‘Buy-local’ movements are for the economically illiterate

If everyone in the nation bought nothing but local products and shopped nowhere but at small, locally owned stores, would the nation’s economy improve?

As ridiculous as that question is, it is the premise behind a study by a group called Civic Economics that was touted this week in Salt Lake City. (Read a news story on it here.)

Independent local businesses “return” 382 percent more local dollars to the economy than those evil chain establishments, and local restaurants bring back 79 percent of the money they bring in, compared to 30 percent for the ones that are part of chains.

Of course, neither figures takes into account the Internet, which often provides the cheapest route to quality merchandise. You can’t eat out online, but you can get just about anything else that way.

And you can quickly find out which restaurant, locally owned or otherwise, offers the best food at the best price.

And isn’t that really what commerce is all about?

Economic illiteracy abounds. In this case, the principle of comparative advantage would be a good one to study. (Click here for a good essay explaining how it works.) It’s the reason protectionism doesn’t work.

People in one place can produce something comparatively better than people in another place. Through trade, consumers in both places benefit.

Look at it this way: My wife and I decided long ago that if we were to make our own clothes or raise our own chickens for eggs, it would be only because we derive some unrivaled pleasure from doing so. We don’t. Doing these things certainly wouldn’t save us money. We can buy those items for much less than it would cost us in time, materials, labor, feed and various frustrations to produce them ourselves, and we can buy them at better quality. Others have learned how to produce these things efficiently, and they do it in a volume that greatly reduces costs.

If I buy an item from a local store that is more expensive than it would be from a chain, I am rewarding wasteful practices and actually keeping myself from spending elsewhere the money I would save.

And if I refuse to buy from Walmart, believing the money would go to Arkansas or some other corporate center, I would have to expect people in those places to not buy products made here.

A couple of professors, Jayson L. Lusk and F. Bailey Norwood, explain it better than I can in their essay, “The Locavore’s Dilemma: Why Pineapples Shouldn’t Be Grown in North Dakota.”

I recommend reading the entire thing. Even though it concerns locally grown food only, it applies broadly to all buy-local movements.

Among other things, they say, “… a shopper involved in the global food chain is part of a much larger community—one that requires a great deal more trust than one is required to muster at the farmers’ market. If we want to foster the civic virtues of trust, trustworthiness, and community, the local-food movement is a move in the wrong direction—it is little more than nativism.”

Early Utah pioneers, as resourceful as they were, couldn’t really build a thriving self-contained economy. But their leaders understood they had to spread far and wide across a large geographic area to try to create as many comparative advantage situations as possible. When the railroad came along, the economies of far-flung Western towns along those routes improved rapidly.

Buying local isn’t necessarily bad. I do it, but only if it meets my needs.

Categories: Utah issues

About the Author

Jay Evensen

Jay Evensen is the Senior Editorial Columnist for the Deseret News. He has 32 years of journalism experience covering politics and a variety of other assignments at news organizations ranging from United Press International in New York City to the Las Vegas Review-Journal and the Deseret News, where he has worked since 1986. During that time, he has won numerous local, regional and national awards. Most recently, he was given the Cameron Duncan Media Award, given annually in Washington, D.C., by the advocacy group RESULTS, to the journalist judged to have done the most to further the cause of the world's poorest people.

One comment

  1. Dan Houston

    “If everyone in the nation bought nothing but local products and shopped nowhere but at small, locally owned stores, would the nation’s economy improve?”

    As a co-author of the Civic Economics study discussed, let me say, of course not. Now, with that straw man dismissed, let’s consider what the “buy local” movement actually advocates.

    First and foremost, small businesses ask for a level playing field. Every time a local government provides tax incentives or waives development-related costs for a new big box development, it puts a thumb on the scale to the detriment of local, independent firms. Projects like these are far more common than you might expect, and are sold to policy makers on the assumption that all of the taxes and jobs produced at the new business are actually new to the local economy. I would suggest that market distorting government action like this is among the most destructive products of economic illiteracy in American communities.

    Secondarily, independent businesses are asking consumers to consider local alternatives for a small portion of their eating, drinking, and shopping trips. Independents believe they can compete with chains in offering value for money. They are more price competitive than you may assume, and they offer additional value to the consumer that chains struggle to match. Distinctive products, a menu built around what’s freshest and most economical today, and the lost art of personal assistance are the hallmarks of many independent businesses.

    “Buy Local” typically ask consumers to consider local alternatives for just 10% more than they do today, confident that small businesses will earn the loyalty of those new customers. No need to buy sheep and a loom, but there is some world class cheese coming out of Utah these days that your readers might be pleased to discover.

    The Civic Economics study released in Salt Lake City last week provides area residents a compelling reason to consider those independent businesses and give them a chance. Local firms recirculate more money locally than their chain competitors, and that translates into concrete improvements in the local economy: a home on your street renovated; an extra something in the collection plate at your church; a sponsor for your child’s little school science fair and then a responsible job when that child grows up.

    So, I would end by reiterating what we documented last week. A small change in the habits of local consumers can make a substantial difference in the local economy, to the tune of nearly a half billion dollars every year.

    The economically illiterate are those who believe that burning a straw man resolves anything.

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