Carpe Diem's Mark Perry, who lives in Michigan, spends valuable space on his blog discussing a post on Cafe Hayek — which is a product of Virginia and Maryland. (Russ works in Virginia at GMU, but immigrates in to his job from his home in Maryland.) Putting aside the damage that Mark is doing to Michigan's economy by promoting a non-Michigan blog, I believe that Mark's blog post is well worth reading.
Loco: The Sequel
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Perhaps this is an over-simplification but who buys and/or consumes more stuff made close to home? Someone from a small town in Africa? or someone in Europe or North America?
"Ah", the contrarian might say, "There are many other differences that account for that."
Yes, there are many differences. And better division of labor through free trade is one of them…and it also one of the most crucial economic factors that separates people in Europe and North America from a century or two ago or prior and those of today.
Far too many people seem all to willing to make excuses and ignore such basic factors and discount them as being so obvious as to not matter or as false factors…as if they can really demonstrate that something underpins their quality of life that has nothing to do with (or more importantly: operates IN SPITE OF…)division of labor and freer trade.
Yes, we have better informal and formal social institutions. It's true. We have the rule of law. It's true.
But what those aforementioned social institutions do is enable freer trade and peace.
The rule of law and solid social institutions WITHOUT free trade will be orderly and support clean commerce, I suppose. The "rule of law" could ensure that all trade is confined to small geographic areas…however orderly and honestly it may be. But will be the citizens of those areas be better off? No.
Now I suppose some "market failure economist" could take that claim to task and demonstrate in some very cherry picked and narrow study where this may not be the case…in magnitude advertised by generic economic principles…in particular place over a set period of time and with a particular set of circumstances.
But so what?
Does this demonstrate anything useful in 98-99% of cases as a rule of thumb? No. All it will do is be misused by some journalist looking for a reason to write sophistic obfuscations to empower or advocate protectionism and make it seem sensible to the unsuspecting reader.
Do you remember when the Royal Navy protected German industry during World War I by blockading the ports? And no good deed shall go unrewarded: the Germans returned the favour by practicing unrestricted submarine warfare around the British Isles. Remember folks, World War II did get the U.S. out of the Great Depression. Blackades, death, and destruction are an excellent stimulus to the economy. We should be at war all the time!
All those hundreds of thousands of years ago, when my buddy Og walked across the valley and traded with Mog, globalization became inevitable. The curious thing is that Og ran into no border crossing, no bureaucrats, no tolls, no tariffs, no taxes, no regulations, and ultimately wound up better off than he was before he made the trek.
Pity humans had to screw things up, eh?
http://news.yahoo.com/s/ap/20090412/ap_on_bi_ge/chinese_drywall
During the height of the housing bubble, about 100,000 homes throughout the country were built with this cheaper import from China to save some money. Now many thousands of people are suffering the ill effects of the "free" under-regulated trade. The cost in money and lives will mount as time goes on. I blame Bush for all the tainted goods scandals orginating from China and elsewhere. Something about the buck stops here, as I recall.
I don't know how to create links in the comments; the above is incomplete. I'll try again:
http://news.yahoo.com/s/ap/20090412/
ap_on_bi_ge/chinese_drywall
But the grand question is: do people have a right to voluntarily trade with local providers regardless of why they are doing it? What of the Amish? How poor have they voluntarily made themselves by rejected modern technology? Do they have that right? By the same token what of people who voluntary choose a life of vices and decrease the wealth of society – e.g. smoking, drinking, random sex, gambling, etc., should they be forced to engage in a pure living by coercion? If certain folks won't put a barrier between 'voluntary association' and 'government protectionism' then a great many Libertarian issues becomes greyed: charity v. welfare, defensive force v. initiative force, payments v. taxes, private ownership v. government, etc. . .
"But the grand question is: do people have a right to voluntarily trade with local providers regardless of why they are doing it? What of the Amish? How poor have they voluntarily made themselves by rejected modern technology? Do they have that right? By the same token what of people who voluntary choose a life of vices and decrease the wealth of society – e.g. smoking, drinking, random sex, gambling, etc., should they be forced to engage in a pure living by coercion?"
These are some of the easiest questions I've ever had:
Yes, people have a right.
Yes, the Amish have that right.
No, they shouldn't be forced.
With a little work, you might be able to corner those who attempt to make a moral foundation out of the utility of free trade, but those who have identified the solid metaphysical foundation in the Lockean tradition find no compromise for liberty from any economic argument. The praxeological and empirical consequences of that foundation are happy conclusions and observations to be sure, but they are not primary.
It seems to me that the assumption in "buy local" is that, locally, we have the best natural resources, capital, and labor for all products & services. Certainly, that's true for some products and services. But it strikes me as incredible to think that we would have it for *all* products and services.
If we don't have it for all products and services, then it should be clear that advocating "buy local" means buying some products and services that are either
a) inferior quality or
b) higher price or
c) both
How exactly that makes the local economy richer is a mystery to me.
I wrote more on it here.
TrUmPiT, it's not true that a "free" market is unregulated. However, a free market is not regulated by the government. Rather it's regulated by market forces.
The problem is that because of government regulation, consumers at every level are falsely comforted into believing that they have no responsibility to determine if the thing they're buying is adequate for their desired safety, etc. In other words, government regulation encourages people to forgo market regulation by not being more careful in their purchases.
Certainly, market regulation can make mistakes. But so does government regulation. The biggest difference is that market regulation catches those mistakes much more quickly, while government regulation acts under the hubris that it is impervious to mistakes.
TrUmPiT wrote:
Now many thousands of people are suffering the ill effects of the "free" under-regulated trade.
In the first place, builders are liable for the material damages caused by any defective materials they use in construction. Those who purchased homes made with defective materials have recourse, in the civil justice system, to recover damages from the builder. There is no need for them to suffer endlessly.
But such recourse is not enough for you, is it TrUmPiT?
I know what it is you want, TrUmPiT — it’s the same thing “muirgeo” and the other anti-free trade crusaders want, and it’s the same thing all of you who clamor for total government control and regulation of economic activity want: you all share a fundamental desire to exist without effort, especially without the mental effort of working, thinking, evaluating, deciding, choosing among alternatives and looking out for your own best interests.
You dream of an effortless, riskless existence wherein economic goods and services fall magically from the sky without the necessity of being produced and thus without the necessity of being earned — an existence wherein your mere wish for something is enough to cause it to come into existence and into your possession — and you fall for any clown who claims that government can make such an existence possible or, at a minimum, that government can move you materially closer to such a state.
But a riskless, effortless existence is not possible, TrUmPiT — you cannot have effects — such as economic goods and services — without the causes that bring them into existence — the innovators, entrepreneurs, investors and businessmen who organize, manage and make possible production. Your endless demand for more government controls and regulations is, in effect, the demand that such people be enslaved to do your bidding — but they won’t work under such conditions. Just look at what happened in the U.S.S.R., Cuba, North Korea, or any place that imposed total government control of production and economic activity.
Government cannot provide you an effortless, riskless existence TrUmPiT — but it can eliminate your freedom, eliminate virtually all your choices and reduce you to subhuman poverty.
Michael Smith -
RE: "I know what it is you want, TrUmPiT — it’s the same thing “muirgeo” and the other anti-free trade crusaders want, and it’s the same thing all of you who clamor for total government control and regulation of economic activity want: you all share a fundamental desire to exist without effort, especially without the mental effort of working, thinking, evaluating, deciding, choosing among alternatives and looking out for your own best interests."
I can't read their minds, but I think they were thinking about something more on the order of "somebody should inspect/validate these products with some minimal degree of scrutiny because although people to have recourse to the courts, this all seems pretty damn preventable."
Granted, they COULD be more interested in a riskless existence with total government control (that sounds like an oxymoron to me). I can't read their minds – they could want that… but that wasn't the impression I got.
That's not to say I liked TrUmpit's propensity to blame the free market and Bush… but Michael Smith, I think your talk of "reduction to subhuman poverty" risks overcompensating in the OTHER direction.
mjh -
RE: "If we don't have it for all products and services, then it should be clear that advocating "buy local" means buying some products and services that are either
a) inferior quality or
b) higher price or
c) both"
Your mistake is in assuming that everybody experiences or understands quality in the same way. They don't. It's subjective in a way that prices aren't. You're to caught up in "quality". Quality is simply one component of the utility that a person could get from a particular product. Utility is influenced by a lot of things, INCLUDING feelings and thoughts about who made a product and how it was made. People aren't eschewing "conflict diamonds" and non-free range chickens because they are lower quality. In many cases, these have higher "quality" from a "quality control" type of perspective. But there are other elements non-conflict diamonds and free-range chickens that compensate for potentially inferior quality, such that the total utility received from these so called "socially conscious" products is greater (for certain people, of course).
I strongly suggest that people on this blog ignore TrUmPiT. He or is welcome to post as long as he or she avoids vulgarity or truly libelous remarks. But it's a waste of time to respond to anything that he or she writes.
Don -
Your selective censure is again striking me as very odd.
TrUmPiT was a little tough to swallow, but are your really more perturbed by his concern (however misplaced) for these homeowners than you are of Michael Smith's accusation that TrUmPiT and muirgeo (and unnamed others) are advocating complete government control of everything, a risk free life where nothing is earned, and subhuman poverty?
I know this is your blog – you can censure who you want to censure (perhaps mine is coming). But in terms of who is and isn't worth responding to you truly confuse me sometimes.
I only raise the point because it consistently seems that your criteria have less to do with what is worth responding to, and more to do with the extent to which the victims of your censure are in agreement with you.
Last night I was going to watch the "Dark Night" (a Batman movie that received good reviews) then five minutes into it someone makes a "Buy American" joke about a gun bought in China. I turned the thing off and read some Econ instead.
Thanks for the hattip. I stole it for my Sunday blog entry. Happy Easter.
Daniel,
You like living in left field?
"Don -
Your selective censure is again striking me as very odd.
TrUmPiT was a little tough to swallow, but are your really more perturbed by his concern (however misplaced) for these homeowners than you are of Michael Smith's accusation that TrUmPiT and muirgeo (and unnamed others) are advocating complete government control of everything, a risk free life where nothing is earned, and subhuman poverty?"
STrUmPiT has yet to say one sensible thing on this blog. It has always been incoherent ramblings of leftist nonsense. Strip away the slightly better wording and muirduck is the same.
When I was young and living in central Texas, our little town had the village idiot/town drunk, whenever sensible and rational people gathered on a corner or in the park and discussed things and "Snuffy" wandered up and tried to insert his ramblings it did one of two things, he was told to move on, or the group broke up and went about their business.
STrUmPiT, muirduck, et. al. are this blog's village idiot, and while Don hasn't yet blocked them, his advice fits my little town's actions vis-a-vid idiots.
Your attempted nurturing of them makes a blatant statement about your judgment, and probable agenda here.
TrUmPiT's post asserts that the free market failed in the cited case. I say it was simply a lack of transparency in the material selection – the contractor and the original home purchaser failed to apply due diligence, naively assuming the government would do that for them.
BTW, I would not be shocked had the vendor been a good ol' AMERICAN source. (Think: Peanut Corp. of America!)
"I strongly suggest that people on this blog ignore TrUmPiT."
I strongly suggest that people around here don't ignore TrUmPiT. You may even sneak a delicious little peek at what I say, but obviously, you won't change your obdurate ways, but others may question the "party line" by my insightful, sincere comments. I read or peruse the comments, but you falsely seem to believe that I'm motivated by them and if people "ignore" me by not responding, I'll find something else to do with my excess leisure time. Unlikely I could get frustrated and go on a shooting spree like so many of the men recently laid-off (crazy women don't seem as trigger happy or likely to commit mass murder from mere unemployment).I don't work that way. I'm no longer a Pavlovian lab rat, thank heavens. (Or so I hope.) If you're not your own best company, then you may get stuck in libertarian groupthink. That kind of thing resulted in the blind allegiance to … Fill in the blank. As for being called a sTrUmPit, which is a variation of strumpet, which is an old term for a whore, sticks and stones may break my bones… I have nothing againt prostitutes or being called one, as long as their mutually beneficial transactions aren't interfered with by a middleman pimp involved to control, exploit, and leech money off from the contractual parties involved. But capitalism is that pimp on a scale that dwarfs governmental intrusion in our lives by a long shot. Sorry, but self-evident truths must be repeatedly pointed out to your blind libertarian followers. Don't drink the "free" Don Beaudreaux kool-aid around here, or you risk your life, liberty, and long-term happiness. And don't buy a house made with Chinese drywall, either. Buy American! That includes Canada and Mexico for the geographically underdeveloped among you. Take my word for it, it's much easier to recoup your financial losses from a Canadian national or government than a Chinese one. If regretfully you die from tainted Chinese candy, then the question is moot as far you are concerned. But your loss is another's gain. In this case. the caterers, flower vendors, and mortician at your funeral.
Why was my comment about 100,000 homes made with toxic drywall worthy of being ignored. Is it already common knowledge. What if your home has that nasty stuff in you walls, and you or kids get sick from it. You are originally from New Orleans, and after Katrina, many homes were built or rebuilt using the poison Chinese-made drywall. Don't you care about the people who live there now? I have to stop with this comment for now because I'm nauseous from your lack of compassion for the victims of the drywall. I want to bang my head on the wall, but now I'm afraid it may release some pent-up poison gas.
vidyohs -
RE: "You like living in left field?"
I live in Arlington. I guess some people think of them as one and the same.
Re: "TrUmPiT has yet to say one sensible thing on this blog. It has always been incoherent ramblings of leftist nonsense."
Well, like I said – I didn't find that comment by him/her especially insightful either. But I thought it was far less noxious than Michael Smith's response, which earned no censure from Don at all.
Tru_liberal -
RE: "TrUmPiT's post asserts that the free market failed in the cited case. I say it was simply a lack of transparency in the material selection – the contractor and the original home purchaser failed to apply due diligence, naively assuming the government would do that for them."
Otherwise known in the field as a "market failure". Admitting problems with markets isn't being anti-market, and it isn't the same as believing that they consistently fail.
TrUmPiT -
RE: "Why was my comment about 100,000 homes made with toxic drywall worthy of being ignored."
It's not worthy of being ignored. I don't know if I'd draw the same conclusions as you (I hardly see how this is Bush's fault, much as I loathed his administration) – but it was a worthy point to make. One thing I've learned VERY quickly is that this blog isn't about economics at all – it's primarily about political philosophy, and it's generally not very welcoming if you don't share that political philosophy (a few commenters – MnM, is actually the only one that comes to mind! – accepted).
Daniel -
"Otherwise known in the field as a "market failure". Admitting problems with markets isn't being anti-market, and it isn't the same as believing that they consistently fail."
"Market failure" means only that you bought a pig in a poke. Makes no difference if it's drywall or peanut paste – foreign or domestic – the government CAN NOT BE TRUSTED to protect you, and its agents are immune from any recourse from you.
That's the sad truth, and sloganeering on either side won't solve the matter.
Well… "market failure" means that sometimes there is asymmetric information, externalities, or some other inconsistency that makes markets operate sub-optimally.
I'm not saying government can be trusted – it's why we have to keep an eye on them. I'm just saying it's not "sloganeering" to admit that asymmetric information between Chinese producers and American consumers can have consequences.
Daniel,
I don't think I'm making the mistake that you are ascribing to me. I made no claim that quality was anything but subjective.
Certainly, if buying local is an important measure of quality for you, go ahead. But don't get frustrated when the vast majority of people don't also find it important. Organizations like backyard economics appear to want everyone to believe that their subjective ideas of quality should *always* include localness. I don't think that most people consider that when evaluating quality. Certainly some do, but not IMHO most.
But certainly if local is an important part of quality for you, I would absolutely defend your preference to buy local. I am not trying to tell you what to do. I'm trying to explain why I won't listen to "backyard economics" tell me what to do. I would make the same argument against any organization that was trying to convince people that blue things are better for the economy, too. And I like blue.
Cheers,
mjh
mjh -
Re: "Certainly, if buying local is an important measure of quality for you, go ahead. But don't get frustrated when the vast majority of people don't also find it important."
Who says that frustrates me? It's only on a very few number of goods that I care about it either. What bothers me is that people seem to be assuming that a voluntary preference for local goods somehow hurts the local economy, when I think it should be pretty obvious that any increase in demand for local production can only improve the local economy. If people don't have those preferences, it doesn't bother me – and I believe I said as much.
mjh -
Re: "Organizations like backyard economics appear to want everyone to believe that their subjective ideas of quality should *always* include localness."
Yes – imagine that. People advertising and promoting their preferences in an attempt to convince other people! How anti-market!
I recently bought an advanced Seiko electronic dictionary which was expensive but a marvel to behold in my opinion. I bought it off a website in England because it's not available in the States at this point in time. I took a chance because you can imagine the hassle if the device (or as the Brits like to say "a piece of kit"), was defective. They added on an exorbitant shipping fee, I guess to cover such contingencies.
Seiko is a Japanese company, but the actual device was made in China. So you can see I have no trouble doing international trade as I see fit to benefit myself. I never said otherwise.
"I strongly suggest that people around here don't ignore TrUmPiT. You may even sneak a delicious little peek at what I say"
Why? Do you actually think you matter?
Of course, I'm smarter than you and I matter more than you do. Your comment is that of a troll.
I should like to propose a "what if":
Say the Chinese inspectors, or the US inspectors, did their job, blew the whistle and embargoed the faulty drywall. What would be the result?
Answer: An estimated 100,000 new homes could not have been completed during that period of rapid growth, easy credit, and high demand.
What would happen to home prices during that period? How would you describe the effect on the housing "bubble"?
"Your comment is that of a troll"
ROTFL…yeah, my incoherent ramblings are spattered all over this blog…don't call the kettle black
"…it's primarily about political philosophy, and it's generally not very welcoming if you don't share that political philosophy (a few commenters – MnM, is actually the only one that comes to mind! – excepted)."
Daniel,
So long as government exerts force on peaceable trade, then political philosophy and economics are going to be intertwined. The majority of patrons of this Cafe are (within a broad context) individualist libertarians who don't take kindly to being told, "You can't do that because it's bad for you." Many adults chafe at being treated like children (and most adults at this Cafe).
Most of your comments since you've started patronizing this Cafe have been in defense of the State. Well, many here are weary (and wary) of Statists and their good intentions, and some of their replies may be snippy or even rude.
I freely admit that I'm as rude to Mierduck as he's been to me, so please don't equate my calling Mierduck a "Statist asswipe" to calling you a "Statist".
I don't think I've been rude to you; and I try not to be rude to Gil (although his intentional obtuseness sometimes gets to me), and I'm convinced that Trumpit is a satirist, so I laugh at his posts.
It seems that the bone of contention among the dissenters of Don's original post is that as long as there's no force of law behind Florida's Buy Local campaign, then, as a libertarian, he should just shut up about it.
Since ignorant ideas often become law, it would be foolish for someone who can explain the flaws in such ideas to be quiet about them.
Daniel Kuehn,
"What bothers me is that people seem to be assuming that a voluntary preference for local goods somehow hurts the local economy, when I think it should be pretty obvious that any increase in demand for local production can only improve the local economy."
Do you think the "local" economy is static? If the demand for some "local" product is low because a "foreign" product is better, then the producer can: find a different line of work, improve his productive machines, find out what his competitors are doing, etc. The signal you send to an inefficient "local" producer whose product you still buy is that he doesn't need to improve. That OBVIOUSLY makes the "local" economy worse off than it needs to be, because the "local" producer is then being subsidized by the "locals" who are throwing away valuable resources on a producer who won't adapt.
Lou Dobbs spoke in my town. Some local xenonphobic nativist went without work that evening.
Daniel says, "Yes – imagine that. People advertising and promoting their preferences in an attempt to convince other people! How anti-market!"
I don't think it's anti-market. I think it's bad economics. If local preferences emerge for a local product, that's great. No amount of cajoling people to choose locally produced products when they're not preferred, will make that cajoling good economics.
"xenonphobic" ??
Tolerance is not the same as approval.
I tolerate prostitution, but I do not approve of it. I tolerate cocaine use, but I do not approve of it. I tolerate people who watch The Batchelor, but I do not approve of it. I tolerate people who buy local with an intent to help the local economy, but I do not approve of it.
One thing that so-called liberals fail to understand about tolerance, is that it does not entail approval. I may criticise a decision, belief, habit, or behaviour without necessarily believing that it should be banned.
brotio -
RE: "It seems that the bone of contention among the dissenters of Don's original post is that as long as there's no force of law behind Florida's Buy Local campaign, then, as a libertarian, he should just shut up about it. "
It's not just that Don should "leave localism alone" – it's that Don is dead wrong that it would end up hurting the local economy. An increase in demand for local goods can only increase consumer surplus and producer surplus (otherwise the change in purchasing behavior wouldn't occur in a free market), and increasing consumer and producer surplus can only help the local economy. Don isn't simply guilty of nosing into other people's preferences (in fact he doesn't really do that – he says it's fine with him if people like buying local) – Don is guilty of misinterpreting the result of those local preferences.
Healthy markup -
You don't have to explain to me the logic of market discipline, although I appreciate the effort.
RE: "The signal you send to an inefficient "local" producer whose product you still buy is that he doesn't need to improve."
The signal you send to "local" producer who's product you still buy is that he's producing a product that somebody is willing to buy. That's a price signal just like any other. Why does the logic of market discipline break down for you when someone decides to base their preferences on geographic proximity?
RE: "That OBVIOUSLY makes the "local" economy worse off than it needs to be, because the "local" producer is then being subsidized by the "locals" who are throwing away valuable resources on a producer who won't adapt."
What?!?!? If they want to buy from a local producer how are they throwing away resources? They would be throwing away resources if they didn't buy what they wanted to buy. The whole point is they WANT to buy locally.
Lee Kelly -
RE: "I tolerate people who buy local with an intent to help the local economy, but I do not approve of it"
But presumably there is some reason why you approve or disapprove of cocaine and prostitution, right? What is it about wanting to buy at a farmers market that raises so much bile in people hear? This is absolutely bizarre.
It's produce people! This isn't cocaine! It's a preference that many people have which markets have emerged to fulfill. Why is this the target of this kind of ire?
Daniel,
I don't feel any ire over this subject, and I didn't read any into Lee's post. Although, Don may have needed to make it more explicit, I also assumed that he was talking about paying more for local only because it's local. Several people pointed out that if you pay more for a local product that is no better than a product imported from South Carolina, then you are hurting the local economy, because you now have less disposable income.
Let's stick to manufactured goods, since I agree that produce which is allowed to ripen on the vine tastes better, and I'm willing to pay the premium while it's in season (which is not buying local for the sake of buying local).
Say there are two bicycle manufacturers; one in Miami, and one in Charleston. Both manufacture bikes in exactly the same manner and the finished product is of exactly the same quality. I live in Tallahassee. The bike made in Charleston is being sold in Tallahassee for $300. The bike made in Miami is being sold for $500. I want to support Florida business, so I buy the Miami bike. But, now I don't have the $200 I was going to spend at the Tallahassee detail shop to have my car detailed. How is the Florida economy better off?
What bothers me is that people seem to be assuming that a voluntary preference for local goods somehow hurts the local economy, when I think it should be pretty obvious that any increase in demand for local production can only improve the local economy.
No, the point was not that it would hurt the economy, but that it would not, IN ITSELF, boost the economy.
Second part; right off, it may increase economic activity locally, but as to whether it improves the local economy can only be determined if total created wealth increases as a result of that increased activity.
Healthy Markup asks the basic question: Do you think the 'local' economy is static? The answer to many is apparently: yes. What makes people presume that local producers sit on their hands whereas international producers are constantly on the move? Or that everything good comes out of China? Daniel has pretty said all I would say. It's voluntary hence irrelevent. You can find the odd smoker who doesn't believe what he is doing is harming him because he knows of someone who smoked all his and died at a healthy old age. Would it really matter if someone was buying bird seed because he intends to grow birds? If Don done complains that he doesn't like people who buy local 'because it's local' then he's attacking a tautological strawman.
If Don done complains that he doesn't like people who buy local 'because it's local' then he's attacking a tautological strawman.
That's not what he said at all. He didn't say that he doesn't like people who buy local, etc.
How can you so misperceive his argument?
His point is about sloppy economic thinking. Nothing more, nothing less.
Why would he care if Floridians decide to buy local?
Buying local has as much impact on the economy as does buying non-locally.
I like the pink grapefruit from Texas better than the pink grapefruit from Florida. If Florida citrus growers want to change my preference, they'll have to grow tastier grapefruit.
If I lived in Florida, I would prefer the Texas grapefruit, based on my experience to date. If I were to buy Florida grapefruit to boost the local economy, then the Florida citrus growers wouldn't be getting the signal that I prefer Texas grapefruit.
If they want to boost the economy in citrus, then they NEED that signal.
"The signal you send to "local" producer who's product you still buy is that he's producing a product that somebody is willing to buy."
I'm not telling YOU to buy the product that is best (when not accounting for the emotions engendered when you buy from someone you consider "local") but it's a poor reason in boom times and a ridiculous one now. Would you actually make this argument with an out-of-work friend? “Even though you’re strapped, you should buy this inferior product so you can subsidize this local provider. It's better for our economy because trade with non-"locals" is less enriching.”
"That's a price signal just like any other. Why does the logic of market discipline break down for you when someone decides to base their preferences on geographic proximity?"
Your signal disciplines producers for living a little further away than an inferior "local." It's weird. I envision your purchasing decisions as a serious of concentric circles with some value discounter on the product you're considering based on its distance of origin from you. If you figure out the discount I give you permission to publish it under the name XENOPHOBIA MULTIPLIER.
"They would be throwing away resources if they didn't buy what they wanted to buy. The whole point is they WANT to buy locally."
People’s wants are changed by convincing arguments. Right now you’re actually arguing for xenophobia. Boudreaux is arguing for cosmopolitanism. Aren't "progressives" supposed to be more worldly and empathetic than everyone else?
Healthy Markup -
Re: "Would you actually make this argument with an out-of-work friend?"
Why would you expect the advice I would give to an unemployed friend to at all resemble the advice I'd give an employed friend?
Re: "“Even though you’re strapped, you should buy this inferior product so you can subsidize this local provider.”"
If you want to buy it, it's not an inferior product – if you don't want to buy it it is an inferior product. If you don't want to buy it, you won't buy it. If you do want to buy it, it's not a subsidy – it's a purchase. Why is this so tough. What makes you the arbiter of what good is "inferior" and what counts as a "subsidy"?
Re: "Right now you’re actually arguing for xenophobia. Boudreaux is arguing for cosmopolitanism. Aren't "progressives" supposed to be more worldly and empathetic than everyone else?"
Xenophobia is a hatred or fear of foreigners. You might want to provide a little more evidence for why I'm promoting that… I don't see it that way. While some proponents of cosmopolitanism do argue from this extreme position, most don't discount some sense of an value of a community. And I've never considered myself a "progressive", and I've tried not to weigh myself against others like that.
brotio -
RE: "I also assumed that he was talking about paying more for local only because it's local. Several people pointed out that if you pay more for a local product that is no better than a product imported from South Carolina, then you are hurting the local economy, because you now have less disposable income."
But who cares of place of origin enters your utility function? If you are willing to pay more for that, it suggests you value it more – you have less "disposable income" precisely because the marginal utility of that local product is higher than the marginal utility of anything else you can spend that income on. So where is the loss? Explain to me where the loss is.
Re: "But, now I don't have the $200 I was going to spend at the Tallahassee detail shop to have my car detailed. How is the Florida economy better off?"
The $200 is in the hands of the Tallahassee bike manufacturer, but not the Tallahassee detail shop, so there is no difference in the FL producer surplus (in terms of that marginal $200). You obviously wanted the FL bike more if you bought it voluntarily, so there is a marginal $200 increase in your utility (presumably higher than what your utility would have been if you used that for the detail shop, or else you would have used it for the detail shop!). Plus the base $300 went to the bike store in addition to the $200 margin over the SC bike. Where is the loss? You would have experienced a loss if you had to buy a bike to SC that you didn't prefer. And if you prefered that bike you wouldn't have wanted to buy local, and you would have bought the SC bike!! The market doesn't break down when people include localism in their utility function!!!!
Sam -
Re: "but as to whether it improves the local economy can only be determined if total created wealth increases as a result of that increased activity."
Right – and why wouldn't it increase if this was a free transaction? Why does the logic of the market suddenly break down here for so many people? I don't get it! And I usually have a skeptical eye for why and when markets break down… but as long as we're talking peaches and bicycles I don't see that much evidence for a market failure!
Sam -
Re: "If I lived in Florida, I would prefer the Texas grapefruit, based on my experience to date. If I were to buy Florida grapefruit to boost the local economy, then the Florida citrus growers wouldn't be getting the signal that I prefer Texas grapefruit."
Listen to yourself!!!!! If you bought Florida grapefruit to boost the local economy you WOULDN'T prefer Texas grapefruit!!!!! And Florida growers would certainly get that message! That why it helps the local economy.
Yes, if you masochistically buy something you don't want to buy, and purchase everything locally just to "throw off" the local producers, I suppose it could distort some things. But who does that? The point is you buy it if you want that local product. If you don't, you don't purchase it (and that sends a price signal that there is less demand for it).
Don's (implicit) fallacious assumption is that people who buy locally don't really want to buy locally – a baseless assumption in my mind. That is the ONLY way you can conclude it won't help the local economy.
I disagree somewhat with Gil. If smokers think it will make them healthy or bird enthusiasts think they can grow birds, they're wrong – but it will improve the economy even if they're wrong about what exactly it is they're purchasing. Local buyers who want to improve the local economy are right, AND it will improve the local economy. So I wouldn't quite equate those examples.
Daniel Kuehn -
RE: "I disagree somewhat with Gil. If smokers think it will make them healthy or bird enthusiasts think they can grow birds, they're wrong – but it will improve the economy even if they're wrong about what exactly it is they're purchasing"
Let me take that back and replace it with "it will improve the economy even if they're wrong as long as they continue to want that product". I do think the "buyer's remorse"/"multiple selves" argument that psychologists have come up with provides a convincing reason why markets may not be entirely efficient… because people's preferences are not static and over time they may come to regret an earlier purchase with more information.
Regardless, this doesn't really impact the issue of localism – presumably they're better informed than smokers who think it's healthy.
Ok, a little off topic but:
""xenonphobic" ??"
It's true! The man avoids flourescent lights like the plague! *rimshot*
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