'Buy Local' Is Really Bad Economics

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Coca-Cola's "Share a Coke" campaign is the latest effort by multinational companies to de-emphasize their global reach. By replacing the logo on its cans with colloquialisms and common names in markets it serves, one of the world's most recognizable brands is hoping to look and feel a bit more "local."

Coke's marketing strategy is just one example of companies responding to growing public sentiment that buying local is synonymous with doing good. Indeed, more than 150 groups representing more than 30,000 U.S. businesses are promoting ‘buy local' campaigns with slogans like "Don't Buy from Strangers, Buy from Neighbors."

Of course, suspicion of foreign goods is nothing new. Phrases like "Made in China" have long been associated with poor quality. But when did shunning foreign made products become a matter of conscience?

The truth is, the growth of international trade over the past 30 years has sparked a revolution in living standards for hundreds of millions of people around the world. Stigmatizing global trade threatens to undo hard won gains.

History and research show that as trade increases, poverty decreases, and China is a prime example. Since 1978, when the country opened to foreign investment, China has grown to become the world's largest trader - measured by total imports and exports. The results have been striking.

In 2012 alone, average factory wages in China rose 14 percent. In manufacturing, specifically, worker wages have increased 71 percent since 2008. Over the last thirty years, Chinese families living in extreme poverty dropped from 84 percent to under 10 percent. To put that in perspective, 680 million Chinese people-over twice the entire population of the United States-are no longer living on the edge of catastrophe and dying from preventable problems like diarrhea and malnutrition.

China is just one example. A study by Yale University and the Brookings Institution finds that in just 30 years - 1981 to 2011 - the world's population living below the extreme poverty line plummeted from 52 percent to 15 percent. The study credits the rise of globalization and capitalism as primary drivers of the decline in poverty, noting that countries that have displayed the greatest success have been most engaged with the global economy.

The stress many Americans feel about buying products made abroad is rooted in bad economics, and we're not the first generation to make this mistake. Prior to the late 18th century, most Western economies believed that one country's economic gains had to be another's loss. Trade wasn't viewed as mutually beneficial to the seller and buyer-countries thought they gained economic power by encouraging exports and discouraging imports.

Today, champions of the buy local movement often follow the same faulty economic reasoning: nobody wins unless somebody loses and "I'd rather have the person who looks like me, lives by me, and talks like me win, so I'm going to buy from him."

What's sad about this thinking isn't just that it draws arbitrary moral distinctions between humans based on physical traits and location, but it undermines the openness to trade and commercial interaction that has made so many people better off.

Complaints that overseas workers are stealing jobs are short-sighted and unfair - why is someone less deserving of work simply because he's willing to do it for $2 an hour instead of $20? Why does it matter if his name is Jin instead of Jim? Is the humanity of a worker in Beijing of less worth than the humanity of a worker in Cleveland?

To be sure, there is nothing wrong with "buying local." Indeed, there is something beautiful about watching a local craftsman labor over furniture or a farmer harvesting crops. But there is simply no reason to stress when the furniture in your home or the food on your plate has to travel across national borders to reach you.

In fact, if we think about the conditions of the foreign stranger who has made that furniture or grown that food, and what it means to him to have the chance to do business with us, we ought to find plenty of reasons to celebrate.

Trade opens up opportunities to pursue a fulfilling, honest living and raises people out of poverty. And that should give all of us a little peace of mind.


Brian Brenberg is the program chair of Business and Finance and an assistant professor of Business and Economics at The King's College in New York City.  Chris Horst (@chrishorst) is the vice president of development at HOPE International and co-author of Mission Drift and Entrepreneurship for Human Flourishing.  

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