“Economic life develops by grace of innovating; it expands by grace of import-replacement.” — Jane Jacobs, Cities and the Wealth of Nations
Years ago, I was working in a small town with a population of roughly 250. They had received a grant from a foundation to allow them to prepare a community plan – a comprehensive master plan, as it were. Their objective with this plan was simple: fulfill the requirements – one of which was having an adopted comp plan – that would allow them to apply for a larger grant so they could build a community center.
Me being me, I reacted to their delusion by showing them – in sharp relief – why they were totally screwed. I showed them, with serious mathematical rigor, why their long stagnant tax base and dwindling population was going to be insufficient – something like a 95% shortfall – for them to simply maintain a community center, let alone maintain anything else that might actually be critical to their survival like, perhaps, a water pump.
We went back and forth and back and forth, with them agreeing that I had things right but then continuing to want the community center as their key implementation strategy nonetheless. Finally, they threw up their hands and asked me what I would recommend they do to create some jobs in their city. What would I do to get things going?
My response was genuine but they found it bizarre and unhelpful. I asked them who cut their hair. One by one they told me that they all went to the regional center forty miles away to get their hair cut. Apparently people over the years had tried, and failed, to start a barber shop or hair salon in town, which left them no choice but to make the drive. Of course, when they made that drive they brought the entire family and used the occasion to visit the big box stores to stock up for the month.
So then I asked them whether they would go to someone local for a haircut if that opportunity existed and, if so, if that would reduce their need to travel to the regional center. They were all affirmative on both counts.
So here was my idea: Go to the regional center and find someone who cuts hair. Invite them to travel to town one day a week to cut hair with a guaranteed number of cuts. Find an old barber's chair and put it in city hall. Have everyone agree to cut their hair locally and work with their neighbors to make sure the list is always full. Bam – a successful and viable business and one fewer reason to drive to the neighboring city.
They looked at me like I was insane. They ask for jobs and growth and I give them haircuts? What?
Of course, my idea was not haircuts. My idea was import replacement. And it was actually only a partial import replacement at that, since the labor was, in this case, going to be the import. By giving them one fewer reason to leave town, I was one step closer to ensuring that their capital – their wealth – stayed in their community. Of course, this thought process wasn't meant to stop at haircuts. The idea was to look at everything that someone could possibly do locally and find a way to make it happen. Find a way to keep money from leaking out of the local economy.
This isn't my idea. I first read it in Cities and the Wealth of Nations. I've written about how one of Jane Jacobs' most important insights was her recognition that that city, not the nation, was the central organizing geography around which economies are structured. Many people associate Jacobs with a love of walkable neighborhoods, urban parks and historic buildings. What they fail to grasp is that these are means to an end, not the end itself. The end for Jacobs was always economies and the complex relationships that allow humanity to flourish.
For example, I live in the central forested region of Minnesota. I am surrounded by farms and woods. Yet my house is built almost entirely from materials brought in from other regions. Little of the furniture in my home is made in Minnesota. The food I eat – while it could easily be raised, harvested and processed locally – is brought in from all over the world. Yet we're a poor city with high unemployment and lots of underutilitzed private land served by massive public investments.
If anyone locally realized the problem with this – and some have – what do they do? For furniture, they would try to find a major manufacturer of furniture and entice them – using a vast array of subsidies – to move to town. Of course, a manufacturer like this is only going to move here if they can get really cheap labor and, if we're honest with ourselves, that's not really helping anyone except the owner of this business (who likely doesn't even live here). All the materials would be imported and all the profits exported leaving Brainerd in the unenviable position of being slightly cheaper than Mexico, a situation that becomes particularly fragile once the subsidies run out. This is what happens when we organize an economy around a nation; we maybe hit national GDP targets now and then, but we do so at the expense of making most of our cities insolvent and fragile.
What happens when we organize an economy, as Jane Jacobs suggests, around a city? In the furniture example, we wouldn't be looking for a huge manufacturer but someone who tinkers with furniture locally. If they can become successful at a local scale, then export to a larger region. Now, what supporting industries are needed? A lumber mill? Loggers? Custom metalwork? These start small and scale as well, creating the need for other supporting industries – human resources, banking or even haircuts, for example. The key is that the city grows and prospers by replacing those things that it currently imports with things that it can produce locally, keeping capital within the community where it can be put to more productive use. None of this is sexy – very little of it will have a ribbon cutting ceremony or a federal grant application attached to it – but it is the basic bread and butter that makes a place strong and resilient.
Now, this is not to suggest that cities go out and attempt to manufacture their own furniture locally. I'm not trying to to tell you what to do but how to think about the problem. The key is to look around at what you are doing well locally and then build off of that. Constantly try to find a local substitution for things that you must currently import. Slowly and incrementally grow your local economy. This is why I've been so enamored with the concept of economic gardening; at its inspirational core, it is very Jane Jacobs.
You can start building a strong town through an import replacement strategy today, wherever you are, whether it's with furniture or genetics research or something as simple as a local haircut.
This article originally appeared at StrongTowns.org and is re-published here under a Creative Commons Attribution-ShareAlike 3.0 Unported License.