Question to the economists

[SFRT - Frenchy]

I'm listening to this shop locally commercial where the Mayor states ' every $ spent locally is comming back to the community 7 times over'.

How is it possible that after taxes and operating costs $1 creates $6 more? ... Or does it means that the consumer pays an average of 7 times the value of what he buys?

[Shuffler]

My take on it is folks stay employed locally and spend their money locally. Taxes are collected, sales, property, etc..

[RTHolmes]

#1 its an advert, so its a lie to sell you stuff

#2 its a mayor, so hes lying to get re-elected


I'd love to see his workings for this, 10fr says he hasnt sent them to the economist ...

[Maverick]

Frenchy,

Its a saying referring to the movement of money through the local economy. Assuming you are spending your buck at a locally owned store and buying a domestic product. Your dollar doesn't just go into the register then to the manufacturer. It ends up being divided between the store, store owner, employees as well as the manufacturer. That dollar then goes from the employee and or store owner to another member of the community for another service or product and helps them to survive in the economy as well. Before that dollar leaves the area it should have traveled between several folks helping them to buy more for themselves just as you did.

Did that answer your question? It was a very shortened version of the process.

[Rolex]

It's an unrealistic theoretical myth in today's world.

Independently-owned stores are rare now. Even a locally-owned franchise transfers most of its revenue outside of a "local" area.
Domestic products are rarely locally produced. Even if they are, the raw materials are rarely local.
23% of wages are non-local transfer payments (Federal income tax, SS, Medicare).
State taxes are non-local transfer payments.

[CAP1]

I'm listening to this shop locally commercial where the Mayor states ' every $ spent locally is comming back to the community 7 times over'.

How is it possible that after taxes and operating costs $1 creates $6 more? ... Or does it means that the consumer pays an average of 7 times the value of what he buys?

 i think it goes something like this.

 if you bring your car to my shop for repairs, i employ a mechanic to work on your car. my mechanic now has money to spend, and goes to the local quickie mart on the way home, to pick up the shopping list his wife gave him. this helps keep the cashier employed, who now has money to go to woodchucks(that's a local to me small engine specialist) to pay for his weed wacker. now the mechanic at woodchucks has money to go to als auto parts to pick up spark plugs, cap and rotor for his 69 chevelle.....now the counter person has money to go take his kids to the movies.......and on and on, etc.

 so it's not turning $1 into $6, but rather he's trying to say that if you shop locally, you keep local people employed, who in turn keep more local people employed. 

[PFactorDave]

i think it goes something like this.

 if you bring your car to my shop for repairs, i employ a mechanic to work on your car. my mechanic now has money to spend, and goes to the local quickie mart on the way home, to pick up the shopping list his wife gave him. this helps keep the cashier employed, who now has money to go to woodchucks(that's a local to me small engine specialist) to pay for his weed wacker. now the mechanic at woodchucks has money to go to als auto parts to pick up spark plugs, cap and rotor for his 69 chevelle.....now the counter person has money to go take his kids to the movies.......and on and on, etc.

 so it's not turning $1 into $6, but rather he's trying to say that if you shop locally, you keep local people employed, who in turn keep more local people employed. 

Don't forget that the government gets to tax every transaction too.

[CAP1]

Don't forget that the government gets to tax every transaction too.

 that too.