Economics 101 & Public Square

Portlandia’s Lesson on the Economics of Ethical Buying Practices

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While watching the most recent season of the sketch comedy show Portlandia, I came across a skit that parodies ethical buying solutions with surprisingly good economic thinking.

Made in Portland

“Reverse Sweatshop,” a skit found in season four, episode seven, begins with a couple shopping for clothes in Portland.

The woman picks up a blouse and looks at the tag that reads, “Made in Macau.” Annoyed, she says “I can’t do that anymore.”

The man agrees with her consumer concerns. “Those countries just make me think of sweatshops or something,” he says.

She replies, saying “I wish I knew where my clothes were made and who was making them.”

To solve their problem, the couple decides to hire a custom shirt designer to work in their home. The designer lets them know that it will take about a month to make a custom shirt, implying it will be expensive. “I mean we get it, we’re paying for the quality,” the woman concedes.

Just a few days into the gig, the designer realizes she can’t meet the demands of the couple, who ask her to produce at a faster pace, so she brings more hands on deck. Ironically, eventually a sweatshop forms in the couple’s basement in Portland, and they find themselves perpetuating the very problem they were trying to avoid.

The end of the skit comes full circle, showing a couple shopping in Macau, China. The woman looks at a tag on a blouse that reads, “Made in Portland.” She says to her husband, “They have good labor practices. Should we buy it?” “Yes,” he replies, and the consumer knowledge problem continues.

The Shortcomings of Buying Local

This skit teaches (perhaps unintentionally) the shortcomings of buying local. It parodies consumers who automatically assume bad things about foreign manufacturing.

This is a knowledge problem between producers and consumers that isn’t automatically solved by producing locally, as the ending of the skit suggests. If we produced everything locally, we would run into the same economic realities of comparative advantage and supply and demand, as illustrated by the couple asking their designer to make clothes faster than she is able to by herself.

As consumers today demand more knowledge about the products they buy, ethical buying is a serious question we have to consider from a Christian perspective, without tossing good economic thinking to the curb. If ethical buying is your concern as a consumer, you might be able to do more to help the world by focusing on supply chain transparency instead of just buying local.

When the buyer has a close relationship with the seller, they are able to share more relevant information with the consumer about quality, ethics, safety, and environmental impact. Therefore, if the consumer demands lawful business practices, the seller will be held more accountable to that. Take coffee, for example.

Coffee and Comparative Advantage

I spent the summer of 2011 living in Grand Rapids, Michigan for an internship, and I spent a lot of my time at Madcap Coffee downtown. Like all other coffee roasters in America, Madcap doesn’t buy local beans. Hawaiian coffee is the only American-grown coffee because it’s the only state in the U.S. that has the right climate to grow beans. Madcap imports their beans from other countries to roast in house.

Because they can’t buy local, they focus on building relationships with the coffee growers they buy from abroad. According to an Acton Institute blog post,

A representative from Madcap has personally visited 75 percent of the farmers who provide their raw beans.

Ryan Knapp, owner and founder of Madcap, explains why a relationship matters when it comes to supply chain transparency:

A certification doesn’t really tell the whole story…. The big piece of it is the transparency aspect and knowing exactly where our dollar is going and being able to trace that down to people that are actually growing the coffee, farming the coffee.

Growing coffee isn’t our comparative advantage in the United States. If we tried to simulate an environment that made growing coffee possible in the U.S., it would be extremely expensive and probably wouldn’t taste nearly as good as coffee from Columbia or Kenya.

Just like coffee, labor-intensive manufacturing isn’t our comparative advantage in the U.S. either. China’s comparative advantage, on the other hand, lies in labor-intensive manufactured goods. This is why so many of the clothes we wear are made in China, and not by custom shirt designers in our basement. Buying shirts from Macau doesn’t have to be a bad thing, especially if good supply chain transparency exists.

Improving Over Time

Business markets, at home and across the world, create positive incentives to produce good products and improve working conditions over time. All businesses want to maximize value, and in order to do that, they are incentivized to create better products. This often means providing better working conditions to retain better employees.

Even without supply chain transparency, though it may be preferred, we know the incentive structures of the market remain in place and will improve product quality and production safety over time.

This humorous Portlandia clip teaches us that buying local isn’t always better. We have to think more deeply.

We should work on building relationships with foreign manufacturers and then support the companies abiding by lawful business practices and making clothes better than we can.

When we build relationships and support growing economies in free trade, we help the poorest people of that nation work and flourish. Letting go of the buying local obsession and focusing on supply chain transparency might be the more ethical way to love our global neighbor.

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