Place-Based Enterprises: Small Is Still Beautiful

To keep the economy healthy, go back to Main Street

| May-June 1999

The real voyage of discovery, wrote Marcel Proust, "lies not in seeking new lands but in seeing with new eyes." Seeing with new eyes requires challenging the conventional wisdom that bigger is better, that separating the producer from the consumer, the banker from the depositor, the worker from the owner, the government from its citizens is a necessary requirement for achieving a prosperous economy and a healthy society.

Seeing with new eyes means rediscovering the importance of place. Perhaps the finest empirical analysis of the relationship between local institutions and community life was conducted 50 years ago by Walter Goldschmidt, then a researcher for the U.S. Department of Agriculture. Goldschmidt examined two remarkably similar farm communities in California's San Joaquin Valley. Dinuba and Arvin had the same volume of crop production, comparable soil quality, and similar climate. The communities were equidistant from major urban areas and were similarly served by highways and rail lines. They differed in only one major respect: The Dinuba economy was based on many small family farms, while the town of Arvin depended on a few large-scale agribusiness operations. Goldschmidt discovered that Dinuba's family farm economy provided its residents with a substantially higher median income and standard of living. Moreover, the citizens of Dinuba, to a far greater extent than their counterparts in Arvin, were involved in building a strong community.

For example, the quality and quantity of projects that benefited the entire community, like paved streets and sidewalks and garbage and sewage disposal, were far superior in Dinuba. The agribusiness town had no high school and only one elementary school. Dinuba provided its citizens with four elementary schools in addition to a high school. The family farm town had three public parks. The corporate farm town had a single playground, donated by a corporation.

Dinuba's residents not only invested their money in expanding their community's physical infrastructure, they also invested their time in building its civic infrastructure. Dinuba had more than twice the number of civic associations as Arvin. In Dinuba, there were various governmental bodies that enabled residents to make decisions about the public welfare through direct popular vote. No such bodies existed in Arvin.



You would think that the government would have been delighted by Goldschmidt's findings, for he had empirically validated the uniquely American belief that the key to a healthy society is the broadest possible ownership of productive assets. You would be wrong.

For 30 years the USDA suppressed the report. Indeed, under pressure from industry, it abolished Goldschmidt's position and, later, the entire office that studied agriculture's impact on communities.