DRI-284 for week of 8-10-14: All Sides Go Off Half-Cocked in the Ferguson, MO Shooting

An Access Advertising EconBrief:

All Sides Go Off Half-Cocked in the Ferguson, MO Shooting

By now most of America must wonder secretly whether the door to race relations is marked “Abandon all hope, ye who enter here.” Blacks – mostly teenagers and young adults, except for those caught in the crossfire – are shot dead every day throughout the country by other blacks in private quarrels, drug deals gone bad and various attempted crimes. Murder is the leading cause of death for young black males in America. We are inured to this. But the relative exception of a black youth killed by a white man causes all hell to break loose – purely on the basis of the racial identities of the principals.

The latest chilling proof of this racial theorem comes from Ferguson, MO, the St. Louis suburb where a policeman shot and killed an unarmed 18-year-old black man on Monday. The fact that the shooter is a policeman reinforces the need for careful investigation and unflinching analysis of the issues involved. The constant intrusion of racial identity is a mountainous obstacle to this process.

The Two Sides to the Story, As Originally Told

The shooting occurred on Saturday afternoon, August 9, 2014, in Ferguson, MO, where 14,000 of the 21,000 inhabitants are black and 50 of 53 assigned St. Louis County Police officers are white. The two sides of the story are summarized in an Associated Press story carrying the byline of Jim Suhr and carried on MSN News 08/13/2014. “Police have said the shooting happened after an [then-unnamed] officer encountered 18-year-old Michael Brown and another man on the street. They say one of the men pushed the officer into his squad car, then physically assaulted him in the vehicle and struggled with the officer over the officer’s weapon. At least one shot was fired inside the car. The struggle then spilled onto the street, where Brown was shot multiple times. In their initial news conference about the shooting, police didn’t specify whether Brown was the person who scuffled with the officer in the car and have refused to clarify their account.”

“Jackson said Wednesday that the officer involved sustained swelling facial injuries.”

“Dorian Johnson, who says he was with Brown when the shooting happened, has told a much different story. He has told media outlets that the officer ordered them out of the street, then tried to open his door so close to the men that it ‘ricocheted’ back, apparently upsetting the officer. Johnson says the officer grabbed his friend’s neck, then tried to pull him into the car before brandishing his weapon and firing. He says Brown started to run and the officer pursued him, firing multiple times. Johnson and another witness both say Brown was on the street with his hands raised when the officer fired at him repeatedly.”

The Reaction by Local Blacks: Protests and Violence

When a white citizen is shot by police under questionable circumstances – an occurrence that is happening with disturbing frequency – the incident is not ignored. But the consequent public alarm is subdued and contained within prescribed channels. Newspapers editorialize. Public figures express concern. Private citizens protest by writing or proclaiming their discontent.

The stylized reaction to a white-on-black incident like the one in Ferguson is quite different. Ever since the civil-rights era that began in the 1950s, these incidents are treated as presumptive civil-rights violations; that is, they are treated as crimes committed because the victim was black. Black “leaders” bemoan the continuing victim status of blacks, viewing the incident as more proof of same – the latest in an ongoing, presumably never-ending, saga of brutalization of blacks by whites. “Some civil-rights leaders have drawn comparisons between Brown’s death and that of 17-year-old Trayvon Martin.”

Rank-and-file blacks gather and march in protest, holding placards and chanting slogans tailored to the occasion. “Some protestors… raised their arms above their heads as they faced the police… The most popular chant has been ‘Hands up! Don’t shoot!'”

Most striking of all is the contrast struck by headlines like “Protests Turn Violent in St. Louis Suburb.” There is no non-black analogue to behavior like this: “Protests in the St. Louis suburb turned violent Wednesday night, with people lobbing Molotov cocktails at police, who responded with smoke bombs and tear gas to disperse the crowd.” This is a repetition of behavior begun in the 1960s, when massive riots set the urban ghettos of Harlem, Philadelphia and Detroit afire.

Joseph Epstein Weighs In

The critic and essayist Joseph Epstein belongs on the short list of the most trenchant thinkers and writers in the English language. His pellucid prose has illumined subjects ranging from American education to gossip political correctness to Fred Astaire. The utter intractability of race in America is demonstrated irrefutably by the fact that the subject reduced Epstein to feeble pastiche.

In his Wall Street Journal op-ed “What’s Missing in Ferguson, MO.”(The Wall Street Journal, Wednesday, August 13, 2014), Epstein notes the stylized character of the episode: “…the inconsolable mother, the testimony of the dead teenager’s friends to his innocence, the aunts and cousins chiming in, the police chief’s promise of a thorough investigation… The same lawyer who represented the [Trayvon] Martin family, it was announced, is going to take this case.”

But according to Epstein, the big problem is that it isn’t stylized enough. “Missing… was the calming voice of a national civil-rights leader of the kind that was so impressive during the 1950s and ’60s. In those days there was Martin Luther King Jr…. Roy Wilkins… Whitney Young… Bayard Rustin…. – all solid, serious men, each impressive in different ways, who through dignified forbearance and strategic action, brought down a body of unequivocally immoral laws aimed at America’s black population.”

But they are long dead. “None has been replaced by men of anywhere near the same caliber. In their place today there is only Jesse Jackson and Al Sharpton…One of the small accomplishments of President Obama has been to keep both of these men from becoming associated with the White House.” Today, the overriding problem facing blacks is that “no black leader has come forth to set out a program for progress for the substantial part of the black population that has remained for generations in the slough of poverty, crime and despair.”

Wait just a minute here. What about President Obama? He is, after all, a black man himself. That was ostensibly the great, momentous breakthrough of his election – the elevation of a black man to the Presidency of the United States. This was supposed to break the racial logjam once and for all. If a black man occupying the Presidency couldn’t lead the black underclass to the Promised Land, who could?

No, according to Epstein, it turns out that “President Obama, as leader of all the people, is not well positioned for the job of leading the black population that finds itself mired in despond.” Oh. Why not? “Someone is needed who commands the respect of his or her people, and the admiration of that vast – I would argue preponderate [sic] – number of middle-class whites who understand that progress for blacks means progress for the entire country.”

To be sure, Epstein appreciates the surrealism of the status quo. “In Chicago, where I live, much of the murder and crime… is black-on-black, and cannot be chalked up to racism, except secondarily by blaming that old hobgoblin, ‘the system.’ People march with signs reading ‘Stop the Killing,’ but everyone knows that the marching and the signs and the sweet sentiments of local clergy aren’t likely to change anything. Better education… a longer school day… more and better jobs… get the guns off the street… the absence of [black] fathers – … the old dead analyses, the pretty panaceas, are paraded. Yet nothing new is up for discussion… when Bill Cosby, Thomas Sowell or Shelby Steele… have dared to speak up about the pathologies at work… these black figures are castigated.”

The Dead Hand of “Civil Rights Movement” Thinking

When no less an eminence than Joseph Epstein sinks under the waves of cliché and outmoded rhetoric, it is a sign of rhetorical emergency: we need to burn away the deadwood of habitual thinking.

Epstein is caught in a time warp, still living out the decline and fall of Jim Crow. But that system is long gone, the men who destroyed it and those who desperately sought to preserve it alike. The Kings and Youngs and Wilkins’ and Rustins are gone just as the Pattons and Rommels and Ridgeways and MacArthurs and Montgomerys are gone. Leaders suit themselves to their times. Epstein is lamenting the fact that the generals of the last war are not around to fight this one.

Reflexively, Epstein hearkens back to the old days because they were days of triumph and progress. He is thinking about the Civil Rights Movement in exactly the same way that the political left thinks about World War II. What glorious days, when the federal government controlled every aspect of our lives and we had such a wonderful feeling of solidarity! Let’s recreate that feeling in peacetime! But those feelings were unique to wartime, when everybody subordinates their personal goals to the one common goal of winning the war. In peacetime, there is no such unitary goal because we all have our personal goals to fulfill. We may be willing to subordinate those goals temporarily to win a war but nobody wants to live that way perpetually. And the mechanisms of big government – unwieldy agencies, price and wage controls, tight security controls, etc. – may suffice to win a war against other big governments but cannot achieve prosperity and freedom in a normal peacetime environment.

In the days of Civil Rights, blacks were a collective, a clan, a tribe. This made practical, logistical sense because the Jim Crow laws treated blacks as a unit. It was a successful strategic move to close ranks in solidarity and choose leaders to speak for all. In effect, blacks were forming a political cartel to counter the political setbacks they had been dealt. That is to say, they were bargaining with government as a unit and consenting to be assigned rights as a collective (a “minority”) rather than as free individuals. In social science terms, they were what F. A. Hayek called a “social whole,” whose constituent individual parts were obliterated and amalgamated into the opaque unitary aggregate. This dangerous strategy has since come back to haunt them by obscuring the reality of black individualism.

Consider Epstein’s position. Indian tribes once sent their chief – one who earned respect as an elder, religious leader or military captain, what anthropologists called a “big man” – to Washington for meetings with the Great White Father. Now, Epstein wants to restore the Civil Rights days when black leaders analogously spoke out for their tribal flock. Traditionally, the fate of individuals in aboriginal societies is governed largely by the wishes of the “big man” or leader, not by their own independent actions. This would be unthinkable for (say) whites; when was the last time you heard a call for a George Washington, Henry Ford or Bill Gates to lead the white underclass out of its malaise?

In fact, this kind of thinking was already anachronistic in Epstein’s Golden Age, the heyday of Civil Rights. Many blacks recognized the trap they were headed towards, but took the path of least resistance because it seemed the shortest route to killing off Jim Crow. Now we can see the pitiful result of this sort of collective thinking.

An 18-year-old black male is killed by a police officer under highly suspicious circumstances. Is the focus on criminal justice, on the veracity of the police account, on the evidence of a crime? Is the inherent danger of a monopoly bureaucracy investigating itself and exercising military powers over its constituency highlighted? Not at all.

Instead, the same old racial demons are summoned from the closet using the same ritual incantations. Local blacks quickly turn a candlelight protest vigil into a violent riot. Uh oh – it looks like the natives are getting restless; too much firewater at the vigil, probably. Joseph Epstein bemoans the lack of a chieftain who can speak for them. No, wait – the Great Black Father in Washington has come forward to chastise the violent and exalt the meek and the humble. His lieutenant Nixon has sent a black chief to comfort his brothers. (On Thursday, Missouri Governor Jay Nixon sent Missouri Highway Patrol Captain Ron Johnson, a black man, heading a delegation of troopers to take over security duties in Ferguson.) The natives are mollified; the savage breast is soothed. “All the police did was look at us and shoot tear gas. Now we’re being treated with respect,” a native exults happily. “Now it’s up to us to ride that feeling,” another concludes. “The scene [after the Missouri Highway Patrol took over] was almost festive, with people celebrating and honking horns.” The black chief intones majestically: “We’re here to serve and protect… not to instill fear.” All is peaceful again in the village.

Is this the response Joseph Epstein was calling for? No, this is the phony-baloney, feel-good pretense that he decried, the same methods he recognized from his hometown of Chicago and now being deployed there by Obama confidant Rahm Emmanuel. The restless natives got the attention they sought. Meanwhile, lost in the festive party atmosphere was the case of Michael Brown, which wasn’t nearly as important as the rioters’ egos that needed stroking.

But the Highway Patrol will go home and the St. Louis County Police will be back in charge and the Michael Brown case will have to be resolved. Some six days after the event, the police finally got around to revealing pertinent details of the case; namely, that Michael Brown was suspected of robbing a convenience store of $48.99 worth of boxed cigars earlier that day in a “strong-arm robbery.” Six-year veteran policeman Darren Wilson, now finally identified by authorities, was one of several officers dispatched to the scene.

Of course, the blacks in Ferguson, MO, and throughout America aren’t Indian tribesmen or rebellious children – they are nominally free American individuals with natural rights protected by the U.S. Constitution. But if they expect to be treated with respect 365 days a year they will have to stop acting like juvenile delinquents, stop delegating the protection of their rights to self-serving politicians and hustlers and start asserting the individuality they possess.

The irony of this particular case is that it affords them just that opportunity. But it demands that they shed what Epstein calls “the too-comfortable robes of victimhood.” And they will have to step out from behind the shield of the collective. The Michael Brown case is not important because “blacks” are affronted. It is important because Michael Brown was an individual American just like the whites who get shot down by police every year. If Dorian Johnson is telling the truth, Brown’s individual rights were violated just as surely whether he was black, white, yellow or chartreuse.

Policing in America Today – and the Michael Brown Case

For at least two decades, policing in America has followed two clearly discernible trends. The first of these is the deployment of paramilitary equipment, techniques and thinking. The second is a philosophy is placing the police officer’s well-being above all other considerations. Both of these trends place the welfare of police bureaucrats, employees and officers above that of their constituents in the public.

To an economist, this is a striking datum. Owners or managers of competitive firms cannot place their welfare above that of their customers; if they do, the firm will go bankrupt and cease to exist, depriving the owners of an asset (wealth) and real income and the managers of a job and real income. So what allows a police force (more specifically, the Chief of Police and his lieutenants) to do what a competitive firm cannot do? Answer: The police have a monopoly on the use of force to enforce the law. In the words of a well-known lawyer, the response to the generic question “Can the police do that?” is always “Sure they can. They have guns.”

All bureaucracies tend to be inefficient, even corrupt. But corporate bureaucracies must respond to the public and they must earn profits. So they cannot afford to ignore consumer demand. The only factor to which government bureaucracies respond is variations in their budget, which are functions of political rather than economic variables.

All of these truths are on display in this case. The police have chosen to release only a limited, self-serving account of the incident. Their version of the facts is dubious to say the least, although it could conceivably be correct. Their suppression of rioting protestors employed large, tank-like vehicles carrying officers armed with military gear, weapons and tear gas. Dorian Johnson’s account of the incident is redolent of the modern police philosophy of “self-protection first;” at the first hint of trouble, the officer’s focus is on downing anybody who might conceivable offer resistance, armed or not, dangerous or not.

What does all this have to do with the racial identities of the principals? Absolutely nothing. Oh, it’s barely possible that officer Wilson might have harbored some racial animosity toward Brown or blacks in general. But it’s really quite irrelevant because white-on-black, white-on-white and black-on-white police incidents have cropped up from sea to shining sea in recent years. Indeed, this is an issue that should unite the races rather than dividing them since police are not reluctant to dispatch whites (or Hispanics or Asians, for that matter). While some observers claim the apparent increase in frequency of these cases is only because of the prevalence of cell phones and video cameras, this is also irrelevant; the fact that we may be noticing more abuses now would not be a reason to decry the new technology. As always, the pertinent question is whether or not an abuse of power took place. And those interested in the answer to that question, which should be every American, will have to contend with the unpromising prospect of a police department – a monopoly bureaucracy – investigating itself.

That is the very real national problem festering in Ferguson, MO – not a civil-rights problem, but a civil-wrongs problem.

The Battle Lines

Traditionally, ever since the left-wing counterculture demonized police as “pigs” in the 1960s, the right wing has reflexively supported the police and opposed those who criticized them. Indeed, some of this opposition to the police has been politically tendentious. But the right wing’s general stance is wrongheaded for two powerful reasons.

First, support for law enforcement itself has become progressively less equated to support for the Rule of Law. The number and scope of laws has become so large and excessive that support for the Rule of Law would actually require opposition to the existing body of statutory law.

Second, the monopoly status of the police has enabled them to become so abusive that they now threaten everybody, not merely the politically powerless. Considering the general decrease in crime rates driven by demographic factors, it is an open question whether most people are more threatened by criminals or by abusive police.

Even a bastion of neo-conservatism like The Wall Street Journal is becoming restive at the rampant exercise of monopoly power by police. Consider these excerpts from the unsigned editorial, “The Ferguson Exception,” on Friday, August 15, 2014: “One irony of Ferguson is that liberals have discovered an exercise of government power that they don’t support. Plenary police powers are vast, and law enforcement holds a public trust to use them in proportion to the threats. The Ferguson police must prevent rioting and looting and protect their own safety, though it is reasonable to wonder when law enforcement became a paramilitary operation [emphasis added]. The sniper rifles, black armored convoys and waves of tear gas deployed across Ferguson neighborhoods are jarring in a free society…Police contracts also build in bureaucratic privileges that would never be extended to other suspects. The Ferguson police department has refused to… supply basic information about the circumstances and status of the investigation [that], if it hasn’t been botched already, might help cool passions… how is anyone supposed to draw a conclusion one way or the other without any knowledge of what happened that afternoon?”

The Tunnel… and the Crack of Light at the End

The pair of editorial reactions in The Wall Street Journal typifies the alternatives open to those caught in the toils of America’s racial strife. We can play the same loop over and over again in such august company as Joseph Epstein. Or we can dunk ourselves in ice water, wake up and smell the coffee – and find ourselves rubbing shoulders with the Journal editors.

DRI-398 for week of 8-5-12: ‘Buying Local’: Reinventing the Wheel – Square

‘Buying Local’: Reinventing the Wheel – Square

According to popular folklore, the 1950s were temperamentally straitlaced and artistically straitened, a time of airless conformity and retrograde sentiment. By contrast, the present day is technologically advanced, artistically avant garde and politically progressive.

Neither stereotype stands up to scrutiny. The 50s produced critically acclaimed cinematic masterpieces like Vertigo, The Searchers, Singin’ In the Rain, Touch of Evil and The Night of the Hunter. They spawned the Civil Rights movement, Jack Kerouac, the Beats and the birth of National Review magazine. The current cinema is top-heavy with inferior remakes of previous classics, knockoffs of television series and comic-books. Our politics is poisoned by the zero-sum implications of the bi-partisan devotion to big government. We stand on the verge of repudiating the commitment to freedom and individualism made by the Founding Fathers over two centuries ago.

Historians will one day cite the doctrine known as “political correctness” as one of the most toxic pollutants of the political climate. One ingredient in the politically correct brew is the behavioral posture known as “buying local.”

The Principle of Buying Local

The guiding principle behind “buying local” (hereinafter, “BL” for purposes of brevity) calls for consumers to confine their purchases, as much as possible, to production originating in the local community. This program is deceptively simple. Close examination, however, reveals that it is adherents who are deceived.

The simplicity of the plan dissolves as soon as one tries to put it into practice. In order to limit purchases to goods produced in the local community, one must distinguish local from non-local. For exemplary purposes, consider the metropolitan area of Kansas City, MO/KS. This is an area of over 2 million people, overlapping the border between two states, consisting of over 30 separate, contiguous municipalities.

Does each one of those municipalities constitute a “local community?” Do the residents of Fairway, KS (population 3,952) pointedly refrain from shopping in neighboring Westwood, KS (population 1,533)? Should they both religiously shun neighboring Kansas City, MO (population 440,885), immediately across the state line to the west and MIssouri’s largest city? In practice, it is safe to assert, virtually nobody does. After all, Kansas City is where the lion’s share of gastronomic, artistic, athletic and cultural amenities are located – not to mention more mundane but even more practical venues like Wal Mart, Target, Costco and the Country Club Plaza (the world’s first outdoor shopping center) are located.

Very well. We will assume that advocates of BL will stipulate that the entire Kansas City metro area qualified as a “local community.” Once that’s settled, we confront questionable cases like Olathe, Leavenworth and Lawrence, KS and Peculiar, Harrisonville and Belton, MO – all small towns lying within a 40-mile radius of Kansas City. And the argument is reversible, since residents of Kansas City will want to travel to and import goods and services from these outlying communities.

Suddenly, it dawns that there is no objective, universal meaning to the term “local community.” This effectively torpedoes the concept. But that does not destroy its usefulness, which is utterly independent of economic logic and practical value.

Emotion and Politics

BL is a useful concept because pretending to use it allows people to regard themselves favorably. Because they associate the term with pleasant feelings, they do not react badly when they see the concept used to practice economic protectionism;that is, totake money away from efficient producers and give it to inefficient producers. Thus, buying local is useful to those who advocate and promote protectionism. Mostly, these are left-wing sympathizers like union members, environmentalists and central planners.

Ever since the dawn of the Industrial Revolution and the advent of mass production, small-scale production has been gradually but continually displaced by large-scale, mass production. The assembly line allowed larger quantities of output to be produced at lower unit cost than older production systems such as handicraft and piecework. All other things equal, the law of demand states that consumers will wish to buy more of any good at lower prices of that good. A corollary implication is that consumers will prefer to buy a lower-priced good to a higher-priced one – provided they view the two goods as otherwise homogeneous.

Mass production allowed firms to serve national markets. Larger firms tended to displace small, local firms. This trend began in the 18th century and continues today. Decades ago, Wal Mart established itself by entering small-town markets and displacing the monopolies enjoyed by local merchants through Wal Mart’s low prices and tremendous variety of goods. Now it faces competition from discount retailers like Target and Costco.

The economic logic underlying this historical evolution is unassailable. Countries, states, regions, cities and municipalities specialize in producing goods that highlight their “comparative advantage,” which means goods whose production they can accomplish with the smallest sacrifice of alternative output. After production, the goods then travel throughout the world via trade – international, intranational, inter-state and inter-local. Money tends to obscure the underlying barter nature of this trade by interposing itself as a medium of exchange.

Although efficient trade tends to optimally enhance the real income of just about everybody, less efficient producers often object to the outcomes realized under competition. That is where BL comes in. Promoters use it as a pretext for preventing consumers from buying lower-priced outside alternatives to local goods, or trying to, or scolding consumers who succeed. The local producers and their employees gain from this interference. The promoters of BL gain power and influence as brokers of the benefits enjoyed by local producers. And these gains come at the expense of everybody else.

The Tribal Roots of BL

The pleasant feelings associated with BL are stimulated by human instincts traceable to the evolution of our species. When male/female pairs began to aggregate into groups, the human race spent thousands of years developing habits conducive to the survival and growth of the local tribe. Production was organized to benefit the group; dependence on outsiders was dangerous. Although trade dates back as far as recorded history, the full realization of its advantages developed slowly.

Over time, more sophisticated institutions took the place of the tribe. Religion provided a form of group identification, as did geographic origin and residence. With the nation state came confederations bringing together towns, states and regions under one banner. The common denominator of appearance made ethic membership another popular source of group differentiation.

The ambiguity of the word “local” makes the concept of buying local to stretch far enough to cover all of these bases. Jews can feel good about keeping kosher. Residents of Tightwad, MO can feel virtuous about keeping their deposits at Tightwad Bank instead of Bank of America. Without quite realizing why, we can all bask in the inner glow of belonging to the tribe.

What’s the Harm?

Casual boosters of BL may object to the objections raised by economists. What’s the harm in a little local color, a little local favoritism? After all, we’re going to buy our vegetables somewhere, aren’t we? Surely economists aren’t suggesting that we shouldn’t root for local sports teams and nourish local traditions, are they?

An example may clarify the relevant distinction. Professional sports leagues were organized by creating teams linked to geographic localities (typically cities). Observation indicates that most people root for and identify with teams based on “tribal” factors like geography. On the other hand, some people derive pleasure from sports based purely on the athletic excellence displayed, regardless of geographic loyalty. If tribal loyalty is itself an originary source of happiness or utility, economists have no basis for decrying it. But the suggestion that tribal loyalty should be artificially elevated above otherwise higher-ranking considerations of economic efficiency is wrong.

There is nothing wrong with being a fan of the New York Yankees. There is nothing wrong with living in New York and being a fan of the New York Yankees. But saying that New York residents must (or should) be Yankees fans is wrong. And the inherent meaning of buying local is that natural market outcomes cannot be trusted and must be overridden in favor of local loyalty. Otherwise, why would we need the slogan?

Most people are quite willing to subordinate the appreciation of athletic excellence to tribal loyalty because it costs them little or nothing to do so. But in cases where it does cost- perhaps quite heavily – to elevate the tribe above all else, it is idiotic to do so.

Price and Perishability

This is the moment to point out that local production has its own set of countervailing advantages and efficiencies, sometimes offsetting those of mass production and national markets. The beauty of free markets is that these are already reflected in the data generated by market competition – we do not need the artificial intervention of BL to make us aware of them.

One of the most frequently cited products by BL advocates is local produce. This is hardly surprising. Consumers across America have come to know and love the products purchased in New York’s Fulton Fish Market, San Francisco’s Fisherman’s Wharf and the Farmer’s Market in Los Angeles’ Westwood Village. There are sound economic reasons why these markets arose and endured throughout the era of corporate farming and aquaculture.

After goods are produced, they must find their way into the hands of consumers. Since the locus of production is chosen to minimize production costs, it will be close to some consumers but distant from others. The price of any good must reflect not only the costs of production but also the costs of transportation from production site to the consumer. In this respect, local production has a built-in advantage – by definition, transport costs are lower for local production than for non-local. But this advantage is automatically conveyed to consumers via the price system, in the form of a lower price – or rather, a lower transport-cost component of the price. This invisibly nudges consumers towards local production. There is no need to interpose BL in the decisionmaking process. Of course, the influence of lower transport costs may not be decisive, since other factors may more-than-counterbalance it.

Although economics textbooks sometimes downplay the fact, quality is a choice variable no less important than price. One drawback of produce is its perishability. Local production enjoys another automatic advantage over non-local here and in the closely-related characteristic of freshness. And once again, markets transmit the qualitative superiority of local produce to consumers without the quasi-coercive force of BL being applied. The continuing survival of city produce markets and roadside vegetable stands is tacit evidence of this.

BL in Action

In its most innocuous form, BL is found in casual references on a variety of media. Hosts and callers to sports-talk shows will urge fans to support the home team by implying or stating outright that “loyalty” demands it. While analytically indefensible, this is comparatively harmless. The relevant comparison is to demands that taxpayers be made to support sports teams with subsidies ranging from operating subsidies to sweetheart stadium leases to bond issues supporting stadium construction. Although the rationale for sports-team subsidies often invokes secondary, multiplier benefits and job creation – none of which has the slightest logical or empirical validity – the tacit premise lurking underneath the pseudo-economic jargon is that tribal loyalty, usually disguised as civic pride, should rule.

In hiring, there may be something to be said for resolving toss-ups or obscure choices in favor of local candidates. For one thing, familiarity with local conditions may carry some advantages in buying, negotiating or adhering to protocol. But BL is a time-honored means of delivering graft by requiring city contracts to give preference to local contractors, vendors or labor.

An all-star example of the BL fallacy is the insistence that BL will “keep your money in the local economy” – as if that were a desideratum devoutly to be wished. The best way to apprehend the money-leakage fallacy is to compare a local community to a country in international trade. When U.S. citizens buy foreign goods, they send dollars outside the country – or, more precisely, to the foreign-exchange market, where the dollars exchange for foreign currencies. But this dollar exodus is not permanent. Foreigners do not consume dollars directly by eating them or using them to mop their brows. As a first approximation, they will buy them from foreign-exchange dealers to use in buying U.S. goods. Now the dollars return home. (Observe that the fundamental nature of exchange is barter, the trade of goods for goods, even though money greatly facilitates this exchange process.) This logic applies to purchases of financial assets as well; the only effect of BL will be to prevent local residents from enjoying a higher rate of return on their money.

Movements in exchange rates and trade in financial assets will tend to equalize the value of a nation’s imports and exports over time. This even holds true when exchange rates are fixed and invariant, although the outcome is accomplished not through movements in exchange rates but through money flows and changes in real income and employment. The same thing applies to local communities – trade inside the U.S., for example, is conducted in a common currency, so imports and exports between the community and the rest of the country tend to equalize. It is true that occasionally a “dying” community will suffer when business leaves and money flows in only one direction. BL will not rescue this situation, though – it will merely lower the standard of living of remaining inhabitants. Lack of tribal loyalty did not cause the civic mortality and BL cannot cure it.

The international realm is the venue for perhaps the most popular display of BL. It is also the only one to attract much serious support from economists. This is the demand for preference towards “indigenous production” in developing countries. In practice, it is usually invoked in support of local agriculture. Expressed concisely, it invokes a scenario in which the real income effects of price changes overshadow the substitution effects. Farmers are so numerous that they cannot benefit from purchases of imported agricultural products, even when those products are lower-priced. The resulting loss of demand for their output causes farmers to lose more as producers than they gain as consumers. Farming is so dominant that the gains in non-agricultural sectors cannot compensate for the net losses suffered by farmers.

The remedy prescribed by the left-wing is BL on a national scale – the restriction or outright prohibition of agricultural imports from developed nations. The problem with this cure is that its success keeps the patient on permanent life support. The only hope for economic growth is to diversify the economic base sufficiently to achieve some measure of balanced development. Protecting domestic agriculture has the opposite effect; it keeps resources employed in agriculture instead of diverting them into alternative sectors.

BL, Raw Materials and Economic Development

The case of (potential) immizerizing trade is by far the exception in international economics. The typical case is that of a developing country producing raw materials, particularly extractive substances such as tin, oil, or rare minerals, or raw agricultural commodities such as cocoa or coffee beans. It would be absurd to limit consumption of these substances to their production locus; in fact, they are transported throughout the world and used as production inputs in thousands of goods and services. Less developed countries are heavily dependent on income from their export. Yet the BL doctrine, taken literally, would dictate their exclusion.

Really, the current flap over BL is simply the same as the “buy American” imbroglio that periodically emerges to bedevil U.S. consumers and economics instructors. Scratch almost any product and you discover that there is no such thing as a purely American good, because the complexity and efficiency of modern markets enables least-cost production to combine inputs from around the globe. Toyota is a “foreign” car because of its nameplate, but it is assembled in the U.S. and its so-called “American content” exceeds that of many domestic models. Meanwhile, goods with impeccable American pedigrees nonetheless employ inputs and labor from abroad.

A list of thousands of key imported inputs used in everyday U.S. production is sufficient to scotch any realistic notion of BL as an actual program. Some of these inputs are imported because they do not exist within our national borders. Others could be produced here, but only as astronomical cost. Still others were domestically produced or still are, but cannot be produced in sufficient quantities to meet domestic demand.

BL and Environmentalism

BL is so economically unsound that only political coercion could even begin to put it into widespread practice. Thus, it has much in common with environmentalist doctrine, which is likewise based on emotive, tribal considerations that dissolve into contradiction when subjected to scrutiny.

The modern reaction against “globalism” is clearly related to BL; indeed, “localism” may be viewed as the opposing metaphor to “globalism.” Environmentalists have hopped onto the anti-globalist bandwagon and made common cause with such fellow left-wingers as labor unions and socialists. Labor unions oppose international trade because trade seeks out least-cost production, and this enables producers to circumvent the local labor monopolies created by unions by importing goods created using non-union foreign labor. Consumers and foreign workers gain from this trade, but union monopolists are left out in the cold – at least in their capacity as sellers of labor, anyway.

The environmentalist link to BL Is forged by the trendy recourse to the theory of man-made global warming, which pinpoints the atmospheric release of carbon dioxide as the culprit. The environmentalist mania for reducing individual and corporate “carbon footprints” has provided a pretext for BL, on the presumption that less transport must mean less carbon usage. Not only is this an unsound generalization, it is also wildly impractical. Even the most powerful socialist dictatorship would not possess the necessary knowledge to calculate the carbon footprints of the hundreds of thousands of goods and services produced and consumed by billions of humans, let alone to successfully coordinate economic life in such a regime. The problems posed are those of “buy American” increased exponentially. And, of course, all this assumes the correctness of the initial theory.

BL is BS

BL pretends that economic problems can be reduced to a crude level and solved with reference to simple geography. But the only valid points made by the BL program are already automatically incorporated into the data transmitted by the free, competitive price system. Meanwhile, that price system also integrates a vast amount of additional subtle and complex data that BL does not even begin to contemplate. Thus, BL not only represents an attempt to reinvent the wheel – it reinvents it square.

In sum, then, BL veers between meaningless platitude and hard-core protectionism. Sliced either way, it is baloney. BL is BS, a victory of style over substance in the great politically correct tradition of the left wing.