Buy Local?

Harold Miller's insightful contribution to Super Bowl mania, Regional Insights: Forget football - which region is winning the economic game?, ends on a discordant note:
Whether Pittsburgh gets its sixth Super Bowl ring or Arizona gets its first, our focus needs to quickly shift to winning in the economic arena. We need to help our manufacturing firms stay competitive and find qualified workers, and we need to help our entrepreneurs get the financing and customers they need to ride out the recession.

Everyone can help by buying local products and using local vendors, which helps keep money circulating in our region rather than somewhere else, supporting the jobs in our economy.

That last graf is a common refrain in the region. It also overstates the case. Douglas Irwin in the New York Times makes a related point: The "Buy Local" argument is necessary only if local goods are more expensive or lower quality than comparable goods from elsewhere. If local goods offer better value, ordinarily we'll buy them anyway, with or without an appeal to the "Buy Local" claim. In that case "Buy Local" is a harmless slogan. But "Buy Local" in and of itself may mean "overpay" for goods and services, presumably in the name of local job preservation.

But whose jobs? As Irwin implies, we have a fixed amount of money to spend. Should I overpay for this but not for that? How do I choose? When do I measure "value" in terms of my bank account, my assets, and my preferences, and when do I measure "value" in terms of what someone else thinks is in the best interests of the local economy?

I can't. If I have $100 to spend on a basket of goods and services, I'm going to look for $100 of value as I define it, whether those goods and services are produced here or elsewhere, and most of the time, I'm looking to measure that according my own household economics. To be honest, when I read Harold's column my first reaction wasn't to make the connection to Irwin; Irwin is an economist and a well-known free trader. My first reaction was that the Terrible Towel, Pittsburgh's and Myron Cope's The Official Terrible Towel, is manufactured in Wisconsin. If Buy Local and Local Manufacturing really are all that, then why doesn't that business get placed locally? My best guess is that the Allegheny Valley School is doing what I do, and that's fine with me. They need jobs in Wisconsin, too.


4 Responses to "Buy Local?"

Harold D. Miller said... 2/01/2009 2:40 PM

One of the challenges of a newspaper column with a limited number of words is that it is difficult to describe the nuances and caveats of both complex statistics and policy recommendations. (For example, the Post-Gazette dropped the words "City of" in the third-from-last paragraph which describes the population comparisons; it's referring to the City of Phoenix, whereas the rest of the article refers to the Phoenix metro.)

At any rate, the "buy local" recommendation was not meant to imply "spend more" (and certainly not to buy white towels instead of Terrible Towels..). But in an era of internet shopping, it's all too easy to buy something from a vendor someplace else when a local vendor may have a superior product at a competitive price, but with a lower page ranking on Google (or no e-commerce site at all).

The real origin of that recommendation, though, was the frequent lament of local entrepreneurs that they have to find their first customers outside of the region, even though there are businesses here that could benefit from their product or service and would ultimately use them once they have a reputation built on sales elsewhere. A fuller and perhaps better explication of the recommendation would have said "give local products and vendors a chance to compete for your business, because if they are successful, it will support jobs here, and the workers filling those jobs will also spend their money in the region, creating an economic multiplier effect.

I don't in any fashion mean to endorse rigid anti-competitive "buy American" types of rules that raise prices and engender retaliatory regulation, but merely to encourage everyone to consider the full range of options and when all else is equal, to support the local economy.

Mike Madison said... 2/01/2009 4:19 PM

I'll take the expansion and clarification of the piece, but I still wonder whether it's reasonable for local entrepreneurs to "expect" to build businesses through local customers. E-commerce and Internet marketing (just to pick two examples) aren't the expensive, exotic mysteries that they were a decade ago. Any small business today that isn't thinking strategically about how to leverage the Internet and potential customers everywhere just isn't trying hard enough -- or already has all the customers that it wants.

Outright local *hostility* to buying local, even when local offers the same or better value, is a different kettle of fish.

illyrias said... 2/03/2009 11:47 AM

I think there are many reasons for the buy local campaign.

To me it boils down to: if you want a local hardware store or pet shop, you have to support them. Otherwise, they will go out of business. For so long, people just looked for the best bargain regardless of the cost. For me, the "Buy Local" campaigns are just highlighting that there is an underlying cost - in local jobs - in local atmosphere. You will not have idyllic small-town America or the iconic downtowns of big cities if all these local businesses go out of business. Also, do we want to be passively encouraging poor labor conditions in other countries just so we can buy more cheap plastic goods?

For what it's worth, I think historically Pittsburgh has done a much better job than most of keeping these places in business from the Strip District to the old hardware shops on Carson St. It's one of the reasons I love the city. We may celebrate Dunkin' Donuts opening, but we also rave about Mancini's and Prantl's.

Jim Russell said... 2/03/2009 6:24 PM

Local businesses should be looking to leverage a proximity advantage against the economies of scale that national or international companies can marshal. Big box stores can't do everything better and there are market niches to be filled.

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