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Monday
Dec032012

The little fellers

We've tilted the playing field so far in this country that we've wiped out an entire class of citizen -- the merchant class -- one that naturally existed for millennia across societies and cultures, one that is essential to the health of our cities. The first step to getting this group back is to recognize their absence. After that, we need to start tilting the playing field back to give the traditional development pattern a chance to reestablish.

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The late Senator Paul Wellstone used to say that he stood for the "little fellers, not the Rockerfellers." As a catchy bit of campaign rhetoric, it resonated with voters, not only because Wellstone actually walked the talk so-to-speak, but most people believe they are "little fellers", that those better off have all the advantage they need. I hope this post challenges some of those assumptions, both in support and in opposition to Senator Wellstone's statement.

Last week I was in Rocky Ford, Colorado, a place that would be eerily familiar to many. Here is a town that obviously was someplace very special at one point. They had at least four neighborhood schools, a myriad of really gorgeous churches, a beautiful Carnegie library, a downtown core with a mix of businesses and civic organizations and surrounding neighborhoods with good structure, nice housing and walkable proximity to everything. The depot along the rail line once provided a connection to the outside world that, while not luxurious, was of very high quality. This was once a great little place.

Today you have to look hard -- it is probably easier with the eyes of an outsider -- to see the vestiges of this prosperity. While the locals will say that it was the closing of the sugar beet factory that begat the current decline, a more dispassionate view of their history informs that the trip downward was well under way by the time the factory was boarded up in 1979. I inquired from many people what they felt the "peak" year was for Rocky Ford. The answer was always somewhere between the late 1950's and the early 1960's.

I have sometimes been accused of being too nostalgic for the pre-Depression America. While I acknowledge that the good old days weren't always good, there are some reasons why people's perceptions of prosperity -- when it comes to their place -- centers around 1960. For much of America, this was the peak.

This was the point in time where our cities had the best of both worlds. The traditional neighborhoods still existed in a mature state. The momentum for growth and development that is inherent with the traditional design (a resilient high upside, low downside configuration) remained intact. We had not yet begun to dismantle our places in service of the automobile and so we still had the agglomeration of humanity consolidated in and around neighborhood centers.

In 1960 we also had the automobile and all of its upside, but without the inevitable downside that would, in later decades, become accepted as normal. One could now travel between cities on open roads at any time of the day, no longer beholden to railroad routes or schedules (although those still existed for people and freight). The first generation of auto-oriented development was in its infancy, the financial sweet spot in the Ponzi scheme where the growth is producing new revenue for the city but the taxpayer's long term costs wait -- uncalculated and unaccounted for -- hidden in the future. There is little wonder why, in Rocky Ford and tens of thousands of other cities across the county, we felt like we could have it all.

Interesting to note at this point that all of our equations that define the trajectory of post World War II growth and prosperity have this time period as an inflection point. I tire of hearing people like Randall O'Toole discuss how automobile mobility is the driver of prosperity. It is a little like saying Skittles are the source of my stamina. True for a while, and statistically the average over time might still be good due to that initial bump, but the diminishing returns after the sugar high are staggering.

There is a very important thing missing in Rocky Ford, my hometown of Brainerd and nearly every small to medium-sized city that was still there in 1960. It is not manufacturing jobs, as locals will attest (sugar beets in Rocky Ford, the paper mill in my hometown). It is something more fundamental and, ultimately, unappreciated.

The merchant class.

Yes, there are still small business owners. I met a young entrepreneur in Rocky Ford that had opened a coffee shop in the location of a failed coffee shop. While I deeply admire the spirit and courage of this person and his family (and we need them), this is simply someone filling a market niche. Entrepreneurial people like this exist in places like the neighborhoods devastated by Hurricane Sandy. Or the Gaza Strip. I admire the hard work and ingenuity, but they do not constitute a merchant class.

Today the merchant class -- or the people that would constitute the merchant class -- in most towns can be found in a few familiar places. They are the manager at a big box retail store. Or they operate a chain restaurant. I know some that own franchise gas stations, auto part stores and the like. They are not entrepreneurs in that they are not risk takers, but they work hard, are solid citizens and generally care about their community. I'm sure a high percentage of these people belong to civic clubs, attend church, donate money to the local sports boosters and generally lead wholesome lives.

So what's wrong with that?

Many things. First, there are just fewer of them. A few years ago I organized a business survey in a small town I was assisting. They had something like twenty businesses, which was far more than people thought when we started. Here's the amazing thing though: when we started talking to older people that had lived there in the 1960's, we found that the city used to have a hundred or more businesses. They used to have a laundry, a hardware store, many restaurants clothiers, etc...all things that you now drive to the regional center to get. Most of the twenty businesses were entrepreneurs (taxidermy, novelty shop, resort owner) or chains (sub shop, gas station).

Second, there is a degree of separation between themselves and their business that wasn't there before. In 1960, if you owned the shoe store, you owned the shoe store. You ordered the inventory, you set the prices, you managed the staff, you kept the books, etc... Today, if you own the national shoe franchise, much of this is out of your hands. You don't unilaterally decide what shoe line you carry, what the prices will be, where you will acquire the inventory, what wages and benefits are offered to the staff. I'm not suggesting these people don't work hard or own their own business, but it is fundamentally different in a way that is far less intimate.

Third, there is a degree of separation between themselves and the community that wasn't there before. In high school I worked at the local Perkins restaurant. The franchise owner/manager was a nice guy who worked really hard, but it was a job for him. At some point he moved on -- I have no clue where -- but unless you knew him and looked for him when you went in like I did, you would never know it. The restaurant hasn't changed; it is still Perkins with the same menu as every other Perkins.

In my hometown I've also noticed a fourth thing and that is that this group of people -- as well as any professionals or others with above-median incomes -- live outside of town. The city may contain a large percentage of their customers (or, more accurately, the highway through the city), but they don't choose to live there. They have made a rational choice and located where there has not been a decades long trend of decline. Unfortunately, I made that same rational choice 16 years ago and am somewhat stuck now.

By losing this merchant class, we are essentially left with entrepreneurs and workers. I would submit that this is not good enough, that the presence of this vested class of residents was the cohesion that made these places work. They ran for local office, they organized events, they sponsored little league teams and they intervened or applied pressure when a fellow merchant wasn't living up to local standards.

Now, admittedly, they also made many important decisions in smoke-filled rooms outside of the public eye. You could rightly say that some of these places would have the feel of a mob town, where the trajectory of the city rested in the hands of a few who could be ruthless. Sometimes it worked, sometimes it was terrible. But how is that much different than today, where the overwhelming majority -- I would place good money on 85% or higher -- can not name their local city council members, let alone an agenda item from the past six months? A merchant class in the social media age would be a far more community responsive group of people than their peers from the 1960's.

So how do we get the merchant class back?

I don't rightly know, but a couple points can be made. First, as I headed in to church Sunday morning I was noting all of the businesses I passed on the way in. The starting investment for a sign alone in these places would be $50,000. If you are not wealthy today, or able to connect in with an outside franchise that can essentially front the costs in exchange for your indentured servitude, you can't afford the ante. The auto-oriented commercial strip is not conducive to a merchant class.

Beyond that, who's actually working for the "little feller"? The merchant class I describe would not be part of what we would call the poor and working class and they would certainly not be part of the wealthy. They are not entrepreneurs looking to put capital at risk with the side benefit of potentially creating some jobs. They are not government employees. They are not stockholders of major corporations or Wall Street executives. I look across the political landscape and I can't identify any political movement, any program or initiative or any individual at all that is the champion of this lost group of people.

We've tilted the playing field so far in this country that we've wiped out an entire class of citizen, one that naturally existed for millennia across societies and cultures worldwide, one that is essential to the health of our cities. The first step to getting this group back is to recognize their absence. After that, we need to start tilting the playing field back to give the traditional development pattern a chance to reestablish.

We need to start building Strong Towns.

 

If you would like more from Chuck Marohn, check out his new book, Thoughts on Building Strong Towns (Volume 1)

 You can also chat with Chuck and many others about implementing a Strong Towns approach in your community by joining the Strong Towns Network. The Strong Towns Network is a social platform for those working to make their community a strong town.

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Reader Comments (6)

I think for most Americans there are two factors that contribute to the loss of the merchant class: time and money. People shop at a big box store because there is a wide selection in a single place (time savings) and because of the economy of scale, those stores can have very low prices. The later is the most critical as the majority of Americans are very price sensitive. I think James Howard Kunstler - as hyperbolic as he can be sometimes - has it exactly right: until energy costs make the 12,000 mile supply line for big retailers untenable, there will not be mass demand for locally owed stores providing mass produced goods or locally owned stores providing locally made goods. We may build a strong town and have rules that tilt the playing field back, but there will always be the larger players that attract buyers for these two reasons. We have this exact situation in Annapolis MD where as a town of 35,000 people with an historic downtown that works very hard for local businesses, we are competing with developments just outside the city limits that cater to national chains. These developments are not suburban big box stores, but in a recently constructed "Maryland Smart Growth" mixed use development - 10 story condo towers and retail in a faux "Towne Center" (http://visitatc.com/). What makes this work (for now) is the demand for the national retailers in one place (lower time and cost), but it really is just an outdoor suburban mall with vertical parking next to some high end condos in the middle of 4 stroads. It's 3 miles from downtown and virtually impossible to ride a bike to. I don't mean this so much as a criticism of the development (which it is), rather to point out that under the best of circumstances where people are trying to do the "right thing" from a development standpoint (it was a redevelopment of a dead mall/strips not greenfield development), the big players squeeze out the little players every time, and that is due to consumer preference for low friction (time/money). A very similar argument can be made for online retailers too, both large and small.

December 3, 2012 | Unregistered CommenterAlex Pline

@ Alex - Right on target.

@ Charles - I don't think the merchant class has disappeared as much as it has changed with the times. Those people still exist, they still run for political office, they still support their communities they just don't run the traditional home grown shoe store or hardware store anymore. They may own four or five franchise stores or they may be in some of the traditional businesses that are still independent (insurance sales, car sales, etc.). I don't think it's fair to categorize entrepreneurs as non-merchant class. It's not clear to me why you say that.

The thing that has really destroyed the merchant class is wealth. Jobs in this country (combined with the affordability of housing, technology, etc) pay well enough that the average person (while not a millionaire) has access to everything one NEEDS and a lot of things they want. If you don't make enough money to get by, there are tons of government programs to help make ends meet. Most Americans can afford housing, cell phones, computers (usually multiple), iPads, iPods, flat screen TV's (usually multiple), cable/satellite service, etc., etc. The point is, the wealth we have takes away a lot of the incentive to take a risk. Why work harder and risk your personal assets when your standard of living is ok? Certainly it could be improved, but most people don't have the drive to really better their position in life. Most just choose to show up at work, put up with the aggravation, and collect their paycheck. It's easier to work for someone than to work for yourself. Anymore it takes truly unique individuals to abandon the safety of their job for the unknowns of self-employment. That's what happened to the merchant class. They went to work for someone else.

December 3, 2012 | Unregistered CommenterJeff Morrow

The differences between the merchant class and the franchisee were noticeable after hurricane Sandy: the former opened their doors to anyone with cash (or in some cases, an IOU) even though they didn't have power, while the latter didn't open until the electricity was on. In a similar issue closer to home, two large franchise businesses used to support the local business association but they were told by 'corporate' not go to the association meetings anymore or donate any money to it. These two businesses were the largest at the node and now the association can't afford its part-time staff so it doesn't meet any more.

December 3, 2012 | Unregistered CommenterFaith

Your description of the problem is right on, but in trying to solve this problem, you have to tackle things that are way outside your purview.

For example, pharmacists. In this day and age, it is difficult, nearly impossible, for pharmacists to tackle dealing with Medicare/Medicaid/insurance companies and the regulatory issues with painkillers, without hand-holding from a corporation like CVS or Wallgreens.

In older times, a hardware merchant made his money by knowing his merchandise. Nowadays, he can't. Brands get bought and sold and then debased, and your hardware store owner has a hard time establishing his own reputation on merchandise he cannot fully vouch for.

The set of niches open to a member of this class has shrunk. What can we do about that ?

December 4, 2012 | Unregistered CommenterOmri

I have often argued this point myself. We have, for the most part lost the ability to create our own employment. Surely there are some exceptions as you stated; the sub shop, the tax shop, etc., but we don't promote it. Your earlier article about embracing congestion really goes hand and hand here. The suburban development pattern simply plays to the big boxes and the chain retailers. Here in Canada we have "Smart Centres" these are a grouping of smaller retail stores, restaurants, and services grouped with a few anchor tenants like Walmart or Canadian Tire. These Smart Centres can be found in many Canadian cities and usually have the same groupings of stores. I find it humourous when my wife goes on shopping trips with her friends in a different city's Smart Centre since she can visit the same stores with the same products and sales here in our home town. (She realizes this too) Unfortunately I think the biggest issue is that we have become so far disconnected from our environments. We simply don't know what a good urban environment should or could be anymore. Many people alive today, myself included, have never really experienced the merchant class environment, except perhaps in small doses.

December 4, 2012 | Unregistered Commenterwindsorshane

Chuck, you have helped me think of employment in this economy in a new way. I'm intrigued by the comments others have added to your post...the power of the big guy...the complacency of the average worker...the industrialization/standardization of our material economy...the impact of branding on our consumption habits.

I've been exploring my ability to survive as a merchant/entrepreneur/worker in this economy over the past decade. This topic helps me develop a framework to better evaluate those experiences and my future. I find it fascinating to look at our society through a demographic lens. I personally fit Winddorshane's description of someone who knows nothing different than what we have in American society today. To a certain extent, my Boomer parents raised me (and my generation) to embrace this way of life. They felt it was in our best interest. It is daunting for most of us to think about a different lifestyle. I yearn for this conversation to continue. I believe there is a better way forward for our children.

December 14, 2012 | Unregistered CommenterLawrence
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