‘Why buying local doesn’t work’ doesn’t work … but buying local does
There’s an essay making the rounds about “Why buying local doesn’t work” that might give the buy-local fans in Cambridge and Somerville pause — right up until they finish reading the essay and think, as I did, “That’s it?”
Because it was posted on a sober-looking site and written in a sprightly but informed manner by someone obviously conversant with current and historical economics, I read the piece expecting to come out of it with my beliefs shaken, looking for reassurance. But my dread was unfulfilled. There’s something a little off about the piece, and it only seemed a little more off when I followed the author’s name from the essay, which was reposted on a blog curiously named “Without Apology,” to his own site, the even more eyebrow-raisingly named “Young, Hip and Conservative: A Skeptical Blog.” Both do that thing where conservatives boldly assert their bold conservativeness, which is actually a form of assuming the role of victim before anyone has attacked. Who is asking Michael Hawkins for an apology? Who said Michael Hartwell was gullible? It also seems a bit gauche to declare yourself hip.
Conservatives come by their defensiveness righteously. Despite how their ethos dominates our culture these days, they have within them the pugnaciousness of the eternally picked-on because they rule through tantrums rather than reason and know it’s no avenue to respect. They say stupid things, seem to have no institutional memory or shame, operate within an echo chamber from the highest levels and stumble around thinking ideology is a replacement for facts — that because they believe things fervently or want to, those things must be true. Conservatives strode purposefully toward this summer’s debt ceiling crisis, for example, saying the markets wouldn’t mind if the United States defaulted on its obligations for a while, and it knew this to be true because theirs are the parties of fiscal discipline (except when it comes to exacting discipline on the rich). Imagine how disappointed conservatives were when the credit rating agencies and Wall Street told them that, yes, the markets really would mind if the country opted not to pay its bonds or even failed to issue Social Security checks as promised.
It’s significant that this latest example of conservative magical thinking is economic, because so are the arguments Hartwell makes in his “Why buying local doesn’t work” — and throughout his postings, as buy local is described as the foremost topic of his blog.
In the doctrine of Cambridge Local First and its ilk across the country, dollars spent at locally owned businesses keep circulating locally, while dollars spent at the stores of national or multinational chains go far away and are of little help to the city or town were the consumer lives. And while Hartwell acknowledges there is such a “multiplier effect,” he calls “localism” a pseudoscience that rehashes a disproved economic theory called mercantilism.
And he has examples from economic thinkers including Adam Smith, David Ricardo and Frederic Bastiat to prove it — kind of. It’s in these Hartwell stumbles, maybe because he’s applying common-sense examples while bashing attempts at common sense from the buy-local crowd, who are not economists:
We all understand that creationists know next to nothing about biology. They do not study biology. Normally, we shouldn’t fault a person for that, but these people have a great interest in biology. We know this because they speak about biology all the time. They do not make sophisticated criticisms based on intimate knowledge of the subject, but instead make “common sense” observations on a crude version of biology.
Localist activists are the same way. Clearly, they have a deep interest in economics. They talk at length about the multiplier effect, supply and demand and growth. They don’t know anything about comparative advantage, economies of scale, creative destruction or trade. Apparently, their interest in economics isn’t strong enough to get them to actually study economics.
Economics isn’t biology, though, which makes this just the first of Hartwell’s weak comparisons and straw men. Try replacing economics with biology in these famous quotes and see where it gets you:
- “Ask five economists and you’ll get five different answers — six if one went to Harvard,” Edgar R. Fiedler said.
- “An economist’s guess is liable to be as good as anybody else’s,” Will Rogers said.
- “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today,” Laurence J. Peter said.
As much as economists would like us to think they know what they’re doing, their work deals in data that can be interpreted more loosely than biological evidence and need never be agreed upon by more than a few adherents at a time. If this weren’t true, trickle-down economics wouldn’t still be the dogma of the Republican party, would it? Ongoing assertions that tax cuts for the wealthiest create jobs and stimulate the economy have never been borne out.
The problem with Hartwell’s comparison of economics to biology by way of rejecting creationism is that creationist theory relies on a supreme being, and there is no god in even moderately serious economics — unless you include the god conservatives themselves seem to keep praying will make supply-side economics work the next time around, even though it never has before. If that doesn’t take faith, I don’t know what does, although applying it that way also comes parlously close to the definition of insanity being “doing the same thing over and over and expecting different results.” But that’s economics for you.
Now, I am not an economist, and I could fall into any number of traps by trying to apply common sense to the field. But let’s give it a try and see how things shake out.
“Buying local means …”
Hartwell believes “buying local means higher prices, fewer choices, longer work hours and a lower standard of living.” I believe buying local can just as well mean better service and higher-quality products, which can add to a better standard of living, and am not sure why buying local means fewer choices unless Hartwell thinks people who buy local somehow lose the ability to buy elsewhere when they want to. Heck, people could do that before there was an Internet. People could do that through the Sears catalog in 1888.
I don’t really understand any of the beliefs he enumerates there, actually, since he doesn’t really explain them. He’s more clear in saying it makes sense to let everyone anywhere do what they’re best at, as in this example: “Letting someone else grow our food frees us up to work on other things, like entertainment or medical technology. It doesn’t matter what side of the community border they do it on.”
True enough. And in the long term, this may be solid reasoning. Certainly if we look decades or centuries out, the problem of online businesses sucking the life out of old technologies and bricks-and-mortar stores will be resolved one way or another, and it will be settled whether it’s better to buy more expensive stuff from a mom and pop store or cheap, shoddy goods made in overseas sweatshops from, say, a Wal-Mart or Target.
In the short term, meaning right now or the coming months and years, these things can result in small-business disaster, empty storefronts, loss of tax base and a resulting lack of municipal services that could repel potential residents of a town, resulting in a spiral of local economic disaster. It could also simply result, in the short term, in the closing of a local store where once you could buy something immediately and now cannot. Did you suddenly run out of paper for your printer? That makes the stationer down the street look more appealing than the Staples big-box store on the edge or town or even staples.com, which might get you that vital ream of paper via next-day mail delivery (for a delivery premium that eliminates any savings from shopping at a big-box store online). Same thing goes for a gift for a birthday party, shoes for yourself or any number of other objects.
And Hartwell’s essay also deals only with products, ignoring the fact people need to find money somewhere, somehow to pay for services that cannot be handled online.
One less suit for the baker
Surprisingly, he does this even while relating an anecdote from Bastiat in which a kid breaks a bakery window and people are displeased until someone points out that “the baker will now have to hire the local glazier for a new window. The glazier will have more money to buy from the cobbler. Everyone is happy and believes the local economy has been stimulated.” Hartwell, channeling Bastiat, is not happy, though. “No one bothered to ask the baker what he thinks. They forgot to look at the other half of the equation – where the money for the glazier is coming from,” Hartwell writes. “It turns out the baker had been saving up his money to buy a new suit from the tailor, but now has to buy another window. The tailor could have spent that money at the cobbler, and so on and so forth.”
But look at the lesson Hartwell draws from this:
The community is now a little bit poorer as the baker has one less suit then he otherwise would have.
It is? How is the community poorer because the baker paid a glazier instead of the tailor, especially when both planned to spend money at the cobbler’s shop?
In a story that seems to be more about the costs of juvenile delinquency than buying local, the only way wealth would leave the community is if the glazier and tailor, who are around to fix windows and measure the baker’s inseam, then went to dsw.com or zappos.com instead of trotting around the block to the cobbler’s for a pair of shoes.
The island anecdotes
The Ricardo anecdote, which addresses who gets to do what jobs in society by way of wondering what happens when John Lennon and Neil Diamond get stuck on an island(!), is interesting on a theoretical level: While Lennon may be the better musician as well as a better fire-tender, see, it behooves both if Lennon tends to the fire instead of letting the inferior fire-tending skills of Diamond risk their safety. If you’re scratching your head over how this example of comparative advantage, of putting people to work where they’re needed and not where they’re most skilled, matters to our topic, it’s about how “international trade has emerged as a critical tool in creating wealth and improving the standard of living for the general public.”
Frankly, I’m still scratching my head. (Even more so because this story seems a bit at odds with what Hartwell was getting at earlier, about why we should bother growing food when someone else can. There should be some sort of standard, and having someone be better at a task is usually a good place to start.) I’ll stipulate that bit about international trade and still can’t see exactly how this applies to buying local or could be applied by me in deciding how and where to shop. Maybe I’m just dumb.
Or maybe Hartwell just doesn’t have very good arguments.
His final one has to do with another castaway situation:
Imagine two castaways stuck on a deserted island. The first night they agree one will gather firewood while the other scrounges for food. However, 50 feet into the brush the food-gatherer discovers a third castaway with a 10-year supply of nonperishable food he’s eager to share. What reaction do you suppose the castaway who was attempting to gather food would have?
Would you expect him to be upset and saddened?
No? But remember, he just lost his job. A “foreigner” is attempting to flood his little economy with cheap food. Of course, he would be happy to have it, as letting someone else provide food frees him up to work on other tasks, such as building a shelter or making a rescue-signal. The same lesson applies to the division of labor in advanced societies.
Aside from the fact that we don’t have a metaphorical castaway “eager to share” anything with us — they’re eager to charge us whatever the market will bear — and ignoring the fact that the 10-year supply of nonperishable food may be no more appealing than listening to Neil Diamond play guitar, Hartwell uses this story to illustrate how “the point of jobs are not to keep people busy, they are to produce things of value,” by which he means that buying local has us paying more money unnecessarily just to artificially keep jobs that would become other jobs if we weren’t swatting away Smith’s invisible hand. (Even though Americans have been “retraining” for other jobs since the 1980s and somehow still keep losing out to Mexicans, Indians, Malaysians or whatever the latest exploitable resource is.)
Buy local? Buy Coke!
The ultimate result of this argument is finding the best producer of anything and having only that producer make it, which sounds very dull and unexpectedly Communist. Even stopping short of that makes me wonder whether Hartwell, who opposes buy-local campaigns, would argue against the massive advertising campaigns of Coke and Pepsi, since it’s a waste to pay for them — there are any number of generic colas selling for much less than those brands. A “buy local” campaign consists mainly of marketing, after all, to convince people doing so is in their interests and the interests of their community; Coke and Pepsi campaigns are based on appeals to emotion leading consumers to irrationally ignore the fact one cola is much like another. So, really, why complain about the campaign that helps keep the glazier in business for when your window gets busted by some kid? And that likely helps keep you in business if you’re a small-business owner?
Hartwell also impugns buying local by invoking conservative economist Milton Friedman:
Pseduoeconomic schemes often focus on creating useless jobs instead of producing things. Milton Friedman once mocked a purposely inefficient job-creation program that made workers dig with shovels instead of backhoes by suggesting they be given spoons instead.
But contrast that with what we know of the behavior of the corporations that benefit most from Hartwell’s buy-not-local notions.
First, corporations are stockpiling cash, hitting a record $1.9 trillion in March instead of hiring, according to The Associated Press (and everyone else) which, quoting its own survey that month, noted that “most economists said the step that would help bring down unemployment the most would be for corporations to spend more of their cash.” (Banks, as well, are stockpiling cash instead of lending. Take a peek at this graph from the St. Louis Fed showing a leap in mid-2008, in the heart of the recession, that looks like a flatliner coming back to life on the operating room table having somehow learned the opposite of the lesson “You can’t take it with you.” Apparently you don’t have to give it away, either.)
Implicit in this, not to be too obvious, is that unemployment is bad. When people are unemployed, they don’t have money. When they don’t have money, they can’t spend it on things. So if more people had jobs, companies could make even more money.
Still, the piles of cash at these companies are so large they can’t even be effectively lowered with executive compensation, which an Equilar study done this month for The New York Times found had risen 23 percent last year from 2009. So “the median pay for top executives at 200 big companies last year was $10.8 million,” but there’s still room at the top for Philippe P. Dauman, chief executive of Viacom, to make $84.5 million last year and for Leslie Moonves, of CBS, to get $56.9 million.
How are chief executives earning all that compensation and businesses making all that cash if there’s so little hiring and proportionately less spending? Well, productivity continues to surge, which is a nice way of saying managers are working the hell out of their employees.
UPI reported just Sunday that, according to a Harris Interactive poll for careerbuilder.com, 77 percent of workers say they are sometimes or always burned out in their jobs and 43 percent say their stress levels on the job have increased during the past six months. Meanwhile, Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, said in a July 22 article in Canada’s The Record that “I’ve never seen labor markets this weak in 35 years of research.”
Now, again, I’m not an economist.
But I still don’t see “Why buying local doesn’t work.” After puzzling through Hartwell’s abstruse anecdotes and looking at how well the big companiese are handling things, I feel like the strongest thesis that can be mustered is something about “Why buying local couldn’t hurt.”