Written by Trent Hamm, The Simple Dollar is a popular personal finance blog that chronicle's one man's road back from overwhelming debt to financial security. Hamm declared the contents of the blog to be in the Public Domain in 2008 and available for sharing when attributed properly. We will share a couple of posts a week.
Mark writes in:
“One of my biggest struggles with becoming frugal is that most of the inexpensive items aren’t made in the United States. I used to make an effort to buy as many products as I could from local places and tried to make sure they were made in the U.S. but doing that was expensive. Do you have to choose between buying local and buying cheap?“
First of all, does it really help to “buy American”? This might seem like a really obvious question, but it’s not as obvious as you might think. Many economists, such as David Henderson, argue that it’s better for the economy to simply buy the “cheapest” item or best bargain item regardless of the source. At the same time, there are many compelling arguments for buying American. There are also many arguments for buying local, too.
The decision to pay more to buy American or buy local isn’t an automatic decision and it has a lot to do with your economic and personal beliefs. Regardless of how you feel about it, it’s worthwhile to get educated on the topic.
The next thing you need to decide is whether it’s more important for you to buy local – keeping as much of your money as possible within the state or county – or to buy American – buying as much stuff as you can that’s “made in the U.S.A.” Essentially, you’re choosing whether to use your dollar to support manufacturing jobs somewhere in America or service jobs in the local area, but the tactics you use for each are different.
For example, if you want to keep as much money local as possible, your best route is to spend your money on purely local “experiences” and on products that are made locally.
Spending money at a local business that simply sells items that were made overseas doesn’t keep much more in the local economy than buying from a box store. Both employ local people, but both are also sending the wholesale cost of their items out of the local community and potentially overseas.
Forbes makes this argument very well, pointing out that many consumer products have low margins no matter where you buy them, so buying them local really doesn’t keep much more money in the local economy.
If you want to maximize your dollars in the local economy, then you should buy all items (except those made locally) as cheaply as possible, then spend the rest of your budget on local services and purely local items. Buy cheap batteries, but then pony up for a membership in the local parks and recreation programs. Get the cheapest diapers you can, but then buy your vegetables at the farmer’s market directly from local growers. Buy inexpensive razor blades, then buy milk from the local dairy.
On the other hand, if you want to “buy American” as much as possible, you simply use normal frugality tactics but exclude products that you discover aren’t made in the United States. Many products are labeled with their origin, but you’ll likely have to research some products to find out where they come from.
There isn’t a “right” or “wrong” answer here. It depends much more on what you find to be important.
As for myself, I am more interested in keeping money local than I am about keeping money within our nation’s borders. A thriving local community means a nicer place to live and better property values, after all.
For me, that means making an effort to partake in local services, join local organizations, and eat at local restaurants. We shop at farmer’s markets and look for strictly local repair people when we need help. We buy our milk from a local dairy and most of our wine from local wineries.
When I buy products, I do check to see where they’re manufactured, but I don’t consider it a top priority to buy everything from American sources. I try, instead, to buy the item that does the job well at the most inexpensive price. If it’s close, I’ll choose the American item, but I’m not willing to pay a premium to buy a product that doesn’t do a job well. My belief is that American manufacturing will succeed when it produces the best products, as described in the first link in this article.
No matter where you stand, though, the important part is that you’ve thought about it and are incorporating it into your daily decisions. As always, the world is a better place if everyone is thoughtful about the day-to-day actions that they take.