Wednesday, 12 December 2012

Why are 'localists' economically illiterate?


A while ago I pointed out that the foundation of much 'localist' dogma is something call the regional multiplier and it's pretty dodgy economics:

The problem is that measures of the multiplier do not take account of the input source (i.e. where the money is earned) and that it is very difficult to define what we mean by “local” or “local economy”.

Despite this people continue with their belief that somehow we can get more value from money circulating more in a local economy. This is despite the indisputable fact that the the models proposed by the advocates of independent shops as the solution don't work because the extra value is entirely taken up in higher prices. There is precisely no evidence that shows that preventing more efficient retail systems results in a more successful economy.

Yet off they go - time and time again - with their guffle:

The dominant big brand retail-led town centre model extracts value from places rather than adding value to them.

No they don't - big retailers add value by being more efficient meaning that prices are lower. That allows people to buy things that - under the system beloved of the 'localists' - they would not be able to afford. And then there's all this discussion of 'production' as if that was the point - it's not, we produce stuff for one reason (even though we may absolutely love the production we've involved in). And that reason is because someone wants to consume that production.

Town centres are important - we need to think hard about how to make them work and what tomorrow's town centre will be like. But peddling economic nonsense, proposing an avalanche of new taxes or imposts and judging the choices and preferences of others isn't what's needed.


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