Sunday, October 18, 2015

Why "Buying Local" Is a Stupid Economic Strategy

On par with the stupidity that was the "Let's Boycott Big Oil" (for one day and then everybody buy twice the amount of gas the next) is the Gen X-inspired, Millennial-endorsed "Buy Local" economic strategy.

With data that is as spurious as a research paper written by a women's studies professor who hates her father, meaningless and unfounded data is thrown around claiming "if just everybody spent $100 locally it would benefit our economy by $3 million!"  Perhaps "$4 million!"  Heck, why not "$1 billion?"

But for saner heads and those who are GENUINELY interested in enacting economic policies that raise everybody's standard of living, and not just 20 something college kids masturbating their political egos, it is time for the Ole Captain to brush off the dust, put on his ole economist hat, and explain to you how "buying local" is not only stupid, but actually HARMS people economically.

At the heart of these naive people's economic strategy is the utopian idea that if you buy locally then the "money is kept in the local economy" and thus benefits those locally.  So instead of going to Wal-Mart and buying everything, you go to the Ma and Pa's store in town, thereby helping them AND their local employees.  And while on the face of it this may sound logical and simple, it is.  So simple it fails miserably to account for the real world.

First, in order for this to work, EVERYBODY, and I mean EVERYBODY would have to be forced BY LAW to re-spend the money locally until death do us part.  Not only would you have to buy from the local ma and pa dime store, THEY would have to buy all of their wares locally as well.  Additionally (and I'm sure the economic masterminds behind the "buy local" strategy accounted for this too), they would have to reinvest ONLY LOCALLY to keep the money local.  Ergo, not only would all goods and services be bought locally, but all sources of financing and investment would be local AND could only go to local companies.  Already you can intuitively see some problems with this as it sounds totalitarian and restrictive. 

Second, which is closely related to the first, is the lack of competition and choice.

What if I don't like the Ma and Pa store?
What if I don't like the local ice cream parlour?
What if the clothier does not have the fashion you want?
What if I don't want to invest in the local bean plant?

Well, tough cookies for you.  You HAVE TO buy local.

The irony is that the people who typically clamor for "buying local" are usually the same ones who protest against monopolies.  However, to a certian level, that is precisely what they're advocating.  A monopolistic market.  The only difference is merely who is the monopolist?

An "evil" big corporation from out of state that has lower prices and a better product?


A "good" local company, owned by Herb and Bethel in Bisbee, Arizona who charges $14 for a "local organic burger" that tastes like crap?

It belies their true political leanings - they're Nazis, but "for the small people," which I guess in their warped and inferior minds makes it all good.

Third, quality.

In limiting competition and choice, you by default lower quality.  Both in terms of allowing people to enjoy specialized products, as well as the benefits that come with having variety.  Soon, you WILL get sick of Bisbee's 5 local-only coffee stores.  You'll also get sick of the decor and the washed up hippie staff.  And you will yearn to have a Starbucks or a Caribou or a Dunn Brothers coffee.  But no, not if they can pass an ordinance in town banning any of those "evil, nasty, chain store" coffee shops.  So you're stuck looking at an algae infested fish tank that they use to brew their kombucha, not to mention listening to the latest in "indie" music out of Tuscon, when all you wanted was a quality cup of Joe.

Fourth and finally, prices.  Specifically, standards of living.

As much as you hate those "national chain stores" or those "eeeevil" multi-billion dollar corporations, the sad truth is that big is beautiful.  And by beautiful, I mean cheap.

See, back in the day they had this thing called the "industrial revolution" which among many other wonderous things, automated a lot of processes previously done by humans.  This allowed us to mass produce the same goods at a fraction of the time, cost, resources, and on-the-job-deaths than before.  However, also key to this was SCALE.

Instead of having everybody make their own cars in their own garages, it paid to make a lot MORE cars for a fraction of the per unit cost in these things called "factories."  Additionally, instead of selling a little bit of everything at the small Ma and Pa dime store, where customers would have to pay a hefty premium for square footage, it made immense economic sense to create super stores like Wal-Mart, Target, and malls where the retailing costs were a fraction of what was once before.  And so now, not only were goods being mass-produced by these large "evil" national chains or multi-billion dollar corporations, but because they were being made on scale, their costs dropped dramatically.  And when costs drop dramatically, that increases people's standards of living dramatically which is the WHOLE POINT OF ECONOMICS.

In short, these large, multi-billion dollar, "chain" stores and corporations like Wal-Mart have done more to PERMANENTLY help out the poor by boosting their purchasing power than any government program or pot-induced "buy local" dipshittery ever did.

The truth is "buying local" is a euphemism for "undeserved charity."  If you buy local you are usually paying a premium for a less efficiently made product or service out of political or charitable leanings.  Additionally, in insisting on "buying local" you also deny yourself the BEST possible goods and services that world has to offer.

Swiss chocolates?  No, not local.
Cuban cigars?  No, not local.
Saudi oil?  No, none for us, thank you.  Not local!  We're from Bisbee!

Just what kind of a life would you lead?

And finally what if everybody only "bought local?"  Like tourism, you are merely taking away business from one group of people to benefit another group of people who just happen to live in your town.  There is no net economic gain in such a strategy for the nation as a whole.  But it's even WORSE than tourism.  Tourism is a net-zero effect and does not adversely affect any particularly industry.  If you insisted on "buying local" only you would wipe out all of the nation's industries and along with it their ability to mass produce and sell on scale.  Prices would sky rocket, quality would tank, and you'd be stuck with what meager goods and services your "local" economy could produce.

So please, to all the restaurants, bars, waitresses, college students, city council members professors, and other varied sorts of wanna-be economists who advocate the "buy local" economic strategy, shut up.  Just please shut up.  You don't know what you're talking about, you're going to hurt your community more than help.  Just please shut up and leave economics, production, and standards of living to free people making free choices.  I know telling people to "shut up" is not a legitimate argument, perhaps an admission of defeat.  But not in your case.  You're so ignorant and stupid about economics "shut up" is not only the response you deserve, it's the only one you'd understand.
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Unknown said...

Appreciate the article, Cappy. I do like to support local businesses however. I will pay a premium for a better service or product that I feel some small/local businesses offer. That said, I've overcome the idea that big is bad. Ideally I think both should exist and society is better off when people support both.

Jones said...

Worse yet: unless there's a box factory in town, I wouldn't be able to buy packing materials so I could move away from such a bunch of economic inbreds.

I would have to smuggle in all of those boxes, of course, and in so doing perhaps I could run a short-run black market business that provides moving boxes to other people who want to get away ...

evilwhitemalempire said...

Also on this issue of big companies vs. mom and pop operations.

My personal experience is that it's those big, evil empire jobs that treat their employees best.

While it's actually the small outfits who's wages and conditions border on 3rd world.

(I might add that the only compensation is that the small ops tend to be far less PC)

The reason is fairly straightforward.

Darth Vader has a zillion and one human rights groups watching his ass all the time but poor, innocent mom and dad struggling to put daughter through college slip under the radar.

al said...

I'd have no problem 'buying local', providing that they were the best choice, best product, etc

but if they're not, and all they're offering is 'locality', sod 'em

Robert What? said...

Uh... Cap... how do you get from encouraging people to buy local to totalitarianism? So I'm assuming that if your neighbor makes great ceramic dinner plates and you happen to need dinner plates but Walmart has ceramic dinner plates made in China for 10% less, you go with Walmart? I mean, looking at it purely from your cash-flow that certainly makes the most sense.

Eric S. Mueller said...

In addition, you can usually depend on convenience and quality from the larger scale. We have a farmer's market locally, but it's only open on Saturday morning. And the prices are hardly competitive, plus we once got tomatoes there that had no taste. Whereas, Wegman's is open pretty much at any time you could need it, and their produce is cheaper and has more consistent quality.

I've had times I wondered if "buy local" is just another leftist scam to force people to give money to businesses that just can't or won't compete. Like local leftist businesses.

Unknown said...

Partly agree, partly do not.

For example food is a large part of my family budget. As much as possible I buy organic, pesticide free, gmo free food grown on local farms. More expensive, yes at checkout it is however I believe when long term health care costs and quality of life is considered it is less expensive to eat locally produced food from small local farms than factory farm meats, eggs, etc (have you seen how they treat their animals?).

Another factor:

Having solid business relationships with fellow community members is just plain good life strategy - you may have forgotten this.

Unknown said...

Partly agree, partly do not.

For example food is a large part of my family budget. As much as possible I buy organic, pesticide free, gmo free food grown on local farms. More expensive, yes at checkout it is however I believe when long term health care costs and quality of life is considered it is less expensive to eat locally produced food from small local farms than factory farm meats, eggs, etc (have you seen how they treat their animals?).

Another factor:

Having solid business relationships with fellow community members is just plain good life strategy - you may have forgotten this.

Hot Sam said...

You are correct in all your points, but there is more.

Lucy the Liberal wants people to buy locally in order to reduce fuel consumption and planet warming emissions. Her warped logic says that if a tomato has to travel only 50 miles, that's less energy than one that travels 500 miles. The problem is that the local goods travel in relatively small quantities on small, inefficient vehicles.The goods coming from Asia travel in ginormous cargo vessels. The AVERAGE cost of transportation for the mass producer is lower and more efficient.

Even if Lucy could enforce her closed economy, she relinquishes all the gains from trading with the outside world, and the efficiency created by it.

Local goods are not always lower quality. Lucy is proud to claim that the hammer she gets from Mom and Pop Hardware and the veggie burrger she gets from Organitron are better than mass producing predators. Absolute quality isn't the correct measure, but quality relative to ones budget and price and alternatives. We don't always want to pay for "the best" of everything. We look for the best VALUE in products according to our preference.

Which brings us to Lucy's major malfunction. She believes everyone ought to value things as she does. She and her chalkboard sign aim to alter preferences. It's a propaganda campaign to convince people that the worst deals are the best.

Lucy doesn't understand economics because she chose to take Political Science for her core requirement instead. She's content to use specious reasoning that economists abandoned hundreds of years ago. Lucy is anti science.

Paul Moore said...

I buy locally when I shop for hardware and lumber because the eighteen year old kid that Bigbox Building Emporium hired last week doesn't know what tool I need to do the job, where I might find it in the store, or what materials will most economically suit my project and budget. Mom&Pop sell nails and screws out of bins, by the pound, instead of bubble packs by the dozen.If they don't have it, they know where I can get it, and they help me carry my stuff out and load it.

Aldomeir said...

Taking your coffee shop example...where did the coffee shop get their coffee? They certainly didn't get it locally. And if they did, who did THEY buy their coffee from. Somewhere along the way, the money was lost locally since coffee is not native to the US. In fact, anything that can be purchased locally has to be either 1) made locally from local materials; 2) made locally from outside purchased materials or 3) had to be purchased outside the community. And not everything can be made locally from local products. Even Ma and Pa had to buy outside to stock their store.

Bob said...

Captain, I'm surprised that you overlooked one major thing since you are normally so astute in your econonomic analysis - and that is quality of jobs. Not only do the chain places usually pay more to start, unlike mom and pop stores they also tend to have infinititely more room for growth. At a mom a pops store you aren't getting promoted unless you marry into the family! I really wish my girlfriend's sister's hippy boyfriend would read this articleaince he refuses to eat at non-locally owned restaurants.

Adam Lawson said...

I love the hate for "chain stores" in that sign like they just sprung up out of evil.

There's a local fry place. They just make fries, with various toppings. They're awesome, as far as fries go. I swing in occasionally and "buy local" because the fries are good and sometimes I want chili cheese fries as is my God given right as an American. They've expanded and opened two new "chains." Oh noes!

Walmart started as a single store, hippies!

There are a lot of non-chain places I shop and it's all about my own.convenience. There's a beer store that has a local brew I like more than any other I have had, so I go there when I want beer - Walmart is about 50/50 on whether they stock it at any given time (and I try to avoid Walmart not because it's a chain, but because it's full of slow moving herds of people...)

Nobody should shop based on anything but their own damn convenience. And if I saw a sign like that somewhere, I'd find shopping there damn inconvenient in the future.

EWK said...

I actually prefer to shop at small, local shops and purchase things made in the area if the value is there. In Wisconsin, this manifests itself nicely with beer selection. Hell, I am even willing to pay slightly more for locally made products, because I'm making a conscious value decision that my dollars are well spent supporting a local business owner who is probably working his ass off. However, if the value is just not there, I'll go wherever I have to go to get what I need.

If the "you're an asshole if you don't buy local" crowd was more honest about the fact that they were essentially asking for charity, I'd take them more seriously. Of course, the aforementioned is just a cheap emotional rhetoric ploy that is part and parcel of leftists, so you can pretty much rule out honesty in that case.

Anonymous said...

Capt. You should remember your history. In medieval times when an army wanted to take a walled city they would blockade it in order for the residents to be so wealthy, fat and lazy they wouldn't bother to fight.

Sokrates said...

Good post: This `buying local´ is another thing supported by people who are not used to think. From

Mr.Cornbread said...

Agree 100%. Most ma and pa stores these days get their supplies from wal-mart, costco, sams, etc. and sell at a markup anyway. As for local farming, I don't buy locally here in California, because most local farmers here are leftist douchebag trust-fund babies with degrees in agriculture from San Luis Obpispo who inherited their grand-pappies farms. The artisan wineries are leftist tax shelters, and the majority of the rest of the farmers are RINOs. Sad state, but thankfully there's a lot of nice hiking here, and loads of ethnic food (ETD).

grey enlightenment said...

There are liberals who refuse to shop on amazon for this reason. they prefer the crappy selection provided by 'local' bookstores

Anonymous said...

Well, what you REALLY want is a local shop for local people ...

(From a British comedy program called League of Gentlemen).

Phil B

Willy B Good said...

It'd be so cool to see Captain Capitalism vs Heartiste on trade. Cappy supports free-markets amd free-trade, Heartiste wants to bring back protectionism. Let the duel commence!

Tony Trucano said...

Yeah, but monopolies and oligopolies are terrible for entrepreneurial spirit. Who wants to create a business or invention when a bigger fish will simply outsource, outmarket, and outclass your idea to market.

August said...

Did you know that if you get the leftist hipster into farming he stops being so leftist?

His competitors are all big corporations who get massive subsidies, and every time he wants to do something he encounters government interference.

Suddenly he doesn't want so much government.

This is more effective than talking to them. I suspect a similar thing could be achieved if they just opened a coffee shop or something. They start to notice how much the government costs, how much it gets in the way.

I cannot understand why some of these Republican politicians haven't seen this as an avenue for rerouting their population's bias. Instead we get governors who play that pathetic photo-op game where they make a deal with some big company for X number of jobs. There's is plenty of data showing that crap never works out.

But you get people producing stuff- and it has to be 'local', because, in order for this to work, it has to be personal, so that they can personally learn- and suddenly all these collectivist schemes don't sound good anymore.

Anonymous said...

If you buy a made-in-China watch at your local mom'n'pop jewellery store instead of at Wal-Mart you're simply subsidizing the mom'n'pop with your own money. The product still comes from overseas, the manufacturing job is overseas, etc.

Anonymous said...

Mike Rowe endorses buying local:

Why don't you pay Mike Rowe a visit and tell him to Shut Up !

Auto generated account said...

Hey man, don't blame Gen X for the "shop local" crap. The only local shopping I do is from my couch while I'm on Amazon.