Why buying local is a bad a idea

2013-11-20-buying_local_infograph1.jpgTo the right is pretty long infographic, but it has some interesting and compelling information, centering primarily on how buying local means a better local economy. At least, that’s what it seems like. In reality, it’s just saying what happens to revenue (and pollution, which I won’t go over here -I don’t know what to compare it with), which is an extremely vague and tricky benchmark to go by. Revenue fails to count any potential benefit from outside the immediate industry at question and also fails to count any non-money related motives we could have for buying habits. While the infographic here seems interested in scaring you into buying local, must arguments are for more social reasons.

The Institute for Local Self-Reliance (ilsr.org) gives a list of 10 reasons why we should buy local (http://www.ilsr.org/why-support-locally-owned-businesses/). The first five or so all center around local well being, emphasizing phrases like “local decision-making and character,” saying a stronger local economy results in decisions made by local economic leaders. This promotes better character and results in better wages for employees. Perhaps most importantly, these things lead to “community well-being.”

And that last phrase is my biggest issue with the buy local movement. However, I’d like to ponder the potential economic impacts first. ILSR claims that local stores increase market competition, product diversity, and drive innovation, saying that “A marketplace of tens of thousands of small businesses is the best way to ensure innovation and low prices over the long-term.” That just doesn’t make sense. Local markets don’t compete with other local markets – that’s why the word local is used. Small businesses at Campbell University in Buies Creek, NC, don’t even compete with those back home in Fayetteville, a mere 30 miles away. Low prices at Sherry’s Bakery in Dunn don’t influence the prices of JJ’s Bakery in Smithfield. Why? Because 50 miles is enough separation that the consumer populations are entirely different. Large chains prevent this from happening. Target and Walmart have the infrastructure for a much lower increasing marginal cost of producing goods, and so can offer goods for much less, while driving each other to innovate and keep prices low. Local business can only do that locally. While that might mean isolated communities do well, the US is no longer made up of isolated communities. We do better when the entire country of 300,000,000 succeeds, not when our town of 20,000 succeeds by standing alone.

The only time to buy local is when the product produced is actually better than chain products. That often happens, especially for food products. But when we buy local, we do so for our own self-interest (Smithian self-interest, or course!). We don’t buy local in order to help those around us. That’s ridiculous. First, local jobs mean nothing. Economist Brian Caplan calls this the “make-work” bias. We believe that someone having a job creates value, when in reality, it only benefits that person. To create value for society, that person must fill a void that is needed (The Myth of the Rational Voter, pg 41). As we already saw, chains generally fill the void better than local businesses. Even so, which is better for your environment, a local grocer employing 50 people at $10.00/hr full-time, or Walmart employing 250 people at $7.25/hr part-time? Overall, Walmart is the better alternative, simply because it helps more people. Neither solution is enough to bring someone out of poverty, but at least Walmart can help more people. 

Along these lines is my biggest reason I don’t want to buy local. I do want to help people. But who needs my help more, someone without a job in the US, or someone without a job in Africa, India, or wherever else there might be a factory? Here we have massive welfare programs set up to aid those in need. There, there are no such programs. While buying from chains doesn’t directly go to those workers (like buying locally does), I see that need as far greater than the need of the local jobless. We would both earn far greater utility per dollar if I used my Walmart savings to hire them to mow a yard while also helping those in 3rd world countries.

So yes, we do have the duty to help those around us, and people wanting to help those are to be esteemed, even if they do it in a way that I find inefficient. The impact of that is far greater if we use our savings to directly help those in our community. True, it’s much easier to convince people to help those around them if it means going to Al’s Produce instead of Walmart rather than telling them to go out under the bridge downtown and pass out manual labor jobs. For many people, buying locally may be their only means of helping others just because of issues with time. But they should know the true impact of their money.

So don’t just buy local because it helps your neighbor. Think about who you could help, yes, but don’t forget to think about who you might be taking help away from. The way I see it, we are being extremely arrogant by assuming that our local economy deserves to be better off than a local economy somewhere else. Just because we can’t feel the suffering from here doesn’t mean it’s not far worse.

Maybe buying local will remain in your convictions as the best way for you to help others. It may very well be so. But I challenge you to think deeply before accepting it as the best way. Where is your dollar going? Who really needs the help? Just remember – economies need not be zero-sum games. You can create value for everyone at the same time. We just need to be conscious of how we do that. And if you are, you’ll be able to continue helping to the best of your ability, even as everyone’s situations change.

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