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Economics Rule

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I’m listening to NPR again, on Stitcher, of course, and the show is “Freakonomics,” a spinoff from “ Marketplace.” The show begins by discussing the green wisdom: it’s better to buy and eat local produce. This thought has given rise to farmers’ markets across the land. (I have to say that I love Tulsa’s, and my wife and I go every Saturday morning that we can. We buy cheese and corn and squash and… well, you know, right? You probably do the same.)

It turns out, according to academics who have parsed the matter eight ways from Sunday, that local isn’t necessarily better. It does not have much of an impact on greenhouse gases whether our food comes from down the road or across the nation. Santa Barbara County is a place in the top 1% of agriculture that is famous for “eating local,” both in restaurants and from the farmers’ market. But that “local” reputation is a myth, and only about 5% of food produced in Santa Barbara County is consumed in Santa Barbara County.  

It doesn’t matter, of course — my wife and I will still go to our farmers’ market and you will, too — but Adam Smith’s invisible hand is visible everywhere. Food gets to where it needs to be at the price that’s appropriate. When I was a kid and stayed with my grandmother in Manhattan (not Kansas, although there’s not a thing wrong with that Manhattan), it was said that the city got the best of everything — best beef, best produce and so forth. (New Jersey is still the Garden State, and it got that moniker because, before refrigerated railcars and trucks, it used to supply New York City with its veggies.) Why? Because it was the biggest city in the United States and demand was strong. In marketing, cash is king, and there was more money to be made by selling to New York City than anywhere else.

I thought of that because I got an Internet rant from someone about GM making cars in and for China. Of course! There’s Adam’s hand again, at work. China is where car buyers are, lots of car buyers. Good for GM. Good for Adam Smith. (And, even so, that local corn-on-the-cob was doggone good.)

Have a great week and buy local, or from anywhere your heart desires. This is a global economy, or it will be when Europe gets together on fiscal rules. As Mr. Buffett says, at the moment it’s half way there with currency, but the game won’t work forever until Europe has a sound cooperative fiscal policy.