Buy Local Think Global?

That is the heading of one website devoted to a movement that appears to be gaining momentum over the last few years. According to this site, 

Buying local means buying food and goods that are grown raised and produced close to home whenever possible. Buying local products not only supports local farmers and business, it provides you with peace of mind knowing where your goods are coming from and that they must conform with all government guidelines in their production and farming methods.

This movement and its supposed emphasis on saving the global environment would, at first glance, appear attractive from a Christian view. After all does good stewardship not include taking care of God’s creation? Nevertheless, this call to buy local, always engenders mixed feelings in me. As with all economic issues, we must count the cost of supporting this practice.

The Cost on Poor Countries: One negative aspect of the “buy local” policy is the effect upon our distant “neighbor”—the poor in Third World countries. In some cases at least, the alternative to “buying local” is to buy products produced by farmers in these poor countries. Thus, purchasing local may be done at the cost of the very poorest. However, a common thread of development economics is to seek to enable the poor to help themselves—to teach a man to fish instead of giving him fish. That also needs to imbue government policy consistently—not, as the Canadian government has done in the past, to provide foreign aid to poor countries and then discourage the import of products produced there by continuing high tariffs. In any case, the lot of the poor countries should also be considered. “Thinking global” doesn’t necessarily mean “buying local”!

The Waste of Resources: A second negative aspect of this “buy local” movement may be bad stewardship. Good stewardship, I believe, means that we must use the resources God has given us as efficiently and effectively as possible. God is unlikely to condone that his resources are wasted. Economics teaches that, within a country, efficiency is achieved by “specialization of labour”. That is, instead of all of us trying to grow our own food, our own clothing etc. (including providing our own health care), we are much better off by many people specializing in those things they do well and trading for the many things that others produce--by selling and buying products and services in a free market. Less labour is used and better quality is provided. Moreover, when we specialize, we can improve our skills so that even less resources (material, labour. etc.) are used to produce a given quantity. In our modern world, that specialization occurs within businesses (people working together). Businesses can get even more efficiency by growing and using more specialized equipment to get “economies of scale”. Thus specialization has enabled us to obtain a wide assortment of goods and services with a minimum use of resources. Competition in a free market ensures that only those goods that are wanted are produced and that they are produced as cheaply as possible with the least amount of waste[1].

The same benefits are available through global free trade. Countries should specialize in those products and services which they can produce better than other countries. It is obvious, for example, that although Canada could produce oranges and kiwis in green houses, that would be a costly waste of resources. We import oranges from Florida and kiwis from New Zealand because they can produce them more cheaply—less waste of resources. International trade is worthwhile not only in such an obvious case where countries have what economists call an “absolute” advantage”, but also when they have only a “comparative” advantage. A country’s limited resources should be used to produce those goods that they can produce most cheaply. Trade theory teaches us that free trade encourages companies to produce as efficiently as possible. We have less waste of God’s resources. Unfortunately, the “buy local” movement will have the effect of encouraging less efficient production locally than could be done in some foreign countries. After all, if it was as cheap to produce locally, there would be no need for the movement; all goods would be produced locally.

Neighbourhood Effects: There is, of course, some validity to the movement’s environmental claims. Transportation of goods over long distances increases pollution and carbon dioxide emissions. The costs of pollution, etc. are, however, not included in the price of these goods. They are “externalities” or “neighbourhood effects”—costs which are borne by people not part of the transaction (the buyers and sellers). We do, however, not have to voluntarily abstain from foreign purchases. Economists have a simple solution within the market system—make the polluter pay the cost. If these “global” goods are forced to pay the true cost of pollution and other emissions, through, for example, an additional tax on transportation fuels, the cost of these products will be higher, and, in a free market, less would be bought. One alternative to such a tax could be to increase highway tolls. With modern technology of transponders or other electronic passes, it would even appear to be possible to have tolls for larger trucks only. In Ontario, for example, a “transport-trucks only” toll on the 401, 403 and QEW could cause a lot of distantly produced goods to bear the true cost of production (including pollution)and level the playing field for local producers.

In conclusion, I suggest that Christians should not automatically jump on the “buy local” bandwagon. We should consider the producers in poorer countries. We should also recognize that by choosing those products that provide the best price/quality[2] combination in the market we will be encouraging good stewardship of resources. To the extent that the effects of pollution and carbon emissions are not reflected in the final selling price, we should encourage government to rectify that through tolls or taxes.

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[1] Companies that do not produce efficiently or produce the wrong goods will eventually go out of business.

[2] If you truly believe the local product is better in quality, then the free market allows you to make that choice.