Saturday, April 11, 2009

Backyard Economics is BACKWARD Economics; And Ultimately Leads To Economic Self-Sufficiency

According to the website Backyard Economics:

Money spent close to home adds up to better job security for everyone in the community. Out-of-state spending means fewer jobs in Florida. An economic impact study by Florida TaxWatch concludes that every $100,000 spent online with out-of-state companies costs one Floridian a full time job. In 2008, Floridians spent an estimated $11.2 billion on Internet purchases, mostly with out-of-state businesses. That adds up to more than 112,000 jobs lost in Florida just last year – reverberating across all sectors.

Plant the seeds of economic recovery in your own backyard. Support the businesses that will reinvest your dollars in your community.


An editorial in support of Backyard Economics appeared here in the Jacksonville newspaper, which inspired Don Boudreaux to respond and conclude that:

Florida's buy-local effort boasts the charming name "Backyard Economics." A more appropriate name would be Backward Economics."

MP: Here's another challenge to the Backyard Economics concept.

Jacksonville is in Florida's Duval County. Both state borders and county borders are just imaginary lines on a map, so whatever is said by advocates of Backyard Economics about the state of Florida should also apply to the county of Duval, no?. That is, the logic of Backyard Economics should apply equally to both the state of Florida AND Duval County, and we should be able to substitute Duval County for Florida below:

"Money spent close to home adds up to better job security for everyone in the community. Out-of-DUVAL COUNTY spending means fewer jobs in DUVAL COUNTY. An economic impact study by Florida TaxWatch concludes that every $100,000 spent online with out-of-DUVAL COUNTY companies costs DUVAL COUNTY one full-time job.

In 2008, Duval County residents spent an estimated $521 million on Internet purchases with out-of-COUNTY businesses . That adds up to more than 5,200 jobs lost in DUVAL COUNTY just last year – reverberating across all sectors."


(Note: Florida figures are adjusted to reflect Duval County's share of the state's population: 4.65%.)

Conclusion: Using Backyard Economics logic, Duval County residents should only support Duval County businesses, and should avoid patronizing out-of-county businesses.


But let's go one step further. By the same logic, cities located in Duval County like Jacksonville Beach should only patronize shops, restaurants, and businesses in Jacksonville Beach, and avoid out-of-city businesses. But then the logic would also apply to even smaller geographical areas like neighborhoods within Jacksonville Beach (don't buy "out-of-neighborhood"), a neighborhood resident's own block (patronize only "in-block businesses"), and then ultimately a resident's own household.

In other words, the logic of Backyard Economics for state economies like Florida ultimately leads to an individual household's OWN BACKYARD (literally), and complete and total economic self-sufficiency at the household level (don't buy any "out-of-household" goods or services).

14 Comments:

At 4/11/2009 1:07 PM, Blogger Bobby Warren said...

Reading this reminded me of the paradox of saving. If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy.

 
At 4/11/2009 1:42 PM, Anonymous JGillman said...

You know.. there are a lot of mail order businesses.. I'll bet for every $100,000 Michiganders spend on FL businesses, a Union Rep loses a job

hmmm...

 
At 4/11/2009 1:42 PM, Blogger Bruce Hall said...

Yes and the other paradox is that if everyone buys only imported products, our ability to export withers and then we get 12% unemployment and corporate bankruptcies.

Extremes always refute reasonable decisions and policies.

 
At 4/11/2009 5:18 PM, Anonymous vikingvista said...

"If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy."

"if everyone buys only imported products, our ability to export withers and then we get 12% unemployment and corporate bankruptcies."

And what both of these notions misses is that it isn't any particular configuration or extreme that matters, but whether or not individuals are free to act in their own interest. If the latter is true, then the economics of any configuration produces prosperity.

Put another way, what is missed is the difference between movement in general, and movement for profit; the mere pushing money and goods around versus using the tool of trade expressly for wealth creation. Trade does not necessarily create wealth, but voluntary trade rarely does anything else.

 
At 4/11/2009 5:18 PM, Anonymous Lee Kelly said...

Bruce,

The boundries used for accounting "imports" and "exports" are arbitrary. And buying imports does not diminish "our" ability to export.

If we take your household in isolation, all purchases you make are imports (because you don't pay yourself for goods and services rendered to yourself!). Does this diminish your ability to export i.e. to render goods and services to others?

The U.S.'s ability to export may have been undermined, but it is not a consequence of imports. For its causes you must look elsewhere.

 
At 4/11/2009 6:47 PM, Blogger Craig said...

If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy.

I'm not so sure that the paradox exists at all. In the case of saving, what's good for one family is good is surely most excellent for all.

 
At 4/11/2009 9:36 PM, Anonymous Anonymous said...

Reading this reminded me of the paradox of saving. If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy.

Saving is where real capital comes from, so it is always good for the economy. Saving is just future spending.

 
At 4/12/2009 3:03 AM, Blogger John said...

Interesting that this would be believed in a state whose economy is so heavily dependent on tourism. If people to the north decided to spend their vacations in their own backyards, Florida's economy would resemble Mississippi's.

 
At 4/12/2009 7:58 AM, Anonymous Anonymous said...

"other paradox is that if everyone buys only imported products, our ability to export withers and then we get 12% unemployment and corporate bankruptcies."

The dollars spent on imports are repatriated as payment for US exports.

 
At 4/12/2009 10:07 AM, Anonymous Anonymous said...

Bobby Warren said: "Reading this reminded me of the paradox of saving. If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy"

This is as much nonesense as the backyard economics argument. Since increased savings causes an increase in capital goods investments, and thus production, the end result is an increase in consumption. In other words, one may choose to consume the entirety of ones income, or spend all of ones time on hunting/gathering in order to consume. However, if you want to increase production such as to enjoy a higher standard of living, and consume more, one needs to save money, that is, to temporarily reduce consumption, and invest time/money in building some machine/technology etc. that will enable one to, e.g., hunt more efficiently, or gather food more efficiently. This is not at all bad for the economy. The so called savings paradox is in other words no such thing.

 
At 4/12/2009 12:10 PM, Anonymous gettingrational said...

From The Florida Times Union and Jacksonville.com.

HEADLINE: Governor Declares Florida Now Export Driven Economy

The governor declared beginning today that Florida will be an export driven economy. Special tax concessions (holidays) will be given to state exporters and tourists visiting Florida. One of the first iniatives will be for Duval county to become an entry point for internet purchased goods into Florida.
The Jacksonville Airport will be a designated facility to authorize delivery to customers of internet purchased goods. Inspectors at the facility will have responsibility for certifying that each product meet state standards that will evolve over time. Please have patience because we are just getting ideas from The 2009 National Trade Estimate Report on Trade Barriers. Economic pundits are quite pleased with the Governor's new stategy because Florida produced goods will be cheaper for consumers in other states. We will bring you updates over the next few years as the policy evolves and is refined.

 
At 4/12/2009 9:30 PM, Blogger OneCleverCookie said...

This newspaper's article is to parrot the government's desire to tax the out of state purchases most aggressively in order to fund their domestic agenda.

Bobby Warren said: "Reading this reminded me of the paradox of saving. If one family does it, saving is generally a good thing. If every families reduces consumption due to saving, then it is not so good for the economy"

The Keynesian argument regarding savings rates is no different than a Casino that doesn't reward players who don't put their bankroll into action. ALL Governments want the money to move, so that they may tax this capital movement in order to collect their Vig.

 
At 4/13/2009 8:18 AM, Anonymous SaulOhio said...

How about looking at this from another direction? Florida exports a LOT of oranges. What if people all over the country decided to buy local and only buy oranges grown in local greenhouses, since their climates aren't all that good for growing oranges? Florida's economy would suffer, putting all those orange growers ouf o business, and everyone else's oranges would be much more expensive. Everyone would be poorer by that much.

Has anyone seen that 50 mile suit, a suit of clothes made only from materials obtained within 50 miles of where it was made? It was done as an experiment, and looks like somehting Fred Flintstone would wear.

 
At 4/13/2009 12:02 PM, Blogger The Big "D" said...

It is a fallicious argument to assume that the cause of an effect reversed will be the reverse effect. That logic works in mathematics at the simplest level but not necessarily in actual practice. If $100,000 of Floridians' money stays in Duval county, does it mean that a job is saved? Possibly, but that is not what the statistic stated. Either way, I imagine that the harm coming from a buy-local mentality will far exceed the benefits. Good luck "buying Florida" outside of fruit.

 

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