The economic field calls “Buy Local” or “Buy American” policies protectionism. Politicians have taken on the mantle of protecting domestic businesses by discouraging foreign trade through taxes and tariffs. They try to encourage citizens to keep their business local with rally cries of patriotism.
Don’t buy into it. They’re killing our economy.
I’ll admit, it sounds logical. If you buy American products, the money stays in America, and thus the nation keeps the wealth. If local businesses grow because of our support, the economy grows with them, and all are benefitted from it. I used to think this way.
But the logic doesn’t hold up to proven results. When your logic doesn’t match your results, check your premises.
If buying local is in fact sound economics, then the more local you keep your business, the better. Helping local businesses helps the local economy, which helps your local business. Driving this concept even more local, helping your neighborhood businesses helps your business. Well shoot, let’s go all the way with the concept and just do everything ourselves. We’ll farm the food, collect the resources, and build all our products ourselves. We’ll be our own doctors and teach our own kids. We’ll keep all our business within the fence of our own property, thus promoting our own business.
All right, I know that sounds stupid, but that’s the theory that is being promoted. Buying local for the sake of buying local promotes the less efficient businesses at the expense of the more productive businesses. What if I, living in Utah, could only buy Utah products. That means no oranges from Florida, no steaks from Nebraska, no grapes from California. Where would I get my clothing from?? Utah doesn’t have the climate to grow oranges or cotton. So I’d have to do without? Or at least they would be really expensive and low quality.
Economics teach us that market specialization allows for far more productive output than localized comprehensive production. In other words, places that have the natural and human resources to focus on one certain product can typically produce a product at a much better value than someone else can. Americans produce good products that go out to the rest of the world. The rest of the world produces products that we buy for a great value. We each produce products at the best value and trade them for each other’s products.
If Americans want to protect their economy, they should remove foreign trade barriers. Foreign trade barriers prevent us from getting things at the best value. If we’re worried that the rest of the world is better at producing things than we are, then we’re not the America that brought the world out of the economic dark ages. America has always produced the most final product, but we collect the resources for those products from other nations. It’s okay to depend on other countries, just like we depend on the Midwest for our food, and states like Texas and California for our cotton. Kansas doesn’t have a very large tuna production, yet many Topekans enjoy a tuna fish sandwich every now and then just the same. Free trade, without government tariffs or subsidies, ensures we get a fair trade from the most efficient companies. This is good business, and effective economics.
Protectionism forces us to pay more for less. As a result, our own costs, both in personal life and business, grow, and we are less able to be productive and efficient. And that hurts our economy. Yes, American producers will go out of business, but that is what was called by Adam Smith (the father of capitalism) “creative destruction”, allowing those human resources to be moved to more productive industries.
Buy American, so long as American is the best value. Otherwise, buy Chinese, Mexican, or whatever it may be.
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3 comments:
That sounds good to me. I guess people in other countries could really use the work too.
Love ya buddy!
Time out, time out. PARTS of this I can agree with. Like I said in my email before, with large products and what not, yes... you have to buy the best value. If America wants us to buy their cars, then make better cars. Okay. Straight. BUT, when you have the option of two equal quality, equal value products, I say buy local. Or even if the local one is slightly more expensive, I prefer to buy local vs the national big corporate chain store who forces lower quality by only offering low prices to producers who are forced to go with it because they are the biggest store in the nation and then they take their businesses overseas so they can hire cheap labor, etc. I won't name any names. How exactly does THAT fit in to all this 'best quality' for the value economics lingo schmingo? Things like THAT make me say, 'buy local' (when it makes sense to do so).
The principle is the same for all products, big and small. If your local product is more expensive even without the shipping costs that non-local producers have to pay, it's because they are not nearly as good at it. If the products are equal in your mind, then it doesn't matter which you buy. But remember to get the best value, not just the lowest price.
Your argument for losing quality doesn't hold. Yes, it makes it tough for suppliers struggling to compete to make it. It drastically reduces their profit margin. But then again, if the big corporations squeeze their producers out of business, then they're our of business too, right?
And I don't want to hear any sweat shop liberal arguments. I lived in Honduras. Yes those factory workers get paid pittance compared to the U.S., but in Honduras the factory jobs are highly sought after. Those were good paying middle class jobs in Honduras where the cost of living is tiny.
Can you imagine if our clothes were made by $15/hr workers? We would be paying $100 for our shirts and $200 for jeans. Big corporate companies are always being demonized, but they are the companies that have made our high standard of living standard. Otherwise the products we take for granted would all of a sudden be luxuries few of us would be able to afford.
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