Is everyone better off if we "buy local"?
Buy local - a good thing?
This video is live here: http://mruniversity.com/courses/everyday-economics/buy-local-movement-shop-small-business
Christian Hill commented
If we buy everything locally we would buy less, decreasing incomes of sellers and decreasing our own incomes
Keith Sketchley commented
Why wouldn't people wouldn’t shop locally. After all, it should be more convenient, and potentially provides personalized advice on what to select.
But not if products aren’t available locally. An attitude of arrogant complacency is commond, exemplified by wanting me to pay in advance for the inventory carrying costs they don’t have, and sometimes even surcharging the price. If I have to risk my money and make two trips to their store, why don’t I just shop with my keyboarding fingers at “The Big I” and have what I need on my doorstep in as little as a day?
And not if staff lack product knowledge but are clever at making excuses.
Many businesses whine about everyone but the image in their mirror. Often they aren’t merchandising well, aren’t running their store well including usability and efficiently, don’t have a fundamentally viable business, or have become jaded as they age. Business isn’t easy but that’s what they chose – if it were easy everyone would have a store so who would need them?
Collective efforts serve to prop up the mediocre and sleazy by obscuring differences – why do great businesses want to be part of doing that? Worse, some businesses try to co-opt government force to pay their own promotion costs.
And some "shop local" advocates exclude chain stores like WalMart, who employ many people locally, and by the way refer people to specialized shops.
I go well out of my way to deal with the ones who are really trying to provide value, but I’ve fired others. I avoid those who try to force people, such as by promotion funded by government force, and only shop at mediocre ones if I am desperate. The free market protected by a justice system promotes selection, efficiency, and honesty. Buy Local efforts smell of assuming the negative about humans, reminding me of the fixed-pie drive-to-the-bottom theories of Karl Marx.
I'd also (I was Anonymous) question whether a theory like comparative advantage can be taken from the example of two individuals and put across an entire country. The connections between individuals are already complex in a neighbourhood, even more in a city ,and certainly across a country, so to view a country as a distinct body with uniform strengths and weaknesss seems a stretch.
In many ways, it seems that it is only commodification, marketisation and globalisation of the world-wide economy that has enabled us to generalise about whole nations (because large firms dominate entire countries (often in collusion with governments) and therefore dictate what their comparative advantage is), and it is getting to the point where even that won't be possible as firms become multi-national and state structures become supra-national. You could maybe still define things on a continental basis (Europe and US is much around services and experiences, particularly financial, legal, arts/entertainment, etc., whilst Africa more agrarian and minerals, and Asia more about manual labour and technology/engineering) but I wonder whether with continuing globalisations those differences will be eroded in coming decade and centuries.
It depends on many things. Whilst from a purely mechanical point of view, using theories like comparative advantage it's better to shop and trade with people wherever around the world.
However, we aren't machines, and so its more complicated.
I personally believe that relationships are the most fundamental aspect of being alive. Therefore economic choices have to be relational to be fulfilling. This means that we want to ensure our goods are made and sourced ethically. It also means that sourcing and trading our goods in a relational way is important. People might like to shop in a supermarket rather than online because they like the human interaction, whilst some may prefer local shops to supermarkets for similar reasons. Similarly, we might like to buy from local farmers because we want to keep people employed in our local area.
The other factor, returning to a more mechanistic analysis, would be where negatively externalities aren't captured by the market. If buying abroad means lots of pollution which isn't factored into the cost in some way, then sourcing from abroad might be detrimental and a sub-optimal trade takes place.
So it's extremely complex.
My personal preference is to keep things as local as possible, whilst getting foreign goods where you need something that isn't sourceable locally.
Jack Karczewski commented
This is a popular mis-conception and it is mentioned prominently in "The Myth of the Rational Voter". I like to use an example: Suppose that Alaska and Florida were independent countries; their national policies were to buy only locally. That would mean that Florida could not import and oil from Alaska and Florida has no oil to extract and Alaska could purchase no produce from Florida. If those policies were lifted (the international equivalent of globalization) both trading partners would benefit.
Alaska has an absolute advantage in oil production and Florida has the advantage in food production.
Jack Collins commented
Will supporting local craftsmen, farmers, etc. jeopardize global commerce, if taken to an extreme?
No we need to have a blend of local and international. The idea of local can never be completely sustainable in a global economy, and with the life style many are living.