Thursday, July 18, 2013

Town Economics

Come on, now. Don't roll your eyes back in your head just because I used the "E" word. The way economics works, and can help Norristown thrive, isn't all that hard to understand.

Money ought to move around a community the same way blood moves around your body. It should have a nice healthy circulation, minimum blockages, and regular nourishment from outside. And while a small amount of blood leaving the body won't do much harm, bigger leakages will kill you. So it is with town economics.

When a dollar is spent in Norristown, different percentages of that buck are set aside for employee salaries, supplies and equipment, rental or mortgage of the business property, and other expenses. Whatever profit is left goes into the owners' pockets. Ideally, if Norristown businesses are owned by residents and employs residents, if their supplies and equipment are purchased from other Norristown businesses, and if the properties are owned by residents, most of our dollars will remain in Norristown. If local businesses all buy from each other, and employees do their shopping in Norristown, those dollars could circulate here a good long while. On top of that, the borough will profit from real estate and income taxes, and from licenses, inspections, and other fees.

However, if you spend a dollar at McDonald's, 4 cents of it goes straight to their headquarters in Oakbrook, Illinois. You think, 4 cents, that's not so bad. But, in addition, each franchise owner has to pay McDonald's an initial licensing fee, plus a rental fee for the property, based on gross sales, plus other fees. For the kind of Mickey D's we have, with a gas station and convenience store, probably at least a million bucks has left Norristown and gone to Oakbrook. On top of that, most supplies and equipment for this business aren't purchased locally.

What stays in Norristown? The borough still takes their cut, of course, though earned income revenue likely doesn't amount to much, considering what McDonald's pays in wages. Hopefully, the franchise owners and employees spend some of their own earnings at resident-owned businesses in town. Though, to balance the vampire effect, we need many, many more resident-owned businesses.

I'm not saying you can't eat at McDonald's. Just that, the more you do, the more properous Oakbrook, IL becomes at our expense. The same can be said for any other corporate businesses in Norristown. Profits and fees go to their home offices. Unless those corporations can be persuaded to move their home offices here (like USM did at Logan Square), their presence in Norristown isn't good for our economy.

A little blood lost is no big deal. A lot lost will kill us. So eat at McDonald's twice a week instead of every day, and check out our local food places instead.

Throughout my lifetime, various members of borough council have always pushed the idea that one big anchor store (remember Ports of the World?), or Walmart, or CVS, or a film studio--one big outsider could come in and save our economy. Time to let go of that thinking. Our West End business district is beginning to prove how beautifully a resident-owned business model could work for the whole town. Let's work on it.

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