View Full Version : The threat of Buy Local

4th Feb 2009, 06:34
Recently BHO (PBUH) got flack form the the EU and Canada for trying to put a Buy American clause in the economic recovery bill.

Is this really such a bad thing?

I am a big proponent of buying local (typically to me, this means < 50 miles from where I live, if possible).

Sure, I like foreign 'specialty products', though too me there is nothing like buying food or other products made locally, and lots of strong local economies build up towards a strong national and global economy (imnsho)....

What are the informed opinions of my fellow prooners?

Where do we need to draw the line between supporting local (or national) economies, vs. fostering global trade?

P.S. Personally, I would like to have my cake, and eat it. (i.e. both local and global trade)
P.P.S. Not sure where I draw the line between local vs. national

green granite
4th Feb 2009, 06:40
A bit like British jobs for British workers.

In times like this look after number one, if number one can't supply it then buy it from the nearest country that can.

4th Feb 2009, 06:49
I think the trade between our two countires is a valuable thing for both of us. (US-Can). It's win-win.

Now where is that button to turn off the oil and gas? I know I had it around here somewhere.

4th Feb 2009, 07:35
"Is this really such a bad thing?"

For my money it is not. Globalisation has produced some obscenely wealthy people, and left in its wake many who have no chance of a reasonable lifestyle. Is this what it is all about??, some who have so much wealth they can never spend it, and some who always have to worry where the next meal is coming from? Surely the law makers, politicians, for want of a better word, their first responsibility is looking after their own constituents?
I was not a fan of BHO but it would appear he may be making a stand against the greedy fat cats of the world, and in this endeavour I hope he prospers.

4th Feb 2009, 09:12
Nonsense. World trade makes everybody better off. The slump in the 30s was so bad because each country closed its borders off for trade and tried to not import. Everybody suffered. Opening world trade will produce more wealth for everybody. Closing borders hurts. For example, if the US does this sort of thing, Europe will only buy Airbus, Boeing will find life even tighter. The customer will not have a choice, prices of aircraft will go up. Who benefits? Not the public! It works both ways. By buying all goods everywhere, you foster trade, so Kenyan farmers can sell me vegetables and coffee benefiting their families, I can buy the best French or Chilean or Aus/NZ wine and Jap TVs and German or Jap cars- the best the market has to offer. I can buy the best the world has to offer instead of some local overpriced alternative that is not nearly as good, or having to buy some rubbish Brit car, or wait for it.....British wine only at twice the price, making me poorer and giving me less VFM! This works right through the economy with everything you can think of. If you want best VFM, then free trade is the only way, and because you are getting VFM, you buy more and benefit everybody. So what you produce yourself sells better, making you wealthier and buying more from everybody else. Everybody benefits. That's what free trade is all about.

Obama is already showing that behind his wonderful rhetoric and truly amazing speech writers and his speech delivery, there exists someone with not altogether an awful lot of experience, idea or original thought. His honeymoon won't last. He's already making mistakes a far more experienced politician would have learned to avoid.

Prospector, are you seriously saying against the scale of worldwide trade, a few overpaid 'fatcats' are enough to justify killing off world free trade? Bizarre. Rather cranky socialist in the extreme methinks! Or are you what is laughingly called 'green'? You want 3rd world farmers to starve?

4th Feb 2009, 09:27
Nonsense. World trade makes everybody better off

You really do talk out of your hat Rainboe. In your black & white world, we should all buy securitised American mortgages then? Oops, we tried that didn't we, didn't go so well as I recall. There are also many coffee farmers to whom you refer who would dispute your assetion that they are better off as a result of world trade. Do some reading.

If you're going to be a professional naysayer to any opinion other than your own, at least try to inject some balance. How you managed to shoehorn potus in to this is also beyond me. The truth of the question lies as ever inbetween - support your local sheriff and drive a Merc.

4th Feb 2009, 17:24
Rainboe, if you will humor me, as this is a "philosophical" topic, there are two statements you made I would like to explore/challenge, in a "local" context.

In the car example, if a "local" company, either as subsidiary or license, manufactured your favourite German/Japanese car, I would consider that in the buy local scenario. This is win/win for both scenarios, and in fact, for many places is the scenario today, fostering local employment AND global trade.

With regards to commodities, why should there be a "singular" price world wide? I see two scenarios that come into play:

Capital Markets scenario:
The science of supply and demand economics, I would hope you would agree, is poluted up with the supply/demand of financial commodity traders affecting both the price, and availability of said commodity amongst the producer/consumer traders.

Typically, only a fraction of the commodities are traded on the capital markets, which set the price for all transactions. Thus, if there is a run on the available supply on the capital markets, it can end up impacting prices, even though production and consumption remained constant; needless to say, it invariably ends up affecting production and consumption decisions.

Disparite local pricing scenario:
Global trade works effectively when there is equal net flow of imports vs. exports. This is managed somewhat at an international level, through the likes of Free Trade Agreements, and the WTO; The challenge however is that these are based on National economics rather than local/regional economics, and tend to work in favour of larger corporations, rather than the smaller producers.

Thinking through this, my thoughts are now that this is not perhaps a buy local vs. global discussion, rather "More smaller businesses vs. fewer larger corporations".

I think that perhaps the market, would be more affective, less volitile, and more in touch with the realities of local markets and economies, and particularly employment, if coordinated at a community level than a state level.

If you can agree with the above statement, there are reasons why it would make economic sense, to pay more for a local product than buy it cheaper from a global vendor, as that helps foster local consumption and spending, which in turn feeds back into the economic strength of the local community, and its positive impact on you.

This is not feasible for all products or commodities, and then that is where global trade comes in.

A big topic, and trying to come up with, and sum up my world economic philosphy in a condensed post and time frame, is quite a challenge ;)

4th Feb 2009, 17:32
Now where is that button to turn off the oil and gas? I know I had it around here somewhere.

How'd that work out for Iran, err, Iraq? :E

4th Feb 2009, 20:11
The threat of a 'buy local' policy from the world's largest consumer, particularly at the cusp of a global recession, is in the medium rather than short term.

Short term, every politician will feel an almost gravitational pull to say what the majority want to hear pretty much because in a democracy the voting majority are only thinking in the short term.

Short term soundbite guarantees of 'local jobs' is what the people want to hear in the current climate so the politicos trot out the soundbites to suit. This would be hunky-dory in a world where the population of every nation-state would be both self-sufficient AND satisfied with purely domestic manufacture of their daily dose of contentment in terms of all the product they consume.

As sure as night follows day, a protectionist stance in the US would result in the same from every other trading bloc in the world. Within a year or two eg the cars that Chrysler manufacture for domestic US consumption would become either more expensive or more crap (because some preferred component from Bosch or Mitsubishi are now subject to tariff). So either the price goes up and domestic demand goes down or the product quality goes down or jobs get axed to cover the new cost/margin/equilibrium.

Extending the analogy globally and over medium, rather than short term, prices go up and products degrade, so the standard of living is going down, and jobs are being lost and everything is becoming gradually more expensive, and this when the world economy is genuinely struggling.

That to me is the 'threat'. It doesn't become apparent in the short term but unfortunately that is the timeframe our politicians inhabit.

4th Feb 2009, 20:22
Hey try telling the folks in the Republic of Ireland to buy local! Thousands cross the 'imaginary' border between the ROI and Northern Ireland every day to do basic hand to mouth grocery shopping, why? because they are being ripped off in their own country. Lower prices, lower tax (such as VAT) and the weak pound £GBP mean that savings of as much as 40% can be had 'north of the border' and the result in the ROI? well guess what retailers are folding by the day and the muppet (Mmm maybe that's unfair on muppets) Irish Government have no answers.

Roll on the economic recovery.:)

4th Feb 2009, 20:44
That's another angle to this.

At the moment the exchange rate from the West to China is arguably artificially low which results in an equally excessive demand for Chinese manufacture of product which in turn leads to their massive trade surplus in cash terms which is in turn invested back predominately in stuff like US Treasury Bond/UK Gilts/German Bunts which are in turn providing Western Governments the cash-flow breathing space to massage the true medium/long-term costs to their taxpaying clientèle with the short term soundbite of a 'necessary' bailout package to those institutions.

Western Governments are not actually bailing out they're own, they're largely bailing out their coupon obligations to China. They're own voters will simply pick up the bill over the next couple of decades - conveniently long after they as politicians leave office.

4th Feb 2009, 21:25
Somehow I don't think that the US is going to restrict its oil purchases to the local product. As well, a considerable part of the recession we have up here was made there.

After an excellent landing you can use the airplane again!

4th Feb 2009, 23:09
Birddog, there is absolutely no excuse for 'may more for buy local' or 'avoid large corporations'! Buying local your car/goods and paying more means you purchase less goods overall. What we need to get the economies going again is more consumption, and buying more goods. Featherbedding local suppliers gets us less for our money and purchasing fewer but more expensive goods- not what we need at the moment. But local is a luxury for wealthier times, not slumps.

If large orporations lower the price for me, well bring 'em on! I get more for my money, more people get work producing stuff for me, as I get work producing for them because they purchase more giving me work because we are all interrelated and reliant on each other. Break that cycle and we all lose out. Trade imbalances don't matter as long as markets are not protected- they will find their own level eventually. As for theoretical sanctions against these supposed commodity traders/big industrialists.....it sounds terribly hammy 'green' nonsense. They are working to increase efficiency and prices. Sometimes it goes wrong- oil is an example, but largely the capitalist system still works better than any other nonsensical system. What else is there? Communism? That worked, didn't it- look what the Soviet Union fell to!

5th Feb 2009, 00:01
Somehow I don't think that the US is going to restrict its oil purchases to the local product.

We can in Oklahoma. ;)

Come to think about it, shoot, we got our own natural gas, oil, coal, cows, pigs, farms, Army, Air Force, but, no Navy, may have to work on that. Heck, we even got some trees if you look hard enough. :p

5th Feb 2009, 00:15
We can in Oklahoma. ;)

Is that like saying "Yes, we can!"

5th Feb 2009, 00:18
Is that like saying "Yes, we can!"

Yup, just look above, I just edited me post. :)

5th Feb 2009, 01:27
We have a chef here (in Steveston) who works to the "ten mile" rule for procurement of food. Not 100% workable so he has some wildcards for produce that can't be sourced that close. It does make for tasty, fresh meals.
I try to stick to the 100 mile rule but would go 5,000 miles for some decent bacon.

But that's not what we're talking about.

5th Feb 2009, 01:43
Actually RT, that is exactly what I was talking about, though the reasons for buying local were not just for freshness, it was to support the local economy.

i.e. if you had a diner, and bought local, you would be putting money back into your local economy, thus creating more sustainable clientele.

That's loosely speaking the theory, however, I think the science is a bit like perpetual motion... ;)