Some people make the moral argument that it’s better to leave money in the local community. But there’s another moral argument to be made that people who are way poorer and worse off in foreign countries who lose jobs and wages when we buy local.
So that has to be weighed in as well.
One argument says that it’s better for the environment not to buy outside of your local community because you don’t pay for transportation, shipping, bad politics in other countries, and the pollution it all causes.
But another argument is that those externalities are actually only a small percentage and worse for the environment than having food delivered to your house.
It works the same as protectionism but on the local scale. The thinking is that if we keep our money within the local community, or our own country, everyone will get wealthier in that community.
But that has been thoroughly debunked and is explained in the economic concept of comparative advantage. Gains from free trade outweigh the losses. Free trade creates more jobs than it destroys, and jobs go to more productive sectors. It makes countries produce what they are good at and trade with each other for less money.
Argentina is a great producer of bananas and the U.S. is a great producer of cell phones. Argentina could choose to produce bananas and cell phones for themselves, and the U.S. could produce cell phones and try to grow bananas.
But if both countries trade what they are good at, they both get higher quality goods for less money than if it had only been produced in their home countries. This frees up more money to be spent elsewhere, increasing demand for goods and services, increasing demand for labor, increasing the need for workers, and reducing unemployment.
It also puts money into productive sectors and creates more efficient jobs.
But now say the U.S. is good at producing cell phones AND bananas, and Argentina isn’t good at producing either.
It still makes sense for Argentina to produce the item we are worse at, because it frees us up to produce what we’re more efficient at, say, cell phones.
That’s comparative advantage.
Modern statistical models have shown the evidence to be correct that comparative advantage benefits people more than protectionism. Being self-sufficient is less efficient for the most amount of people than free trade.
A historical example
This has been shown during Japan’s Meiji Restoration, from 1868-1912, which is what brought Japan into becoming a modern nation.
A modern example
The blockade on the Gaza Strip severely restricted imports to the territory, which caused labor productivity to fall 20% in 3 years.
After removing the blockade, and allowing free trade, national incomes rose 65% in 15 years.
Also, here is also an interesting article from the people who wrote Freakonomics, if you liked that book: The Inefficiency of Local Food. I enjoyed Freakonomics but when I looked at their data, some of it was incomplete, but it doesn’t mean everything they said was wrong.