Dan McLaughlin

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To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	Post Comments Below © 2007 Daniel J. McLaughlin The “Buy Local ” Challenge I recently heard a radio program promoting the “Buy Local Challenge”. A small group of people took the challenge voluntarily to consume only locally produced food. The program is part of a movement promoting the virtues of buying only locally produced products. It is an idea that many people seem to embrace, and a number of buy local programs exist throughout the country. New Orleans even promotes “buy local” as a way to help residents recover from hurricane Katrina. There are some valid reasons to buy locally. Sometimes food is fresher and better quality, though that is not always the case. Maybe you want to support a local business, even if sometimes prices are higher or quality lower or the selection limited, because you don’t want the inconvenience of having to drive to a more distant store if the local one quits. Sometimes you want to support friends and family. Some people even get an emotional lift by feeling “close to the land”, so to speak. The people in the challenge ran into numerous problems with buying only locally produced food. In most cases, it is very difficult, or even impossible to buy everything locally, even when that includes a radius of 100 miles. In order to live a satisfying lifestyle above the subsistence level, there are some economic realities which must be taken into consideration. The division of labor is the most fundamental reason for the progress of any society. Everyone cannot be an expert at everything. People become experts by spending an inordinate amount of time on one particular activity. That time spent makes them better at that skill than most other people. There are, however, only so many hours in a day. The time spent in becoming an expert welder means that there is much less time available to learn how to become a surgeon or a carpenter or a news reporter. As a person’s skill becomes more valuable, he is able to trade that skill to others who provide the goods and services that they are skillful at producing. If everyone was a farmer and produced his or her own produce, milk and meat, nobody would have time to develop other skills. Trading between people with different specialties increases value and creates wealth in society. Both traders are better off trading than they are doing it themselves. In small geographic areas, there are only so many people and so many skills to go around. Expanding the network of traders beyond the locality allows each to benefit from the highest use of the skills, economies of scale and geographic advantages. The bigger the network to draw skill from, the more likely that any individual is able to satisfy his or her needs in the most effective and efficient way. The primary appeal of the “buy local” philosophy is that, if we buy local, all of the money stays local. If we buy American, all the money stays in America. If we buy from within our state or hometown, the money stays within that state or hometown. The argument could be extended, using the same logic, that if each family keeps the money within their own household, the household would be better off. If each household kept all it produced, without trading with outsiders, it is quite obvious that the family would descend to subsistence farming in a very short time. It would never be able to ascend from poverty, because it could not possibly have all of the skills needed to produce the various capital goods, which make work less time consuming and less difficult. Capital accumulation is enhanced by reliance on the skills of others while making the most of what you do best. If there is a choice of paying $75 for an item from outside the locality versus paying $100 to a neighbor, the question is whose pocket ends up with the $25 difference, yours or your neighbor’s. If you buy from outside, you not only satisfy your need, but you also have $25 left over to invest as you see fit, rather than having it invested as your neighbor sees fit. Competition encourages improvements and efficiency. Buying local is indeed a challenge. Strict adherence to it challenges every economic principle that makes people prosperous and well fed. If you buy local, that is great if it satisfies you. Just be aware that the more people buying everything local, the quicker the economic decline, whether it’s New Orleans or your own home town.
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Daniel Mclaughlin Copyright © 2007 [Daniel McLaughlin]. All rights reserved. Revised: 01/06/08

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The “Buy Local ” Challenge

I recently heard a radio program promoting the “Buy Local Challenge”. A small group of people took the challenge voluntarily to consume only locally produced food. The program is part of a movement promoting the virtues of buying only locally produced products. It is an idea that many people seem to embrace, and a number of buy local programs exist throughout the country. New Orleans even promotes “buy local” as a way to help residents recover from hurricane Katrina.

There are some valid reasons to buy locally. Sometimes food is fresher and better quality, though that is not always the case. Maybe you want to support a local business, even if sometimes prices are higher or quality lower or the selection limited, because you don’t want the inconvenience of having to drive to a more distant store if the local one quits. Sometimes you want to support friends and family. Some people even get an emotional lift by feeling “close to the land”, so to speak.

The people in the challenge ran into numerous problems with buying only locally produced food. In most cases, it is very difficult, or even impossible to buy everything locally, even when that includes a radius of 100 miles. In order to live a satisfying lifestyle above the subsistence level, there are some economic realities which must be taken into consideration.

The division of labor is the most fundamental reason for the progress of any society. Everyone cannot be an expert at everything. People become experts by spending an inordinate amount of time on one particular activity. That time spent makes them better at that skill than most other people. There are, however, only so many hours in a day. The time spent in becoming an expert welder means that there is much less time available to learn how to become a surgeon or a carpenter or a news reporter. As a person’s skill becomes more valuable, he is able to trade that skill to others who provide the goods and services that they are skillful at producing. If everyone was a farmer and produced his or her own produce, milk and meat, nobody would have time to develop other skills.

Trading between people with different specialties increases value and creates wealth in society. Both traders are better off trading than they are doing it themselves. In small geographic areas, there are only so many people and so many skills to go around. Expanding the network of traders beyond the locality allows each to benefit from the highest use of the skills, economies of scale and geographic advantages. The bigger the network to draw skill from, the more likely that any individual is able to satisfy his or her needs in the most effective and efficient way.

The primary appeal of the “buy local” philosophy is that, if we buy local, all of the money stays local. If we buy American, all the money stays in America. If we buy from within our state or hometown, the money stays within that state or hometown. The argument could be extended, using the same logic, that if each family keeps the money within their own household, the household would be better off.

If each household kept all it produced, without trading with outsiders, it is quite obvious that the family would descend to subsistence farming in a very short time. It would never be able to ascend from poverty, because it could not possibly have all of the skills needed to produce the various capital goods, which make work less time consuming and less difficult. Capital accumulation is enhanced by reliance on the skills of others while making the most of what you do best.

If there is a choice of paying $75 for an item from outside the locality versus paying $100 to a neighbor, the question is whose pocket ends up with the $25 difference, yours or your neighbor’s. If you buy from outside, you not only satisfy your need, but you also have $25 left over to invest as you see fit, rather than having it invested as your neighbor sees fit. Competition encourages improvements and efficiency.

Buying local is indeed a challenge. Strict adherence to it challenges every economic principle that makes people prosperous and well fed. If you buy local, that is great if it satisfies you. Just be aware that the more people buying everything local, the quicker the economic decline, whether it’s New Orleans or your own home town.

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