The arithmetic of abundance

There are quite a few podcasts that I keep an eye on but do not actually subscribe to. One of those is Econtalk, and recently I spotted a couple of things there that looked interesting enough to mark for listening. Rachel Laudan talked to Russ Roberts about the ideas in her book Cuisine and Empire, and as she's an old cyber-friend and previous guest on my own podcast, I was keen to hear what she had to say.

One of Rachel's key points is that we now live in an age of abundance. Globally, we grow enough food to give the whole world a decent diet. Sure, there are problems of distribution, but those are problems of politics and economics, not agriculture. We could quibble about that, especially taking a longer-term view, but there's another problem. How do you control, or even influence, what people choose to eat in this age of abundance? Nudges are all the rage, making the healthier choices easier to make; is that enough to get people to forego, for example, three meats a day? A few hundred thousand years of evolutionary history in which fats, sugars and salt were scarce have left us with little in the way of brakes to apply. Now that those commodities are cheaper than ever, and food processors are smarter than ever, we're eating more of them than is good for us.

One of the themes that runs through Cuisine and Empire is the way that food is a marker of class and privilege. Right now, a few rich people who have been blinded by the light of a more sustainable diet are making different choices, eating lower on the food chain, eating less. Do we have to wait for economic development to make people so rich that the whole world comes to the same realisation? And when that happens, how will the elites distinguish themselves once again?

It's a puzzle, for sure. I certainly don't have answers, although I am convinced that one problem is the way we keep the score. The cost of abundance is paid elsewhere -- in health care, environmental damage, animal welfare, human rights.

Which is why the other Econtalk show I listened to had me hopping mad. The host, Russ Roberts, talked about the economics of buy local with his colleague and co-author Don Boudreaux. Two things in particular made me cross.

One was the overuse of reductio ad absurdam as a rhetorical device. Like, if you have a local economy then you have to have a local car manufacturer, and that would make cars so expensive that nobody could afford to buy them anyway. Or, if the Chinese decided to set fire to a nominal $400 million trade deficit with the USA:

Then the goods and services they otherwise could have bought are available to the rest of us, so the value of the remaining dollars rises, so we can now afford to buy those goods and services. Dollars are claims on American assets. If foreigners don't take advantage of that, it's a gift to us. Year-round Santa Claus.

Which is true, but in my view that is not an argument against buy local as most people understand it. It's an argument against a straw man of protectionist, isolationist economics. Against trade, in fact, which was what most of the hour seemed to be dedicated to. And that is not merely a straw man but, as my old friend Nick Humphrey memorably said, a straw man with feet of clay.

Roberts and Boudreaux did briefly touch on buy local as most people, in my experience, understand it, which is in connection with food. Here too, they tried to rubbish the idea by making it silly; what if the farmer from whom you bought your broccoli spends the money on a car, or a fridge made in China?

The really good reason to buy locally, especially for food, is that it may reduce some of the externalities associated with food production and consumption.

And that's what made me really mad; throughout the discussion these two economists never once directly mentioned externalities, positive or negative. They weren't even implicit. So the idea that local food might have a lower carbon footprint, reduce other environmental pollution, even, God help us, result in more humane treatment of the workers who produce it, got barely a look in. That's not to say that all food should be local. I quite agree, for example, that New Zealand lamb shipped to Europe or the US might overall impose lower externalities than local lamb under some circumstances. But if food can be grown locally without too much in the way of inputs, I believe that there is virtue -- and economic sense -- to preferring it over the same food produced further away.

This is by no means an argument against trade, as Roberts and Boudreaux seem to want it to be. Nor is it an absolutist argument. If you buy local broccoli, you must also buy a locally made car, fridge and hedge-trimmer. If you buy local food, you must buy only local food.

Those are indeed absurd ideas.

However, buying some of your food from local sources brings benefits that their economics doesn't capture, in environmental pollution, in labour and possibly even in human health. The fact that their economics doesn't capture those benefits is not a reason to pretend they don't exist. It's a reason to change the way economics keeps the score and maybe change the arithmetic of abundance.

P.s. Comments still not implemented here, but there was a follow-up discussion that you can see here on Disqus.