Russ Roberts

Boudreaux on the Economics of "Buy Local"

EconTalk Episode with Don Boudreaux
Hosted by Russ Roberts
PRINT
Bogle on Investing... Rabushka on the Flat Tax...

DonB.jpgProponents of buying local argue that it is better to buy from the local hardware store owner and nearby farmer than from the Big Box chain store or the grocery store headquartered out of town because the money from the purchase is more likely to "stay in the local economy." Don Boudreaux of George Mason University talks with EconTalk host Russ Roberts about the economics of this idea. Is it better to buy local than from a seller based out of town? Is it better to buy American than to buy foreign products? Does the money matter? In this conversation, Boudreaux and Roberts pierce through the veil of money to expose what trade, whether local, national, or international, really accomplishes.

Size: 12.8 MB
Right-click or Option-click, and select "Save Link/Target As MP3.

Readings and Links related to this podcast

Podcast Readings
HIDE READINGS
About this week's guest: About ideas and people mentioned in this podcast:

Highlights

Time
Podcast Highlights
HIDE HIGHLIGHTS
0:38Intro. Defenders of buying local argue that if you buy, say, in Virginia, the money stays in Virginia; if you buy from an American, the money stays in America. So, it's better to buy local. Is that true? No. Why stop at state level, or town level? The same logic would imply that you should only buy from your neighbor. It's an argument for subsistence, self-sufficiency, but those societies all are very poor. Much of our wealth would disappear if we only bought from those we know. Wealth creates the illusion of being available to be claimed, but some methods of tapping it cut it off at the source. Oak St. example: Let's hire only our own family so that none of the jobs escape. Immediately realize that that life is very poor. Frontier House, PBS documentary. Grueling, unromantic reality. Self-sufficiency is the road to poverty, not wealth. Lose the advantages from the division of labor (Munger podcast). Trading locally means forgoing the power of specialization.
9:00Julian Simon: ultimate resource is human creativity, human effort. Natural resources are spoken of as if they are just out there, but they are not resources till someone figures out how to use them productively. Early native American would have felt that oil bubbling up near a creek ruined the water, not a resource. "To say 'buy local' is to say 'Look, let's reduce the number of human beings who are participating in this economy.' And that's to say, 'Let's reduce the number of resources that we have in this economy.'" It reduces the number of units of human creativity. Formula for poverty. You can always choose to be self-sufficient if you want, going into the woods to buy land and live. But those people take with them items like axes that they couldn't have made for themselves. The common argument to buy locally is different: Yes, you may have to pay a little more to buy from a local hardware store owner or local bookseller than a big-box store. Yes, you may have a smaller selection. But the money stays locally; the big chains just take it away. Any truth to that? Suppose I go to Wal-Mart to buy a hedge trimmer. The argument is that the profit goes to corporate headquarters, and gets spent far away. But if we buy from a local small hardware shop, how do we know the person doesn't just buy a Toyota, or a refrigerator made in China? A chain hires local employees. Who cares where the money goes? Money is just a medium of exchange. If I buy from a local bookseller and pay more, consider what I would have done with the extra had I instead bought cheaper from Barnes and Noble. Maybe I would have given to a local charity, or hired a local handyman. Studies that estimate percentages that stay in the local area for buying at local versus chain stores are suspect: unimaginable to think of ways to calculate this. Inherently flawed.
17:24Money is not our true source of wealth. Money is our command over resources. The fallacy is to forget that you get something in return. Money-part grabs your attention, hard to disentangle that from what is really going on. Suppose you agree within a town to not only buy local, but to "recycle" the money, spending it only within the town. What will happen is that everyone will have to make everything for themselves. Any individual town is good at some things, but not at other things, so those other things will cost much more than in nearby towns without that agreement. The true cost is the loss of resources. Dramatically lower standard of living results. There is nothing wrong with buying locally, but it has no inherent virtue worthy of requirement. Those who promote buying local present themselves as progressives; but it seems hostile to those who happen to live outside some arbitrary political border or who are less familiar. Tribalism.
24:24Bastiat's "Petition of the Candle-makers": satire, French candle-makers ask legislature to take measures to keep out the sun. Big-box businesses supply us value--competition, economies of scale, data-base technology--valuable aspects we buy, outputs we get virtually free along with the goods we buy there. True cost is forgone opportunities. To expand our command over goods and services, to live the lifestyle we have (as opposed to the lifestyle of the frontier), we have to find ways to produce the things of value at low cost. Only two ways to do that: either find better technology, or trade. Bastiat's "Seen and Unseen".
32:22International trade. Is it bad to buy from China because 1. the Chinese don't buy as much from us as we buy from them, so 2. therefore more money goes out than comes in, so 3. therefore we run a trade deficit, which is 4. a form of impoverishment? This argument misunderstands that trade is an exchange of things we want for things they want. Trade deficit is meaningless for one country. Boudreaux has a huge trade deficit with Giant Foods. We each have a huge trade deficit with most of the economy and a huge trade surplus with one or two employers. Virginia has a huge trade deficit with some States, say Michigan. Would you conclude that something unfair is going on? Between States, we can see that there is nothing unfair, trade deficit occurs naturally. For a country, you have to ask: What are the foreigners doing? Why would the Chinese sell us a billion dollars worth of services they toiled to produce but only buy $600 million dollars worth of stuff from us? Are they giving us $400 million dollars worth of stuff?! They must be suckers! What are they doing with the $400 million that they don't use to buy from us? Much of it is invested. It thus comes back but not for things counted as goods and services. They may invest in U.S. companies, buy U.S. stocks and bonds, buy real estate, loans to U.S. firms or government, etc. But suppose they don't even do that--suppose they just burn the money. Then the goods and services they otherwise could have bought are available to the rest of us, so the value of the remaining dollars rises, so we can now afford to buy those goods and services. Dollars are claims on American assets. If foreigners don't take advantage of that, it's a gift to us. Year-round Santa Claus.
43:35When foreigners use the money by saving it, they are investing it in dollar-denominated assets. We should be happy! We celebrate when U.S. citizens save because it increases future productivity. Why should I be happy when someone in Minnesota or Hawaii saves more and invests it in the U.S. economy, why should I be unhappy when someone from Canada or Mexico do the same? Saving isn't inherently good or bad--simply don't want it to be distorted. U.S. tax system artificially lowers savings rate. If the Chinese for whatever reasons pursue policies that increase their saving and providing those resources for U.S. investment purposes, it's good for the U.S. If Bill Gates offered to invest in your education, it would be great. You wouldn't say "Where have I gone wrong?"
48:51Immigrants. You go to Western Union and you find people who come here from around the world wiring some of their earnings to family back home. Helps ameliorate horrible poverty around the world. A private, voluntary form of foreign aid. But some people say it's horrible "because the money leaves the United States." Same fallacy. If someone cuts my lawn with a cool standing lawn-mower and I pay him and he ships some of the money to Guatemala, the dollars still come back here. The person exchanges the dollars for pesos, and the Guatemalan banker spends the money back here.
53:01Quotation from historian Will Durant, 1939, The Life of Greece. Minoan culture, Athens culture.
The crossroads of trade are the meeting place of ideas, the attrition ground of rival customs and beliefs; diversities beget conflict, comparison, thought; superstitions cancel one another, and reason begins.
Trade not only brings us goods and services, but it's a source of human reason. It can destroy the distinction between good us and bad them.

Comments and Sharing



TWITTER: Follow Russ Roberts @EconTalker

COMMENTS (25 to date)
robert writes:

The argument for local buying I hear most often is environmental: you shouldn't eat food grown far away because the environmental impact of shipping is too great. The imponderable of carbon dioxide emissions and their potential repercussions (dire!) is invariably cited.

Last New Year I served some lovely Kenyan sugar peas my local supermarket regularly carries, and one of my guests started beating her breast about long-distance shipping. My comeback was that fresh sugar peas, rarely available previously, are now constantly in stock. If enough people buy them, maybe some local producer will decide it's worthwhile to start growing them.

Which isn't really true. Between energy and labor costs, local (Swedish) sugar peas are not going to be competitive with Kenyan peas for a long, long time. There are any number of reasons, which I hardly need to rehearse for you, that my Kenya peas are good for us and good for the Kenyans. Needless to say, though, my liberal economic argument didn't convince my progressive friend that this wasn't a tragedy of the commons and therefore a Bad Thing.

Can you improve on my argument? Or is global warming anti-globalist kryptonite?

Sarah Natividad writes:

I think that while many supporters of "Buy Local" are rather ignorant of economics, there are others who are not. A vibrant local economy, with some degree of non-specialization, is essential to an area's success in a global economy. As an example, I present two small towns in Utah: Logan and Tooele.

Logan is now a town of around 50,000, but about 10 years ago it had about 30,000. Logan is mildly geographically isolated, being in a mountain valley about 2 hours' drive north of Salt Lake City, where the road goes through a pass that is sometimes cut off by winter weather. When I moved there about 10 years ago, Logan had a strong local business community. Besides national chains such as ShopKo and Albertson's, Logan also had many locally-owned small businesses, such as a bookstore, clothing boutiques, restaurants, and such, as well as its own opera house and arts community. If you wanted something out of the ordinary, like maternity clothes, you'd have to mail-order or drive through the pass into Ogden or Salt Lake, but most things you wanted could be had in Logan. Today Logan is home to a thriving business community, with more chain stores but also still a strong core of local stores. Logan is not by any means economically isolated, and it exports dairy and agricultural products, technology, and university degrees to Utah and the world.

Tooele also has about 30,000 people and is even closer to Salt Lake City-- about 35 minutes drive east. However, Tooele has much less of a local business community. The best place in town to shop is Wal-Mart (no, I'm not a Wal-Mart hater, but I do get sick of shopping there when it's the only store in town). There are no bookstores, no arts community. The farmer's market consists of four tables, three of which are crafts. There are three tattoo parlors in the area. In general there is a MUCH smaller number of local businesses in Tooele than there was in Logan when Logan was the same size. I can't get any kind of specialty goods in Tooele whatsoever. Anytime I want a book, a special food ingredient, a bra that fits, or even a nice dinner at a restaurant, I have to drive "over the hill" into SLC.

What makes the difference? Well, in my opinion, it is the existence of a local economy. Tooele never developed its own local economy because of its proximity to SLC. Logan was forced to by its geographic isolation (before the advent of the internet or the highway system) so it has a tradition of local production and buying. As the marketplace becomes more global, Logan has adapted and is connected to it. Tooele exports nothing, produces nothing, and is merely a bedroom community for the Kennecott Copper Mine, Tooele Army Depot, Dugway Proving Ground, and the growing Salt Lake City area. I guess you could say Tooele exports real estate to Salt Lake City, but there's only so much of that and they're not making any more. The "Buy Local" values have transformed Logan into a small global player, while the "buy over the hill" value has made Tooele into a dump.

Anyway, just my two cents.

Ironman writes:

Another case in point on how difficult it is to produce and consume things locally: the story of the 100-Mile Suit (reported March 30, 2007 in Wired magazine):

When educator and designer Kelly Cobb decided to make a man's suit only from materials produced within 100 miles of her home, she knew it would be a challenge. But Cobb's locally made suit turned into a exhausting task. The suit took a team of 20 artisans several months to produce -- 500 man-hours of work in total -- and the finished product wears its rustic origins on its sleeve.

Grayson writes:

The show is wonderful, and I can’t quite express my gratitude. I look forward to it more than anything on TV or radio.

I remember once laughing myself into stitches seeing an “ABC: Always Buy Colorado” bumper sticker on a Mitsubishi Eclipse.

You can still get Always Buy Colorado license plates here.

cljo writes:

A great podcast. You provided me some fodder for my blog ... discussing the value of local "micro-currencies" that are usually marketed as a way to keep money in the community.

http://competitivenotes.blogspot.com/2007/04/buy-local-on-econtalk.html

Doug writes:

I agree with Robert. The current main selling point of buying local is environmental.

I believe that if we get a carbon cap/trade policy enacted, it will eventually lead to an increase in the cost of shipping.

At that point, the environmental argument will have no further impact and we can focus on creating value for everyone.

Doug writes:

Regarding the Oak Street example.

This is a sad truism about humanity.
My family is more important than the neighbors.
The neighbors are more important than nearby towns.
My state is more important than the rest of America.
America is more important than the rest of the world.

People willingly choose to do poorly, if that will cause outsiders to do even worse.

If we can figure out how to counter this tendency, the world would be a much better place.

Marvin writes:

I was listening to the new econtalk and had a sudden realization.
If I buy from a "distant" person for less money, my "local" person doesn't get
the extra money, I do.
If its better to buy local, then its better
for my neighbor to get my money than it is for me to have it.
Now I understand.

If I could find a way to express the difference between what I need and what I have,
maybe I could get a better understanding of Socialism too.


p.s. Sorry Sarah, your Logan-Tooele comparison is weak.
Logan has a 120 year old mitigating factor called Utah State University.
Tooele has USU alumni like you and my brother.

Jonathan writes:

"Defenders of buying local argue that if you buy, say, in Virginia, the money stays in Virginia; if you buy from an American, the money stays in America. So, it's better to buy local. Is that true? No. Why stop at state level, or town level? The same logic would imply that you should only buy from your neighbor."

I'm not sure the same logic really does imply this. What stops us from proceeding to the smallest local level is the concept of an economy of scale. Too small, and we lose the benefits of a complex division of labor. Too large, and we lose the benefits of balanced and diverse local development - which means livable communities. It's not so much about either/or as it is about balance.

I've posted a letter asking any interested economists (professional or otherwise) to help me better understand why I shouldn't purchase apples grown in my home state of Maine. Feel free to help me out.

Jonathan writes:

It would have been useful, IMHO, to introduce the possible distortions we see in trade deficits caused by central banking.
Would US citizens have been so willing to consume so aggressively if the Fed had not kept interest rates so low? Would US long rates have stayed so low if the central banks of Asia had not been such aggressive buyers of UST bonds for mercantilist reasons?

Tim writes:

I wonder if Bill McKibben sells his books outside of his hometown?

If you say to the 'average progressive intellectual' that, say, people should only read books, plays, movies, poetry etc. written and produced in your hometown they'd look at you as some kind of philistine nut.

There is a kind of "environmentalist" localism too that argues that transportation is bad as it produces pollution and therefore localism is good. This reasoning reminds me of the little girl who says to her dad that when she grows up she wants to drive the car with her baby brother in the back. She hasn't imagined that her baby brother will grow up too. The environmental localists seem to assume that localised production won't generate pollution. In fact it could generate more, generally less productive facilities are more wasteful and generate more pollution. As isolated localities struggle to reatain some sort of standard of living Dickensian technology would be the norm.

McGuire writes:

What about the case where two companies offer the same product for the same price... In that case, should I buy from the more "local" company? Is there _any_ economic benefit to "buying local".

For example, two large national chains, like Home Depot and Lowes, carry the same weed-wacker for the same price. If Home Depot is headquartered in my home state, is there benefit to buying it from Home Depot instead of Lowe's?

paul writes:

I think the main thing that must be considered is ALL of the costs with more trade and the ALL costs with less trade (I do not know what all of the costs are) should be considered. The environmental cost could be a big one, the cost of policing the oceans could be a big one and I am sure other costs are involved with having more free trade. When ALL cost are paid for and taken into consideration I am guessing that most trade is good but I do not know that until all of it is taken into consideration. What environmental costs are in place when we ship goods all over the world? I have no Idea if it is a big deal in terms of overall environmental costs or if it even helps the environment because the work is done in a more environmentally friendly way in a more efficient place that is not local. My guess is that trade causes more environmental damage and that the people that gain are not always the people that pay the price. In some cases people may even fight wars over oil that is necessary for trade.

Of course if we eliminate all trade I would have had to build my own computer and so would each of you. I am all for trade but just want to make sure the people that benefit are the also paying the added cost that may look unnoticeable the same way that a small tariff may look unnoticeable but is not a good thing if it is for protecting local jobs.

Tomi writes:

I don't think that treating local vs non-local prices as if they included all externalities is correct, and I'm not only talking about the environmental externalities. If people in place A buy local and in place B don't, that sends a message to the "markets" (e.g. an owner of a company) that it's better to close down a production plant in in place B even if that plant was more productive in other respects (more modern, for example) than in place A. That is an example of what some economists seem to call a negative social externality and although they are hard to quantify it doesn't mean that they don't exist.

Another confusion, in my opinion , had to do with your discussion on currencies. Sure, most of the dollars Americans spend on foreign goods tend to flow back to the USA. But so what? As far as I can see, your original argument was that this should have nothing to do with anything. It's after all a good thing if, say, Montanan dollars are spent on Californian goods although there is no guarantee that those dollars will flow back to Montana. Why is it then so important that the Chinese invest back to the States? Why is it important to "all Americans" where the money goes but not to Montanans, in other words?

Tomi writes:

Sorry about the duplicate. It wasn't my fault ;-) The latter one is better.

Anyway, buying local is definitely a good thing in many cases. The hard thing is to figure out when. Then again, my guess is that you can't go much wrong if you buy always local when there is no big difference in price - externalities included - or quality. And, yeah, I do care how the local community survives; if my kids can still be living here in the future.

[duplication fixed--Econlib Ed.]

Matt Povey writes:

There is a subtlety to the environmental argument which is being missed.

Simply because a commodity has been shipped half-way around the world does NOT mean that it is inherantly less environmentally friendly that an equivalent commodity sourced locally. A good example of this is New Zealand lamb which studies (funded by the NZ govt. it should be said) have shown to have a smaller carbon footprint than equivalent British lamb when sold in Britain.

As a commodity though, lamb is very easy to freeze and subsequently thaw. Much of the 'fresh' NZ lamb sold on british supermarket shelves has previously been frozen. Because of this, lamb is effectively removed from its seasonality. The same is not true of many other food stuffs which do not freeze well or have other effective preservation mechanisms.

A version of the 'source locally' argument does perhaps hold water because of this. In the last twenty years, we have stopped consuming vegetables in-season. Global markets mean that we can have vegetables which previously would only be available in a window of time, all year round. In order to deliver these to our supermarket shelves at the peak of freshness however, it is often necessary to fly vegetables (for example Chilean Asparagus) around the world.

The 'carbon footprint' for this food is pretty huge as a result and can be avoided by only buying Asparagus when it is in season and available from 'local' (think EMEA for me in the UK) sources.

It's important to remember that the imported Asparagus is not necessarily cheaper than the EU sourced equivalent. It is however, available during the winter months of Europe. Given this and the un-paid for externality which maybe arises from trans-atlantic air-freight, the sense of such purchases is questionable.

The problem from my perspective is that many of those making the argument do indeed use it as a trojan horse for protectionism. It's one thing to argue that you should eat vegetables which are in-season. It's quite another to suggest that govts. should mandate it.

Max Roberts writes:

Hey Professor Roberts,

Great episode. The topics covered were most enjoyable, especially the international trade segment. If I could offer one request, I'd like to see a podcast geared specifically towards international trade. I'm in a topics seminar about trade, and we read some stuff by Danny Roderick. Perhaps you could interview him, as he seems to differ from the classical, or commonly accepted, view on international trade.

St Wendeler writes:

Great Podcast!!!

If self-sufficiency is the road to prosperity, why don't more countries welcome economic sanctions from the UN? Why is that seen as the ultimate punishment?

People realize that self-sufficiency would result in abject poverty and death, but reason that self-sufficiency and protectionism in a few sectors is acceptable. Or, lack of competition, quality, and free market forces in a few industries is acceptable.

After all, we must keep our strategic and absolute advantage in IT HelpDesk Call Centers!!! (At least, that's what I remember Algore/JohnKerry saying during the debates when IT outsourcing of call centers to India was all the rage...)

Regards,
St Wendeler at Another Rovian Conspiracy

Frank Josbacher writes:

Matt Povey cites the availability of Chilean asparagus out of season. The value of that availability may be high based on consumers' preferences, but is it really the same product as the local asparagus? Might I find unwanted chemicals clinging to the imported product? How deo I know? How can I be safe? Does my local agricultural inspector certify the non-toxic quality of the foreign-sourced asparagus the same as the domestic produce?

This relates to a type of "span of control": how much control do I have over my economic activities.

I offer another scenario: when the multi-national big-box store has prompted local stores to close up shop, what keeps it from extracting monopoly rent from us? The other multi-national big box store, the one that can afford the barriers to entry, the one that is attracted by the prospect of sharing in the [higher] profits?

Perhaps then I'll contribute to the situation by not making purchases and slowing down the economy.

morganja writes:

This was an extremely weak podcast. I hate to be so harsh, but the authors do bill themselves as professors, and the chairman no less of the Economics Deartment at GMU. Is the deparmtent really this weak?

There is no excuse for someone coming into a podcast like this as totally unprepared as Don Bedreaux obviously was and then failing to look up facts when it became apparent that they were relevent. Could you not stop the podcast long enough to do a little basic research?

I refer specifically to the unequivical statement that "No", there is no truth to the theory that buying local benefits the local economy followed by "I don't know the numbers" and "I don't know how they calculate those amounts". If you don't know the numbers, find out. If you don't know how they are calculated, find out. Obviously you have access to a computer and a phone. Use them before you make an unequivical statement followed by very clear indications that you haven't taken the five minutes to understand the opposing argument. You come across as woefully ignorant of the issue yet more than ready to pronouce judgement, a very common failing in University professors who spend too much time amongst fawning students and not enough time around people willing to call them on their BS.

Throughout the podcast, Bedreaux repeatedly appeals to the ad hominum argument that since he is chairman of the GMU Economics department whatever he states must therefore be fact. I refer specifically to the numerous times, and I will not go back to count them, that Bedreaux responded to a softball question by responding "It seems to me....".

If I was interested in what 'seemed' to you I would read your poetry. When you advertise yourself as Chairman Of Economics, one can reasonably expect that you will discuss facts and analysis.

Repeatedly, the podcasters attacked a 'straw man' instead of dealing with the issues. Once again, this was probably an indication of coming to the podcast uninformed of the opposing arguments and thus flailing around at whatever seemed an easy target. I refer specifically to the, you called it mercantilism, but it seems clear you actually meant to attack the concept of bullionism. If there is some bullionism advocated by some members of the buy local crowd, not only is it miniscule, but also totally irrelevent to the posed question. There is also no doubt some in the Buy Local crowd who support the Cincinatti Reds. However, it is totally irrelevent to the issue.

I also refer specifically to the long discussion on 'living off the land'. Who cares? It is also irrelevent to the posed question. By pretending that 'living off the land' is the obvious extension of the 'buy local' theory you take a logical leap that defies all comprehension.

It is these leaps that trouble me the most as they show either a complete disdain for logical thought, or more disturbingly for GMU, an inability to sustain a logical analysis.

I hate to put GMU on the spot here, but I didn't create the podcast. It is this form of lazy, pompous pronouncement devoid of real analysis that has given economics the deserved reputation as a 'soft science' from which nothing of real value is created. Perhaps economics suffers from a lack of true competition within the field which leads to this sort of garbage. I have a hard time thinking of a field in which ones skill is as irrelevent to career advancement as a university professor. No doubt there is competition, but it is a political competition instead of a skill based competition.

Note that I have not taken a position for or against buying local. I have only taken a firm position against lazy musings advertised as economic analysis. If you found this podcast helpful, perhaps you should reexamine your own understanding of what economics is suppose to be. An argument which can be used at a party to support ones political opinions and make you sound smart to a drunk girl is a poor substitute for a genuine thirst for truth and understanding.

morganja writes:

I might have come across as more harsh than I intended to make my point. I do think that podcasts in general with 'experts' are a wonderful aspect of the internet culture. I want to encourage them to do more in the future, but to take the time and effort to approach it seriously, to prepare and research, and create something which is of real value to others considering the issues. These should be an example of how to critically approach an issue as an economist, and less like a conversation between two drunk guys at a pub.

Russ Roberts writes:

Morganja,

The studies that I have seen (and that we were talking about during the podcast) trying to measure the economic impact of buying local were conducted by local merchants or people hired by the local merchants to do the analysis. They are not reliable. I don't know of any serious rigorous empirical study of the issue. I doubt if the effect of buying local could be measured accurately, but if you know of any such study done by people without a vested interest in rigging the results, I'd be happy to look at it.

Russ

Grayson writes:

Well, Morganja, everyone is entitled to an opinion.

It might just be possible that one of the reasons for listening - or doing a podcast on economics - is simply to raise the level of economic discussion above where it has been.

There are tradeoffs to getting technical in a podcast. One of those might be listenership. Get droll and technical enough and many people will turn off. Bear in mind that the more technical you get, the longer the discussion will need to be, and the more likely you are to shed listeners. Think of it as mastige economics.

Trade-offs, Morganja, trade-offs.

Another reason is that more technical arguments aren't done well verbally at all. - that they are better done in print. Thus, the research paper. The inability, in fact, to transmit large amounts of technical information orally might be one of the reasons that cultures that wrote are better off and more advanced than cultures that didn't write.

Curiously, though, are you sure the professors haven't done their 5 minutes of research? It seems, actually, that they may have an enormous amount of research under them. Perhaps some of it exists in print. For you to make such a claim - that they haven't - implies that you yourself have studied how much research the two of them have done or studied on the topic, no?

That of course, wouldn't be the case. You've certainly read up on their combined ouvres, I'm sure.

Is it possible that Mr. Bordreaux didn't give us numbers because he didn't have them in his head - that the general direction was more important to the point? Quick: how many people died on September 11, 2001?

What? You can't cite the figure off the top of your head? Well, then. You sound woefully ignorant, now don't you? Or is the number 3,000 sufficient for the point in that case, and no more detail is necessary? That's one particular figure in a very particular case.

Now imagine if your head swims with figures from all manner of cases. If he says 10x and really it's 15x, now we're quibbling because he's 50 percent off. Ludicrous! Clearly, he doesn't know his facts!

Is it possible that the purpose is to simply have a discussion? To chat about an economics topic in an entertaining and freewheeling way?

I'm not arguing that criticism isn't useful. Clearly any sane marketer would say that it is. And if they didn't feel it was, they wouldn't allow comments. But if it's so appalling, you know the Internet is an open market. Perhaps you can launch your own site, get enough listeners together and really show 'em how it's done. Free market thus far.

Moreover, I took Mr. Bordreaux is trying to make it clear that his opinion is just that, and not facts. He's stressing what he knows, and therefore how he sees.

His lead, "It seems to me..." as a caveat, not an argument from authority (which, not to be pedantic, is not quite the same as an ad hominem, being that the ad hominem means "against the man," not "from the man").

Philosophy is also not something that one should only use to impress girls at parties. (As though that were likely to happen.)

BJCefola writes:

Wow, this is a big topic. 'Buying Local' could mean any number of things to people who espouse it. My two cents:

1) I think 'buying local' is implicitly anti-consumption. Buying local restricts consumption to whatever the local area can supply, which in most cases for most things is less then what the world could supply. It's therefore inappropriate to condemn such a practice because it doesn't increase consumption, it's not intended to.

2) Tying local consumption to local production exposes people to the environmental consequences of their decisions. Suppose production of X produces smog, pollution, and other sundry effects. If production of X is restricted to the town of Y, everyone outside Y will consume as if there were no consequences. Y bears all the cost. If X is produced locally, the demand curve will take into account the local environmental consequences.

Implicit in this is the notion that polluting is bad whether it happens in your back yard or someone else's. Hence sympathy for people outside your local area is a key tenet of 'Buying local', a far cry from the xenophobia suggested in the podcast. I say this quite conscious of the fact that the town of Y might volunteer to host X production, and are made worse economically for not being able to. Every labor law, safety code, and environmental law has this effect. Whether or not you support those is besides the point; child labor laws were not enacted because we hated children.

3. My last point is about economic diversity. It is quite possible for a town to specialize in the production of a single commodity or service. And so long as that commodity or service is in demand, the town prospers. But what happens if demand dries up? New England is littered with dead and dying industrial cities that failed to adapt to a post industrial world. Were the people that lived there well served by their specialization? Sure, you could up and move to a new city or region which specialized in a new product, and when demand for that fell move again. But what if you want 'home' to be more then a sequence of boomtowns? Diversity promotes adaptation, and local diversity makes it more likely your town will still be a town in a hundred years.

morganja writes:

I do think I came across as too harsh and for that I apologize. However, I do think that these two were capable of a much more in depth, informative discussion than they provided. Perhaps it was the format in which it was conducted. An interviewer and two people with opposing viewpoints and an honest desire to explore the issue would have been much more beneficial to those of us looking for real analysis. Softball questions from one to another already in total agreement doesn't really lead to informative discussion. I think if one had been asked in depth questions and they had taken the time to look up certain pertinent data than they would have given us very compelling arguments on their position. As it was, I felt a little cheated.

Russ, you bring up the point that there isn't any data on this issue that has been gathered by disinterested third parties. I agree with your point but would extend that to include pretty much all data out there on economic topics. I think we all know that economic research isn't conducted at random. Economists choose to devote their time and energy to one topic over another because it does interest them. Or they are getting paid for it. Either way they bring their own prejudices and their own interest to their research. If one chose to exclude all data gathered by interested parties than there wouldn't be any data out there to analyze. One can take data put out by an interested party, take their interest into account, look at their techniques and judge how valid the data is for the purpose intended.

To get to the particulars on this issue. There are reports out there such as the Chicago Andersonville report that purports to show that local businesses tend to pay out more locally than corporate chains. This makes sense on several levels that I think on which you would both agree. However if you did disagree with the numbers or the way they were gathered, than that should have been your argument. As in: "Report X claims that local businesses in their survey put 65% of revenue back into the local economy while chains only put 46% back in. We disagree because...." They claimed that the data was gathered by seeing to whom each check was written out of revenue. If you think that is an invalid method, or that they didn't follow that methodology, a pertinent criticism would have been useful.

There are many interesting, important questions that should have been explored. Starting from: Is buying Local beneficial to the LOCAL economy? That question can be explored on its own before getting to bigger questions such as if each community competes will they 'win' while the nation as a whole 'loses'? What are the benefits and what are the costs?

These are important questions that town and county commissioners are grappling with across the country. I would love to hear another podcast from you in which you explore these topics in greater depth and provide us with a useful tool that we can provide local government officials as we decide what to do in our currently changing economic environment.

Perhaps finding an economist who is an ardent supporter of these ideas would help in the discussion.

Comments for this podcast episode have been closed
Return to top