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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  • Tim Weinhold

    “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.”

    Come on, really? General Motors has been making cars for a very long time — plenty of time for those beneficial “market structures” to have had their effect. GM has now issued 75 recalls this year alone, totaling over 30 million vehicles — more than triple the number of cars they sold worldwide last year. Oh, and one of those recalls was for an ignition switch defect that GM acknowledges caused the death of 27 people, and may be responsible for well over 300 fatalities. If only the market incentives you naively trumpet worked as simply and beneficially as you imagine.

    • Accidental economist

      Such an odd example to use. GM has been protected from normal market forces for decades. If the market had been allowed a decisive vote, GM would have gone bankrupt years ago. it’s not called Government Motors for nothing.

      • Tim Weinhold

        Really? Do you think the GM example is an anomaly? Samsung recently officially apologized and promised compensation to hundreds of employees (most in their 20’s and 30’s) who developed cancers from the company’s unsafe handling of toxic chemicals during semiconductor fabrication. More than 50 of their workers have died from these cancers. Earlier this year, the town of Oso, Washington was wiped off the map by a landslide caused by clearcutting the hillsides above the town. 43 people died. Multiple investigations into the BP Deepwater Horizon blowout concluded that the primary factor was that BP had been shortchanging safety for profits for years. 11 workers died and 16,000 miles of U.S. shoreline were contaminated — the largest environmental disaster in the history of the petroleum industry. The list could, unfortunately, go on and on. Markets don’t work nearly as simply, or beneficially, as you seem to think.

  • heartsandmindsbooks

    Thanks for this. I appreciate your efforts to educate us about these complexities and thought I’d weigh in.

    It seems to me that this piece didn’t quite make sense to me. It advocates “supply chain transparency” suggesting that this is somehow possible with global businesses. I myself have had some direct dealings with large corporations, trying to learn about their global practices, attending share holders meetings, interview Board members and so forth. I’ve done this with globally recognized multi-billion dollar transnational corporations, as well as regional grocery store chains, and, in an effort to resist pornography, a regional convenience store chain. I’m not expert, but have spent hours and hours in conversation with corporate business leaders investigating these very matters.

    Allow me to be blunt: not all are guilty, of course, but some of these folks simply lie to consumers. More than a few global corporations have been known to kill people who press too hard to learn about the details of their practices. (Think of the horrific situations in most Central American countries when pineapple or banana growing labor practices were being explored in the 1950s and advocates for change were literally murdered. Or in India, recently, where sweatshops are protected by corrupt police and justice advocates can be dangerously repressed. I’m sure you’ve read Gary Haugen’s most recent work, “The Locust Effect” about the horrendous lack of the rule of law in so many parts of the world.) This writer of this piece should have admitted that this is very complicated and will take hard work in a world as fallen as ours.

    That somehow we can know far away multi-national corporations whose headquarters are shielded from the public (with security systems and oodles of lawyers — again, I’ve been there!) and invite them to fair practices more easily than we can locally owned businesses is naive beyond belief.

    The good example used in this essay was, of course an independent, local business in Grand Rapids; the writer could get to know them, and learn about their practices, in part because, well, they are relatively small and local, and accessible. She could meet with the staff, talk with the owners. Try finding out this kind of stuff from an out of town chain with layers of corporate managers and lawyers and PR guys who are paid to spin their work and lead consumers astray. As they say, “good luck with that.”

    An evangelical organization like the Institute for Faith, Work & Economics, it seems to me, should be more attuned to the teaching of the Bible about sin, the likelihood of injustice, and the duplicity among the powerful. This piece seemed nearly laughable in its simple idealism, suggesting we can know the big corporations and ask them to be transparent, and mean in its mocking of those who realize that this may be more plausible in and with local businesses. The Madcap example, again, shows how this works: family owned, locally-based businesses can be accountable, and often want to be, since they are rooted in their own towns, and are involved in their own local civic organizations, Chamber of Commerce, churches and the like. To get at the good idea of supply chain transparency did you really have to caricature and mock those of us who are glad for those who support local, family-owned businesses?

    I also have to note that the last paragraph troubled me as well. It made a huge, un- argued leap (of faith) by stating, “When we build relationships and support growing economies in free trade, we help the poorest people of that nation work and flourish.” We do? Always and everywhere?

    The writer went from “building relationships” (fair enough) to “supporting economies in free trade” which, for many who have actually built relationships with third world businesses, those liberated from sweat shops, farmers or migrant workers sweating in agricultural lands in Hondorus or California, have come to believe, based on the reports of these very workers, that free trade alone is not adequate. This is a different conversation then the point of this piece — locally-owned businesses vs global entities, relationships and supply chain transparency — and thought the free trade plank shouldn’t have been just dropped in there as it was. The point that not all local owners are good and that not all transnational corporations are bad is fair enough. Even granted that, though, the jump to “free trade” as helping the poor was not examined or argued and as a reader it felt odd seeing that bit of controversial ideology just dropped in uncritically.

    By the way, as a small business owner, a locally-based, family-owned retailer who does national and international sales, I greatly appreciate the “buy local” movement. Of course it can be overstated, and the Portlandia sketch I’m sure was funny, laughing about the extremes in that hipster locale. But for this writer to caricature those who are struggling to rebuild sustainable, regional economies, guided by ancient wisdom such as (Roman Catholic) subsidiarity or (Kuyperian) sphere sovereignty, as an “obsession” isn’t respectful or helpful. Who is it, exactly, that is “obsessed” with only buying local? I know of no one who say or does that. What localist doesn’t appreciate “comparative advantage”? Who doesn’t know that we needn’t manufacturer all our products ourselves? It’s fun to laugh at the extremes, but to suggest this offers some vital lesson feels like a “straw man” argument.

    However, if we are going to talk about “comparative advantage” realistically, we must affirm, as this writer does, that in God’s world, different locales have various gifts and assets — good climate, say. Sure it is good to do business with others from all over God’s diverse world. But it is irresponsible to suggest, as some seem to, that the vicious sweat shop conditions or awful wages and near slavery practices of some places is a legitimate part of their “comparative advantage.” That some third world countries — China comes to mind — have a disastrous lack of environmental regulations, again, shouldn’t be touted as a wholesome sort of “comparative advantage.” This is an advantage they have that is reprehensible and no amount of fair trade ideology is going to speed along their repentance.

    I do not know what, exactly, is the wisest and most prudent and virtuous path forward, but this piece seemed naive, at best, and insulting of those of us who in fact are trying hard to work for thriving local economies, responsible stewardship of our own resources and buying habits, and who wish for greater consumer awareness about the things that matter so very much. Supply chain transparency is a good idea, to be sure and I appreciated the author’s suggestion to work on that as a key to faithful and fruitful economic reform. Let’s just be realistic about how hard this will be when dealing with people who you do not know, in places you do not know, and who do not care about you, let alone about God’s principles of justice and ethical service.

  • heartsandmindsbooks

    If you don’t mind, I’d like to add another concern or two, sharing my frustrations with this piece. I am aware that this wasn’t intended as a major treatise on the pros and cons of the localist movement. Readers ought not expect you to say everything about all this in one short blog post. Understood.

    The essay seemed, though, to me at least, to throw the baby out with the bathwater, as they say. It seemed pendantic, as if you just wanted to critique those who support family owned businesses, as if that is somehow foolish or ill-informed.

    Yet, it might be noted that for many in the “buy local” movement it isn’t just that we as buyers can have real relationships with our local neighbors who offer goods and services, making the economic transactions more face-to-face and relationally meaningful (and allowing for accountability and reform, since the shopper/vendor relationship is less abstract) or that it is a more efficient way to generate money and taxes locally, but there is also this concern about our stewardship of resources. Shipping stuff all over the world in instances when it isn’t necessary is just so costly and wasteful of God’s energy that it seems unwise, perhaps dangerously so.

    It is just foolish to genetically modify tomatoes, say, which now are hard and white and mealy and tasteless, with little (God-intended) nutritional value, so they can be flown in from so far away, even if from a place with the “competitive advantage” Ms Amyx taught us about (sunshine all the time, say.) Bad food, manufactured via industrialized processes so they can be shipped and sold in large, corporate stores, use vast resources of (limited) energy, bringing us a bad product at a huge cost, that is largely unaccounted for in typical economic reports. This is a very unwise strategy, when local shoppers could buy local tomatoes in season from local farmers, and can and jar produce for use in the winter months. I know, I know, most of us can’t or won’t do that. But the desire to support local and regional agriculture and traditional cooking skills and habits is not some lefty hipster ideology from Portlandia, it is old fashioned common sense, supported in our area by old fashioned farmers, many who are Christians, who have thought long and hard about meaningful, sustainable farming and selling of produce. (In our area in South Central Pennsylvania, this includes a lot of fruit, too — including some of the world’s best apples!) If they read this critique of their way of life and livelihood, based around farmers market’s and such, these old school hard working Christian farmers — would be perplexed and hurt, I’d think. Do you really mean to mock those who have poured energy into revitalizing local markets, places for farmers and artisans to get their stuff sold? Do you really mean to suggest that preferring global supply chains from faceless corporations elsewhere may be a better way to help cultural flourishing and the serve the poor? Always and everywhere? For instance, say, to really think it is Christianly faithful to buy chemically-polluted, water-ed down honey from little plastic containers made in China, without regulation, rather than supporting regional (or local) bee-keepers, whose honey is indigenous, and therefore much more healthful, fresh and good? Competitive advantage or not, we should cringe when we see the unhealthy junk that is peddled in plastic, while local friends and neighbors who may be providing earnest, wholesome goods and services languish because their product costs a bit more.

    Which is to say, again, I thought this exercise in trying to draw a lesson from a TV comedy was not as helpful as it might have been, and it felt like you were chiding many traditional Christians for our desire to be good stewards, support our neighbors, know our regional economies, and be sensible about the stuff we purchase, and the companies we support in the marketplace. Perhaps you didn’t intend for it to come across this way…

    By the way, this arena of agricultural services and food buying is another illustration of your main point: these matters are complicated and the answers are not simple. My wife and I desire to buy much of our meat, poultry, milk, and produce from local providers, but so many of them — good neighbors, friends, and really local — use chemicals and unstewardly practices that we try to avoid. So we have to go farther away to find farmers who do their butchering and milking and chicken-raising in more wholesome, normative ways. I’d like to support our local farmers more, but sometimes they aren’t doing good work; buying chemically-polluted produce from down the road is maybe better than flying it in from across the continent, but not by much. So I affirm your good insight that the choices are not merely to buy local or not local; sometimes it is better to go farther, and local isn’t always best. And I am thankful daily for the good gifts (like coffee) that come to us from far away. Few would deny that, I don’t think.

    My take away: don’t mock the localists who have many good reasons for what they do, and whose books and research and experiences should not be dismissed so glibly. But, I agree, these matters aren’t simple, and living faithfully in God’s broken world demands much conversation with many different stakeholders, contributors, and participants in our complicated economy, those who are near and those who are far away.

    • Elise Amyx

      Thank you for your comment. You are right – free trade alone is not adequate. A firm and just rule of law must be in place in order to protect ethical business practices, as I mentioned in my post. But even that can’t stop sin. There will always be lairs, cheats, and greedy business men, and I should have emphasized that more. That is why we need the Jesus. However, my point was simply that increasing transparency between buyers and sellers can hold the seller more accountable to the values of the buyer. I think this should be considered a valid alternative to buying local, especially since increasing free trade between nations has been proven to benefit developing nations significantly (see WTO, World Bank) when the conditions are right (i.e. just government and firm rule of law in place).

      But as you mentioned, transparency might not be easy to attain at all. It might be much easier to have transparency with local businesses rather than global corporations. I do not believe there is anything wrong with buying local at all, and I apologize if it came across that way. I love buying local produce at the farmers market in my neighborhood and supporting local businesses. I’m also a huge fan of Virginia local and organic farmer Joel Salatin. I wrote a series about him on our blog here: http://blog.tifwe.org/joel-salatin-on-work-and-stewardship-part-1/. I mentioned one of the comparative advantages in the U.S. is agricultural production, so I think buying local tomatoes makes a lot of sense. All I would like to propose is that buying everything local is not a one-size fits all solution in caring for the poor. It’s easy to forget that trading with developing nations can do a lot to improve their economic conditions for the poor. We all agree as Christians we need to protect the poor and businesses should act with integrity. This isn’t an easy issue and I’m excited we’ve started a dialogue about how Christians can address these issues.

  • heartsandmindsbooks

    I saw this quote from a book called “The Home Town Advantage” by Stacy Mitchell that reminds us again of how government policy can be helpful or hurtful, and nothing develops in a vacuum. With the free market orientation of the Institute, I’d think you might want to explore this:

    “Losing local businesses to national chains stores is by no means inevitable. Indeed, the growth of chain stores has been aided in no small part by public policy. Land use rules have all too often ignored the needs of communities and undermined the stability of existing business districts. Development incentives frequently favor national corporations over locally owned businesses. Increasing numbers of communities are rewriting the rules around a different set of priorities that encourage a homegrown economy of humanly scaled, diverse, neighborhood-serving businesses…. Active decision making at the local level and a creative approach to zoning can provide a powerful arsenal for defending community.”

    • Elise Amyx

      Yes, I’ve thought about this before. How can we protect the small business from Walmart barging in to buy up their property? Well, the customers have the buying power. Look at Austin’s campaign called “Keep Austin Weird.” It’s just one example of a community rallying together to keep small businesses alive and well in a community.

      • heartsandmindsbooks

        Thanks Elise. I appreciate your writing. May I be honest, though: even though this is just one little reply, it seems a little naive. Shoppers do not have the way when the elected officials give tax breaks to places like WalMart. I’ve joined other citizens to organize public hearings about WalMart getting tax breaks and the county using eminent domain to take farmland to expand the lanes of traffic so Wal Mart could abandon their current huge facility and huge parking lot (who is going to buy such a spot?) to take up needed farmland to create a new one nearby? We citizens and shoppers have little power over the government incentives, the tax laws, the guys in suits with legal power. These lawyers with endless resources are in collusion with local folks to do stuff that isn’t normative, good, beautiful or true in our community, and it has been grueling to resist their power. If it was a big company based here in town, made up of a board we knew, and who cared about us, it would be a very different conversation, I’m sure.

        But, yes, local folks can and do rally and support local businesses, and we are grateful. People of integrity can avoid the faceless porno dealers at amazon, but it will be an uphill effort to get people to think about being faithful in their daily economic choices. If more Christian think tanks helped out, we who own family businesses that try to do good would be grateful. Giving ideological justification for buying from faceless corporations who deal in sweatshops from countries with bad labor and environmental legislation, as it seemed you did, doesn’t help us live out our stewardship in our local towns.

        Thanks again for making us think.

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