What’s Wrong With This Picture?

29Nov12
Aerial View of the Pendleton, Oregon Wal*Mart Property

Aerial View of the Pendleton, Oregon Wal*Mart property, formerly the site of Harris Pine Mills.

I am a member of a Facebook that someone posted this picture to some time back. The poster asked for ideas of what could go into the space between the building and the road. Several people made suggestions, mostly retail, food service, or entertainment, and mostly requesting some sort of chain or franchise. Some people took it as an opportunity to complain that the “city fathers” or the “old boys network” was restricting development.

The poster’s point was that the space to the left of the building was undeveloped, but I was struck by what this picture says about the national economy. The building on the right side of the photo is the local outlet of a chain retail establishment. The previous occupant of the property had been a pine mill. The previous occupant brought money into the community. The current occupant takes money out of the community.

If you look closely at the infographic below (or follow its link), you see some of the benefits of shopping locally:

Image from Upworthy

It’s worth noting that even when shopping at a locally-owned business, nearly one third of the money spent leaves the area. That is because there is a limited extent to which retail can add value. A substantial amount of the retail price is made up by the wholesale price. Imagine what the pie chart would look like if you were buying locally-produced merchandise, or better yet, selling locally-produced merchandise to outsiders. What would the chart look like for an auto plant? Or a steel mill?

In the 1990s, Western politicians of all stripes hailed the rise of the service economy as manufacturing declined, as though wearing a dress shirt (or a blue vest, or red polo) to work made life significantly better for workers than wearing coveralls. In some ways, actually, the decline of the manufacturing economy has made life worse for workers — many service jobs (especially in retail and hospitality) are poorly-paid and/or part-time. (The New York Times recently ran an article diving into the ways that large employers use part-time work to avoid ‘over-scheduling’ employees, and how they punish employees who want more hours or who cannot work assigned shifts, while promoting part-time work as a great solution for employees who need flexibility.)

I don’t want to argue that we need to bring back the manufacturing economy of the 1950s, primarily because that’s not going to happen, but we cannot ignore the necessity of a production economy. I also do not want to downplay the importance of service jobs — your doctor is a service provider, and you probably think their job is pretty important. Though manufacturing contributes to a production economy, it is not alone. Journalists and authors create most of the value of their work, as do artisans, web developers, and app programmers (and even bloggers). It is probably telling that the recent economic crash happened when demand for new housing dropped, cutting off demand in part of the manufacturing sector.

We should not think of manufacturing and production as looking backward. Beyond the examples above of web developers and app programmers, take a look at what The Plant is doing with an old Chicago meatpacking facility.

It is also important to remember the importance of production to the people who work in it. For many people, stocking shelves, filing papers, or repairing cars is nowhere near as fulfilling as writing a novel, making hats, or building airplanes. For these people, depending on their skills and talents, there may be no fulfilling jobs available in a wholly service-based economy.

When we tried to respond to the decline of the manufacturing sector with service sector growth, we failed. We did create jobs, and some of those jobs kept the economy producing. But too many of the jobs created were low-pay jobs in a consumption economy, leaving behind people whose talents, skills and interests lay in production, and shipping the pay for those jobs overseas. I wish I knew how to better balance an economy, but you can’t expect Wal*Mart or the Olive Garden to do it for you.

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