Tuesday, January 4, 2011

The Locavore's Dilemma: Why Pineapples Shouldn't Be Grown in North Dakota

by Jayson L. Lusk and F. Bailey Norwood


January 3, 2011

Oklahoma's government, like those of 45 other states, funds a farm-to-school program encouraging cafeterias to buy their food from local sources. U.S. Representative Chellie Pingree (D-Maine) wants to help; she recently introduced the Eat Local Foods Act (HR 5806) to assist schools in providing local foods in school lunches. From Michelle Obama's White House garden to grants from the U.S. Department of Agriculture's "Know Your Farmer, Know Your Food" initiative, an agenda has emerged to give local foods more prominence on our dinner plates. Interestingly, no agricultural economist has informed the public that a key claim of local-food advocates—that local-food purchases enhance the local economy—violates the core economic principles taught in every introductory economics class. Until now.

A major flaw in the case for buying local is that it is at odds with the principle of comparative advantage. This principle, which economists have understood for almost 200 years, is one of the main reasons that the vast majority of economists believe in free trade. Free trade, whether across city, state, or national boundaries, causes people to produce the goods or services for which they have a comparative advantage and, thus, makes virtually everyone wealthier. Princeton University economist Paul Krugman, who won the Nobel Prize in economics for his contributions to the economics of international trade, called comparative advantage "Ricardo's Difficult Idea" because so many non-economists deny it and are unwilling to understand it. But if people understood comparative advantage, much of the impetus for buying local foods would disappear.

When the tomatoes are ripe and the price is right, we, the two authors, enjoy local food. In fact, we grow vegetables in our own backyards. But, according to some bestselling authors, daytime talk show hosts, celebrity chefs, and the U.S. government, we aren't growing and buying enough. These groups have offered a host of economic arguments to promote the sale of local food—arguments that are fundamentally wrong.


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