Slow Money Arouses Free Trade Backlash

by Stowe Boyd

Russell Nelson lays out the free trade argument in the comments for my earlier post on Slow Money, and sighs, deeply, since I obviously don't get how free markets are making the world a better place for everyone:

Sigh. Why do people feel compelled to reinvent economics, badly? Trade is good; more trade is better. You get ahead by specializing; by doing what you're best at, and trading for the rest. Where does "local" come into that? How does your locality turn your product into something intrinsically better than somebody who has a product which I like more? Sure, shipping has a cost, but that (obviously) already biases trade in favor of the local. Why is it necessary to further bias trade in favor of people around you? Because they'll trade with you? But that PRESUMES the answer that local trade is better than remote trade.

My response:

The point isn't 'getting ahead' on an individual basis, or even on the basis of one region relative to another. The notion is to keep and grow a deeply connected local economy, where local money swirls around a few times before leaving the area for goods and services that are provided for more remotely. That third or fourth cycling of a dollar is good -- to get hardwood chairs from Canada, or coffee beans from Columbia -- but the first two or three cycles, through local pockets, supporting local relationships and building stronger social capital in the community, those two transactions are just as good, and maybe better. "More trade is better' is a statement that suggests unbounded optimism in the power of unfettered free trade, unfettered markets, to naturally serve the interests of all involved in those markets, even when their interests are not naturally aligned. I do presume that trade that is local first -- for a few cycles of transactions -- is better than trade in which local money is exchanged for goods without ever cyclying through the local economy.

The notion is predicated on people adopting a new set of ethics, one in which we decide to favor certain practices because we see them as part of a better civilization, like not spitting on the floor, littering, or pushing old people out of the way to get onto buses. We see oursleves as part of a network of others, not just solitary consumers fragmented by market forces.

The decision about what makes a product, service, or an economic process 'better' is grounded in ethics as well as pure monetary economics. Just as we have to move past industrialism that spews pollution into the air and waterways, and agriculture that is predicated on low-costs of oil and transportation, we also have to consider the impacts that national and international trade have on local economies. If we want fragile, thin, anemic local economies, we can continue as we have been for the past 50 years.

So it's a question of what yardstick do you use to measure 'betterness'. If you leave it to the classical market viewpoint of a consumer choosing a product on shelf without consideration of it's greater social impacts, that argument might hold. But the citizen of today and tomorrow knows that things are connected, that it matters whether the milk comes from this aquifer or some unknown region in China, or that the paper in the carton is recycled or not, or whether the people making the product reinvest or contribute to the local economy.

Oh, Russell, PS -- Save the snark: it doesn't work on me.

Originally posted as a comment by stoweboyd on /Ground using Disqus.