Local economies are a lot like businesses

At the end of the day, a local economy is a lot like a business. The goal of a local government is to provide a set of services while bringing in more money than they expend. Too often, we don’t think of things in the least abstract way- money in must equal or exceed money out.

For local governments, tax dollars are the obvious key ‘market’ to target. It makes sense, then, to undertake efforts to increase those tax dollars in way that don’t saturate or exhaust that market. It also makes sense to nail that basic need before trying to overextend and do too much, creating a deficit.

Rural governments leading rural economies often focus on things like quality of life, arts, culture, and tourism, which are frequently ill-defined and, in the final analysis, low-impact overall. This happens while the basic tax-collecting infrastructure is neglected, and businesses are left twisting in the winds of unsure regulatory environments or convoluted processes to engage local officials.

This can be relieved to an extent by opening the lines of communication between government and businesses, especially the small businesses that- when taken as a collective- make up an overwhelming majority of employment and an incredible potential source for tax revenue.

Think of the small business boom potential in rural cities if only an area’s small businesses were truly aided in growing and their needs were almost all met within an area. Imagine a city that develops the positive feedback loop of a diverse, self-sustaining cluster.  Imagine the potential for all the things we aim for now- quality of life, nature trails and greenways, culture, arts, tourism- built organically, strengthened on a bedrock of a strong employment, good wages, and robust business environment.

It’s vital for local governments to understand their ecosystems- their markets. They can, like a business itself, build a reliable market and a continuing stream of income. It just takes boiling things down to the lowest level of abstraction: money in must equal or exceed money out.