My View: 'Buy local' is a bad buy

 

My View: 'Buy local' is a bad buy

 

Date: May 7, 2009
by: Rod Thomson | Gulf Coast Business Review

 
 

In weak economic times — shoot, sometimes even in strong ones — the impulse to push “buy local” programs overwhelms all common sense, particularly in government, where common sense is already at a premium. The blinding to where this road leads seems complete.

After all, it sounds so good. We need to make sure “our” builders and suppliers and manufacturers get the contracts and our retailers get our purchase decisions, etc. We need to band together to make it through.

Who could possibly be against “our” guys?

I’m sure not. I think we should create a business-friendly atmosphere of low taxes, reduced regulations and limited government intrusion. That would benefit all of our guys.

But “buy local” is a bad idea. In the great slippery slope of local economic policy, this leads eventually to an all-out protectionism war in which everybody loses, with the possible exception of the pandering political class.

When local governments pursue the “buy local,” inevitably they are going to get lesser products at some point for a higher cost. This is not an offense against local suppliers, but an obvious reality. Why tilt the scales for local businesses if they were already the lowest quality bidder?

For instance, Sarasota County gives local bidders extra points on construction contracts over their non-local competitors. They also allow any local company whose bid is within 10% of the lowest bid to match that low bid and win the contract.

That last part would really tick me off if I were an out-of-area bidder who had worked, spent money and squeezed every last savings to win the low bid, just to see it given to a guy who was higher because he was local. Inevitably, the county will start seeing fewer non-local bidders, which will slowly drive up prices.

Sarasota County commissioners were upset last month when — despite their rigging of the bidding — out of about $6 million in contracts, they awarded $1.8 million to companies outside the area. So they are looking to change their formula even more toward local firms — at the cost of quality and price. And note the verbiage that accompanies these discussions, about “them” in reference to out-of-town companies.

Quite unhealthy.

I feel compelled to say again that this does not mean local firms are not good quality, just that we probably don’t have the best quality at the best price in every category. That is a Lake Wobegone kind of unreality.

The truth is reflected in tilting the bidding field further and further to help locals.

And that means taxpayers lose.

Even when it is just citizens doing it on our own accord, there are bizarre outcomes.

Taken to logical conclusions, if you are a Sarasota County resident, you would try to choose a store on the south side of University Parkway, which is in Sarasota County, rather than the north side of University, which is in Manatee County.

But there is another side to this two-edged sword, and it is dangerously sharp.

Here’s a hypothetical, taking local builder W.G. Mills, which has been successful getting school-construction contracts around the state. It wins a contract to build a local school, and our politicians trumpet the local preference provisions that helped keep those Sarasota jobs here. They pat themselves on the back.

But then everyone else has the same crummy idea, and W.G. Mills, which in an open and free market wins contracts elsewhere to build schools, is frozen out of those markets because it is not the local guy in West
Palm Beach or Orlando.

Suddenly “buy local” isn’t looking so great. In fact, it has done harm to our local guys.

Now let’s take it up a step.

In the worsening global economy, more countries are enacting trade barriers to protect “their guys,” even though this always results in higher prices and scarcities for their citizens. Trade wars are lose-lose, except for a few favored industries and, of course, politicians.

We see newspaper pictures of protesters in England, Russia, Greece, India, Bulgaria and so forth, carrying signs that read, for instance: “Enough is enough. British jobs for British workers.”

The problem with preferring “our guys” is that everyone else has their own guys, and when everyone traverses this path — from Sarasota to Georgia to Great Britain — we all end up in our own little isolated ponds and far more damage is done than help is gained.

Rod Thomson is executive editor of the Gulf Coast Business Review and can be reached at rthomson@review.net.

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