Get me out of the Apple economy

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Thanks to the mayor Bernie Sanders who is now running for president for the Democrats, Burlington, a small town in Vermont, US, made itself immune to economic crisis created by flaws in the global urbanised economy. Burlington and Apple both started to change things in 1984 and both have been successful. Maybe it is time for the two models to mix, writes futurist Nils Elmark, consulting futurist at Incepcion.

Since Apple Inc. launched its Macintosh during the third quarter of the 1984 Super Bowl football game, the volume of the annual trade of goods on the globe has grown from two to 20 trillion dollars and Apple itself has developed from near bankruptcy to be the most valuable company in the world operating seamlessly across cultural and national borders, manufacturing where it is most favourable, selling where it’s possible and placing its profit where the taxations are lowest.

Apple has become a role model of modern global urbanised economy. This is how successful companies operate today. Since the financial crisis, a new generation of brands has thrived on the ashes of the twentieth century. Facebook, Starbucks, Google, Amazon and Apple have become representatives of a modern global economy and they have been followed by a host of other huge companies operating in the same way starring on Wall Street and The City.

It’s marvellous how fast the global economy has progressed in the last decade. And we should be happy for it because it’s in the process of pulling a large part of the global population out of poverty into the “middle class”.

But something’s wrong

It’s as if the urbanisation sucks the energy out of its surroundings and the global companies subsequently suck their profit out of the cities and hoard cash they don’t really know what to do with in their tax heavens. It leaves local communities vulnerable.

Look what happened to Detroit when global economy went wrong. The city lost half a million jobs, went bankrupt and is still struggling to get back on its feet. Look at what happened to Nokia. In its heyday it had a 40 per cent of the global market for mobiles now Nokia has disappeared from the world map. Over a few years the company lost 20,000 local jobs and as a former employee in Oulu in northern Finland said: “We are not as bad off here as they are in Greece, but we will be.”

Even though they may be clever, we cannot put our future entirely in the hands of Tim Cook, Mark Zuckerberg, Jack Ma and the rest of the business leaders who have formed the world after 2008. We have to protect billions of people against the next crisis of the global economy, which may be even worse than the one we saw in 2008.

But how do we do that?

We may find an answer in the City of Burlington in Vermont in USA. It’s a community of 50,000 odd people close to the Canadian border. Nothing really grand ever came out of Burlington unless you consider it grand to be immune to global recession.

In a recent book Sustainable Communities: Creating a Durable Local Economy it is revealed that while millions of Americans lost their jobs, the citizens of Burlington went through the financial crisis as if nothing had happened. Before 2008 the small community was amongst the top five municipalities in the US regarding employment and the crisis that sent Detroit and Oulu into the abyss left the Burlingtonians untouched. They are still top five in the country. And during the height of the great recession Burlington had the lowest foreclosure rate of any city in the nation.

“The reason for that is a strong local economy”, reveals Bruce Seifer who, together with some extremely progressive mayors – one was even a socialist, for three decades headed a development team that worked persistently to create a sustainable local infrastructure for people and small businesses. So when Apple took part in the creation of a global economy Bruce Seifer started to created a resilient local economy independent of Wall Street, oil prices and real estate bubbles in China.

In 1983 Burlington was in bad financial shape but Bruce Seifer and his mayor Bernie Sanders – now democratic presidential candidate running for the 2016 election – turned the entire exhausted community into what can best be described as an incubator and accelerator for small businesses. They legally fought the “big box stores” and instead set out to support local retailers.

“Actually, it’s not rocket science”, Seifer says. “There is not one single way to do it. It has taken hundreds of different actions to get where we are today. Basically, we have just asked the people and business owners of Burlington what they wanted and then we have done what we could to support them. Luckily, we have had strong political power behind the good intentions. The city council decided to create a strong local economy backed by a long-term development programme that we have stuck to for 30 years.”

Local economy

Building a local economy makes sense. There has been a lot of research which indicates that if you spend £100 pounds in a local shop, 45 per cent of the money will remain in the community compared to only £15 pounds in a retail chain such as Tesco or Sainsbury’s. And if you have dinner in a national or even international chain restaurant only 30 per cent of the money stays in the area whereas 65 to 80 per cent of the money will re-circulate in the community if you dine in a local restaurant, which at the same time will create 2 to 3 times as many local jobs.

I’m not suggesting that we should isolate ourselves in local communities like they did during the plague in the middle age. But I think that both politicians and businesses – and consumers – need to integrate the learning from Burlington – and many other places for that matter – in the design of the future. Apple is not the only company with access to new technologies that facilitate the creation of economies.

We need to break up the global economy into local economies so communities can get their independence back; not as an act of protectionism but with intentions to cooperate with each other within the global framework. New technologies have given us the power to decentralise and to network – we should use these opportunities.

Nils Elmark is founder of the business and finance consultancies Incepcion and BankingLab.london. He is a futurist who helps companies create better and braver dreams. Nils has written three books on his old Remington typewriter and is a great motorcycle enthusiast.

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Photo credit: Ales Krivec

 

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