Friday, September 22, 2006

Buying Local

Is it better to "buy local" instead of cheaply imported products from third-world countries? One might argue that it's better to support your local community, but surely we ought to be more cosmopolitan than that. Third-world workers need your custom more than your neighbour does. Granted, favouritism might be justified in case of pre-existing personal connections, but most of us don't personally know the producers of local products. But what if buying direct could help foster such connections, thereby strengthening local communities (in a more robust way than merely benefiting a local individual)? That may be a better argument -- what do you think? (Of course, this won't apply to indirect/retail purchases.)

For an alternative argument: some worry about wasting fossil fuels by transporting goods halfway across the world. But does shipping really have that much impact, compared to other sources of carbon emissions (e.g. cars, industry, etc.)? Doesn't this argument risk ignoring price signals? The fact that foreign products remain cheaper than local goods, even after the cost of transportation, seems to indicate significant differences in production efficiency. Those goods are easier to produce overseas; our bumbling efforts can't compare, so we would do better to specialize in some other area that we are better suited to.

This counterargument is flawed, of course, because the environmental damage caused by emissions is not factored into the price. So we can't really know whether foreign imports are all-things-considered more efficient after all. (Damn corporate feudalists, thwarting the free market with their unprincipled opposition to eco-taxes!) If the cheapness of foreign imports is due to this environmental vandalism -- damaging our common property without permission -- then it would presumably be better to buy local. The cheaper alternative is no more truly "efficient" than buying stolen goods. It's only cheap because you aren't paying the true price.

But what of the other case? Suppose that, even after adding appropriate eco-taxes, imported goods would still be cheaper than local produce. Should we nevertheless buy local, just to reduce the environmental impacts? Correct me if I'm wrong, but my limited understanding of economics suggests not. The cheap price here indicates efficiency: relatively little (incl. environmental) cost is being imposed in order to obtain the benefit of the end product. If we want to reduce environmental impacts -- and of course we should -- then we should invest our limited resources where they would have a greater effect. That is, we should buy the cheap goods from overseas, transport emissions be damned, but then use the saved money to make a much bigger difference elsewhere. Perhaps we could bribe an inefficient industry to cut down hugely on their unnecessary emissions, for instance.

If you spent all your money reducing transport emissions by "buying local", you could no longer afford the much greater environmental benefits obtained by (say) reforming industry. In light of this opportunity cost, then, buying local -- like buying hybrid cars or solar panels -- might, ironically, be bad for the environment.

A final argument for localism might appeal to the security value of self-sufficiency. You might worry that the current global system is unsustainable, and that we need to invest locally now, so that the farmland is available and ready to feed us when the ships cease to arrive. This raises questions about how likely such a doomsday scenario is, and how much more difficult it would be to adjust if we remain dependent on foreign imports. (Also, it plausibly only applies to food imports. Our "reliance" on imports from less essential industries would hardly matter if we could live without them altogether.)

Which is the best of the offered arguments? Have I missed any better ones? What's the verdict: is it better to buy local?

5 comments:

  1. Other factors you could add. 1. Our taxes pay for impoprting goods. ie the cost of ports, air and highways are not factored into the price. 2. local production means local jobs 3. local jobs and production means money generated which has a multiplier effect, unlike with say Walmart and its Chinese imports which actually drains money out. 4. Cheap shipping is based upon legal fraud, ie flags of convenience and shell companies in the Caymans. Without these shipping would cost more. It makes sense to produce locally what is best produced there. You can grow potatoes, tomatoes and cabbage in Ontario, but it would be foolish to try to grow oranges in greenhouses.Local produce is also fresher and tastes better.

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  2. Another thing is that foreign or third world produce may not necessarily be more eco friendly. Take for instance, the prevalence of coal fired power plants in China, timber furnaces in India, and primitive farming practices which are both unsustainable and inefficient.

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  3. the inefficiency of buying local means the world is poorer (both countries).

    There is a value judgement involved. The damage done to the environment against the increase in welfare of the poor worker selling it to me. I know what I prefer.

    In the long run exports pay for imports. somebody needs to sell something to india or china to pay for their stuff. sell them what we are better at making. you may save Joe's job, but you dont save local jobs. If you prefer Joe, then fine.

    The richer a country is the the more eco friendly its industry. more polution today will mean less tomorrow because you are helping them get richer.

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  4. In a free market, you should consider only quality and price. Plus, purchase of foreign goods entails giving NZ currency to other countries. Ultimately the only thing they can do with that currency is buy NZ made stuff. Obviously if we don't produce enough overall the value of our currency will drop, but the more likely effect of buying imports is that local production will shift to producing goods in demand overseas.

    You are correct that the market is not free because the full cost of environmental damage is not included. However, there are surely better ways to use your money to protect the environment than paying a higher price for NZ made goods.

    A more serious problem is that our high minimum wage and restrictive labour laws and other regulations effectively act as a tariff protecting overseas producers from local competition. This makes it just about impossible to know for sure who is really more efficient.

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  5. I have another reason to buy local: In many cases, famine-afflicted and debt-ridden countries are encouraged by overseas banks and other financial groups to produce cash crops for export, rather than food crops for their own population, thus further worsening an already bad situation. This is a highly pernicious practice which we should seek to put a stop to, and the best way to do that is to decline to buy such crops, so that the market pressures for growing them will decrease and these countries will be more likely to concentrate on becoming self-sufficient again.

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