Online Community Investing Database Unveiled

Don,

Here are some data to ponder:

- FOOD: The overall economics of the food industry right now is that 9 cents of
every dollar spent at the supermarket goes to the farmer, while 67 cents goes to
marketing, advertising, refrigeration, transportation, and middle people (the rest goes
to inputs). Direct marketing agreements between farmers and consumers, therefore, bring
the price of food way down. Hence the explosive growth of community supported
agriculture (CSAs). There are now more than 600 CSAs in North America. The bottom
line of the food sector is that we have very efficient farms and increasingly inefficient
distribution.

- WOOD: The place to find diminishing economies of scale is with reuse and recycling
operations. A specific example, noted by Paul Hawken: The Menominee Indians have
selectively harbested trees on their land, and sold them profitably, for 150 years.
Today, after sales of 2 billion board-feet of wood, their forest remains as healthy an
ecosystem as it was in the 1850s, with 25 percent MORE harvestable trees.

- WATER: That water utilities are gradually being replaced by Water Efficiency
Service Companies suggests changes in the economy of scale. The tasks involved in water
efficiency -- finding and plugging leaks in plumbing, developing better ways to capture
rainwater, implementing more efficient appliances and fewer lawns -- all are best done
locally.

- BANKING: I think you need to question whether mergers are prima facie evidence of
larger economies of scale for banking, or merely an indication of an unfortunate
coincidence between the interests of short-term shareholders of the acquired company and
the CEO of the acquiring company. Most of the studies I've seen, including those done by
the Fed, have concluded that local and regional banking tends to have -- compared with
national or global banks -- lower overheads, higher returns on savings, lower fees on
checkings, lower interest charges on credit cards, and lower default rates.

There are lots of other sectors where this is happening as well: in energy, where
generation capacity is being taking over by conservation (through local energy service
companies) and by regional windmills and by rooftop photovoltaics; in the service sector,
where people's desire for personalize service sets a limit on what the impersonalized
internet can provide; even in the manufacturing sector, where automakers are looking
serious at small-scale, modularized construction as allowing more just-in-time delivery
to niche markets. Even Paul Krugman winds up his book on POP INTERNATIONALISM noting the
growing localization of our economy.

This is good news for community economics. Why resist it?

--- Michael H. Shuman (Village Foundation)

"Donald R. Hinkle" wrote:

> Can you give me examples of shrinking economies of scale in food? I am only aware of
> consolidation in the grociery industry. And in water utilities? I am not aware of any
> new small neighborhood operators. Home Improvement and Lumber also seem to be
> increasing size to effect economies of scale. Finance/Banking.......I also have not
> seen anything but consolidation.



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