Maxi-Box Retail, Mini-Farm Agriculture, and Disposable Income

by Martin Harris

Real economists (and even amateurs like your Humble Scribe) who profess to understand the general “disposable income” principle, see it in terms of the relationship between spending power and quality-of-life: those with more of the former can have (they sometimes make choices whereby they don’t succeed) more of the latter. Disposable income was once defined as what’s left to spend discretionally after taxes; recently, it’s being re-defined as what’s left after taxes and fixed expenses, essentials like food, clothing, and shelter. Historically, the Adam Smith argument that, with productivity gains, the prices of the latter would decline in real terms (not inflation-decimated dollars, but minutes-of-work needed to buy) has proven pretty much correct, which explains why US consumers now spend less than 10% of income on food-at-home, while the same median (non-farm) household spent near 25% in 1950 and near 75% in 1800. Money not spent on food now goes more and higher taxes and to optional choices ranging from computers to investments, from entertainment to college tuition. Part of the Adam Smith thesis is that the supply-demand curve is based on purchaser preference for lower unit cost (quality assumed equal) and that consumers prefer to purchase necessities as frugally as possible so as to maximize residual spending power in the discretionary category.

The recent success of the big-box stores –WalMart, K-Mart, CostCo, even Office Depot and Big Lots– is based on just that understanding, which they accommodate through supply-chain savings based on economies of scale. It’s a strategy which most smaller local retailers can’t match, which explains why, in some parts of the country, there’s a popular hostility aimed at preventing the unequal competition. Some small towns, like Middlebury, have zoned out stores deemed “too large” (50,000 SF in the Addison County Shire Town) so as to “save” Main Street. (Left out of this discussion is the inconvenient fact that, in 19th century street plans like Middlebury’s, you can’t park your shopping vehicle, buggy or auto, as conveniently to the store as you can out on the perimeter, where, typically, there’s as much outdoor square footage for parking as there is indoor square footage for goods.) By such zoning, planners understand that they’re acting to require higher-price spending for basics, but don’t seem to understand that they’re also requiring the resulting reduction in discretionary spending, at the smaller stores they’re presumably attempting to save. Bureau of Labor Statistics data clearly show that, long-term, consumer spending is always at or very close to 70% of GDP, suggesting a zero-sum relationship between essential spending (taxes and essentials) and disposable-income spending. After all, there hasn’t been a downtown basic-groceries or dry-goods store in Middlebury for several decades, and what’s there now, in retail terms, is mostly niche- and specialty marketers of products and services who mostly are not competing with big-box outlets. Typical frequent small-town exception: office-supplies and watches-and-jewelry. Were Middlebury to have approved (subjunctive contrary to fact) a Route 7 bypass (or under-village tunnel, to “save” rural fields) long ago, it could by now have, instead of strip development, both a big-box campus on its perimeter, with the essentials-purchase-savings generated there being spent in downtown mom-n-pop specialty stores and offices. And less downtown through-traffic as well.

The modern local-vore (usually spelled loca-vore) movement (mini-farms offering seasonal produce and artisanal items) shares the rural-gentry’s anti-big-box disdain for the classic-economists’ disposable-income/spending equation, although the mini-ag proponent argument (read the just- published “LocaVore Dilemma” , authors DesRochers and Shimuzu, for the counter-argument) is that the cost premium for mini-farm-sourced non-corporate-commercial food items is based on measurable and positive quality and environmental comparisons. For both sets of retailers –maxi-box and mini-farm– the opposition to the former and support for the latter has the same inevitable negative impact on consumer residual discretionally-disposable income: shrinkage.

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Whether you support or oppose the local-vore concept (its grow-you-own aspect is silently opposed by SmartGrowth advocates, who prefer house-lots so small that very little arugula can actually be grown on them) you can’t easily reject the authors’ fact-based statistical arguments that commercial farming/distribution bring food to consumers over longer distances but at less expense /carbon footprint than the far-less efficient small-scale users of pick-up’s (sellers) and station wagons (buyers) and you can’t easily reject the cited studies showing that mini-farm produce isn’t always higher-quality/nutrition/freshness/purity than commercial-farm produce. The authors falter (Humble Scribe opinion) in their dismissive matching of localized mini-farming and consumption with the subsistence agriculture of historic sociological record, and how it has always resulted in poverty for the producing masses and wealth for the non-producing but ruling few. Modern mini-farming is a lot of things, ranging from the cost-savings (but time-expending) of grow-your-own to the pleasures of small-scale gardening, but it isn’t subsistence ag as practiced by the builders of Stonehenge then or sub-Saharan tribes now, nor is it no-cash-crop subsistence ag as glorified in the early 20th century writings of the Southern Agrarians (who, they explained, were “too busy” in their halls of ivy at Vanderbilt University to practice it personally, you understand) advocating that the hill-farmers of Appalachia benefit from avoiding in-town enticements they couldn’t afford anyway. Yes, there’s a sort of satisfaction in having a few months of potatoes in your basement, should some major socio-economic disaster occur; but if you think that major-breakdown eventuality likely, also consider the ammo you’ll need to defend your hard-earned potatoes, temporarily, from hordes of hungry and angry nearby-urban refugees in worse shape, calorie-wise, than you. More accurately, modern mini-farming is fairly high-tech usually-part-time subsistence/sale ag on the old Jeffersonian model (who idealized that every independent yeoman should have one foot on his own land and the other in his own shop or trade) or on the newer Henry Ford model (who set up his company-town housing with large lots so that temporarily laid-off workers with growing and stored produce could stay around for re-employment) and is remarkably similar to the economic profile of modern commercial farming, in which household income is a similar mix of on- and off-farm earnings.