On the wagon or not? Buy local campaign has supporters and detractors

The Blue Band Wagon campaign encourages participants to wear blue wristbands that remind them to buy local and support Grand Valley businesses. As the campaign enters its second year, the effort continues to draw support, but also criticism from some who say buy local promotions run counter to economic principles. (Business Times photo by Mike Moran)

The Blue Band Wagon campaign in Mesa County celebrated its first anniversary with public fanfare and support from businesses and local media.

Similar to campaigns across the country that encourage people to buy products in the communities in which they live, the effort launched by the Grand Junction Area Chamber of Commerce seeks to circulate consumer dollars within the community as a purported method to create jobs, boost income and increase sales tax collections.

The Blue Band Wagon campaign is similar in philosophy to a “Buy American” campaign touted by some national groups and featured in special reports on national television news in the past year. But it’s a philosophy challenged by the U.S. Chamber of Commerce, which last year campaigned against a “Buy American” provision of in federal jobs legislation. And it’s a philosophy that causes one local businessman and political columnist to challenge the wisdom of such a campaign in the Grand Valley.

“When you start ‘buying locally’ and not buying the best for the lowest cost, the allocation of resources gets distorted,” says Linn Armstrong, who co-authors a politically oriented column in a local newspaper.

If buying a product locally results in paying a higher price than a consumer could pay elsewhere, he has less money to spend on such luxuries as going to the movies, Armstrong said. The result is that the person trying to help local business reduces the amount of products he can buy and a company that provides the product for less money can end up with less profit than it otherwise would earn.

The Business Times contacted Armstrong after he penned criticism of a series of reports called “Made in America,” aired by local NBC affiliate KKCO-TV and news anchor Bernie Lange. In the column, Armstrong cited the philosophies of the French economist Frederic Bastiat, who in the 1800s suggested that restraint on trade is similar to an attempt to increase jobs for candlemakers by blocking sunlight from homes.

Armstrong went on to write: “What Lange sees are the manufacturing jobs lost. What Lange ignores are the exporting jobs created and the additional wealth made possible by trade. Lange sees that spending more money on American-made products would contribute to the paychecks of American workers. Lange ignores the fact that spending more money on the same goods would deprive other businesses of those dollars.”

Free trade is a large reason per capita product in the United States is more than $47,000 annually, while it’s about $7,400 annually in China, Armstrong said.

Lange initially agreed to comment about Armstrong’s comments, but declined after conferring with news director Amanda Wagner. Wagner declined to offer a summation of the “Made in America” reports or to respond to Armstrong’s column.

“KKCO doesn’t have any ‘reaction’ to any sort of comment,” Wagner wrote in an e-mail response to questions from the Business Times. “We welcome all different viewpoints and opinions …. KKCO always looks for all angles in all the stories we present.”

One such alternate opinion was expressed by the U.S. Chamber of Commerce, which announced in January 2010, that it had sent a letter to Senate leaders opposing “Buy American” requirements in a jobs bill.

“The ‘Buy American’ rules are now backfiring on the United States, stunting job creation, delaying projects and causing retaliation abroad,” Bruce Josten, executive vice president of government affairs for the U.S. Chamber wrote. “As we approach the anniversary of the passing of the Recovery Act (American Reinvestment and Recovery Act of 2009), we should learn from our mistakes and avoid including such rules in future legislation.”

The U.S. Chamber also cited a 2009 study that concluded the cost of “Buy American” provisions in the recovery act is substantial, especially as other countries implement ‘buy national’ policies of their own.

A parallel can be drawn locally, as “buy local” efforts in nearby Western Colorado communities mirror the effort in the Grand Valley. The Montrose Chamber of Commerce recently implemented its own buy local discount card, offering reduced prices to people who shop in the town.

The launch of the campaign was announced in Grand Junction media, begging the question as to whether it’s permissible for Grand Junction to seek shoppers from outlying towns while also promoting the concept of buying in town whenever practical.

“We tell them to shop their local community first. But if they do not spend their dollars there, we ask that they consider spending their dollars with us versus going to Denver or buying from an online company that does not have a local or regional presence,” Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce, wrote in an e-mail to the  Business Times.

The Grand Junction chamber doesn’t ask people to limit their purchases to Grand Junction businesses. The campaign covers all of Mesa County, including the municipalities of Fruita and Palisade. And there’s no policy that asks people to limit shopping to locally owned businesses or within the county’s borders, either.

“What we’ve said all along is, ‘where possible,’” Schwenke said during an interview about the campaign last summer. “Not 100 percent of the purchasing is done locally.”

The chamber itself has exercised the option, hiring Indus Travels of California to manage details of a chamber-sponsored trip to Italy last year. The travel agency was equipped to handle the trip and has joined the local chamber, Schwenke said.

And the chamber has plenty of public support for its campaign. KREX-TV aired an announcement featuring general manager Randy Stone, who endorsed the buy local concept. “We’re big supporters of the community,” Stone says in a voice message response to the Business Times. The concept is simple and straightforward, Stone says, because local purchases result in funds for paving roads and for the salaries of police officers, firefighters and teachers.

KREX is not among the more than 150 businesses that have joined the campaign and advertise discounts to customers who display blue wristbands as part of the Blue Band Wagon campaign. The special offers are as diverse as the types of businesses which have joined the campaign. Bank of America offers $500 off closing costs for the purchase of a new property. Decadence Gourmet Cheesecake offers 15 percent off all products.

St. Mary’s Hospital offers a 10 percent discount in the hospital coffee shop. The Western Colorado Botanical Gardens offers $1 off the regular admission charge.

Armstrong argues that in some cases, businesses are selling at discounted prices when customers would have paid full prices to begin with. So a local business can actually be harmed by the effort to boost local sales.

The campaign runs counter to the philosophy of another famous economist, Adam Smith, who wrote “Wealth of Nations” in 1776. The proponent of the “invisible hand” of a free economy began his philosophic quest by searching for the most moral way of life, Armstrong says. Smith concluded consumers and businesses can best produce a stable and expanding economy by pursuing their own economic self-interests. This became known as laissez-faire policy, which is routinely debated in modern times as the country seeks ways to improve the economy.

Schwenke declined to join in a discussion about whether the buy local campaign runs counter to Smith’s views. “Sorry, but I’m not into deeply philosophical discussions about the program and really can’t answer your question relative to Adam Smith’s invisible hand philosophy,” Schwenke wrote in her e-mail to the Business Times.

In Fruita, the publisher of a newspaper there went so far as to oppose the selling of non-Fruita area goods at the local farmer’s market — with the exception of farmers themselves.

“I don’t have a problem with farmers selling anything, all fruits and vegetables grown outside of Fruita, but I do have a problem with street vendors selling jewelry, clothing, food, all items that Fruita merchants pay leases, rent, payrolls to promote their wares,” said publisher Bob Sweeney.

Out-of-town visitors to the farmers’ markets in Fruita, Grand Junction and Palisade bring out-of-town dollars to the local communities, just as the chamber of commerce touts the local Cabela’s as a nationally acclaimed store that lures shoppers from outlying areas, even as far away as Denver.

Such issues involving the “buy local” campaign have some Grand Valley business owners questioning the wisdom of the Blue Band Wagon. But they confided with the Business Times they won’t publicly criticize the campaign for fear of losing business.

As local efforts to improve the Grand Valley economy continue, there could be more analysis of the merits and potential problems of a buy local campaign.