Developing the Rules of Localization
by David Morris

Editors Note: This a speech by David Morris given at a Global Teach-In, held November 10-12, 1995 at Columbia University and sponsored by the International Forum on Globalization (IFG). See the related articles about the IFG and a speech by Jerry Mander at the May 1996 Global Teach-In 2.

For twenty-one years the Institute for Local Self-Reliance has been examining the question of globalism and localism and we've concluded the following: we make the rules and the rules make us. Much of what we see around us, the scale of the production systems, the kinds and quantities of materials that we rely on, the very shape of our communities, are not the consequences of some divine intervention, or some inexorable unfolding of the laws of nature. They are a result of the rules that we have made, and those rules have channeled scientific ingenuity and entrepreneurial energies and investment capital in certain directions. We have reaped what we have sewn. We have ended up with a system principally characterized by bigness and separation. We've separated the farmer from the kitchen, the power plant from the appliance, the investor from the investment, the banker from the borrower, and the depositor and ultimately the government from the citizens. We have in brief, built a society in which we've separated those who make the decisions from those who feel the impact of those decisions. And that is a prescription not only for tyranny and widespread insecurity, but for very poor decision making.

Marcel Proust once wrote, "The real voyage of the discovery lies not in seeking new lands, but in seeing with new eyes." The first step towards stopping the runaway train of globalization, is to begin to see our communities and our regions with new eyes. To see our communities as not only places of residence and recreation and retail but also as places that nurture active citizens who make the rules that govern our lives and who will have the skills and the productive capacity to generate real wealth.

Today in the United States and Congress and also in the state legislatures, we hear much about the need to build strong communities, but the rules they are making would do just the opposite. They would destabilize communities and strip us of our power to make rules. What we need is to begin to establish rules that truly honor a sense of place, that honor rootedness and continuity and stability. To achieve that, we need to design rules that shorten distribution lines, that discourage absentee ownership and that promote decentralized and decentralizing technologies that lend themselves to the widest possible ownership. Happily as we engage this task, we will find that we are blessed with widespread popular support. For at the same time that globalism has captured the imagination of our leaders, at the same historical moment that there appears to be a consensus on the inevitability and the benefits of globalism, people all over the world are rediscovering the value of community and are demanding a significant say in designing their own futures. And moreover, the empirical evidence, the facts, are piling up that whatever we look at, whether it is education, health, welfare, manufacturing, farming electric power generation, that it is not bigness and globalization, but localism and smallness that is the most cost-effective and the most profitable, the most environmentally benign, the most democratic, and the most enduring.

The only thing that smallness lacks is power, the power to make the rules. Now people know that intuitively. People overwhelmingly support neighborhood schools, locally-owned businesses, decentralized technologies. What we need to reassure them is that their intuition is correct, that they're not backward looking, but forward looking, that they're not anachronisms pining for a romantic nostalgia, they're not dragging their feet against the inexorable flow of history, they are pioneers fighting for a better future. We need, in brief, to promote the concept of local self-reliance. And local self-reliance doesn't mean self-sufficiency. Nations are not self-sufficient, but they are self-conscious, and they are self-aware, and they are self-governing. They have the capacity to make rules that channel ingenuity and capital and energy in directions that protect the common good.

Now what would be the rules of localization? If we had our druthers, if we controlled Congress, or if we controlled the state legislature, or if we controlled the city council of new York City, what would be the rules that we would develop that would really promote strong communities? We must insist that we have the right above all to favor our neighbors. We need rules that discourage absentee ownership, and encourage local ownership.

The country of Slovenia is a country about one quarter the size of New York City, about the size of Chicago, about the size of Philadelphia, and if they join the European Union, they have to abolish their national laws that prohibit foreign ownership of their property. In similar ways, the United States prohibits states and cities from favoring their neighbors. Well back in the early 1930s, Governor Huey Long of Louisiana hit on an idea whose time may well have come again. A branch store tax. The more branches that your store has, the higher the tax. What Huey Long understood was that as the retail chain grows, there are social costs involved. The owner becomes more distant from the customers, and the business gains political power as it increases and concentrates its economic power.

Back in the early 1970s the U.S. Congress offered tax benefits for companies that established employee stock ownership plans. Today over one thousand companies are primarily owned by their employees, and an employee-owned firm approaches decisions from a very different perspective. Many absentee-owned businesses will shut down a plant not because its unprofitable, but because they can earn a higher profit in another place. But the costs of unemployment and higher crime and family violence while not part of their cost-benefit analysis, are part of the cost-benefit analysis of employee-owned firms. In my state of Minnesota, several employee-owned firms, or the managers of those firms have said that they would have left the state because of Minnesota's higher business taxes except for the fact that they're employee-owned. Because employees view business taxes quite differently because they're not only owners of a business, but they're users of the services that the taxes provide. They're kids are in the local schools. Absentee owners of businesses don't take into account the full balance sheet. Majority employee ownership is one type of rooted organizational form that we should create rules to favor.

Another is producer cooperatives. In the agricultural sector in our country and in other sectors, many sectors, in Europe and other parts of the world, cooperatives are a routine organizational form. In North Dakota three years ago, wheat farmers--durum wheat farmers --got together and they organized the first cooperatively owned pasta manufacturing enterprise. And they became members of the National Pasta Association. And they were the only members of the National Pasta Association that opposed NAFTA. Why? Because they were wheat farmers. And the other pasta processors on both sides of the border supported NAFTA to get the price of wheat down. But if the farmers own the processing and manufacturing unit, they're not interested in getting the price of wheat down. They take a look at things differently because they're locally owned and rooted.

The front page of this week's papers gives us another example about the costs of absentee ownership. The Cleveland Browns are going to Baltimore not because of a lack of local support -- over 70,000 mad fans show up regularly every Sunday to watch the Browns games. They're leaving because the citizens of Maryland and Baltimore threw money at a rich owner. The Green Bay Packers are not leaving Green Bay, however, and they won't. Why not? Because back in 1921 when the National Football League was setting up, the Packers raised money from local citizens to capitalize the team. They are a locally owned team. The citizens who own the Green Bay Packers, of course, have the right to sell them but according to the original stock certificate that they got, they will only get back the original amount of money that they put in, and any surplus has to go to build a memorial to the war debt at the local American Legion Hall. The Green Bay Packers are rooted.

We need not only develop rules that encourage a locally owned economy, we also need rules that encourage decentralized and localized production, rapid prototyping, manufacturing, renewable energy, sustainable farming. Each of these technologies roots a productive capacity in strong communities. There are many strategies for moving in that direction. In the state of Minnesota a year ago, the legislature literally mandated that $1 billion be invested in renewable electricity production using fuels that were homegrown wind and plant matter in the state of Minnesota. Over the next seven years, thirty percent of all new electricity at a minimum will come from homegrown fuels. The legislature spoke.

We need to begin to move toward a full cost accounting system as well. We need to begin to internalize the true costs of the goods and the services that we buy. There are a number of studies, for example, that indicate that if trucks had to pay their own way, the cost would be at least five dollars per gallon. The amount of subsidies that we provide to the transportation system in the U.S. right now is over $300 billion. I have yet to see, but look forward to seeing, the slogan crying out through all the hills and dales of the U.S., "Get the trucks off welfare."

And finally, we need to develop rules that allow us to make the rules. That is the opposite direction from where we're now going. GATT and NAFTA as you found out last night and today pre-empt national and state and local authority, but in many ways, so does the U.S. Constitution. We should recall that in the 1880s and 1890s, as state corporations outgrew their local and state economies and became national corporations, the U.S. Supreme Court interpreted the Constitution as pre-empting state and local authority over commerce. We need to examine our own constitutional foundations of free trade. Today the conservative republicans are looking to have a constitutional amendment that would for the first time in American history overturn parts of the Bill of Rights, the First Amendment. Me, I'd love to see a Constitutional amendment that reframes Article 1, Section 8, Paragraph 3 of our Constitution, the Interstate Commerce Clause. Because the Interstate Commerce Clause as interpreted has done as much damage in this country as GATT and NAFTA and the U.S.-Canadian Free Trade Agreement.

We have a rare historical opportunity at this moment because there's a consensus that the system is broken, and there's a willingness to propose very bold solutions, and there's even a willingness and even an eagerness to dismantle and tear down systems that we know well, to get rid of the old ways of doing things. The conservatives argue that the problem is government, and Newt Gingrich argues that the problem was that in the 1960s, we took off our clothes and smoked some dope. I think a much more persuasive case can be made that it's the private sector, not the public sector that's broken, and that we need to create rules that reinvent the economy, not reinvent government, and that we need to begin to stop talking about government and start talking about governance, not talk about the noun the bureaucracy, the thing that delivers services, but talk about the process of decision making. And we all in each one of our countries need to echo the thoughts of our founders. We need to speak the language of our countries. In the U.S., one of the greatest Americans was Benjamin Franklin. And Benjamin Franklin once said, "The person who would trade independence for security deserves to end up with neither." And I think that in many ways we have made that trade in this country and around the world. We now need to go back to our founding fathers and our founding mothers, go back to what we really want in our heart of hearts, go back to what the communities are asking for and develop the rules of localization.

David Morris
Institute for Local Self-Reliance
1313 5th Street
Minneapolis, MN 55414
612.379.3815 (tel) 612.379.3920 (fax)
http://www.ilsr.org

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