Think Globally, shop locally.

That’s a phrase that is garnering significant support here in Baton Rouge, though Louisianans, typically, are very good when it comes to supporting local business.

Supporting local business just makes sense, doesn’t it?

But the buy local campaign is far from a universally accepted “good thing.” In fact, there is a very sharp schism between those who believe shopping locally is a good thing, and those who don’t.

When Donald Boudreaux, professor of economics at George Mason University (and prolific contributing writer for a number of newspapers, magazines, and scholarly journals), was asked if there was “any truth” to the claims made by proponents of the buy local campaign, he responded succinctly:

“No. Not at all.”

Huh?

“They reduce to the argument that the left arm should not exchange with the right arm,” he explained. “In fact, much of our wealth, today, would disappear if we gave up exchanging globally. Our wealth is so deep and so fast, many of these people just take it for granted.”

Boudreaux went on to say that without inter-anything trade – interstate, intercontinental... intergalactic – we wouldn’t be able to enjoy much beyond trying to gather up enough food to feed the family. Somehow, it would destroy society as we know it.

Boudreaux made a hyperbolic argument, sure. But if buying locally is so bad, why does it make so much sense?

Meet the Localvores

“Localvore” (or “Locavore,” as it is sometimes spelled) is a term that originated in the early 2000s to describe a diet that emphasizes locally grown produce, grain, and meat. Since then, the word has by default come to describe a movement of people dedicated to bolstering community and sustainability by supporting local farmers, grocers, retail establishments, and service providers.

Localvores in Baton Rouge

Brandell Lomas is a realtor here in Baton Rouge, and she is very familiar with trials of owning a business – she and her husband, Ken, have been business owners for years. Consequently, she has become an ardent supporter of local business.

“My husband and I have always been very passionate about the concept of supporting local businesses,” Lomas said. “We’ve seen a trend in this country, a lot of chains and big box-type businesses come into communities, and typically the small, locally-businesses are really hurt by that, because they can’t compete.”

Lomas and her husband started the Buy Local Card here in Baton Rouge about a year and a half ago.

“We wanted to do a marketing program that would be exclusively for local businesses,” she said. “We feel the power of this is getting lots and lots of businesses to bring attention to buying local – in other words when we have three or four hundred businesses participating, people will really pay attention to it.”

So far, Lomas said, over 130 locally owned companies are participating in the program.

“We do not accept into our program businesses that are chains or big-box type businesses. They can be small chains, if they are locally-owned,” Lomas said. “Fifty percent of the ownership has to live in the greater Baton Rouge area.”

The Buy Local Card, which can be purchased either online or at any of the participating stores, offers customers a deal for patronizing a local shop.

“All the businesses are giving some sort of reward or discount, but it’s up to the business what they want to do,” Lomas said. “So the local businesses are saying, ‘We are willing to give you an award for coming in and doing business with us.’”

Lomas said she’s not against big business, per se, but rather that local businesses provide more value to the community beyond the products they offer.

“There is a benefit to a community, anytime a business comes in,” she said. “We’re not on an anti-Walmart crusade. Because of the hyper-growth of the city, every single chain has really tried to come into this market, because it’s a good market, the economy is good. A lot of local business couldn’t survive. The ones that have survived really understand the importance of local buying.”

Spend $100 of your money at a local shop, and around $45 stays in the economy. Spend $100 at a national chain, and only $13 stays here. Lomas said those are the “nationally-accepted” numbers, but some studies have the ratio closer to $68 per $100 spent locally will stick around in the local economy.

The logic Lomas uses certainly appeals to the public. The card has proven quite popular.

“We have moved through us 8,000 cards at this point,” she said – and it’s hard to see how supporting local business could hurt anything.

That is, unless you’re an economist.

Illusions of local prosperity

The basis of the buy local campaign is that local economies benefit from local business. The other side of that coin is that local economies suffer from big box stores.

It might be more accurate to say that local businesses suffer from big box stores.

Economists are quick to point out that just because a company is put out of business by a national chain, that doesn’t mean that the overall community has “suffered.” In fact, most economists would argue that the rise and fall of any business is proof that the marketplace is functioning properly.

I asked esteemed economist Loren Scott, professor emeritus at LSU, if he thought the buy local campaign was good or bad for the state.

“Most economists – me included – would refer you to a principles of economics text and say look up ‘Law of Comparative Advantage,’” Scott wrote in an email. “That law basically says we are all better off when there are as few barriers to trade as possible and we buy from whomever can supply us the product/service at the cheapest price.”

According to Scott, putting a restriction on trade, such as constraining purchases to establishments that are only locally based actually hurts the community. The ways in which it hurts vary – and if you don’t remember econ 101, they’re kind of confusing. First, there is the opportunity cost of purchasing a local, and often more pricey, product. By confining your purchases to locally owned shops, you are greatly reducing the potential selection of products, and prices, to choose from. So you may pay $20 for something that you could have got for $5, online.

Second, there is a theoretical flaw in the thinking of the campaign. If all cities in Louisiana (or in the country) stringently followed the buy local campaign, than intercity trade, and interstate trade, would vanish. That means no music from Nashville, Tenn., no oranges from Florida, no wines from Oregon.

That doesn’t sound like very much fun.

Me and We: the local multiplier effect

One of the problems with applying economic logic to real-world issues is that economic models don’t really allow for emotion – or what might be deemed irrational preference.

The bottom line is that for localvores (and many others), the satisfaction of supporting a local business is greater than the satisfaction of getting that one awesome Sony digital camera you’ve been eyeing since black Friday.

The notion that price drives demand is integral to economics, but in some ways, shopping locally places that principle on its head. Here, larger companies (big box stores, national chains, etc) are penalized by localvore consumers for, essentially, being big enough to be able to offer lower prices.

How bizarre.

That might not make textbook economic sense, but for this rapidly growing group of people, it does make common sense.

There is merit beyond your own pocketbook to having a thriving locally based economy and proponents of the buy local campaign are quick to point them out.

“Non-profit organizations receive an average 250 percent more support from smaller business owners than they do from large businesses,” non-profit Sustainable Connections boasts on their website. Here are some other perks often cited: there is less of an environmental cost associated with supporting local business – less transportation, shipping, packaging etc.

Also, local business owners are invested in the community, and the future of the community. Plus, it sure does feel good to know from whom you are buying a product. Not only does it build relationships and trust within a community, but also serves as a quality control mechanism of its own.

Finally, localvores often point out that communities need local business to preserve a sense of place. Areas filled with retail chains, fast-food joints and big box stores – “Clone Towns,” as the London-based New Economics Foundation calls them – look as though they could be literally anywhere in America. A community filled with small boutiques and local business, on the other hand, has a decided feel to it, a culture all its own. “What makes a city unique is having local businesses – because they’re different,” said Lomas. “They’re bringing uniqueness into the community.”

For localvores, that’s far more important than good they could get a Walmart.

Interested in the Buy Local campaign? The Baton Rouge Buy Local Card has over 130 participating stores, from retail to restaurants to fitness, each waiting to offer you a great deal for shopping locally. Visit www.TheBuyLocalCard.com for more information.