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A vertically-integrated community can meld community businesses, infrastructure, education, care, and other resources to provide decent wages and benefits. Can this serve as antidote to Walmart-itis?

Walmart sales for 2014 are projected at $476 billion. Forbes 20-Feb-2014

The US gross domestic product (GDP) for 2014 is projected at $17.3 trillion while US retail sales for 2013 totaled $4.5 trillion. This means Walmart accounted for 10.6% of all US retail sales and 2.6% of the total US GDP. This is frightening.

The ‘Walmart formula’ might be best summarized as “buy low cost goods from China and other low-wage nations and sell them at prices marginally lower than the price of domestic goods. Once the market is captured and competition destroyed, then boost margins.” This formula destroys US manufacturing and sends US jobs overseas. Other US chains, such as Home Depot, employ essentially the same formula.

These companies appear to have neutralized any effective governmental ability to rein in their practices. These juggernauts appear to be in the final stages of assuming control of US markets. And they can use their capital and connections to take over one further market segment after another. The one that personally irks me most is the Walmarting of charitable giving—where Walmart asks customers to donate to charity, and many of them do, and then Walmart is in the position of dictating even where charitable dollars flow.

Are we helpless? No. The federal government appears to be under their thumbs. State governments are being captured systematically with the ALEC formula. However, communities and cities could be more resistant.

The vertical integration of community can be the antidote to Walmartitis. Here’s the vision. A community has businesses, government, manufacturing, infrastructure, and  education. It could be possible to vertically integrate the community so that local wages and benefits are maintained, local businesses encouraged, local manufacturing protected. Vertical integration means these separate forces in the community establish deeper cooperation. Up to now, these are each considered in isolation and each permitted to go about their business as they pleased.

An example. I was lead to this proposal by a business model I recently created. It was a 70-parameter model that looked at the integration of: a) a college, b) manufacturing, c) residential and commercial construction, d) farming, e) nursing care, f) veteran’s programs. The model was for the growth phase of a community from empty land across a 7-year period of expansion to a population of 15,000. I was stunned to find that students at the college could receive very good wages ($30k to $40k--single and married) and could build their own homes and could buy them at reasonable cost. By the end of the 7 years, in this model, the total cumulative value of all goods and services in the community grew from $10 million (startup investment) to over $1 billion. The community itself ended up with $200 million of assets at the end of 7 years, apart from the privately owned assets.

In this plan, the community grew its own food. It manufactured much of the construction materials used in the homes (doors, sinks, windows, roofing, etc.). A percentage of students were training in construction management and actually built the homes and commercial buildings of the new city, and all its infrastructure. Another percentage were training in nursing and would be employed in nursing as they worked through a four-year degree.

This model does work. Alaska distributes some of its resource extraction revenues to residents. The Amana Colonies, here in Iowa, were once organized this way.

Every economic system has advantages and disadvantages. This model is optimized for community self-sufficiency. Because of the remarkable level of wages and benefits available, I think such a community would be especially appealing for young families where one parent or both would like to complete college and learn trades.

What does get lost in this model, unfortunately, is large individual accumulations of wealth—the construction company that builds 4,000 homes would ordinarily make tens of millions of dollars. Instead the community ends up with this money. And thus the community needs to help businesses with capitalization.

At present there is a draft 70-page business plan and the draft financial model is built in Microsoft Excel. If there were interest, send me a message. There won’t be a one-size-fits-all model. However, I’d be interested to learn about others initiatives. And perhaps these resources might be useful for related projects. Perhaps a portfolio of solutions could be assembled, and then local organizers could pick and choose, and come up with something that works for their community.

The model demonstrates that there is at least one way to organize for everyone in a community to enjoy a reasonable reward for their work. There are certainly other ways as well. The corporatization of America is not a given. But, the current trajectory of the US economy must be altered if we do not want to simply hand government over to corporations.

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Originally posted to greenkrete on Sun May 25, 2014 at 08:21 AM PDT.

Also republished by Changing the Scrip and Community Spotlight.

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