Buying local in a flat world

This Minnesota 2020 think tank keeps coming up with interesting items. The Duluth News-Tribune has a story about the challenges and possible impact of the “Buy Local” movement. Read it here, or an excerpt below:

Economists say buying local is a complicated ideal
Jane Brissett
Duluth News Tribune – 12/10/2007

Christmas shopping at J. Skylark, a locally owned toy store in Canal Park, is a longtime tradition for Paige Salyards of Duluth.

“I try to always shop locally,” she explained. “I just see the value of supporting our
local economy.”

Donna and Lauren Sletten, also of Duluth, do likewise. “We just love those one-of-a-kind gifts,” she said.

Consumers locally and throughout the nation are becoming more aware of the “buy local” movement, believing it will boost individual businesses, the local economy and the quality of life where they live. A recent report by a new state think tank, Minnesota 2020, highlighted the value of buying local this holiday season.

Local buying advocates point out that mail order and Internet sales send money
elsewhere and that even big box stores and chains divert most of their money to corporations, although they do pay local salaries and rent or property taxes that put money into the economy.

But whether spending locally really makes a big difference is an open question, two local economists said recently. While no one is saying shoppers shouldn’t favor their favorite local merchants, the economic issue really hasn’t been well studied.

Buying service

Part of the reason it’s difficult to tell whether buying local benefits the local economy, said Jim Skurla, acting director of the University of Minnesota Duluth’s Bureau of Business and Economic Research, is “it’s so difficult to tell what’s local and what’s not.”

Even if an item is sold by local merchants, it’s probably made elsewhere, he pointed out. Sometimes — but not always — local prices are higher than large retailers.

What you’re buying locally really is service, Skurla said. “That’s what the local people are adding to it, is the knowledge and the time,” he said.

There’s also the question of what is local. Big box retailers Target and Best Buy, for example, are Minnesota-based corporations. They pay taxes in the state, contribute to community causes and employ people at their headquarters who wouldn’t be in Minnesota if the companies were based elsewhere.

And, taking the argument to the extreme, what would happen to the shipping ompanies if everyone bought local, asked Tony Barrett, economics professor at the College of St. Scholastica. If northern Minnesotans stopped shopping in Minneapolis,
workers might be laid off and then they’d be unable to afford to come to Duluth
as tourists, he added.

The world of commerce is too interconnected for the buy local argument to be simple, he said.

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