Buying Local

 

(Banner art from Rural Roots)

Host intro: On today’s “Our Northwest Economy” feature, Mary Hawkins and WSU’s Andrew Cassey discuss the Buy Local movement.

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Hawkins: The Buy Local movement is being embraced in just about every developed country in the world. Proponents argue that buying local boosts local economies, creates meaningful jobs, and makes for diverse and healthy communities. Macroeconomist Andrew Cassey argues that this movement often doesn’t take human nature or even the nature of money into account.

Cassey: In some ways the Buy Local movement strikes me as mercantilism, this political economy system very popular in Europe in the sixteen hundreds where country governments would try and hold onto gold by selling a lot abroad and not buying anything abroad. And, people weren’t doing that well in the 1600s in Europe and ultimately this whole system failed. It strikes me a little of this…

Hawkins: Cassey’s says: it’s not as if you fill up a bucket that’s a local economy. He prefers a pipeline analogy: money flows in and out of your town, in and out of your pocket, and doesn’t just sit there. And he thinks many local incentives miss the mark. For instance, in Europe there’s a form of currency called the Chiemgauer, which can only be spent in the Chiemgauer, an area of upper Bavaria. The presumption is that using these dollars, money will stay in the local economy. He believes this Chiemgauer does a bad job of doing what money’s supposed to do.

Cassey: There’s nothing inherently valuable about money. Its use is as a medium of exchange and as a storer of value. And this thing isn’t very good at that because once you leave (I’m presuming) this small geographic area it’s not a store of value and it’s not a medium of exchange. Vodka is better as money than this thing is.

Hawkins: Cassey also believes that “buying local” doesn’t have a bit of traction for consumers. If it did, then big box stores wouldn’t be so popular. People want cheap goods and big chains accommodate. Goods are cheap because they’re bought in bulk and shipped in. Also, big box stores can use their market power or monopsony power (like Monopoly) in order to suppress wages below what would otherwise be competitive. They don’t have to do this….but they can and they generally do….you’ll also find that big chains don’t raise prices, as the proverbial “company stores” did in old industrial towns…

Cassey: It doesn’t matter if you have a Safeway and an IGA in town, or some mom and pop grocery store. Walmart doesn’t care about them at all. It acts as a monopolist and it sets prices and even if the other stores close, Walmart doesn’t then raise their price[s]. They don’t care about the other person at all. So now there’s a trade off here because one way that Walmart is able to charge low prices is that they have very aggressive tactics and market power when it comes to the intermediate firms they buy things with and how they treat their on the ground employees. But they’re also selling stuff for really cheap. …And it’s not clear to me why people want to punish them for their great innovation.

Hawkins: according to proponents of buying local, you have a disintegration of quality, you have low wages within communities and a degradation of communities. You have a lack of distinction from one area to another. In terms of goods and services you have the same culture in Baton Rouge, Louisiana as you do in Wenatchee, Washington.

Cassey: But if that’s what people want - and it seems that other than this burgeoning buy local movement, that IS what people want - I wonder if one day people will cry about Walmart closing when Amazon takes over. They’ll say “Oh, my local Walmart is closing. I should have bought local at Walmart instead of at Amazon.”

Hawkins: There is a small chink in the big box armor, though, and that’s transportation. A lot of carbon is emitted during the transportation of stuff.

Cassey: One of the appealing things about the “buy local” movement is: if distances are shorter, even if the money costs is more, there’s going to be this cost-savings with respect to the environment. So I think that’s one of the things the “buy local” movement should push.

Hawkins: Cassey says that along with great bargains, people will consume local products if they feel that the quality is better. He’s a big fan of regional beers, which he enjoys. Great products and great innovations will probably find their buying public, slogans or no slogans.

Cassey: So, what makes economies rich or successful or vibrant is the value of the things being produced in this geographic area. And if you’re worried about the flow of dollars – that’s all sort of smoke and mirrors in a sense. It’s the underlying value of the things that you make, so what causes economies to grow and be successful…It’s simple. It’s innovation and technology improvement and having the institutions that allow those things to occur.

Hawkins: For more information about the buy local movement, come to “Our Northwest Economy” at N-W-P-R dot org. I’m Mary Hawkins.

Buy Local Links:

More about the chiemgauer here

http://sustainableconnections.org/ is a "buy local" organization that supports businesses

Rural Roots supports local farmers

Buy Local Moscow is one of many sites that networks for locally-produced products and cooperatives, including 2 Degrees Northwest, Where Art Meets the Land - a cooperative of regional artists and artisans

Comments

[Dan Young]

Mr. Cassey misses the point. I do not believe that dollars alone drive the "Buy Local" movement. It is the interest in living in a town (think small, like Pullman, Palouse, Colfax) where the town center is alive and well with businesses, not empty store fronts. Many people are now realizing that buying at the "Cheaper" Wallmart has bigger impact than just their pocket book, but impacts where they live and their community. Yes, cheaper does drive many family buying decisions, but I think we see that slowly changing. It is the local business person who lives next door and donates to the local school and knows your name. When they go out of business, not only does your downtown die, so does your neighborhood, your school, etc.

Look beyond the dollar, it is a desire to preserve our local community, quality of life, and knowing where your food and products come from.