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March 26, 2007

Buy Local, or Buy Cheap?

Marc Comtois

This snippet from the ProJo's Robert Whitcomb got me thinking:

This past Sunday’s Boston Herald detailed, in a story by Phil Restuccia, a growing movement of consumers and local businesspeople called Local First. This national group has organized 17,000 businesses around the country into 50 groups promoting their services directly to local shoppers, appealing to geographic loyalty and a sense of community. It’s kind of the “Small Is Beautiful” movement redux, or a cousin of the New Urbanism.

Founded by Massachusetts health-club owner Laury Hammel, the movement wants to strengthen community ties by keeping locally owned businesses in, well, business and in so doing to strengthen frayed community ties in anomie-ridden America.

The movement has gained considerable traction, but given Americans’ obsession with the low prices offered by national store chains whose stuff is made by cheap labor abroad, and the comfort factor for many consumers of national brands, you have to wonder how far this movement can go — as attractive as it is to affluent and urbane people in the Northeast. {Links added by me--MAC}

As the sole breadwinner of a family of four, I certainly have some "free-market" proclivities (ie; cheap=good!). Nonetheless, I also have always felt a certain--responsibility?--to frequent local, mom-and-pop or small businesses when I can.

But I wonder what a conservative economic theory would hold as being more, well, conservative. I think it safe to say that, generally speaking, if the quality of the product is the same, that a larger business--like the big box retailers--can offer the same product at a cheaper price. But is it--should it be--all about price?

In the short term, it's hard to argue against paying the cheaper price. But what about long term consequences? Should we promote buying local, even if it's more expensive, because it helps out our own micro (Rhode Island) and micro-micro (town or city) economy? I would think that buying local will help local business (wow, how insightful, huh?), the local economy and, yes, even local tax revenues. I suppose this is a micro-economic version of the argument for "Buying American."

I realize this is theoretical and that most people will go for the lowest price, but what do other conservatives think? In other words, quality of product being equal, does it make fiscally conservative sense to prioritize buying local?

Comments

I consider myself a conservative and quite frugal, but I do try to patronize locally owned and operated businesses as much as I can.

I am not anti-Walmart. We do a lot of shopping there for our family, especially for paper products, detergent, and a lot of non-food grocery items. But if you shop around you can get good values from the locals, too.

It is also a myth that you get the best prices at the bigger stores. We recently bought a new refrigerator. We looked at Lowe's and Sears and then shopped at a small local appliance store (one of the last ones around). The local store had more variety, had lower prices, and was much more reliable in its stated time of delivery.

We do shop at the big supermarkets, but we buy many items at a local convenience store that has good prices in its deli and beats the large chains on milk, bread, and similar items.

I try to patronize a locally-owned coffee shop in the morning rather than the mega-chains that are around. The coffee is just as good and is either the same price or a little less.

Posted by: brassband at March 26, 2007 8:28 PM

From a purely economic standpoint, paying a premium for local business makes a certain amount of sense. For instance, with RI's corporate income tax at 9%, you can pay a 9.89% premium for a local good, and all of the extra money would, theoretically, find its way to the state.

Ultimately, you would have to define what kind of utility you are seeking in order to see how much of a premium you should pay. If you disapproved of the way RI spends its tax revenue, you might not be better off by giving it more. On the other hand, you might want to pay a higher premium to Benny's simply because you like seeing their sign on your way to work.

In short, as long as there are no nanny state laws and trade barriers forcing you to make certain economic choices, there's nothing wrong with taking into account different types of utility when making purchases.

Posted by: Mario at March 26, 2007 11:04 PM