16 June, 2011

Made in X campaigns rarely work

Every country seems to have them - campaigns to buy goods made in-country. Buy British, Buy American, Buy Australian, Buy New Zealand Made. When asked in surveys, people often say, “I prefer to buy locally-made”, but they very rarely do so. That’s not surprising; people’s stated intentions are often self-deluding, but are used by agenda-pushers to justify all kinds of dubious initiatives. In reality, people usually buy the best value product for their needs and budget (by whatever idiosyncratic value criteria they choose). Country of origin is rarely an issue during the actual purchase, except sometimes as a positive or negative indicator of quality.  So the campaigns don’t achieve their goal.

Even if they did achieve their goal, these campaigns are based on a economic fallacy - that buying locally-made goods is better for the country than buying imported goods. Take that argument to its logical conclusion. You’d grow all your own food, make all your own clothes, build your own home, fill it with furniture and appliances you’ve made yourself, teach your own children, and treat your family illnesses yourself. Except you wouldn’t. 99% of humanity wouldn’t be here, and the 1% would be living a primitive subsistence existence with low life expectancy.

Imports are paid with exports. Not buying imports means that someone will not buy your exports. It’s a nil sum game. However, trade gives you access to better goods and services than you can provide for yourself, paid for with your better goods and services. Trade is the primary means of improving standards of living. Trade started within a family (role specialisation, eg. hunters, gatherers, nurturers), then a tribe, then between tribes, then towns and regions, and now countries. Trade is good. Buy local campaigns are anti-trade and diminish overall standards of living.

I used to be on the board of the New Zealand Manufacturers Federation (now part of Business New Zealand). Every year we’d sign off the money for the Buy New Zealand Made campaign, but I suspect that few of us believed in it, and to be honest, we had bigger fish to fry at the time. The campaign champion, the irrepressible Dalton Kelly, was such a nice bloke and so enthusiastic, and no-one could bring themselves to kill the sacred cow.

I should draw one exception - the foodies' Buy Local movement. The food-miles argument is fundamentally flawed (and pushed by anti-free trade vested interests), but many people are emotionally connected to their local land. When there's great local food and wine available, I'm as proud to buy and serve it as anyone. Note that adjective: great. Being locally produced isn't a sufficient motivator in itself.

Footnote: Having said all that, I acknowledge that some government buyers need to lose their antipathy towards local providers.  That's the reverse problem - unthinking bias that goods and services from big overseas-owned suppliers must be better/safer/etc than the local providers.

Updated from first version posted December 9th, 2008

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