Friday, January 3, 2014

Community Economic Sustainability: Accumulating value

Consider the value balance.
For any community to be economically sustainable, the value created in or brought to the community needs to exceed the value sucked out. If the value all gets sucked out, it'll decline and disappear.
We come together in communities for trade, economies of scale, and social connections. For example, villages sprung out of a landscape of family farms in large part to process the harvested bounty and facilitate trade. 
Trade, along with the specialization of labour, means that we don't need to all work on family farms in order to eat. Someone else will grow the food. We can specialize in some other kind of work, confident that we'll be able to acquire food elsewhere.
Economies of scale show up when you don't have to go so far to get to school, we can all share the same fire department or we can all use the same water and sewer systems, rather than needing one of your own.
The social connections are valuable, and lead to some of the other emergent properties of cities, like artist communities, sports teams, and music festivals.
But if you can't make the economics work, by generating or acquiring more value than is sucked out of the community, your community will wither.
Be aware of the value balance. The balance sheet for this is complex, and includes food, taxes, income from other communities and expenses to outside. It's not just about money either. 
It also explains how lucrative housing development is. People add lots of value at the front end by taking on mortgages, but then send that value back out of the community plus interest as they pay it back. The interest in particular is a drag on value accumulation. It takes more than it gives.
Growing food and generating electricity with solar panels are both clear examples of how value can be generated within a community.
Value is also created when the systems within a community make something easier or cheaper for a group than it would be for people to do on their own. Farmers sharing a grain elevator, for example. 
With all the specialization and trade, it's tricky to calculate the economic balance of communities, because every transaction figures into it, but if on balance your community isn't accumulating value it will wither.
Since you obviously want your community to be economically sustainable, look for ways to generate value and keep your value within the community.

Practically speaking, that means: Supporting local businesses and industries, growing some food and staying conscious of the value balance.

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