An Economic Plan for Jackson County

20 10 2010

In the current race for County Commissioner seats, there seems to be some misunderstanding of what a “local-economy” strategy means for the Rogue Valley. Greater resilience, self reliance and local ownership of business is viewed by some folks as a throwback to an earlier age and out of step with a global economy.

This view is very mistaken.

One only needs to look at current day China, who continues to grow at 8 percent even while its number one customer, the USA, has been in recession for the past two years. One only needs to look at such ‘mini dragons’ as Taiwan, South Korea, Singapore, and Hong Kong; or European countries and regions such as Germany, Scandinavia and Northern Italy. All of these areas have taken a pronounced local-first approach to developing their economy. We should do the same here.

The local-first approach revolves around two important ingredients: local ownership of business and import substitution.

The crux of the local economy strategy is the ownership of business enterprise and other productive assets (such as farm land) by the people dwelling in the region. No other factor is as important as this. Local ownership allows for the greatest proportion of the added value stemming from enterprise and economic activity to accrue to the population that created and managed it. Added value is composed of wages, salaries and profits (and also taxes, as taxes come out of the former). This accrual to locals is the basis for further expansion, as when saved earnings can be channeled, ideally through a local bank, to new and expanded businesses.

For the people of the Rogue Valley to get the most out of economic development requires them to own the businesses and economic assets that generate incomes and profits. Inviting outside companies as a source of jobs – most of which would be minimum wage jobs – is NOT the best approach to development. To think that a country such as Taiwan became prosperous by inviting foreign companies in merely to provide its people with “jobs” is ludicrous. In all of these other countries listed above, there are strict requirements about ownership. Foreign firms, to operate in China, must have a local joint-venture partner that maintains 51% or greater control of the company.

The second crucial ingredient to a living economy is import substitution. This does not mean to become 100% self reliant in every conceivable good or service that we use here. Import substitution is an ongoing strategy that is never finished. It means for our local entrepreneurs to provide services and products – if profitable – that have been coming from out of our region. Energy and food production are two sectors of our economy where we have much potential to provide more for our own consumption. Certainly we will never become “off the grid” of the national and global economy, but to capture more of the value add in the consumption in these two areas can boost our prosperity immensely.

Japan provides a classic example of import substitution. At the beginning of the 1900s, every bicycle in Japan was imported from the USA or Europe. Over the decades, Japanese entrepreneurs went from building replacement parts, then full bicycles for the domestic market, to finally, building full bicycles for overseas markets. Today, Japan is a dominant exporter of bicycles and high-margin bicycle components.

Japan also underscores a third important aspect of the living economy model: that of exports. Living economies are export driven. This may sound like a contradiction. If every region attempted to reduce imports, how could any region sell its exports? Trade happens because every economy is dynamic. New products and services come and go. Entrepreneurs and investors have to be agile to global conditions and markets. Again, the living economy model does NOT mean “getting off the grid” of the global economy. It means the people of a region realizing the greatest return on their human, natural and financial capital through their own ingenuity and hard work.

Two other important ingredients to the local economy strategy are buying locally and creating local investment mechanisms. These act to keep local dollars circulating locally and through a multiplier effect, increasing local personal incomes.

For further detail about how the living economy can be applied to Jackson County, see http://www.goldenforjacksoncounty.org/local_jobs_agenda.html.

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Capitalism Gone Bad in the Rogue Valley

27 09 2010

Yesterday’s Opinion Piece in the Meford Mail Tribune was right on target, if not sad, in its take on the situation of one of the area’s largest employers, Harry and David.

Purchased a few years ago in a private-equity leveraged buyout, the company was saddled with a $20 million-per-year interest payment. Ever since, it has been in the red.

A new chairman and CEO, appointed by the syndicate, lives in Atlanta and is hell bent on laying off folks, and apparently, turning much of the H&D orchards into tract homes.

We in this county have unwittingly become poster children of capitalism gone bad. The practices of Heyer and the Wasserstein syndicate are extractive, predatory and anti-democratic pure and simple, made possible by an era of cheap and free-to-roam money credit. They are lining their pockets while extracting and destroying value here in Jackson County. The situation is unfair and should be stopped. The fact that it is technically legal burns me to no end, and only underscores how upside down are the current laws regarding capital and ownership. The employees of H&D as well as all the residents of Jackson County are the victims of financial sleight-of-hand that, at present, is draining our county of assets and denying us of self determination regarding land, livelihood and lifestyle here in the Rogue Valley.

There are alternatives. We can create cooperatively owned ventures like the Grange Coop, the Medford Food Coop and the Rogue Valley Credit Union. We can use and encourage local banks to be more proactive in investing in their local community. We can use local investment mechanisms such as the Jefferson Grapevine, Community Resiliency Fund and micro-finance to back local entrepreneurs. We can create local and regional mutual funds, like Leslie Christian of Upstart 21 of Portland, where locals buy shares, and the fund buys local, privately held companies, thus keeping them locally owned. We can structure the ownership of a company, like is done in China and other countries, with two categories of shares: one for locals only and have controlling votes, and another for non local “foreigners” with no voting privileges. We can convert local companies into employee-share owner plans (ESOPS). As local business owners, we can band together in associations and marketing non-profits such as THRIVE to promote the local commercial class. Instead of playing victim and patsy to global predatory capitalists like Heyer, Wasserstein and company, we can take our own steps to local ownership, which is the right move to economic self-determination and democracy.