Thursday, October 15, 2009

The war between economists and localists

The Freakonomics blog just concluded it's three part anti-locavore series from guest writer James McWilliams.

Part one

Part two

Part three

Like all of the other anti "buy local" posts on the blog, the comment sections were immediately descending upon by "buy local" true believers.

I don't think enough has been said about "buy local" being just another pseudoscience.

The"buy local" argument contradicts what we learned from Adam Smith and David Ricardo about the creation of wealth through specialization and the division of labor. It's not that these well-intentioned people have an alternate view and wish to challenge these fundamental concepts - they simply don't understand them.

It's like Paul Krugman wrote in Pop Internationalism:

...We learn that the authors on my reading list do not base their disdain for academic economics on a superior or more subtle understanding. Rather, their views are startlingly crude and uniformed... [the view] is dominated by entirely ignorant men, who have managed to convinced themselves and everyone else who matters that they have deep insights, but are in fact unaware of the most basic principles of and facts about the world economy.

Like a lot of pseudosciences, the hyper-protectionist "localism" movement is dominated by die-hard activists who ignore their critics and continue to push woo - and the general public lacks the tools to digest their claims rationally.

I was skeptical when I first encountered the buy local claims a few years ago. It was nakedly a protectionist strategy and seems to break a lot of windows, in the metaphor of Henry Hazlitt. As I've researched it, I've found over and over again that economists are on my side. Always. I've tried my best to find an actual economist willing to support a buy local movement, but every web search just turns up more economists speaking against it.

This is another case of scientists versus creationists; just like biologists have creationists and psychologists have Scientologists, economists have "buy local" activists.


  1. Sorry, I have no inflammatory dissent to make to this one. I completely agree with you.

  2. You need to frame the above comment.

    Seriously, the point that buy local is protectionist is important. Protectionism is the same philosophy behind anti-NAFTA.

    Interestingly, the role of mercantilism in the American Revolution is not well understood by the general public even though the more general point that the UK was holding us back economically is recognized. Buy local, in a sense, is a type of mercantilism.

  3. I completely agree. I have branded buy localism as "hyper protectionism" and it's the mercantalist attitudes that first tipped me off that it's a form of pseudoeconomics. If you look at my very first post on this blog you will find that the ending paragraphs are about mercantilism.

  4. What about the merit behind a local collectivist libertarian movement that buys and sells within' it's own sphere. I agree that searching a broader base for a more specialized and advanced version of what you're looking to purchase may also have it's merits. I also think that perhaps it equally depends on the product that you're buying as well and that maybe there isn't necessarily a universal correct or incorrect way of viewing local vs non-local. Perhaps it's really a person by person, situational and philosophical difference beyond the ability to objectively grant merit to.

    Political agnostic- Emily

  5. Albeit I try to remain politically agnostic I was at one point pretty opposed to Clinton's NAFTA as I saw it outsourcing jobs and such. I personally think we need to strike some sort of balance in terms of global trade and we need to make sure we're keeping jobs in the country.

    Emily or.... a political Taoist maybe?

  6. This isn't on the topic of someone's philosophy of where their goods come from - it's about if restricting to local companies stimulates the local economy. It does not. It's the same "Broken Window" fallacy that "Economics in One Lesson" was based on.

    If someone gets a kick from buying from a local person, that's their business. To me, it's the same as paying $100 more for a black iMac. People can buy what they want for whatever silly reason, but they shouldn't believe that there is some overt virtue to buying from a local group of people.