Wednesday, July 22, 2009

"Buying Local"

It has recently come to attention that the UAW, at least in Michigan, prohibits cars of foreign make from parking in union hall parking lots and that any violators of the rule are to be towed away. Such sentiments are not limited to the UAW: in the past few weeks I have noticed that the editorials continuously call for people to purchase goods and services produced only within the local economy. The premise underlying all of this, of course, is that keeping money within the local economy improves the local economy.

This, however, fails to establish the context. While so many are quick to condemn businesses for daring to outsource work and to import foreign materials, none ask the most important question: why are these businesses choosing to outsource? By not answering this question we risk merely making the economy worse, so let us examine the possible reasons.

I am not aware of any explicit reasons as to why the companies based in Michigan would want to outsource (e.g. harmful legislation, favorable conditions overseas, et cetera), but we can conclude that their reason(s) fall within two categories: 1.) the cost of running business is cheaper in particular foreign locales, and/or 2.) the quality of production is greater in particular foreign locales. Few businesses uproot their operations "just because".

Michigan editorials are calling for either people to purchase things only locally or for companies to relocate their operations locally, but by not answering the question above, what do we risk losing? If businesses are relocating because the cost of business is cheaper elsewhere, then we will have to face higher prices than we otherwise would have to pay; if businesses are relocating because the quality of production is greater elsewhere, then we lose that superior quality. If it is a combination of both factors, then we have lost much.

The point is that we must have in mind the full context before choosing to take a course of action. If we do not, then we are merely making guesses, even if educated ones.

"Buying local" as a principle does no good or harm; it is meaningless without the context of appropriate factors. People, for instance, bought locally in The Great Depression. The Smoot-Hawley tariff mostly, if not entirely, cut off U.S. trade with other countries. "Buying local" improved the economy none since people were subject to such excruciatingly high taxes back then in order to fund New Deal programs.

When thinking about these issues we must chant the mantra context, context, context within our minds.

1 comment:

Burgess Laughlin said...

You have highlighted an intriguing element of our culture, a union demanding that it's members buy only "locally" made cars. Alone, this demand probably wouldn't have much effect.

Cultures change when multiple voices call for the same result, even if for different rationales. Leonard Peikoff documents this in Ominous Parallels, Ch. 3, "Hitler's War Against Reason."

"Buy local" comes now not only from autoworkers, but from those worried about the local economy for strictly economic reasons; from communitarians who see buying local as a way of "building community"; and from environmentalists who see it as a way of reducing "carbon footprints."

"Buy local" was a telling characteristic of the medieval period. Everyone had to buy locally. There was no safety beyond one's own domain.

"Buying local" is very dangerous. It is a sign of disintegration if it catches on.