Saturday, April 11, 2009

Thought for the Day no 5

Jim Henderson writes Against the Tide and has a piece on ‘Antiquated Ideas’ (11 April).

I thought this was good enough for a post on Lost Legacy under the Thought for the Day series:

It is not only the Federal Government that pursues fallacious economic ideas. It happens at the local level as well. Witness Florida where a policy called "backyard economics" is being advocated. This policy suggests that buying local, from Florida businesses, is better for the Florida economy than buying elsewhere. This ignores the fact that each consumer who pays more for local goods has less to spend on other goods in the local economy. Buying some goods for a lower price elsewhere leaves more of the household budget for local purchases. On the other hand, supporting local merchants who charge higher prices subsidizes local inefficiencies; presumably some businesses should become more efficient or shut down because their goods can be produced more economically elsewhere. The ultimate result of buying locally would be for each household to produce as much of their own needs themselves, but that went out with the advent of the "division of labor" (thank you Adam Smith). The bottom line is that "backyard economics" is just so many antiquated ideas and Floridians (as well as the rest of us) deserve better.

Excellent thinking.

To which I would add: what about localities already deep in poverty because there is not enough exchangeable goods and services around to circulate among people in exchange for what they may be able to produce locally?

If Locality A has some olive groves, which produce more olive oil than the locality can use, and they cannot take their surplus to a nearby village, or distant town, short of olive oil (or none at all) in Locality B, but has an annual supply of oranges, including a surplus of them, it defies common sense – and the facts of life of human nature, that rather than live under the tyranny of the local olive monopoly, or its equivalent local orange cartel (for be sure, to prevent exchange this is precisely what would be needed by those wedded to the stupid ‘buy local tyranny’), some individuals would find ways to smuggle their olive oil for oranges, whatever the local dictators try to impose.

This is apart from the enormous task awaiting its proponents who want to undo the myriad exchange links among human societies across the globe. It is not beyond the wit of idiotic governments, and those who influence them, to achieve a break up of the robust networks of exchange relationships – some unhappy examples from history are there to be studied.

Moreover, pre-history shows that our early predecessors traded certain products found in nature over great distances. Look up the history of the movement of supplies of obsidian across Europe when our ancestors were hunter-gatherers living in the stone-age and the movement of artifacts like the figurines. You’ll get a glimpse of from where we came from to where we are now.

Jim Henderson writes good sense and you can find out more by visiting his blog, Against the Tide HERE.


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