Why buy local is a silly idea in practice.

So recently a friend of mine posted on Facebook a call to buy locally; that is not buy from chain stores, but at local, non-franchise, stores. The logic here is that money from local stores goes back into the community while with the larger Wal-Mart/Target/Best Buys etc. the money will go somewhere other than the community you live in, and thus to buy locally will help out your community while buying from the larger guys will hurt your community in the end. It’s not a terrible line of thinking, and it is seeing more steps into the future than most lines of reasoning, it’s just that in the grand scheme of thinking it is not the best line of thinking.
The problem with this thinking is that it assumes only the existence of a local economy that is separate from the national economy (which is at this point the same fallacy that believes that the economy in the rest of the world doesn’t affect us.)
Now what is the most obvious advantage to buying at those big chain stores as opposed to your local store? Price. The simple economies of scale allow for Wal-Mart, Home Depot and all the rest to sell at much lower prices than your local store. So you could spend $120 at your local store or $100 at your local Wal-Mart. You save $20. Now that’s $20 you’re either going to save, which puts you in a better position financially (if only marginally) or $20 you’re going to spend on something else you wanted. Now, no matter what you do with that extra cash you’re in better place. If you save it you’re more financially secure, if you spend it, it’s another amount of money going into circulation.
However it’s not just that more money is in the system. Money comes out of the system too. If you shop at Wal-Mart, Wal-Mart makes money. But they also have to pay a worker to be a cashier, stock the floor, manage the entire building. All those people get paid. Paid in money that, since they live in the community that the Wal-Mart exists in, goes back into the economy of the system. The problem with the original call to buy locally is that it assumes that once money leaves the community it doesn’t come back. This is highly incorrect.
The second problem with this line of thinking is that there aren’t secondary benefits to these big stores. This is incorrect. Ask yourself, why can’t unions get a hold in Wal-Mart? Because while they’re not offering golden parachutes to every low level employee, again, the economies of scale allow them to offer some pretty decent benefits. Benefits that a local store may not be able to offer. Benefits, like better medical insurance, which means more money to local doctors, dentists, and optimists. Better benefits like opportunities for promotion that simply are not available in a purely local store. If you’re a great worker at Wal-Mart you could get promoted to manager, district manager or even higher. If you’re working at some family business as a minimum wage employee, odds are no matter how good you are you will not reap the rewards nepotism will give out.

Oh but there is the advantage to employees to consider. Do employees do better when you buy only from local stores? No. Local stores are often family businesses, running shortened hours, hiring maybe at most a half dozen employees (yes there are exceptions, lots of them). There is less opportunity for flexibility of schedules, which means these are terrible jobs for students and people who have children or who need a second job to earn that little bit of extra money to start their own business venture or get out of debt so they can start living for themselves and not their creditors.
Also huge companies have more opportunities for training and advancement. More manager positions. More chances to grow. Yes lots of people will just do the bare minimum in their jobs, but that’s their choice. The opportunity for advancement is much greater in these companies than in smaller local shops which is certainly better for the employee. And if the employees are in a better position then that is work experience and education that they can use to get into better jobs, jobs which may have a great effect on the economy and help grow said economy.
But there’s another benefit. Yes stores that don’t adapt get put out of business by Wal-Mart. But that’s the way capitalism works, much like evolution. Adapt or die. With Wal-Mart, Target, Kmart (at least I’ve been told they’re still around), and Costco offering the low prices on generic crap that we all need, it allows stores that have the sanity to adapt to offer more specialty items. Think about this, most local stores offer the kind of items that you can’t get at those big chain stores…i.e. those big chains help to produce a wider variety of items for you.
Furthermore a hatred of big stores is silly for another reason. In the modern world of capitalism (I’m assuming here that Obama will be kicked out of office before he has a chance to drag our economy down to the point where the U.S. looks like a Mad Max movie) there is no such thing as a local monopoly. Even if Wal-Mart were able to drive everyone one of its competitors out of a town, which by the way is impossible, there are still numerous internet options to buy from that will all but guarantee that those Wal-Mart prices remain very competitive.

This is a myopic view that suggests the greater lack of vision in a global economy. If more people are doing better it means they are in a better position. If we export a thousand jobs to some other country, we may have temporarily lost jobs here, but very soon those thousand new workers in that other country are going to have a lot more money to buy things (and that’s completely ignoring that the people who built the factory now have more money to buy things) and odds are some of the things they’ll buy are from the US from companies managed by the US. Now the only people who won’t benefit are those who don’t adapt and constantly learn and acquire new skills to make sure they are never out of a job. Notice that part of the problem right now is that it’s just not that the US economy is down, it’s that the world economy has slowed. There is no true local economy anymore there are only pieces of a large economy. It’s like saying that this cell or that cell in your body isn’t doing well. Either the body as a whole is healthy or it’s not, the individual cell isn’t what you need to worry about.
And if a local economy does hurt…guess what you can move, probably to a place that has a better economy (like most people seem to be moving to states with lower tax burdens as the latest census has shown us).
Now I’m not saying to avoid buying things locally. But there is no point in shopping somewhere else if those big chain stores will save you time and money. Buy locally or buy from a big store, it really doesn’t matter, it all helps the economy. So the only real question is… are you going to pay for more just to support a lie if it helps your local economy more?

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2 Comments

Filed under Capitalism, Economics, Long Term Thinking, People Are Stupid

2 responses to “Why buy local is a silly idea in practice.

  1. The only reason I shop at the farmer's market is because the prices on many things are not much different, there is a different culture to it which I enjoy, and I don't have a car…the market is the closest place. If walmart was closer I would definitely shop there. Local vs. national matters not a bit to me.

  2. If people are "buying local" for the reasons that you describe, then I somewhat agree with you… although having more businesses that export profits to New York – or Europe – does mean that money is taken away from the locals, regardless of how many employees are hired. However, I consider the term "buying locally" to mean buying products that are produced locally. WalMart, since you use that example, is full of cheap worthless trinkets from China. I'd rather spend more money on one thing that I actually need that's made well and didn't have to be shipped overseas, that the less money on a similar item… plus eight dollar-bin pieces of junk, just because they're there. It's paired with a mentality of decreased consumerism; and recognizing the hidden costs of things (carbon emissions of shipping, human rights for workers in foreign countries). That's what's important to me when I buy local.

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