Sunday, November 13, 2011

The Paradox of Buy Local

            Russ Roberts and Don Boudreaux’s podcast on the economics of buy local is a timely discussion about a topic we were recently discussing in our math economics class.  One of my classmates who works as a researcher at the University has been tasked with analyzing the costs and benefits of purchasing ‘locally’ produced goods and services for the sustainable village.  The discussion turned to the arbitrary nature and misguided reasoning behind the ‘buy local’ movement.  What value is there in buying a good or service at a higher monetary price?  We live in an international system, nothing stays local.  As soon as I buy a slice of pizza from the local store, the owner most likely places their money in the safety and security of bank.  Even if it is a local bank, the bank invests in funds that surely are not local[1].  The reason I buy pizza at the local pizza joint versus the chain, is because I enjoy their product and prefer it to the chain’s pizza.  There is of course a limit to the additional price I would pay and some threshold of price for which I would not pizza at all.
            If at an individual level, the ‘buy local’ ethos provides a certain level of self-righteous misinformed utility, then more power to them.  They then in effect pay for the extra utility received by buying local even though they could have bought a similar good at a lower price at one of those “big evil box stores”.  I loved the podcast because Roberts and Boudreaux discuss how self-subsistence is the road to poverty - it is through exchange that value is added and the standard of living is raised.  My favorite part was when they pointed out that if you wanted to live a subsistence lifestyle, there was nothing stopping you from going to buy some tract of land and giving it go.  I for one would not choose such a route, but to each their own, even if it is foolish path.

[1] Point brought up by our instructor, Greg.


  1. Great post and bonus points for the footnote.

  2. Great comment! The basic idea should be that you don't want to prevent people from buying local. It's a matter of taste. However, people who support buying local shouldn't use the political apparatus to prevent people with different preferences to buy goods from big box stores like Wal-Mart just because they rather buy cheaper goods (even if quality is lower).
    That's the "beauty" of markets. Most of the time, they allow to satisfy people's diversified tastes.
    Good comment!