Friday, November 21, 2008

When 'Buy Local' Means Inside Your Country

Small businesses have always been the backbone of America's economy and will save today's economy by using the opportunities only America can provide. Warren Buffet has said and it is well known that "ultimately the value of the stock market can only reflect the output of the economy." More broadly, the wealth of a nation depends most on its ability to produce. As mega-corporations such as Walmart and Nike increasingly import their good and use cheap foreign labor to produce their goods, we have seen a slow seeping of America's money into the banks of other countries. This scenario mirrors that of a lake whose flow out is greater than its flow in, eventually it dries up.

A stark example of this theory is the big three automakers: Ford, General Motors, and Chrysler. The auto-companies have shut down plant after plant in America while opening new plants in Mexico and other 'cheap labor' countries. Many Americans have found themselves looking for a new job due to these job exports. I will never forget the story i heard of a 19-year old college kid training a forty three year man to run a cash register at a sporting goods store because his job had been sent overseas. And many middle class American's find themselves in this situation. According to the US Census Bureau, 70% of America's economy comes from the non-goods producing sector (the service industry). As we replace our goods-producing jobs with service jobs more and more American money is finding its way into the hands of other countries, while the American middle class is making less money to spend on goods. It will be very difficult for America to thrive on a purely service industry based economy as foreign businesses get better at insurance, professional consultation, and banking. America must start producing more to keep cash in America.

Small businesses are the answer for keeping America's manifest destiny intact. Companies like AIG, Walmart, and GM all started small and got big because they were the best and brightest. As some of the mega-corporations succumb to the diseases of greed and mismanagement it is time for new companies to rise from the ground and inject capital into America once again. This will happen because small companies rely on and employ the American worker. This symbiotic relationship puts cash in the pockets of the American middle class, cash that it has historically been known to spend. The big question is, can the little guy win the fight in a room full of giants?

Small companies have an uphill battle to climb against the multi-national corporations who have the deep pockets to spend money on R and D and marketing. Also, a theme now of big companies has been to buyout, rather than compete with, the smaller companies. Despite this fact I will keep my faith in David with his slingshot against Goliath. Small business must prevail to save the American economy. I will support the local smaller guy to keep my dollar in America.

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