Amazon has steadily gobbled up market share even as small businesses around the country have struggled to survive the Covid-19 pandemic. Amazon’s stock is up 77% over last year and it has already hired 175,000 people during the pandemic.
Meanwhile, according to Yelp, as of August 31, 163,735 US businesses have been forced to close, and some estimate that 60% will not reopen. The loss of a small business is never merely economic; it is a loss for the community. A thriving local community is inseparable from a thriving local economy.
Therefore, the health of a local economy is not simply about maximum efficiency, the allocation of resources or providing goods at the lowest possible price. It is also about the health of a local community and its small businesses, which help cultivate these three things:
Keeping money within the community
Shopping at a locally owned small business helps money remain in a local community. When money leaves the community — as when a person shops at Amazon, for instance — the consumer enjoys a short-term benefit, but the community does not.
On the other hand, when citizens patronize locally owned small businesses, it incentivizes the creation of local jobs and encourages the creation of more local businesses.
Some innovative communities have even sought to institutionalize local spending by developing local currencies, whereby people exchange dollars, often at a local bank, for local scrip that can be used in local businesses. Such innovations encourage consumers to focus attention on the health, stability and economic security of their communities.
Making people better citizens
Small businesses provide opportunities for the ownership of property. When people own property, they develop the habit of thinking about the future and treat local issues with sober attention.
When those without property are surrounded by examples of small, local business owners, they can be inspired to become owners themselves and engage with the community in a similarly attentive way. Large-scale chains and other businesses reduce such opportunities for ownership.
Small businesses help cultivate trust between citizens, while large chains and e-commerce tend to foster anonymity. Trust between citizens is a vital part of a healthy community and is built through reciprocal relationships that are fostered in places like local businesses, where individuals encounter each other and exchange goods and services. In regular face-to-face interactions, trust is built, and trust helps to nurture neighborliness.
Instead of jumping onto the Prime Day bandwagon and shipping your dollars to Amazon, consider buying local. Such a radical act would be a boon to local businesses and would, in the process, strengthen the local communities in which we live.