Seeking Profit by Denying History

by Martin Harris

You need not go back solely to St. Thomas Aquinas and his praise for pecuniativa in household or business management; the same concepts of prudence in money-matters and the virtues of profit-seeking were described earlier by Aristotle and later by Adam Smith. It was the latter who enlarged on the concept by arguing “comparative advantage”, mutually beneficial exchanges (today we call it economic activity) on an inter-regional scale between producers of goods and even services, the underlying concept being that the superior product (in terms of quality and/or price), when purchased or sold distantly, retains savings locally for other consumption or investment purposes. Typically, advocates for local preference ignore Mr. Smith, just as advocates against big-box retail ignore the same inconvenient fact: when money is saved during purchases of needed goods at lower price, the savings can be, and typically are, spent elsewhere, most usually locally, so that the best way to “save” a mom-n-pop store on Main Street is, contrary to the critics, to enable low-price big-box retailing out on the by-pass.

All that history and economics notwithstanding, niche-seekers in retail sometimes argue that local-vend/local-vore is best, and they can make it all happen, while exercising pecuniativa for themselves, a personal-profit point usually concealed behind lofty rhetoric about “our mission to increase community wealth”. Recent local example: Dan White, founder of LocalVore, Inc., a new-to-Vermont retail-intermediary which sells (at a profit, one would hope and suppose) the service of connecting consumers/buyers with producers/retailers/vendors more efficiently, cost-wise, than traditional advertising, thereby enabling voucher-based-discounting to attract buyers while reducing overhead-costs-of-sale to attract sellers. On a broader (dare your Humble Scribe say “inter-regional”?) scale, the same business model now being pushed by him within little Vermont has already been quite successfully established across the US by such corporate giants as Groupon and LivingSocial.

Vermont’s economic history isn’t mentioned in Mr. White’s keep-it-local (with him as middle-man) rhetoric, and that’s because it’s filled with inconvenient facts which give more credence (and gave more “community wealth” within Vermont) to the Adam Smith argument that selling remotely can raise standard-of-living locally far better than refusing to do so. Vermont’s economic prosperity started early in the 19th century, when the agriculture of the just-cleared-of-primeval-forest Champlain Valley was converted from subsistence (local-vore) to commodity-sale, enabling (briefly, because of the Erie Canal) the wheat-basket for already-urbanized southern New England and New York. It was profitable for the growers, as the remarkably elegant (and expensive) architecture of surviving period farmhouses, churches, and municipal buildings still illustrates. By mid-19th century, Vermont was deep in the high-price Merino-sheep-wool export business, with beyond-State-borders buyers willing to pay a remarkable 57c/lb ($14.70 in today’s diluted currency, compared to about $2.60 in recent years) for the commodity; and by late 19th century Vermont had gone dairy, with night trains to Boston and New York carrying milk and milk products to distant (that’s non-local) consumers/buyers. By the early decades of the 20th century, Vermont’s machine tool industry in the Connecticut River corridor had earned, and was profiting from, a national and global market, a technological accomplishment and reputation which were part of the mid-20th century (1957) IBM decision to set up shop in Essex Junction, not so ironically at the close of a long period of milk-price prosperity for small-scale family farmers, and so it, and other industries, did their bit to limit and counter the inter-regional export of young Vermonters to middle-class jobs and futures elsewhere. Now, it’s precisely that continuing loss of young adults, primarily for economic reasons, which could be managed by encouraging high-tech production for inter-regional trade, but which can’t and won’t happen until present patterns of hostility to business, particularly inter-regional business, on the parts of both voters and pols, are somehow reversed. IBM’s recent investments (and relatively-high-wage job-creation) for just such purpose have taken place at Fishkill, NY, not Essex Junction, VT.

It’s quite true, as Mr. White argues, that money spent locally is re-spent locally; but it’s also true that it’s goods bought and sold distantly (think cars and tractors from the Midwest, milk and cheese to the Eastern Seaboard) which enable workers and savers there to come in and spend their discretionary dollars on Vermont tourism, to purchase Vermont products at a distance, even to send their college-age kids to Vermont schools. Vermont is still one of the highest milk-production per capita States, Hoard’s Dairyman reports: all that bovine effort couldn’t possibly be consumed locally, as Mr. White would prefer to broker it; a small quantity of artisanal cheese, maybe, but even that would sell more profitably more distantly, to better-heeled consumers in higher-household-income States. And isn’t “more profit” exactly what St. Thomas had in mind with his pecuniativa argument, just like Aristotle before him, Adam Smith after him, and even Mr. White with his “community wealth” argument today?

Derogatory references to local-sell –think Napoleon on England as a “nation of shopkeepers” and some unknown wordsmith on “people taking in each others’ laundry” as criticism of the service component of an economy—notwithstanding, there’s an argument for local-sell and local-vore whenever the 18th century Mr. Smith’s “comparative advantage” for more distant trade doesn’t actually exist. Does LocalVore management (the 21st century Mr. White) so discriminate? You research, you decide.