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Don’t believe the hype: Michael Shuman sets the record straight on small business.

PHOTO: Chris Shields

Think Local, Act Local

Symposium highlights the possibilities—and blasts the myths—surrounding small businesses


‘We have been told that local businesses simply can’t compete with global business,” said Michael Shuman Tuesday night in Troy to a crowd of more than 100 people.

This, he argued, is a myth.

Shuman, noted author and economist, was in Troy at the Sanctuary for Independent Media to take part in a symposium on local business co-sponsored by the Honest Weight Food Co-Op. Troy was one of the final stops for Shuman on his 30-city book tour that he began in August to promote The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition.

To pinpoint the specific industries in which global businesses have a competetive edge on small businesses, Shuman said, he referred to a government database, the North American Industrial Classification System. This database is a composite of 1,000 categories of business, allowing the researcher a concise view, he said, of the overall structure of the country’s economy. And from this list, he was able to conclude that there are only seven industries in which large businesses are actually more competitive than small business.

“It turns out that most communities probably cannot run their own centralized monetary system,” he said. “Most communities can not run their own nuclear-power plant. These would be hard to decentralize. But in the 993 other categories, there are more examples of competitive local businesses than there are of competitive big business.”

“So basically,” he concluded, “you can do almost anything at a competitive level because competitiveness . . . comes from the intelligence of the entrepreneur, the quality of the workforce, the integrity of the business plan and the execution. You can be as local as you wanna be—even in a city like Troy.”

“Careful . . . ” a proud Troy resident in the crowd warned Shuman—perfectly illustrating his point. This was a crowd that believes in local identity, community identity, a crowd of consumers and producers that take pride in their wares and their homes, peopled with those who are proudly opposed to the idea of shopping at Wal-Mart.

Karisa Centanni, the director of education at the Honest Weight Food Co-Op, got the idea for the vendor’s fair and small-business symposium last June when she attended a conference in Burlington of the Business Alliance for Local Living Economies.

“BALLE is an international organization that functions as an umbrella for all of these small, local, sustainable business networks,” she said. “And all of these smaller networks that are part of the larger BALLE network believe in something called the triple-bottom line—people, planet and profits—versus the traditional bottom line: profits.”

“Which got me to thinking about how to found a network that promotes sustainable cities, functional cities, sustainable business.”

One way, she said, is to create opportunities to bring local businesses together.

“I have 17 business owners here tonight because I called them up and they trusted me enough to come. I think that’s really huge,” she said, geturing out over the crowd of more than 100 people and vendors who filled the Sanctuary. The vendors included the Daily Grind, Dana Rudolph, Brunswick Smart Growth, and Mary Jane Books, among a dozen others.

Also represented was the Troy Community Food Cooperative, which, in its efforts to start a citizen-owned grocery store in the heart of downtown Troy, is an ideal example of what a small, sustainable business can be.

In the middle of an evening of eating locally produced foods, perusing the wares of local vendors, and watching the indie film Independent America: The Two Lane Search for Mom & Pop (which goes out of its way, and across the country, to blast the hell out of Wal-Mart), Shuman gave a 20-minute stump speech in which he attacked, among other things, the fallacy that with the big retailers come big consumer savings.

He recalled, in a humorously confessional story, that during one of his trips to the dreaded retail chain, he had intended only to buy a pair of shoes and instead wound up with $275 of values. He tried to comfort himself with the statistic that, on average, the Wal-Mart shopper saves 10 percent over other retailers. So, he figured, he had saved $27.50.

That is, he realized, until you add on all of the additional costs, such as overcharges.

“I was overcharged twice,” he said. “Had those overcharges snuck by me, I would have been out $50, not ahead $27.50. And overcharges are endemic in chain stores . . . as much as 8 percent of the time.”

“I spent an hour and a half driving to Wal-Mart,” he continued. “Then I spent a half an hour in this horrid line. So that is two hours of my time. If I am paying myself a living wage, that’s $20. Then there was the $15 of depreciation on my car getting to get there. So I spent $35 in order to save $27.50.”

Plus, he added, after the shopping frenzy that had taken a hold of him waned, he realized that he didn’t actually need most of the stuff he bought. And that much of it was either of poor quality or was downright broken. “I had wound up shopping impulsively.”

He continued to illustrate the fallacy of savings at large retailers, pointing out that last year, local pharmacies across the country boasted lower prices than their chain competitors.

And the savings myth wasn’t the only straw man he addressed.

Another was the belief that economic development, such as the billion-dollar giveaway Gov. Pataki championed that will bring Advanced Micro Devices to Halfmoon, will somehow save local economies.

“We know that local businesses have two- to four-times the multiplier of non-local business,” he said. “That means two- to four-times the ultimate impact on jobs, on taxes, on overall incoming wealth. We know that local businesses are consistent with smart growth, the creation of tourism. We know that local businesses are much more reliable producers of wealth. They are not going to suddenly leave a community and leave that community bankrupt.”

“We didn’t get in this mess just because local businesses can’t compete,” he said. “That’s the mythology out there. There are reasons for that. Every single year, state and local government are putting $50 billion into the attraction and retention of non-local business. And the feds are putting in $63 billion. So that’s $113 billion of pork to destroy local business. . . . This is a poor public-policy decision.”

And as though he couldn’t help himself, Shuman left the appreciative crowd with a coy play on the old Marxist slogan: “Small businesses of the world unite. You have nothing to lose but your chains.”

—Chet Hardin

What a Week

I Just Like Dead Animals, That’s All

Bryan James Hathaway, a 20-year-old Wisconsin man, is facing a misdemeanor charge of sexual gratification with an animal after he was arrested for having sex with a dead deer. Hathaway was detained Oct. 11 after police met him at his transitional-housing residence. He reportedly was covered in blood and what appeared to be deer hair. Despite a confession, Hathaway could get off—pun intended—if his attorney can successfully argue that the law applies only to having sex with live animals and not carcasses. Hathaway recently was released from prison after serving 18 months for killing a horse, which, he said during the investigation of the incident, he wanted to have sex with.

Global Warming Goes to Court

Who has the power to regulate greenhouse gases? That question is at the heart of the first-ever global warming case to go before the U.S. Supreme Court. The nine justices heard arguments Wednesday in the suit Massachusetts v. Environmental Protection Agency. The court will determine whether the Bush administration must change how it deals with the threat of global warming, and whether the EPA has the authority to regulate carbon-dioxide emissions based on the 1990 Clean Air Act. A coalition of 12 states, three cities and 14 environmental groups are challenging the administration, which, despite its history of seeking greater consolidation of power in the executive office, has argued that it doesn’t have the authority to regulate emissions.

Coincidence or Karma?

A series of unfortunate events recently fell upon the First Family and its entourage. President George W. Bush’s string of unhappy incidents began Nov. 19, when a brake malfunction during touchdown in Vietnam caused six of the tires on Air Force One to simultaneously deflate. Later, in Hawaii, an acting White House official was beaten and robbed. The following day, three police motorcycle officers were injured—one fatally—when they crashed on slick pavement while escorting Bush’s motorcade. Meanwhile, in Argentina, the Bush twins’ vacation did not go without incident. A Secret Service agent was badly beaten days before Barbara Bush became the victim of a purse-snatcher, despite the presence of agents. The Bush twins’ activities sparked an Argentinean tabloid frenzy, including a report that the two were seen running naked through a hotel hallway. Ultimately, U.S. embassy officials “strongly suggested” that the duo cut their trip short.

The Holiday Rush

Pataki pushes the Legislature to right his wrong by passing civil- confinement legislation

The civil-confinement issue has again taken the forefront in New York politics after the state’s highest court ruled last week that the rights of a dozen sex offenders had been violated by Gov. George Pataki’s order to hold them in mental institutions after completing their sentences. Pataki wants to see sex offenders confined after their prison sentences have ended, and he wants to see the legislation that would ensure this passed before his term as governor ends in December.

Some say that his determination is fueled by a grudge. Others say it’s political posturing for a presidential run. Still others insist that it is an attempt to protect the safety of young New Yorkers. No matter his motivation, Pataki has called the state Legislature back for a special session on Dec. 13 to try to hash out civil-confinement legislation.

The Senate and Assembly have separate versions of civil-confinement bills; each passed their respective houses this year, but no compromise was made. The sticking point is a provision in the Assembly’s version that would see sex offenders facing a jury after they are paroled to decide whether they should face confinement. The Senate’s version of the bill has no such stipulation and instead allows for offenders to go straight into confinement. Members of the Assembly are concerned that the Senate version does not provide for mental treatment for offenders.

Some feel a civil-confinement law in New York is simply inevitable, but others, including Assemblyman Ronald Canestrari (D-Cohoes), do not believe one is likely to be passed—or should be passed during a rushed session.

“I think the Assembly bill strikes a balance,” he said recently. “It’s reasonable. But part of me says we should defer to our next governor, and I kind of think we will defer to the new administration. We had a conference on this with the Senate, and our differences could not be resolved. It is highly unlikely we would resolve them in a one- or two-day special session.”

However, Sen. Neil Breslin (D-Albany) thinks that it is part of the Legislature’s duty to take action on the issue in the wake of the judicial ruling.

“I would hope that there is a consensus. The Court of Appeals had clearly spoken and said that the governor’s actions were illegal, and when that happens, it adds to part of the public’s feeling that we are dysfunctional if we don’t come together quickly to make the proper reforms.”

Assemblyman James Tedisco (R- Schenectady) says the consensus of need is there but something else might be missing. “No one here does not agree that we need a bill to keep these individuals off the streets,” he said. “What concerns me is the debate hasn’t changed. We haven’t been able to do it in the last 13 years, and I’m not sure by the governor calling us back he can create the sense of urgency we need.”

Both Canestrari and Breslin favor a bill that would put some of the decision in a jury’s hands. “We have to make sure no matter whom it is, the individual’s rights are protected. We can’t just unilaterally hold people beyond their sentence without due process,” said Breslin.

Tedisco insists that the Assembly version provides too many ways for offenders to avoid confinement and “gives offenders two bites at the apple. When one jury system says, ‘Yes, we find this person a dangerous sexual predator’ it baffles me why we would need to go in front of another jury and say whether this person should be civilly confined.”

A large number of mental-health advocacy groups insist that the Legislature has its sights set on the wrong solution. “It’s an act of desperation, really,” said Harvey Rosenthal of the New York Association of Psychiatric Rehabilitation Services.

“According to research, only 6 percent of offenders are really formally mentally ill. It’s a small amount. We have been arguing that the mental-health system is not the place for offenders. We believe that this policy is being rushed through without full information.”

Michael Seereiter, director of public policy for the Mental Health Association in New York state, said that there are three issues that make his organization vehemently oppose any form of civil-confinement legislation. The first issue, said Seereiter, is safety.

“We are supposed to be providing services for people who are very vulnerable. That provides some serious concerns for us that are pretty obvious. It is tantamount to putting the predator in with the prey, and it is a real problem. The second concern is resources. It will cost millions—if not billions—of dollars in this attempt to use this construct to place individuals who have previous records of sex offense into state psychiatric centers.”

Seereiter said figures suggest it would cost $200,000 per offender per year to confine offenders to state psychiatric hospitals. Seereiter is also concerned with the number potential number of those who might be confined because he says the state’s program for classifying sex offenders is flawed.

“Right now,” he said, “we are possibly defining an 18-year-old who has sex with his 16-year-old girlfriend as a Level Three offender, and possibly placing him in a psychiatric center for decades or more.” The third issue that concerns Seereiter is that throwing sex offenders who may not actually be helped by psychiatric care into psychiatric wards stigmatizes other patients with mental disabilities.

Tedisco, however, thinks he can address the concerns of the mental-health lobby and perhaps by doing so bring the Assembly and Senate together. He proposed confining offenders in “a semi-corrective facility” where they would receive mental-health care.

“There is a stigma there and it is too dangerous to have them with other individuals,” he said. “The two guarantees would be [that] it wouldn’t be a mental-health facility, and there would be a guaranteed minimum level of treatment that is deemed to be valuable. That may be the compromise on both sides, and then we could move away from the second jury system that would give them a second bite at the apple after it has been decided they do have a depravity and are a danger to the community.”

Seereiter said that if public safety is truly the concern, then the approach of civil confinement is all wrong. “This is a reactionary type of response to a societal problem. We need more funding for the professionals and sex-offender-management workers and advocates to do more on the front to prevent them in the first place. We need funding so professionals can recognize those who may potentially be exhibiting some sign that they may end up committing an offense of a sexual nature and offer a treatment option before it happens.”

—David King

Loose Ends

-no loose ends this week-

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