Praise for mayor the advantages of buying local

PHILIP MOELLER

December 26, 1990|By PHILIP MOELLER | PHILIP MOELLER,SUN BUSINESS EDITOR

Baltimore Mayor Kurt L. Schmoke, who has received a few shots in this space, rates a kudos for taking decisive steps last week to ensure that city school Superintendent Richard C. Hunter leaves that post when his contract expires this summer.

Without casting stones at Dr. Hunter, it's clear that he has not been what Baltimore's public school children need -- an effective and innovative advocate for improving the caliber of education that takes place in the schools themselves.

Now, the mayor's political opponents say that he is not what Baltimore's citizens need, either. And they are lobbing grenades at him for moving too slowly to get rid of Dr. Hunter. Such salvos are to be expected, and they're likely to intensify.

But even if some of the criticism sticks (the mayor did hire Dr. Hunter in the first place, etc.) it's important now for Mr. Schmoke to find a new leader for the schools who's good enough to appease his critics and please the voters.

If you believe that improving public education is the most important item on Baltimore's business agenda as well as its social agenda, then you'll join me in wishing the mayor well in this task. Despite the public schools' formidable problems, and gloomy prospects for additional funding, it's clear that one person can make a difference.

*

A couple of months ago, I pulled into a Crown Central gas station in search of a fill-up that might shave a few pennies off of what I'd pay at one of the major oil companies' outlets.

More recently, I've found myself consciously looking for Crown stations, not because of the prices (which aren't always lower than the nearby majors) but because Crown is based here in Baltimore and because the Blaustein family, which controls Crown, is also here.

Anyway, this miraculous thought hit me that maybe, just maybe, "buying local" would be good for the area economy, especially in the tough times we're entering.

Now, this idea may seem basic, if you're a normal, streetwise person with common sense. But to the deranged mind of a pseudo-economist, warped by years of discussion of the economic theories of comparative advantage, competitiveness and free trade, this idea is nothing short of revolutionary. And complicated.

Any dollar spent in the regional economy has local benefits, of course. Most obvious are the wages and benefits of the employee who's directly providing whatever product or service you've purchased. But consider these possibilities:

* If that employee works for a company based outside the region, profits generated by the sale will flow outside the region as well.

* If the store in which you shop is owned by an out-of-state company (an investor such as an insurance company, or perhaps a real estate developer), its rent payments will flow outside the region.

* If the product or service sold to you is also produced outside the region, then the entire wholesale price of what you're buying at retail will flow away.

In economic jargon, the product that benefits any local economy the most is that product that has the greatest percentage of its value added by work done to it inside the local economy.

So, buying baked goods from John Paterakis' H&S Bakery benefits the local economy a lot more than buying goods from a bakery located and owned outside the area. But, as you may have noticed, Maryland is not greatly blessed with amber waves of grain, so H&S must buy its raw materials largely from outside the local market.

As long as we're being chauvinists, "buying local" makes increasing sense in the service sector, where close to 100 percent of the service's value may be added locally. You might still need to leave the market to find specialized accounting, advertising and legal services, but you ought to first make sure that service is not available here.

A Greater Baltimore Committee study last spring concluded that Baltimore was unusually blessed with business services, so buying local in this sector might be good business as well as good citizenship.

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