act:ualise | what we think

Piers Fawkes asked on the PSFK blog recently “is buying local considered protectionist?” It’s a current question given the softening of the protectionist language in  Obama’s stimulus package bill.

And the answer is, yes, it is protectionist. Any action to restrict trade between nations (whether through buy-local requirements, tariffs, quotas or whatever else) is protectionist. But the logical corollary to that answer has to be: does that mean that it’s necessarily a bad thing? The answer here is no.

Anything that promotes buyers’ ability to make a free and informed choice about what they purchase must be for the best. The problem at the moment is that our economic systems hide so many of the true costs from the prices that we actually pay, that no one can really make an informed buying decision. Consider this: can a packet of green beans grown and picked in Kenya, flown under refrigeration to China to be washed and trimmed, then flown under refrigeration to the UK to be packaged and distributed to supermarkets really be cheaper than a packet grown, washed, trimmed and packed in the UK, when you factor in the costs of the flights, the air fuel and petrol and the carbon emissions from all that travel? Of course it cannot – but only a slim proportion of those costs is actually being represented in the wholesale prices that supermarkets pay. They’re costs that will be born by future generations. 

With all these amazing economists applying their minds to economic models, and capital market models, can’t someone have a think about how we “unhide” the hidden costs? Doing so would finally enable buyers to decide when a product from abroad really is cheaper and better value than a local product, and make an informed decision. In effect, it would help to undermine protectionism by levelling the playing field, and effectively exposing where the real value lies.