By Pat Fain and Leslie Agron
The usual theory behind economic development for a community is that the local economy is too small. So, economic development experts seek to bring in new companies, especially industrial ones, to enhance that economy. The theory is that increased local purchases by new companies and their employees are multiplied several times as the money spreads throughout the community. Every additional purchase results in additional sales tax from the same original dollar that exited the new company. Companies that manufacture goods or provide services externally have the greatest value theoretically as they actually bring new money into the community. The rate at which this happens is called the velocity of money.
In Oak Ridge, however, the size of the economy that occurs within our city limits is enormous for our population. The problem for Oak Ridge is that much of that economy occurs within non-taxable institutions and the vast majority of their staff does not live in Oak Ridge. Thus, in Oak Ridge the velocity of money is 70 mph—the speed at which those folks are cruising down Interstate 40 on Friday evening as they take their paychecks home!