KENNEDY: Mom-and-pops keep skin in the game

Sometimes, the more we learn, the more complicated things get.

I recently came across a 2006 study that documented a decline in civic participation, voter turnout and the number of active not-for-profits occurring after Walmart moves into a community. Those behaviors are markers for social capital, the connections citizens have to one another, characterized by what scholars call “norms of trust and reciprocity.”

According to the study, social capital eroded further with each subsequent Walmart.

The importance of social capital to civic life had been studied previously, but it became a more prominent part of the civic conversation after publication of “Bowling Alone” by Robert Putnam, the Harvard political scientist, in 2001.

Research shows that, in cities where economic power is diffused, political power is more widely and democratically exercised. As economic power becomes more concentrated, civic engagement slumps.

Most economic development professionals recognize the benefits of a diversified economic base; in cities where there are many employers, the failure of one business is far less consequential than in cities where a substantial percentage of the work force depends on one or two large employers.

That logic is pretty self-evident, but it turns out there is a substantial body of research supporting the thesis that a diversified economy composed of many relatively small enterprises is not only better able to withstand downturns, but also better able to generate higher levels of civic engagement and a higher quality of life.

In 1946, a USDA sociologist compared two farming towns in California that were almost identical in every respect but one: Dinuba’s economy consisted mainly of family farms, while Arvin’s was dominated by large agribusinesses.

Dinuba had twice the number of community organizations, twice the number of newspapers, and citizens who were much more engaged than those in Arvin. It also had superior public infrastructure: its schools, parks, sidewalks, paved streets and garbage services far surpassed those of Arvin.

C. Wright Mills and Melville J. Ulmer undertook a similar study of several pairs of manufacturing cities in the Midwest on behalf of a congressional committee. They found that communities composed primarily of small, locally owned businesses scored higher than cities dominated by large, absentee-owned companies on more than 30 measures of civic well-being.

Subsequent research has confirmed that residents of communities with highly concentrated economies tend to vote less and are less likely to keep up with local affairs, participate in associations, engage in reform efforts, or participate in protest activities at the same levels as their counterparts in economically dispersed environments. Places with a diversity of small-scale enterprises have higher levels of civic participation and better social outcomes than those controlled by a few outside corporations.

When you think about it, these conclusions are consistent with local experience.

Many of us have expressed concern over Indianapolis’ loss of the business and banking headquarters from which so many of our civic leaders were once drawn.

Now, even our larger law firms are merging with others to form national enterprises; their lawyers are likely to be less involved in the civic life of Indianapolis when we are just one of their many locations, just as the executives who run the local offices of corporations and banks headquartered elsewhere are demonstrably less active in civic affairs than the businessmen and bankers whose prospects were inextricably tied to the health of central Indiana.

Maybe we should offer fewer tax breaks to the big guys from elsewhere, and focus more on helping our homegrown enterprises.•

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Kennedy is a professor of law and public policy at the School of Public and Environmental Affairs at IUPUI. She blogs regularly at www.sheilakennedy.net. She can be reached at skennedy@ibj.com. Send comments on this column to ibjedit@ibj.com.