MULTIPLIER EFFECT 

Aaron Fernando weighs the advantages to the community when it buys locally made products

For many people, the ‘buy local’ movement may seem like another passing fad for the privileged. In the United States, it is understandable why buying local might come to mind along with fads like the Paleo Diet and CrossFit given that the same yuppie demographic tends to love all three.

But buying local has far-reaching consequences that go well beyond the individual. And they are extremely significant in terms of economic resilience, environmental impact and social responsibility.

MONEY MULTIPLIER Firstly, buying local creates a major economic benefit for the surrounding community – viz. your neighbours. Like many other cities in the world, Santa Coloma de Gramenet – to the immediate northeast of Barcelona –– recently established a local currency to protect the economic interests of its citizens. The authorities did this because they found that 90 percent of the money earned in the city left it in just three days.

By operating a local currency, this percentage could be drastically reduced as it offers people an incentive to spend at local businesses. Studies conducted on this issue have found that when spending at a local business (in any currency, local or otherwise), approximately two-thirds of the wealth remains in the region. Of the money spent at a non-local business on the other hand, more than half the wealth ‘leaks out’ immediately.

This leakage can be reduced in many ways. Having consumers understand the leakage and realise that they’ll earn the same wealth eventually if they spend locally is a great beginning. This process of earning the same wealth over and over again is known as ‘the local multiplier effect.’ And it has been found to contribute significantly to the economic resilience of communities around the world.

CARBON FOOTPRINT Next, consider the distance your food and products travel to reach you. Also consider that most of this travel occurs in fossil fuel-intensive modes of transportation – i.e. ships, trucks, trains and aircraft. Since locally produced goods are transported over shorter distances before you can buy them, their carbon footprint will be far less.

In 2013, the radio programme Planet Money followed the production of its branded T-shirts from beginning to end to understand their journey to the marketplace.

What it discovered was that subsidised cotton from America’s south was shipped to Indonesia to be spun into yarn using cheap undervalued labour. This yarn was then shipped to either Bangladesh or Colombia to be cut and sewn – again, because of cheap undervalued labour. The T-shirts were then shipped back to the United States to be sold.

Overall, each T-shirt travelled some 32,000 kilometres before it was available for consumers to purchase. This may sound insane but it represents globalisation. The word ‘globalisation’ sounds so inevitable and ubiquitous that the insanity of the goings-on behind the term is frequently ignored.

It is energy-intensive to have hyper-globalised products like this, and the high environmental and social costs of non-local products are insidiously hidden from consumers behind a low monetary cost.

THE REAL COST The cost of buying local may seem higher in terms of the numeric price that one pays in currency at the point of purchase. This is because most of the real social and environmental costs of goods are hidden from us.

For instance, when a factory in China pollutes the surrounding residences and environment, the cost of the pollution is not built into the price of the goods. The cost of dealing with this pollution – in terms of people’s health and damage to the surrounding ecosystem – becomes ‘externalised.’

Externalising costs is a formal term for turning a cost into someone else’s problem; such as of people who cannot afford healthcare or the environment that may never recover from being systemically pumped with toxins.

Very few people who use smartphones appreciate the extent of virtual slave labour and environmental degradation that go into each phone. If we were to appreciate the gravity of all this and they were built into the cost, few would be able to afford a smartphone… or even want one.

This invisibility and ignorance exist because the true cost of producing a smartphone are distant externalities.

But when goods are produced locally (they’re less sophisticated than a smartphone, of course), these externalities necessarily become more visible to consumers. People will know if employees are overworked, underpaid or abused because the workers live in their community. And they will know when a factory is polluting the environment as soon as friends, family and community begin experiencing health issues.

When the problem is distant, it’s difficult to notice and thus change one’s behaviour. But when a product is manufactured and purchased locally, behaviour can change as a problem is noticed – in fact, behaviour has already changed, and the system has begun to heal at the environmental, economic and social levels.