Economic Growth Is Not the Same Thing as Economic Health

I’ve been reading the Royal Examiner articles about local business, small business, and all the other exciting things that apparently happen when we’re not looking. Things are changing, just as surely as some things are staying exactly the same.

We hear a lot about businesses coming and going on Main Street and, for that matter, all over the county. And sometimes the reason is simply… life happens.

Costs go up. Rent goes up.Utilities go up. Basically, everything goes up except the amount of money left in your checking account. Some business models aren’t sustainable. Some businesses can’t or don’t want to change with the times.

And sometimes, quite frankly, we just age out. There comes a point when you look at your business and think, “You know what? I’d rather be sitting on my porch than explaining this to a 23-year-old.” And that’s okay.

But here’s where I think we sometimes confuse economic growth with economic health. A community can become busier, more crowded, and more expensive without necessarily becoming better.

Ok, you say, visitors can bring more money. And new businesses! There! We’ll solve this with tourists!

I love visitors. Visitors bring money. They eat in restaurants, shop in stores, stay in hotels, visit attractions, and discover what makes our community special. But if we attract more and more visitors without investing in roads, parking, water, public services, and infrastructure, while protecting the historic and rural character that attracted them here in the first place, we may eventually find ourselves with an unsustainable tourism industry and absolutely no idea where everyone is supposed to put their cars.

And if growth means replacing locally owned businesses with chains, turning farmland into subdivisions, putting additional pressure on an already strained water supply, or overwhelming roads and public services, we shouldn’t automatically celebrate it as “economic development.”

The question is whether the benefits remain in the community and whether they outweigh the costs.

“Shop local” may not create new money on its own. But neither does simply attracting other new businesses. If a new business primarily captures spending that was already occurring locally, we don’t get extra economic development points just because the money changed cash registers.

And while a strong commercial tax base can give government more options, there is no guarantee those options will benefit taxpayers. Governments can, and often do, spend additional revenue rather than reduce taxes.

Economic development should not be treated as an end in itself. The goal shouldn’t be to have more businesses, more buildings, more traffic, or more development simply so we can say our economy is growing.

The goal should be to create a community that is financially sustainable, provides good services, protects its infrastructure, preserves its natural resources and agricultural heritage, and remains a desirable place to live … and visit.

Sometimes that means encouraging development. Sometimes it means encouraging and supporting tourism and history that make our community unique.

Sue Laurence
Front Royal, VA

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