In “Is ‘Buy American’ Un-American?” we wrote this paragraph:

Imagine if in Virginia we tried to only buy local. The commonwealth has a lot of high-quality local goods. We’re known for our wine, apples and peanuts. Our coast has crabs and oysters. Farmers’ markets deliver high-quality, affordable organic produce. Consumers need no “buy local” campaign to convince them these items are a good deal. The real question that arises is whether we should “buy local” when local isn’t the best option. For example, should we buy locally grown bananas?

We tried to make it clear that we are not against locally produced products nor against taking pride in the trades where local craftsmen produce quality work.

We buy local food because we get exceptional taste and freshness. That is a great reason to buy the local food. And we are fortunate that in Virginia many wonderful foods are grown in our local community where they do not have to be processed, packaged and shipped to reach our markets. We agree that the quality of food is often enhanced by ensuring its freshness.

But what is true of food is not true of many other products such as movies, video games, books, games, batteries, or computers.

Additionally, confining your purchases to vendors within a geographic region does not strengthen the local economy. In fact it impoverishes your economy whenever you get less value or pay more money. The lost opportunity costs of what you could have done with that extra value or smaller expense is exactly how much you have impoverished the local economy.

Again, we are assuming that you buy local whenever local is the best deal. And if local products are the best deal, we expect others outside of our community would be interested in purchasing them as well. We are critiquing the wrong headed idea that we should buy local even when local is inefficient – either poorer quality or higher priced.

Imagine the economy of local options where local options are 10% less efficient. So imagine that every local purchase costs 10% more than the price you could get elsewhere in the country for the same value. Local purchases would act just like purchasing from companies elsewhere except you would have to pay 10% more. But because local companies are less efficient, they would not receive anything more in profit. It would be as though that extra 10% was just burned by the recipient.

Rather than strengthening the local economy, this inefficiency would only impoverish it.