Buying from Mom and Pops

I was rather surprised when a friend of mine suggested we meet for dinner at an American chain restaurant one day. Although I'm not rabidly anti-American, I still prefer to eat where the money stays local. Since things like eating out are considered disposable income, let's spend it on the local economy. During a recession as hard as this one will be, this is particularly important, here are just a few of my reasons why.

Keeping it in our coffers

When you buy a burger at McDonald's, you pay GST and PST. The staff there pay income taxes, the building owner pays property taxes, but all that pales in comparison to corporate taxes. From what I understand (correct me if I'm wrong), McDonald's Canada, as a wholly owned subsidiary of McDonald's, has to pay "consulting fees" their American Headquarters. If profits are great one year, those fees goes up. If profits are low, the fees are too. In essence, these fees get written off as an expense and there's relatively little "net profit" on the books here. Our government gets completely cut out of the largest point of taxation.

Without those strong coffers, Canada will find itself slower to recover from the recession. Thanks to the insane tax cuts to the ultra wealthy already, we are in a weakened position. Please try to keep those dollars in the Bank of Canada rather than the US Treasury.

Keeping our vibrant culture

Unlike people who are employed by Red Lobster, Jack Astor's, and the like, Mom and Pop restaurant owners are not entitled to EI should their restaurants fail (and yes, they had to pay into it all the same). Losing the mom and pop shops will be a real blow to the vibrant culture of our city. Not only that, where will these people go? They have limited government benefits, and don't have the same cash flow to weather economic storms as big shops do. A lot of small business owners may find themselves in debt and perhaps even on the streets (and please, they started businesses usually because they're immigrants and couldn't find paid work so don't give me the "they took their own risks" bs). Its in our own interests to make sure that our cultural mosaic doesn't turn into one gigantic bland chain food fair. By patronizing mom and pop shops, we are doing ourselves a huge favour in the long run.

Eat healthier for the same cost

Its hard to compete with the price of unhealthy, over processed foods. Small shops tend not to have the prime locations as big chains and nor do they have the same advertising power. However, look at it this way. For most places, the price point for a meal is about the same. In a chain restaurant, money is spent on TV ads, decor, print ads, high rent, to name a few. In a small shop, those expenses tend to be kept down and the you're actually paying for the food as opposed to TV ads. If you compare a $25 meal at Jack Astor's, East Side Mario's, or Red Lobster vs. a $25 meal at a local sushi bar, noodle house, or schwarma house (if there's even anything that expensive on the menu), there's absolutely no question which one is more nutritious.

Coming from a family that depended on a family run restaurant as our sole source of income, this issue hits very close to home. Those of you who knew me growing up, know how many hours I spent as a kid toiling away at my parents' restaurant. My parents are on the brink of retiring now but there are many small business owners that need our support. Before spending a single dollar, please think twice about where you're buying from.

Stupidity gone hog wild

I have been skeptical of the housing market for some time now, particularly in the United States where I read of people getting mortgages that are worth more than the value of their home. Something in the business and economic model just didn’t make sense to me. I am told again and again that Canada is immune to a housing collapse, but I also find that hard to believe. The recent headlines about the sub-prime lenders starting to foreclose homes just reinforce my gloomy outlook on the economy and markets at large.

An article on CNN Money has me thinking about the housing market and the “victims” of sub-prime loan sharks. The article featured a nice young couple with a $5,000 down payment on a $300,000 home facing the possibility of foreclosure. The company that lent the money was made out to be evil snakes from hell and the young couple an unsuspecting victim of money hungry people out to get them. My question is, what are they doing taking out a mortgage they can’t afford in the first place? Why am I supposed to feel sympathetic for a couple stupid enough to pay 10.7% on one loan and a variable interest rate on a second loan which has a fluctuating interest rate that they are worried about?

Don’t make the lenders out to be evil people. They were just out to make some money. Most of the people working are also at the mercy of commissions and high sales targets. If you know you can’t afford the interest payments going up, don’t enter into the agreement in the first place. Why do we vilify people for making a few bucks? Sure, they did it irresponsibly and I am against big business at large, but this time the customers are just as much to blame. If you know you are going to get screwed, don’t sign on the dotted line!

Environmental Fear Mongering

It seems that fear mongering is the largest blockade to doing what’s right for the environment. At a mutual fund manager’s presentation today, I asked how any potential changes to environmental laws would impact his stock picks. He bluntly predicted that the government would likely be too afraid to cause a potential economic collapse. In other words, he really didn’t care about the environment and anyone who does is responsible for the downfall of the Canadian economy.

He then went on about how cheap labour in China impacts our trading model. Canadian companies find it cheaper to cut our trees, ship the logs to China, have the Chinese make chairs, ship them back to Canada, and sell the chairs here. Investors don’t care about the social and environmental cost of this production model, but Canadians should.

Currently, polluting costs corporations nothing because we subsidize it as taxpayers. We pay for landfills, so it costs nothing to dispose of the packaging used for shipping. We pay for health care, so corporations do not see the full cost if emissions cause their employees respiratory illnesses. If we force corporations to pay the true costs of doing business, would it still be cheaper to ship the logs and the jobs overseas? Instead, we might be able to do the environment and our labour force a favour by keeping the process domestic.

Changes to environmental laws will not cripple our economy as pundits will have you believe. It will merely change the way we do business. Canadians were up in arms when we lost tens of thousands of manufacturing jobs to China. Now, it seems we are up in arms again about the possibility of those jobs coming back.