Friday, August 24, 2012

The New Local

(disclaimer. This blog was typed from Germany on a German keyboard. I am sorry for any errors)


I remember the first time that I was asked where I was from and got confused. It was 2004 at a conference in Koln Germany. You wouldn't think that this would be a tough question to answer, but I found that my difficulty to answer said something incredibly promising about the world we lived in. Here was the confusion. I was married, and my wife lived full time in New York. I worked for my family business called Tech Pro which was located in Summit County Ohio, so I spent part of the week there (where I rented a house) and part of the week in New York (where I rented an apartment). We employed up to 50 people in Ohio. I also was a co-owner of a new company that worked with Tech Pro in a German town called Bruggen. I spent one week out of every five there, and had taken a lot of time, and some pride in starting this with my partner Peter Day. My family business also had sales offices in 13 other countries that I visited often. For the first time in my life I truly felt like the cliched, but relevant “citizen of the world”. I loved this, as it showed that internationalism was no longer an artistic construct, or economist ideal as it was in the early 20th century, but was rather a reality of life.

Now times have again changed and we live in the most hyper globalized world in history, but with a strange reactionary tendency which seems to be at odds with the “citizen of the world” ideals which I so much cared about. We live in a Facebook and Google world, where we communicate globally. Strangely, however, there is a paradox, that we seem to be communicating about the importance of being local rather than global. This is seen in a number of places.


The first is in the buy local movement. While I see nothing wrong with buying local, and actually love the idea of supporting local businesses, the more formal movement does have the unfortunate quality of blinding many people to the value of international commerce. It is global trade, not local, which brings prices down, which makes the world more prosperous as a whole, and encourages technology. There are things that are just better when we collaborate globally, such as certain types of manufacturing, sharing of customs and work principles (think of the Toyota Lean manufacturing model which was Japanese), sharing of natural resources, macro and micro economic experimentation and much more. Even for those who support “buy local” for environmental reasons this can often be misleading as local for most of the United States is considered to be anything within 150 miles. To truck small amounts of goods this distance can often have a worse environmental impact than flying large quantities from other countries. As a solution to this, I do propose urban farming which is as hyperlocal as you can get. So you can see that I don't think everything should be removed from a tight community. In fact one of the greatest things about life now is the rapid rate of increase in urbanization which is better for everyone than rural or suburban living.


The other major place where being global has become controversial is in the recent US Presidential campaign. Talk of Bain Capital and the outsourcing of jobs has basically been a standard lie for both parties. Neither want to discuss the reality, taking instead the less substantive approach of avoiding the real issue. The reality is that we need to discuss the importance of a company's survival and when outsourcing is a good idea. We need to see when it has worked, and just as importantly when it has failed. What Romney should say, and actually Obama should agree with, is that there is not a one solution answer to where to place jobs. They should not always be local. That is a reality for a company's survival and ultimately in providing good jobs both in the United States and abroad. Both Romney and Obama know this, but it is politically incorrect to say it. What could be a politically correct and accurate follow up is that often experiments with outsourcing were not the best solution, and that companies are bringing jobs back to the United States when the conditions work out well.

This brings me back to my own identity. Where am I local to now? I live in Brooklyn, New York, and have a new business in Summit County Ohio that employees people who on average make over 50% more than the state average. That company also sells more internationally than in the United States. So to me I am a proud citizen of New York where I live and contribute by being a Dad and Professor, and to Ohio where I contribute by choosing to have a company and hire wonderful people there. I am still in my mind a “citizen of the world” though, even if that title is not en vogue. Something last night surprised me though. I have been giving TEDx talks in various places around the world. But I never considered, nor do i think TED would want, them to be considered local events in the way that only local topics, and a very small definition of local population would speak. Still there is a TEDx Akron coming up, which is in the same county where I grew up, and owned 2 businesses, including the current rapidly growing technology one. I was told by a friend when I asked about speaking at it, that she believed it was for locals. I said, rudely and defensively, that I am a local. (I did this from Germany and by e-mail by the way) I bring the coolest and best paid new jobs to the area. I use local banks, local patent lawyers, local accountants and our growing staff and I frequent local restaurants, stores and bars. We use local hotels constantly as well, because we are global. If I have to pick a place I am local to, Akron must be a contender, and certainly a place that should ask me to speak at a TEDx Akron. To be completely fair to my wonderful friend she is really great. She even worked with and advises our company (another example of us buying local) and she has helped change the landscape of the community. For me to talk about myself was as it sounds; selfish. She is nominated, rightly so, to speak at TEDx Akron. My worry however is not that I won't speak, which is absolutely fine. What worries me is that others like me, who have homes in New York or other places will not embrace my hometown (Akron) for starting businesses if they are perceived as outsiders, even by the very global TED community. I also worry that Akronites will see themselves as Akronites as a main definer of identity, which will prevent them from embracing globalization. I want everyone to eventually be citizens of the world. The world is too wonderful not to want that. This is not specific to Akron, but general to the ideas I mentioned before. We act more globally every day, but often seem to wish we were not. This is a shame, and should be acknowledged by communities and politicians, so that we can fully achieve the dreams that I had thought I had achieved for myself in 2004.

7 comments:

Anonymous said...

I agree completely with you on this. Not only are you local, but you are a major contributor to the local economy. Not only do you purchase and use local business, but the people you employee are local and do all their business and shopping locally. This can therefore be argued that you give twice as much to the local economy and ecosystem.

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Robert M. said...

Matthew, I am shocked to report that I actually agree with a good deal of what you say in this piece. I want to make a few points, though, which have less to do with whether globalization is "good" or "bad" but rather has to do with its implications.

First of all, from my perspective, globalization is a given. It's occurring. It's relentless. It is driven by historical, economic and cultural forces that make it inevitable. So when people argue against globalization, for me it's like arguing against the industrial revolution or arguing against capitalism as it upended feudalism. It's happening, folks! Get on the train or be left behind.

My biggest concern for globalization is also my biggest concern for capitalism (and, in my mind, globalization is the next evolution of capitalism) which is that without careful and effective safeguards, it has the potential for global "rule by corporation," rule by the profit motive alone, and this is potentially very dangerous. Many (most?) corporate entities do not share your benevolence as an entrepreneur. You, Matthew, are delighted to be paying your workers higher than average wages. You are delighted that your workers have health and safety protections. You see running a global business as a responsibility to yourself AND your GLOBAL community, wherever that community may be. In other words, your are actually the poster child for what I would call "humane globalization."

Sadly, though, you are the exception to the rule. For most corporations, globalization is a way of minimizing costs (ie outsourcing jobs to countries where wages are low ,where work protections are low, where environmental standards are non-existent). My question is: Given that globalization is the new local, how can we develop standards (rules, incentives, call it what you will) that will "encourage" global corporate entities (multinationals) to behave in ways that factor in basic human standards of workplace decency, wage decency, environmental decency. In other words, the social costs of doing business in a global economy have to be factored into production costs. If not, then globalization will continue to solidify economic control in the hands of a few very powerful corporate entities. These entities will effectively replace governments as the new political players (we see that everyday in the US.) And there will continue to be a massive re-distribution of wealth into the hands of a very few. The result, if we are not careful, will be a world oligarchy and eventual chaos and terrible inequality.

So, Matthew, if we can find a way to "encourage" multinationals to behave more like you, then globalization offers many, many benefits. The big question is IF..................

Unknown said...

Nice of you to say Robert. I am more optimistic in general than you. I get this feeling that globalization is like a science experiment. You rto a hypothosis, and when that doesn't work you try another. The only way to fail is to stop expirementing, because something new and interesting, and good is bound to be discovered, even if it is not what you had planned at all. a lot of things, and they dont work, but ultimately you end up doing what its best. Unfortunately people do suffer in the short term, but if all goes as I suspect, then the world benefits very quickly. Tht doesnt make it easy for those who lost jobs, and that is why I do believe in a safety net. I especially like new ways to be trained for new types of jobs in areas that are in need even here in the US.
As far as what people pay and benefits, companies seem to be forced into that more and more often by natural forces, like the fact that all of the other cool places offer good benefits. Do I just watch too much Star Trek? If the world really getting as good as I think?

Mark said...

Immediately the economics of Fredrick Bastiat came to mind as I read Matthew's post. Particularly regarding globalization and the outsourcing of jobs, we must take note not only of what is seen, but also what is not seen. http://www.econlib.org/library/Bastiat/basEss1.html

It is all too common for individuals to focus only on what is immediately seen -- jobs being lost at home, foreign employees being paid "lower" wages or working in worse conditions than would be provided (by law) here (in America for example). What is not focused upon and indeed rarely mentioned is the unseen, namely that the outsourcing of jobs to those at lower wages results in lower costs of products, raising the standard of living of all individuals seeking those products. What is not seen is the freeing up of domestic labor for other jobs that are demanded by other employers. What is not seen is the fact that the foreign employee chooses the job at a lower wage than would be established here because that low wage is better than all of his alternatives -- which in some countries amounts to begging or prostitution or less-than-subsistence agriculture -- all much more difficult than so-called "sweat shop" work. I think this is axiomatic, else the sweat shop worker would simply continue begging/prostituting/agriculture.

It is the unseen that takes time. It is the unseen that I think of when I read Matthew's comment that "[u]nfortunately people do suffer in the short term, but if all goes as I suspect, then the world benefits very quickly."

As for buying local, I see no need for it, except perhaps in the area of food, and that for health reasons for the most part. In the area of global trade and "buying American" (as many urge us to do), I would like to offer a reductio ad absurdum. Why stop at buying "locally" by buying American? Buy from within your state, or, wait, buy only from your county, no, only from your street. . .

Regardless, buying local is perhaps an impossibility. For this point, I offer "I, Pencil" by Leonard Reed (and special thanks to a friend of mine who brought it to my attention as we discussed this blog). http://www.econlib.org/library/Essays/rdPncl1.html

On a final note, I get very worried when people propose the establishment of standards/rules/incentives in the interactions between employers and employees, regardless of whether we are speaking of a local employee or a foreign employee. Those standards/rules/incentives are likely to be laws, written by politicians that are, in my book, every bit as likely to be self-serving and morally reprehensible as the multinationals mentioned above by Robert. The standards, rules and incentives will be drafted by the multinationals, make no mistake about it. They will benefit the politically connected multinationals to the detriment of those entities not politically connected. That is how our political system -- any political system -- works. Too big to fail? Indeed.

I suggest it is best to allow the employer and employee to establish their own relationship upon mutually agreed upon terms, and it is not for anyone except them to agree upon working conditions and wages.

Unknown said...

Thank you for the comment Mark. So much more educated than my blog, but making many of the same points, only better. I have recently been exposed to Bastiat, Hayek, and more current economists that share these views, and must rely mostly on personal experience for the moment. Thanks again.

Mark said...

Happy to contribute. Also, I jumped back on here because I realize I never commented on your particular question regarding where you might be considered a "local." I think first you must have lived in a place to even begin to call yourself a local of that place. You also need to be immersed in a particular portion of daily life in that territory (work, shopping, interacting with locals). I think most importantly you would have to have some feeling for the general social mores -- not the nuances, but the broader based stuff.