During this holiday season, many of us will watch Frank Capra's darkly inspirational 1946 film It's a Wonderful Life on TV. It's America's favorite Christmas movie, a bona fide national tradition. Which is kind of odd, because it isn't really about Christmas. It's a Wonderful Life is about banking.

True, the key event in the film takes place on Christmas Eve, when George Bailey, a small-town banker in the fictional village of Bedford Falls, is rescued from a suicide attempt by his guardian angel. From that point on, the movie becomes a nightmare, as George is spirited into an alternate universe where he witnesses the dark fate that would have befallen his family, his friends and his hometown if he had never lived.

He sees that without his little savings and loan, Bedford Falls might have plummeted into poverty. His neighbors would not have been able to buy the homes they live in and would have been forced to rent from a rapacious landlord. Local businesses would have failed and Main Street would be boarded up.

On this dark journey, George comes to recognize that despite the failures and disappointments that drove him to the railing, he's OK, Bedford Falls is OK, and life is, well, wonderful. Nowadays, we might say that he comes to see the importance of community.

Come to think of it, maybe It's a Wonderful Life is a perfect Christmas movie after all—not in the religious sense or the Santa Claus sense, but in the way the story speaks to what the season has come to mean for a lot of people.

To anyone in business, Christmas means either ka-ching! or kablooie! It is the make-or-break season. This is true on every Main Street in the nation (and even on Wall Street). In celebrating the human value of George Bailey's bank, Capra's movie serves as a pretty good parable for the positive role local businesses play in a community. It would make an excellent piece of propaganda for the Santa Cruz merchants who have been urging us all to "shop local" this holiday season.

Localism, Local-Style
A few weeks ago, the word "locavore" was named 2007's Word of the Year by the editorial board of the New Oxford American Dictionary. Clearly, the big brains at Oxford selected the word partly because its meaning is self-evident; nevertheless, a press release explained that "locavore" describes a person who shops at farmers markets and local food stores, believing that "local products are more nutritious and taste better." More importantly, the missive goes on to say, locavores "shun supermarket offerings as an environmentally friendly measure, since shipping food over long distances often requires more fuel for transportation."

Ben Zimmer, the editor for American dictionaries at Oxford University Press, says that the word is significant because "it brings together eating and ecology in a new way."

Of course, here in Santa Cruz there's nothing new about that idea. Volvos and old pickup trucks around here were sporting "Think Global, Act Local" bumper stickers in the '80s. And way back in the 1970s, markets such as People's Natural Foods in Felton and the Community Food Co-op in Live Oak displayed hand-drawn signs telling shoppers the names of the farmers who grew their carrots and corn and which orchard their apples came from. Folks around here have been eating politically for a long time.

Peter Beckmann, owner of Beckmann's Bakery, lives and breathes the locavore credo. He helped escalate the local localism movement recently by spearheading the launch of a group calling itself Think Local First. Created by Beckmann and four other business owners, it has quickly expanded to include many of the most familiar commercial names in the community.

Think Local First joins at least six other local business organizations, including five Chambers of Commerce and one other independent group. Beckmann says he and the other members of Think Local First felt the need for their own association because none of the others represent locally owned businesses.

"There are several organizations that promote shopping within the geographic area," Beckmann says, "but we wanted to go a step further."

Really helping the local economy, he says, requires supporting local ownership. So for the past several weeks, these shop owners have been getting together at Palace Arts to strategize and stuff envelopes. The first mailer was a membership solicitation, and stated the group's mission to "promote and sustain economic vitality while preserving the unique character of Santa Cruz County."

Sitting in the Spartan office of his commercial bakery in the big old Cannery building off Seabright Avenue, Beckmann says his interest in localism dates back to 1999, when he was a student at UCSC majoring in economics and philosophy.

"I realized that one of the biggest problems we face in the world today is globalization," he says. "This is a force that destroys local businesses and destroys the fabric of community life. And I believe we need to build a strong counterforce to its impact on the world."

Beckmann has therefore engaged in battle with a force congruent with the rise of economic globalization: the proliferation of big-box stores and other national chains. Of course, it's in the local shopkeepers' own interests to encourage their neighbors to avoid the chains. But they point out that the big-boxes hurt the community in general. When shoppers give their money to out-of-town owners, Beckmann points out, that money leaves for good, whereas local owners pay local taxes.

"That money eventually comes back to the consumer," he says, "in the form of services, playgrounds and skateparks."

Beckmann also cites what economists call the "multiplier effect," which holds that every dollar spent locally equals a $4 boost to the economy. This mathematical magic trick occurs because local business owners tend to spend their money at other local businesses—for instance, hiring a local contractor when it's time to remodel, hiring a local CPA to do their taxes or buying their envelopes at Palace Arts.

Like a lot of people who've been living and working around these parts for a while, Beckmann can't talk about anything important for long without mentioning the 1989 earthquake. He points out that following the quake, the national chains all disappeared.

"Local businesses tend to stick around," he says, "which means more economic stability."

For now, Think Local First is committed to two goals: promoting locally owned member businesses and raising awareness about what Beckmann calls "the important difference that consumption choice makes." Both of those objectives are upbeat and safe as milk, but after the holidays, the group might ramp up to a more challenging and controversial goal.

Beckmann says Think Local First may soon push local government for zoning regulations that disallow retail outlets bigger than, say, 20,000 feet. This kind of thing has been done in other cities, and is known everywhere as a "big-box ban," even though proponents feign innocence when accused of "discriminating" against chain stores. In many local skirmishes, it has proven to be an effective strategy in the war against globalization—or at least.

Everybody Wins
If It's a Wonderful Life were to be remade today and set in Santa Cruz instead of Bedford Falls, Pacific Avenue would not be boarded up, but there would be another Starbucks where Caffe Pergolesi now stands, and another Borders in place of Bookshop Santa Cruz.

It wasn't all that long ago that every American Main Street was filled with its own batch of hardware stores, shoe stores, bookstores and coffee shops, each under a sign bearing a name only the locals knew. Now every downtown in the country looks familiar. Accordingly, movements like Think Local First have sprung up in communities from coast to coast.

One of the pre-eminent voices in this movement belongs to Michael Shuman, author of The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition. In it he lays out a bullet-pointed list of the arguments for localism, here summarized:

Greater social well-being: In 1946 two noted social scientists, C. Wright Mills and Melville Ulmer, compared communities dominated by one large manufacturer vs. those with many small businesses. They found that small business communities "provided for their residents a considerably more balanced economic life than did big business cities" and that "the general level of civic welfare was appreciably higher."Back in the '40s, when Mills and Ulmer were crunching numbers and Frank Capra was making movies, the word "civic" was in much greater use than it is today. Civics was practically an academic discipline all its own. Nowadays, a handful of economists are again concerning themselves with issues like "social well-being." Meanwhile, more than half of all college students are majoring in business, a newer academic discipline, where ideas like Shuman's are seen as suspect.

We Mean Business
It's not inconceivable that the reincarnated Jimmy Stewart could have played Rick Hoefstetter in our fantasy Santa Cruz remake of that great old holiday banking movie, but he'd have to start working out.

As it happens, Hoefstetter, president and CEO of Lighthouse Bank, looks like a Santa Cruz bank president straight from central casting. Sitting in his new office overlooking the town clock at the top of Pacific Avenue, he wears a crisp white shirt, a dorky Christmas tie and, in place of the classic bank-president Rolex, a yellow-and-black plastic Timex Ironman.

"I used to be a marathon junkie," he says by way of explanation, almost sheepishly.

When we visited last week, Lighthouse had been open for just over a month. It was started after Hoefstetter and a few of his banker buddies decided over coffee at Lulu Carpenter's that the town needed a new locally owned bank.

Hoefstetter had worked for years at Coast Commercial, back when it was owned by a local group, and again after it was sold to Bay Federal. He is a big believer in local banking, for philosophical as well as practical reasons. When he started working in this town, almost 30 years ago, there were a half-dozen locally owned banks. By the time he and his colleagues met at Lulu's last year, there were three. "This was before Rabobank bought Community Bank of Central California, and Wells Fargo bought Coast Commercial,"

he says.By the time Lighthouse opened, there was only one locally owned institution, the Santa Cruz County Bank. Hoefstetter says that bank is doing "a terrific job," but the local business community needed another.

The concept known as community banking—which is all about serving local businesses—has been around for a while, and Hoefstetter says he has been an adherent for as long as he can remember. But he says the real value of the concept took a while to hit home.

"I was working at Coast Commercial as senior vice president in the construction division," he says. "So here I was, 35 years old, a kid. And I had an idealistic commitment to local lending. But it was all intellectual, all in my head, I had never really seen it or felt it. And then we had an earthquake."

Following the disaster that practically leveled the downtown business district, Hoefstetter says, all the big out-of-town banks "literally and figuratively left town." And when it came time to rebuild, and local business people wanted to borrow some money to get the place back on its feet, they were nowhere to be found.

He says he can hardly blame them. "Why would they take this risk? They had choices. They could lend their money to someone in Minneapolis or North Carolina. Look—we have a moral and ethical obligation to local businesses—but in purely practical terms, we don't have that option."

Coast Commercial provided something like 85 percent of the money that rebuilt downtown. "That was the first time I really got what community banking was about," Hoefstetter says.

In explaining his support of the idea of localism, Hoefstetter inadvertently proves the power of the vaunted multiplier effect. He explains that when Lighthouse built its office, it contracted with Bogart Construction. Its office supplies come from Palace. The company car, Marina Motors. Telephone system, insurance, the list goes on. All local businesses.

Regardless of any moral or ethical concerns, he says, "from a practical standpoint, we're going to do business with our customers."

And that's the way the whole thing works. One hand washes the other. When everybody follows that rule, a happy sort of synergy occurs, and the local economy flourishes.

In one of It's a Wonderful Life's many memorable scenes, George walks into his bank to find that half the town is there, demanding that he return their deposits: it's a dreaded "bank run." As our hapless hero, Jimmy Stewart is terrific in the scene, delivering a sputtering, exasperated speech: "You're thinking of this place all wrong, as if I had the money back in the safe. The money's not here. Why, it's in Joe's house—that's right next to yours—and the Kennedys' house and Mrs. Macklin's house and a hundred others!" It's a basic lesson in how an economy works, and George Bailey is powerfully frustrated about having to explain it to his neighbors.

A half-century later, most Americans are as ignorant about business as the citizens of Bedford Falls. How else to explain the astonishing way the nation's wealth has become concentrated in the hands of a few multinational corporations?

Rick Hoefstetter points to a statistic that is frighteningly typical: Ten banks today control 85 percent of the nation's deposits. Obviously, Americans are spending in the same way that they are saving—handing their shopping dollars over to one of a handful of retail giants.

Local business leaders are all hoping that their neighbors will learn to think about local businesses as being part of their community. Because when a big-box bully from out of town shows up and cuts prices, and longtime customers abandon downtown in favor of the strip mall, we get the modern version of George Bailey's nightmare.

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