Saturday, September 15, 2007

Charging Local Purchases

Nate and I ate at Bunky's Cafe last night. We both found it a decent meal, though walked out having spent $45 and not sure it was worth that much; I enjoyed the glass of wine, but the selection was a bit paltry (one Pinot Noir and it was Mirrassou, which cost $6 -- more than half the price of the bottle at Whole Foods!). At any rate, took a while but wasn't a bad experience. Two flyers on the table interested me, however: first one advertising 27 September as a "buy local" night in town (sponsored by REAP) where local restaurants are preparing meals made from only local ingredients. Looking through websites on this subject I found some are even working (ala what grocery stores are doing these days) to note prominently their local ingredients. Unfortunately, Bunkys didn't mention the sources of their ingredients, though they did seem to have an interest on the subject. The second flyer discussed high credit card fees for merchants, led us to question whether they even took credit cards and encouraged me do some research and thinking about credit cards themselves and their relationship to a local economy.

Credit cards are things I use without thinking. (Don't worry, I pay the bill off every month!) While I'm fully aware of how easy it is to get into debt with a card, I've been a responsible user of them for a few years now. Course much of this is sheer luck: I had a decent paying job, cut expenses dramatically and currently share expenses (note the generous view of how much money my graduate salary brings into the household budget!!!). But I rigorously use my credit card because it gives me points and I love the $100 gift cards I get a few times a year. Enter Bunky's last night and their flyer which indicated that local businesses pay heavy credit card fees, money which goes outside of the community and then transitioned into how they gladly accept cash and checks and support the local Atwood community.

I've thought before about the rhetoric of local money staying in the community and have yet to have a full understanding of this concept; I get that when people spend their money locally instead of buying from Amazon, etc. then the local community thrives and can develop new businesses, owners and workers can spend more money, etc. What I'm not completely sure about is to what extent local growth is stymied by sending money out of the community as we don't merely live in our local community. A strong local community inside a weaker national economy is only going to eventually find itself in trouble. So I don't really have an issue with some money going out of my community. I realize that even a national merchant (Whole Foods, J. Crew, etc) has to spend enormous amounts of money in the local community and has as much interest in strong local communities as a locally-owned business. After all, national businesses still hire local workers and often invest in the local community (like Target). The major difference is merchandise, but for that I think changing one's shopping habits -- new clothes or used? -- is of more interest than the source of the business; after all, does it matter more if I go to Century House (a local furniture shop) where all the furniture is imported from Denmark or Rooms To Go, where who knows where the furniture comes from?

I think I'm mainly skeptical about the concept because extra local income doesn't go to the community, but to the owners. While they may spend some money locally, they also might save it, invest it and so forth. The major difference I really see between local and national corporations (as they function within the local community) is that the former have more flexibility in their giving and a more immediate need of their worker's and community's conditions. And national stores are not going to be likely to sell neat local merchandise (as Epoch, a local vintage store does -- they include neat headbands, etc. by a local artist -- who buys her material from an internet site!); and as the local movement gains steam (which is often coupled with encouraging individuality and local styles) I think we will see more flexibility for local managers of nationally owned stores to cater to their clientele. In short, I feel that the basic outlay of any business is local and the profit that is left either goes to a corporation or an individual; while I prefer the latter, I'm not sure I like the rhetoric that suggests the local business' profit equals community profit because it still is something that entirely depends on the owner and the owner's philosophies! I think in short it establishes the appearance of differences that are incidental and in the end only enrich the community after the owner has been paid. If anyone knows more about the economics of local versus national I'd be happy to hear about them! Update: I first raised similar questions from a different perspective in my post Is Fair Trade Fair? and think that Fair Trade might be another term that we feel "warm and fuzzy" about, but which has implications we're not aware of and might affect our views of if we were.

So I came home to do some research because I was still concerned about the implication the flyer made that local businesses were more stringently charged by credit cards (Nate suggested this must mean larger businesses get a volume discount). And everything I saw about credit card fees suggests that there is no distinction between the size of a business in a credit card issuer's world! Forbes included this guide to fees if you're interested. The flat fee ranges from 2-3% and then there's a quarter tacked on for each charge; there is always a monthly minimum (the business needs to take in more than $1500 of card sales to avoid this) and most seem to be waiving annual fees because of competition. Thus, $1.15 of my bill last night went to the credit card company while $43.85 went to the local business which then had its own outlays: food costs, worker costs, etc. Apparently, credit card fees are the third largest overhead expense (after rent and worker costs) in the industry, but I'm still not sure that I feel the community is being unduly harmed by it. In fact, I suspect that my glass of wine sent about $1 out of the community as well!

What do others think about this rhetoric (which is not confined to Bunkys, though they explained it the most fully I've seen)? While we're considering the local and national impact -- and distancing -- of our eating habits, should we also consider the way we pay? What are our priorities in purchasing and what are our responsibilities?

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