Buying locally via voluntary decisions
Consider the following question: If one buys local is that somehow inherently virtuous?
Buying local, as when the local harvest of local farmers comes to market, that would seem rather economical. Very fresh and lowest price.
Buying local because the locally produced item, of any variety, is of the greatest value among comparative items produced elsewhere, that too, would be economical. One wants the best value.
Maybe one wants to buy locally because particular time and circumstance regarding the resource time, is greater than, the resource money, that too is economical. Time can be extremely important.
Further, some people may very well enjoy buying locally and find great satisfaction thereof. Individual maximum utility is important as well.
The afore mentioned example decisions to buy locally, are voluntary decisions. No particular inherent virtue appears, rather, decisions are made to exchange locally based on an attempt to exchange at the point of mutual satisfaction, of both parties, to an exchange. Keep this in mind for a moment.
The advent of private property rights, which was a main driver of the agricultural revolution, spawned the new private property agricultural owners to begin a long string of agricultural innovation. These innovations required artisans to bring the innovative ideas to fruition. With more and more innovation, and those innovations being demanded by a wider and wider group, more artisans were needed. Hence the advent of the industrial revolution.
Kings, queens, emperors and despots of many kinds were very unsure of how to handle the advent of the industrial revolution. However these same kings, queens, emperors and despots did realize they wanted to capture tax revenue from this new phenomena. In a nutshell, the result was a highly regulated industrial sector with only those with political connections awarded the right to manufacturer. The extreme level of regulation was perceived as a way for the kings, queens, emperors and despots to organize, keep an eye on, measure and consequently extract their tax revenue.
The state sanctioned manufactures with political connections then lobbied for as much export of their goods as possible and as little import of goods as possible. Their idea appealed to the kings, queens, emperors and despots as this meant more tax revenue. Hence the advent of mercantilism.
Mercantilism means consumers are forbidden from buying from an exogenous supplier that produces at a lower price and are forced to buy a higher priced item made within the local political authority of the kings, queens, emperors and despots. Meaning, manufactures and their authorizing kings, queens, emperors and despots extracted from consumers a higher price and hence tax. Had the consumer purchased elsewhere by a foreign supplier at a lower price, benefits would have flowed to the consumer rather than the manufactures and their authorizing kings, queens, emperors and despots.
One might argue that mercantilism was the original “buy local”.
Enter Adam Smith and the Book The Wealth of Nations
The butcher, baker and candlestick maker may well be guided by an invisible hand. Yet Smith knew: "People of the same trade seldom meet together....but the conversation ends in a conspiracy against the public...".
Smith advocated free markets to evolve in which the butcher, baker and candlestick maker participate. However, at the same time Smith knew the self-interest of the butcher, baker and candlestick maker cause them to devolve back toward mercantilism.
"...it always is, and must be, the interest of the great body of the people, to buy whatever they want of those who sell it cheapest". The consumer in a free market then offsets the ability of the butcher, baker and candlestick maker to devolve back toward mercantilism. (1)
If the butcher, baker and candlestick maker frame an argument that their self-interest i.e. to devolve back toward mercantilism is really the self-interest of the great body of the people, such argument would be along the lines of "buy local". That is, the argument implicitly is the reverse of Smith's argument and would appear as: ...it always is, and must be, the interest of the great body of the people, to buy local of those who sell it the least cheapest.
Today’s “Buy Local”
If one examines today’s version of “buy local” [mercantilism] one needs to examine if the phenomena is spontaneous/emergent order of the many or is it a phenomena orchestrated by the few? Is buy local emergent order or is it orchestrated by local merchants and local politicos? Are billboards, radio/TV ads, and bumper stickers produced by the many or produced by the few? Do such billboards, radio/TV ads, and bumper stickers attempt to implicitly, if not explicitly, persuade the audience that buying local is somehow inherently virtuous?
Returning to Adam Smith and free people, functioning in free markets, making free decisions with the result being: "...it always is, and must be, the interest of the great body of the people, to buy whatever they want of those who sell it cheapest". Meaning, consumers capture benefit by trading over the widest geographic area possible. If the maker of brand X is in foreign area Y, and brand X is the best value, then the consumer should capture the value -not- local firms and their political authorizers.
In the end, consumers should purchase based on mutual satisfaction at the point of exchange regardless of supplier origin. If a local supplier is the most efficient then buying from a local supplier makes grand economic sense. However, to buy from a inefficient higher priced local supplier merely because they are local, as in one is virtuous in buying local, is to transfer consumer benefit (your benefit) to the inefficient higher priced local supplier. It is also a way to perpetuate an inefficient supplier. The inefficient supplier, capturing consumer benefit based on some virtue of buying local grows fat and happy at the consumer’s expense.
(1) An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith
Saturday, January 24, 2015
Is Buying Local Virtuous?
BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV. Undergraduate Minor in General Insurance. Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA. Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C.. Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College. 38 years insurance industry experience.