So it looks like all of us (90% of us, anyway) are going to get a tax rebate, to “stimulate” the lagging economy. What should we/you do with it? The quick and easy answer: Spend it at the Co-op, of course!

But let’s look at this rebate idea in a little more depth and think about it a little. Not all spending has the same impact on economic activity. A long time ago, the British economist Keynes recognized that a dollar can have different “multiplier” effects when spent. If it goes to corporations who take their profits and run, or goes to increase foreign production, or becomes income to wealthy people who may just save it rather than re-spend it, it may have little

local impact. Conversely, if the dollar goes to a local business that employs local people who in turn spend their incomes locally, it may have an economic stimulus far beyond its initial amount.

Not all spending is equal.

In fact, a flat-out tax rebate is just about the least effective way the national government could stimulate the economy. Roughly 40% of all goods and services purchased in the U.S.A. are imported. State and sales taxes will take another chunk. (The rebates will not be considered as income and taxed federally, as happened in 2001.) So if people go out and spend their rebates on things produced abroad and sold nationally by corporations, they will be stimulating the profit margins of these corporations. The local impact, on jobs or income, will be minimal — some increase in low-paid clerical jobs at the local malls, maybe — and what happens to these jobs when the stimulus is all spent? There are a dozen different ways this amount of federal expenditure would be better used, but this is not the time or place to make a case for them. However, one quick example would be construction jobs to fix New York’s deteriorating bridges and roads. What comes to mind right away is the billboard on Interstate 787 that I see frequently, which reminds us how dangerous our bridges are.

But the legislation has been passed and soon we’ll be getting the checks. To some Co-op members they will be a welcome addition to very tight budgets. I would encourage you to spend the money, even within a tight budget that has little discretionary room, in ways that build the local economy. Perhaps some needed home repair (the repair company will in turn likely spend their income locally). Perhaps on education and training — the more skilled the local work force, the better off we’ll all be. Perhaps buying from local farmers, or a CSA share, or a local business. And, yes, spend as much as you are able to at the Co-op, on local products if you can, and not on the fancy imports.