When cheaper isn't always better (or cheaper)

• Columnist Robert Robb questions the countless economic studies that suggest shopping local helps communities
• If America had 30%2C000 Starbucks locations%2C the company only supports one accounting firm%2C one graphic designer and one website developer.
• But 30%2C000 independently owned coffee shops support 30%2C000 accountants%2C 30%2C000 graphic designers and 30%2C000 website developers

R epublic columnist Robert Robb is tired of hearing about the "buy local" movement and would like Arizonans to turn a blind eye to the economy and simply shop wherever they feel most satisfied. ("Shop where you want, guilt-free," Dec. 19)

He claims the local movement is "hooey," yet unabashedly has no statistics to back this. He just wants you, dear citizens, to throw the concept out the window.

In his article, Robb questions the countless economic studies released since 2002 but does not offer any substantive reasons for the questioning. Instead of following Robb's simplistic calculations, let's turn to the professional economists who back these studies, which have all concluded that an average of $30 more out of every $100 spent will stay in the local economy when money is spent with a local company versus a non-local corporate entity.

A Civic Economics study from 2007 showed the state of Arizona's then-$5 million contract with OfficeMax was causing the state to lose $500,000 per year in economic leakage.

The methodology shows OfficeMax did not offer 62 percent of their employees any health-care benefits, costing Arizona taxpayers significant money to support them through the state's health-care plan, which drains the economy.

Those are actually not cheaper prices at OfficeMax. That's deferred billing: we are paying higher prices when we factor in the true cost of doing business with OfficeMax.

In comparison, Wist Office Products, their local competitor, provides 100 percent of their employees' health-care benefits. OfficeMax supports no business service jobs, called secondary jobs, in Arizona. They don't hire local accountants, graphic designers, attorneys, payroll service providers or any other business, while Wist sources more than 80 percent of their goods and services locally, which creates jobs.

While Robb makes the case that it's too complicated to measure all of Arizona's companies and how often they hire other local businesses, it's important to understand why that number, called the multiplier effect, is vastly greater at locals than chains, regardless of whether or not it's precisely measured.

If America had 30,000 Starbucks locations, the company would still only support one accounting firm, one graphic designer, one website developer, etc. Conversely, 30,000 independently owned coffee shops support 30,000 accountants who have a client, 30,000 website developers who have a gig, 30,000 graphic designers, and so on.

The chain-store model actually eliminates three jobs for every two it creates.

Robb also touts economies of scale, which should be the saving grace of a free-market society. But it's not cheaper to buy a latte at Starbucks. Or tires at Costco, or a movie at AMC. And if you measure the true cost of doing business with most chain stores, there simply is no reward for economies of scale. Unless, of course, you count gains so short they are measured by the day and not the year.

Money in a customer's pocket for a day certainly doesn't change the outcome of a community when the overall community's economy is attached to a lead balloon that includes low-wage jobs, no health-care benefits, and no secondary or tertiary job market.

The whole notion that money saved at chains drives an economy is flawed because it assumes chains are always cheaper, which isn't true. And any savings is significantly offset by jobs eliminated as well as lost income overall.

Economies of scale only work in a free-market society, which we are not. Our food is subsidized — consider 80 percent of all farm-bill dollars since 1995 went to the largest 10 percent of America's farms for commodity crops, which is why processed fast food is so cheap.

Our oil is subsidized, our biggest banks are subsidized, and even chain stores are subsidized — all using taxpayer money. To believe in free markets in the U.S. today is like believing in the tooth fairy. Americans actually have forgotten how the economy works and have no tools to measure the true costs — human, social or environmental — of doing business. To suggest that we shouldn't care about these costs is shortsighted and reckless.

Those who tout free markets often site large chain stores as shining American examples of free-market success, but in reality most of their success is easily traced to massive subsidies, passing the health-care buck to the taxpayers, and wages so low that today roughly 15 percent of Americans are on food stamps even though they have jobs.

In Arizona, Cabela's received more than $60 million in subsidies, and Bass Pro Shops more than $30 million. Walmart is the master of the subsidy, exploiting municipalities' drive for the short-term gains of sales taxes while bringing low wages, very little health-care coverage and then benefiting from food-stamp usage.

Chain stores actually create bigger government. Look around at low-wage jobs and the shrinking middle class. The corporate economy is failing the country, and our government is using our money to pay for it. One solution is to do business locally. Will it save the country? No. Does it empower people to make significant changes within their own communities? Absolutely.

It would be a nice story to tell people that if they just "patronized local merchants rather than national chains, the local roads would be paved in gold and the local residents would all be driving Rolls-Royces," as Robb states, but, of course, this isn't true. No one claims this.

What we do claim is based on an economic study, which showed that if everyone in a city the size of Tucson shifted just 10 percent of their spending from national to locally owned businesses, it would create an average of 132 million new dollars recirculating in the local economy, 1,600 brand-new jobs and $52 million in new local wages.

Big-box corporations spend billions to entice people to buy from them. Buy-local campaigns are in one sense also just an effort to persuade folks to shop from local independents.

Local First Arizona has been incredibly successful. With a tiny budget, the organization has persuaded tens of thousands of people to think differently about the way they spend their money.

Robb finds the LFA message annoying, which speaks volumes about his lack of awareness about what the organization is actually doing. There is no guilt trip in any of our messaging, only empowerment.

There are countless people who gain more satisfaction from doing business with their neighbors in whatever way is convenient for them, while knowing they are voting with their dollars.

Kimber Lanning is founder and executive director of Local First Arizona, a statewide, non-profit organization that works to raise public awareness of the economic and cultural benefits of locally owned businesses.