By shopping local, consumers can use their economic power to mitigate the inequitable destructive effects of the COVID-19 pandemic on small businesses

In the highly divisive political and social atmosphere brought about by the pandemic, one message has been almost universally applauded: shop local. It is no secret that the impacts of the COVID-19 pandemic are distributed unequally.

Case in point: since the start of the pandemic, one in ten restaurants across Canada have permanently closed their doors while Canadian billionaires’ wealth has increased by over $53 billion dollars.

This is not a uniquely Canadian problem — the global debt to gross domestic product ratio has soared to a record 365 per cent, with emerging economies and developing nations bearing the greatest burden. Meanwhile, billionaires worldwide have seen their holdings mushroom by 27 per cent. A k-shaped recovery, indeed.

In Ontario, the unfairness of shuttering small businesses whilst allowing large retailers to continue to sell both essential and non-essential items has generated both confusion and outrage. However, appeals to Doug Ford’s government, such as a petition by the Canadian Federation of Independent Businesses seem to have faced silence.

As the numerous inequalities are spelled out in red, we are left to determine if the uneven financial impacts of COVID are more a product of the realities of a pandemic or the discretionary actions of government. Frankly, evidence points unmistakably to the latter.

In Ontario, the harshest lockdowns prohibit indoor and outdoor restaurant service and only stores providing essential products or services are permitted to remain open. However, big-box stores that are allowed to stay open because they sell essential products are thereby able to continue selling non-essential products, wielding an unfair competitive advantage over small businesses. Why can I walk into Costco and buy clothes, but at a regular clothing store I need to order online and pick them up curbside? 

However, big-box stores that are allowed to stay open because they sell essential products are thereby able to continue selling non-essential products, wielding an unfair competitive advantage over small businesses. Why can I walk into Costco and buy clothes, but at a regular clothing store I need to order online and pick them up curbside? 

In Manitoba, this injustice was addressed by government regulations ordering that any store permitted to remain open could only sell essential products – anything else would only be available through curbside pickup. To ensure compliance, stores had to remove or rope off the non-essentials.

In November, Costco was hit with a $5000 for defying the government regulations. And in Ontario? Doug Ford assures us that he consulted with the Chief Executive Officer of Walmart Canada — but not thousands of small business owners — and concluded that forcing big-box retailers to comply with restrictions on the sale of non-essential items would be a “logistical nightmare,” so it wasn’t worth the trouble.

With the government refusing to address the inequity of closing some businesses and not others, consumers must take it upon themselves to level the playing field. This is the ethos behind “buy local.”

There are myriad benefits to shopping at local businesses: supporting the regional and national economy, ensuring the integrity of supply chains (it’s more than a little disconcerting to go to the grocery store and see empty shelves) and promoting the development of a middle class.

Unfortunately, buying local is expensive. For many people, the effort to support community businesses has become more about virtue and status signalling for the wealthy than a feasible economic alternative. Furthermore, buying products for a substantially higher cost than is necessary undermines one of the central tenets of our economic system: competition.

The benefits of marketplace competition manifest themselves in its corollary: economist Joseph Schumpeter’s creative destruction. The idea is that businesses unable to cope with current market conditions will die off and be replaced by newer ones, thereby ensuring a healthy and vigorous economy that benefits businesses as well as consumers.

The fear is, then, that the economic burden of buying local will be overly-taxing on consumers and will create an uncompetitive local economy that will impair post-pandemic recovery.

However, COVID-19 can be seen as a time of “created” and not creative destruction. Government shutdown regulations and not changing consumer preferences have altered the consumer marketplace to suit the very specific and very temporary economic conditions of the pandemic. Thus, buying the cheapest and most easily available product is not bolstering an efficient economy, it is exacerbating the unfair advantages enjoyed by large corporations in an artificial marketplace.

Post-pandemic, the government regulations will end, but the effects of our consumer behaviour during the pandemic will endure. Therefore, those who can afford to shop local should — nothing less than the long-term economic health of our communities is at stake.

Image courtesy of Graphic by Nigel Mathias

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