Alston: You Don’t Have to Buy Local
By William Alston, Contributing Columnist
Published on Tuesday, November 13, 2012
It’s become something of a fad to advocate for the exclusive purchase of local goods when possible. It’s easy to see why this idea is popular — people naturally favor things that are close to home. Economically, this idea appears to make a lot of sense, as well, because if local businesses receive your money rather than national or foreign businesses, the local business owners will in turn spend their money locally. Friends and family living nearby benefit from the increased economic livelihood — everyone’s a winner, except for the multinational business whose products you refused. It’s even good for the environment, many supporters say.
However, it’s important to think about why you even have to convince people to buy local. Local products tend to be more expensive than those produced by large companies. This implies that the production costs for locally made goods are higher than those for nationally made goods, meaning that their business is less efficient. This can be for many reasons including higher local wages and prices, higher input costs and lack of economies of scale. Regardless, it means that assuming the quality of the products produced by local businesses and large companies is the same, the economy is wasting resources by allocating funds to these less efficient enterprises.
Consider an auto worker with a broken computer. He works an eight-hour shift and makes $20 per hour in the factory but could take the day off to fix his computer instead. He reasons that it makes more sense to pay a local computer specialist $100 to fix his machine because he can spend his time more profitably building cars instead. The situation of the auto worker in this case is analogous to the situation of a community, region or nation. Because some people and places are better at producing certain products than others, it makes sense for people, localities and even countries to collectively specialize in doing what they do best. If a town can either make $2 million worth of shoes or grow $1 million worth of corn, it makes sense for that town to make shoes instead.
Advocates of local farming initiatives would say that it makes more sense for that community to spend its time growing enough corn for itself, rather than buying food from farmers in the next town over. However, that community must spend less time making shoes and as a result, its total product is of less monetary value; in other words, the community has become poorer since some of its residents decided to devote their time to growing crops.
The same advocates would argue that making purchases from local business is more environmentally friendly than buying from businesses far away because doing so cuts down on transportation distances, and thus reduces greenhouse gas emissions. However, in the case of organic farming, local farmers tend to use more land to produce their product than standard agribusiness farms; one could hardly say that using more land is environmentally friendly. That doesn’t do any favors for the transportation-related argument, either — when local farms eat up more land, people have to drive farther to carry out everyday tasks, increasing greenhouse gas emissions.
There are, of course, legitimate reasons to buy more expensive local products instead of brand-name ones. The best of these is that they actually offer you a better product — local restaurants are, quite often, vastly superior to national chains in terms of quality, and fresh local produce may very well taste better (though a Stanford University study suggests it’s not necessarily any better for you). Maybe you don’t necessarily like Dirt Cowboy any more than Starbucks, but go there because your friend works there, or because the workers there make more money and that’s a cause you support — or both. These are all perfectly sensible economic reasons to buy local. But don’t buy from local business out of some sense of economic self-righteousness — you’re only helping perpetuate less efficient business, making the local and national economy poorer as a result.
Buying local is about more than economics-it’s about supporting better business practices. Mr. Alston talks about higher local wages as a bad thing, as an inefficiency. Paying a living wage as opposed to a large company paying only a minimum wage is a good thing, not a bad thing, and I support such institutions when I can.
Some major companies such as Darden Restaurants (corporate owner of Red Lobster, Olive Garden, and Longhorn Steakhouse, among others) are cutting costs by making sure their employees work the max hours of a part-time employee but then cutting them off, to make sure that nobody gets paid benefits (except management, of course). I choose to not go to any of their restaurants and support local, or at least more ethical, alternatives.
Economic efficiency is about making the most amount of money for the system overall while ignoring how the money is distributed. There are perfectly sensible economic reasons to shop at places owned by Big Business . But if you buy from them out of economic self-righteousness, Mr. Alston, you’re only supporting the Mitt Romneys and Mr. Burns and other members of the 1% while leaving the workers scrambling to put food on their table and pay for healthcare.
By Human Cost on Nov 13 | 8:32 am
I don’t think the author said that high wages are a bad thing anywhere in his article. In fact, local businesses often pay lower wages than big business, usually because they can’t afford to. This has a lot to do with why Wal-Mart – which pays more than the minimum wage – supported raising the minimum wage back in the 2000s.
By Anon on Nov 13 | 12:51 pm
Alston, while you may understand economics, you clearly do not understand agriculture or the environment. Saying using more land is not environmentally friendly is quite simply ignorant. Responsible land management is always better for the environment than monoculture factory farming that leads to erosion and nutrient depletion. Please do research on the topics you write on instead of making conjecture based on your intuition and intro Econ courses.
By 14 on Nov 13 | 1:25 pm
Also, I would like to add that often in our modern food system, it is not a question of buying food from “the next town over”, but shipping in vast quantities of fresh food from Latin America, Asia, or Africa, often grown with minimal environmental standards and in poor working conditions to drive down cost.
By 12 alumna on Nov 13 | 3:17 pm
Oh you took Econ 1? You understand the theoretical concept of comparative advantage? Nice.
@Human Cost: you “choose to not go to” Olive Garden and Red Lobster out of a sense of morality? Do you not have taste buds?? Forget the ethics, you should choose not to go to those places because they cook horrendous food.
By ZM ‘13 on Nov 13 | 4:46 pm
As an Econ major and an ENVS minor, I’m guessing you’ve never taken a class in either department. Maybe your roommate is in Econ 1. Maybe. I could complain about each sentence you wrote, but I’ll limit myself to addressing the most obnoxious problem: your casual reference to a famously terrible Stanford study about organic (not local, as you state) food. If you (or that study’s author) knew anything about organic food, it’s that removing chemicals from plants isn’t intended to magically increase it’s vitamin content- it just gives it less poison. The same useless study would have concluded that frosted flakes are more nutritious than an apple, and that a cocktail of cyanide and hemlock is a good substitute for water.
By Jim Steele on Nov 13 | 6:05 pm
“One could hardly say that using more land is environmentally friendly.” Actually, one can say this. Rotating crops thousands of acres wide is MUCH more environmentally friendly than abusing small monoculture swaths of land. Please do some research next time Mr. Alton, I’m tired of reading this trash published under your name.
By Pres. Kim on Nov 13 | 7:50 pm
I love it when people finish a term of econ and then decide that they know everything about economics AND morality. It usually takes another four years for econ majors to think they know everything!
By Juwanna Mann on Nov 13 | 10:14 pm