Updated: 2 days ago
As the world celebrates what will hopefully be a turning point for US politics and society, it's worth remembering that some of Trump's legacy will continue under Biden. In particular, a return to free trade is not on Biden's agenda. This is a contentious position to take - tariffs can help struggling economies but are more usually applicable to developing countries (see footnote), and economic growth was stronger under free-trade Obama than under protectionist Trump. How might this question apply to community-level trading ecosystems?
Local traders face constant competition from outside - most obviously, from online sellers. Yesterday, a leading figure in my community raised awareness that local businesses are challenged not only by covid-19 but by the arrival of Amazon lockers in convenience stores: "As a number of much loved shops in Frome close and go on-line they go into competition with Amazon, while others struggle to compete daily." This is only the start, of course: Amazon is opening retail stores across the UK.
Part of the solution for local economies may be to create their own local Amazon, as the French town of Angers did recently: "In its first week, the website had more than 570,000 visits. Some stores generated up to 30 per cent of their operating sales through the platform." This won't be enough, though. Amazon, eBay, et al have built their success on a combination of low prices and instant availability that will be hard to match for smaller traders, even if they are empowered by similar Web technology.
A town or city cannot impose tariffs, of course, but has the potential to deliver the same support for local traders without the costly administration overhead and retaliatory impact on exports of a protectionist approach, by making the community a brand that people love and support. However, creating your own local "Made In" branding isn't easy. In 2017, the report "Re-branding the High Street - the place branding process and reflections from three UK towns" showed just how hard it is to convince people that "It’s All about Alsager", to make Altrincham a "Modern Market Town", and to "Keep Holmfirth Special".
The difficulty comes from the wide-ranging nature of the challenge. A report published by Institute for Cultural Diplomacy, "The Branding of Cities", highlights some of the prerequisites for this to work: "In order for a city to be a good brand, it must possess defining and distinctive characteristics [including] city appearance, people’s experience of the city, people’s belief in the city, what the city stands for, and what kind of people inhabit the city." In other words, branding a community is a benefit that can be accrued from turning around a community, rather than something that enables it.
Frome, my local town, is a celebrated example of a small town that has done exactly that. Its story together with the stories of other communities are told in my forthcoming book Supercommunities, which sets events into a holistic context of ideas about wellness, community, collaboration, ownership, measurement, and transformation. Ensuring a secure future for local businesses is inseparable from ensuring a secure future for local people - and the way for small communities to become antifragile is social trading.
Footnote on protectionism
Economists generally see three reasons for protective tariffs during the early stages of a country's economic growth. First, young economies need to protect and nurture their producers until they acquire the capabilities to compete unassisted in a global market. Second, young markets do not function very well due to poor transport, poor flow of information, the ease of manipulation by big actors, and other reasons, so they need to be regulated actively and sometimes even deliberately created. Third, until there are enough private or third sector firms capable of running large-scale, high-risk projects, many things have to be done through government intervention, including setting up publicly-owned enterprises.