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Friday, November 23, 2012

Debunking the “Shop Small Saturday” Rationale

As long as it’s peaceful, shop wherever you like. That includes buying local, “shopping small,” or buying materials to make your own gifts. But please: don’t feel guilty about holiday shopping at a big box. A lot of people are selling fallacious thinking. Events like “Shop Small Saturday” can be just another form of rent seeking.

Here are a few of the fallacies:

1.  Buying local conserves energy and helps the environment.

Theoretically it could. But it usually doesn’t. For example, if food comes in on a container ship and then gets trucked to a store, economies of scale mean fewer energy resources are consumed than they would be if yokels hauled food around in pickup trucks. Lower transportation costs due to economies of scale mirror the reduced  environmental footprint. (Pierre Desrochers and Hiroko Shimizu have done the heavy lifting to debunk the claims of environmental benefits of buy-localism.) Similarly, if I have an Amazon package delivered to my home in a package-truck with other 250 boxes, there is less environmental impact than if 250 people with a package on the truck decided, instead, to go out shopping local for the same items using their cars.

2.  Buying local keeps more resources local, which improves the economy.

Again, it depends. If you buy boutique goods from a boutique local producer, then it might keep resources local. But isn’t the point of trade to better satisfy wants and needs (not for your neighbor to hoard your resources)? If you’re spending more of your non-discretionary income on items you could more cheaply buy from a big box, you’re foregoing savings on essential items that would be less expensive due, again, to economies of scale (i.e. the reason big boxes are big). In addition, the extra money you pay for the tube socks doesn’t go to other boutique items in your area – goods in what Chris Anderson calls “the long tail.” So while more of your resources may be going to your neighbor who sells expensive tube socks, fewer resources will be going to your neighbor who sells hand-blown glass. Big boxes and boutiques are symbiotes. Buying tube socks local makes us poorer overall.

3. Buying local improves the local economy, especially the poorest among us.

This is what India thought during the 1950s and 60s. It’s called autarky. And it made India very poor for many years. But if it were true, why wouldn’t we restrict our shopping only to our next-door neighbors? As economist Don Boudreaux says:

Defenders of buying local argue that if you buy, say, in Virginia, the money stays in Virginia; if you buy from an American, the money stays in America. So, it's better to buy local. Is that true? No. Why stop at state level, or town level? The same logic would imply that you should only buy from your neighbor. It's an argument for subsistence, self-sufficiency, but those societies all are very poor. Much of our wealth would disappear if we only bought from those we know. 

I dare say: why not only grow your own food instead of shopping at the Grocery store? That’s about as local as you can get.

4. Buying local makes people happier.

It might make someone feel good temporarily, but there are just so many things that make me happy that come from far away places – and I am even happier when I can buy those things more cheaply. Coffee (Columbia), iPhones (California/China), chocolate (Brazil), Irish Whiskey (Ireland), and Skype (Sweden) are a few examples. The more we only buy from those nearby, the more we restrict number the brilliant minds ready to create the things we want and need. In essence, to restrict the number of people we trade with is to restrict the range of available choices.

5. Buying local helps form tighter community bonds and builds “social capital.”

I have met a lot of interesting people at Starbucks. I have met some interesting people at the farmer’s market. I suppose it’s possible that the farmer’s market builds more social capital. But there are all kinds of ways to build social capital. One way is to start a Meet-up group in your area using software your neighbors didn’t create. Another way is to go and talk to your neighbors or host a barbecue. Yes, commerce can bind people closer together. And building community is important. But building peace among the peoples of the world is a lot easier when the bonds of commerce keep us interdependent. I think it was Frederic Bastiat who said, “If goods don’t cross borders, armies will.” In other words, global social capital is just as important as local social capital.

So please: Buy guilt-free whereever you like.

Update: Skype is an Estonian company founded by a Swede and a Dane.

Max Borders is editor of The Freeman and author of Superwealth, which you can import – guilt free – as a digital download or signed print copy this holiday season.

  • Max Borders is author of The Social Singularity. He is also the founder and Executive Director of Social Evolution—a non-profit organization dedicated to liberating humanity through innovation. Max is also co-founder of the Voice & Exit event and former editor at the Foundation for Economic Education (FEE). Max is a futurist, a theorist, a published author and an entrepreneur.