TCS Daily

The Route to Poverty

By John Downen - July 18, 2003 12:00 AM

The farmers' market in Bozeman, Montana is a charming way to purchase locally grown produce and handicrafts. The ideal of self-sufficiency such markets imply is often advocated by environmentalists and community food co-ops, e.g., "Be a yokel, buy local." But while it may appeal to the well-off and socially conscious, if taken to its logical conclusion it has disastrous effects.

Here's a blunt fact: Self-sufficiency is the route to poverty. If we spend all our time growing our own food and fibers, making our own clothes and shelter and tools, there is no time left to accumulate the capital that improves well-being (e.g. medical care). Mere subsistence is neither pleasant nor helpful to others. Buying locally generally means paying more for the same amount of goods. But for the person living hand to mouth, wealth accumulation is the key to a better life.

Individuals are not endowed with identical abilities. Thus, if someone specializes in doing what she is good at, she can produce more of that than if she had to provide every necessity herself. She can then trade the excess for the goods she wants and needs, made by people who produce them more efficiently (i.e., using fewer resources). Even if she is better at everything than anyone else, it doesn't make sense to spend her time doing everything. By specializing and trading then, we increase the amount of goods produced, promoting economic growth and making everyone better off.

Under self-sufficiency there is no room for artists, philosophers, or scientists. Indeed, as economist Murray Rothbard put it, "Without the opportunity to specialize in whatever he can do best, no person can develop his powers to the full; no man, then, could be fully human."

Specialization also means that each person's well-being is dependent upon goods and services provided by others. This leads to a market economy based on cooperation. Economist Ludwig von Mises described it well: "Through cooperation men are able to achieve what would have been beyond them as individuals... The greater productivity of work under the division of labor is a unifying influence. It leads men to regard each other as comrades in a joint struggle for welfare, rather than as competitors in a struggle for existence."

Self-sufficiency is not only stagnant, but wasteful. An individual or community or nation is not the most efficient converter of the available natural resources into every good it needs or wants. And the particular combination of locally available resources may not be the most efficient way to produce the end product -- someone halfway around the world may be able to produce the same good using fewer inputs. We could grow mangoes, bananas, and coconuts in Montana, but this would be an absurd waste of land, water, and energy.

Thus, protectionism ultimately hurts society. We pay higher prices at home and foreign (whether out of town, out of state, or out of the country) producers are unable to sell us their goods. We also break the ties of mutual dependence and cooperation.

Commerce and trade are natural human activities. When two parties engage in exchange at mutually agreed-upon terms, both are better off. Restricting trade in the name of a pastoral-primitive ideal of self-sufficiency enriches a few at a cost to many, and prolongs the poverty of developing peoples.

I suggest Greens be aware when their environmental concern trumps consideration for their fellow human beings. When folks romanticize poverty and primitivism, and portray the poor as "noble savages" living a simple life in harmony with nature, they are being remarkably paternalistic. The lifestyle of poverty is not to be fostered.

I join my well-off friends when deciding to consume less or to pay more for locally or organically grown food. For the poor, frugality and self-sufficiency are endured out of necessity, not pursued as a noble cause. Those truly concerned about the plight of the poor in the world should favor trade, not aid; economic growth, not welfare.

The anti-globalization crowd would have us keep our jobs to ourselves and deny employment and export opportunities for poor people in developing countries. Neither would they let us buy foreign goods because that takes jobs from people at home. Such narrow-minded isolationism is mean in its consequences.

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