Page 16 RAIN July/August 1984 bids are up to 5% higher than outside bids. If city governments purchased recycled paper that cost up to 10% more than nonrecycled paper, new local paper reprocessors would recoup the extra expense many times. In the private sector, one of the most productive ways communities can plug economic leaks is to replace imports with local products. Perhaps the cheapest, quickest way to start is by matching local manufacturers with local retailers (see RAIN X:4, page 34). Using local economic profiles and computer databases, the Neighborhood Economic Development Corporation (NEDCO) of Eugene, Oregon, helped a bike trailer manufacturer find a local supplier of parts instead of patronizing a parts supplier in Taiwan, among many other matches. NEDCO realized a 1,830% to 5,392% return on funds spent to develop the matching program. Indeed, almost any city with a population over 80,000 should have such a program. Capital in most communities behaves like energy creeping through uninsulated walls: It leaks out of the local economy before it can. be recycled among area businesses and residents. Cities can also develop new versions of imported products or resources. A community that has various renewable resources available locally needs to draw on its innovation and ingenuity. If its residents are creative entrepreneurs, so much the better. Of course, a local educational system that encourages creativity enhances a community's ability to develop alternatives to imports. Once a city has provided for itself what it formerly imported, "the city's greatly enlarged and diversified internal economy .. . [can enter] a period of vigorous export generating [to neighboring cities] and of earning - wide ranges and great volumes of replaceable imports," writes Jane Jacobs in her insightful article "Cities and the Wealth of Nations" (see access). "Rapid or slow," she claims, "this is the cycle that keeps their economies going." What about inter-city trade? The point is to minimize unnecessary energy and resource expense; no community can subsist entirely without some reliance on materials or products that it cannot find locally. Most cities, however, have barely begun to discover their capacity to exist within their resource budgets, but as they do, inter-city trade—including foreign trade—will continue. If cities and regions can curtail demand for nonrenewable resources such as oil from foreign countries, then the need to protect interests abroad, through war or the threat of nuclear weapons, diminishes. Cities, however, cannot rely on national import- export statistics that don't apply to unique city economies. Jacobs explains, "The consolidated information is not specific to [city economies] even with respect to their foreign trade, and it is no information at all with respect to their trade with one another." So cities often incorrectly adjust the volume and variety of their products in response to national currency fluctuations that are based on the entire nation's import-export balance. To correct problems emerging in the balance of trade, nations irnpose tariffs and export subsidies. By doing so, they attempt to bolster the value of the declining currency. But these quick fixes are inappropriate adjustments. "With falling exports," Jacobs states, "a city needs a declining currency working like a tariff and an ' export subsidy—but only as long as it is necessary." City economies cannot be self-regulating as long as they are subject to the vagaries of national economic policy and national currency fluctuations. Jacobs proposes individual city currencies as the best solution to this problem. SHARE is instituting a new currency in Great Barrington, Massachusetts (see also "Avoiding the GRUCC: Creating a Community Currency," RAIN X:4). SHARE equates 100 cordwood notes with one cord of wood, which it defines by dryness and size. One advantage of this unit of exchange, points out Bob Swann, director of SHARE, is that "if the dollar declines, the value of a cordwood note stays the same. The point is to maintain an inflation-free currency." SHARE is helping local businesses to pay their employees with cordwood notes and to accept the notes in exchange for goods and services. Organizing local economic groups to initiate a local currency is a long-term approach to strengthening a community's economy, but several short-term opportunities exist as well. One is the Cooperative Homeowners Insurance Program (CHIP). In California, Mill Valley has been investigating CHIP'S potential (see access). The city government can expect to earn up to 20% of each dollar that homeowners pay on the insurance premium. It does so by endorsing the program, giving a local CHIP broker an easier market, and providing free home fire- and crime-prevention audits. In Mill Valley, firemen have conducted over 200 of the 40-minute checks during their on-call time, at no extra cost to the city. The result is that up to 20% of total homeowner insurance premiums go to the city's general fund rather than to a distant company. Furthermore, the rates to Municipal enterprise: Bill Allinger (left) of Malarkey Roofing checks compressor that will pump methane from Portland's srwage treatment plant to the nearbp roofing manufacturer and pump $130,000 a year into the city's general funds. 4 KRIS NELSON
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