'We believe in you, and we're going to help you start a business and market your invention.'" The mayor helped the would-be entrepreneurs find the capital and support they could never have gotten by themselves from a private sector not terribly interested in small business start-up loans. He encouraged them to open companies and market their products. The results were remarkable — lots of new locally-owned companies, creation of good jobs, and the beginning of a revitalization plan that made Latimer a national figure.

That principle — look locally and use the resources you have — remains the heart of a sustainable local economy.

"A sustainable place can feed, power, and house its citizens with local resources," explained Michelle Long, executive director of Bellingham, Wash.-based Sustainable Connections. "You need to generate new innovations with local innovators."

The late urban thinker Jane Jacobs made that notion a centerpiece of her life's work. Starting with The Economy of Cities in 1969 and later in Cities and the Wealth of Nations in 1964, Jacobs argued that urban economies are like ecosystems — they are healthiest when they are diverse, with many different niches, and they thrive when energy cycles through the system. The cities throughout history that have done best have been those that figured out how to replace imports with locally produced goods and services.

It's not that complicated, really. A sustainable local economy, like a sustainable ecosystem, needs lots of players, needs the energy of the system — money — to stick around through numerous economic cycles, and needs to use local resources to grow.

An economy that doesn't depend too heavily on any one sector will not only do better in good times but will be much hardier. As farmers know, a monocrop system not only needs far more sustenance (fertilizers, irrigation, etc.) but is far more vulnerable to catastrophic failure. Diverse local economies, with thousands of small businesses offering a wide range of goods and services, can survive bad times better than communities that depend on just a few big industries.

As the Guardian has shown through a series of studies we did years ago ("The end of the high-rise jobs myth," 10/23/85) — and which research done since then has proved — small, locally-owned businesses create the majority of new jobs in San Francisco.

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