Dr. John Crawford: Buy-local law bad for economy

Op-Ed piece from the Journal-Gazette by former City Councilman Dr. John Crawford:

Buy-local law bad for economy
By John Crawford

The Fort Wayne City Council, in committee session on July 7 by a 7-2 vote, gave a do-pass recommendation to a buy-local ordinance. This gives preference to Indiana companies bidding on city business.

The ordinance is an updated version of a similar ordinance advocated by Councilwoman Karen Goldner last year that was opposed by the mayor and defeated at the City Council. The city administration is not opposing it this year because it seems less bad than last year’s ordinance.

But it is still bad economics. In this tough economy, it is tempting to do something to help local businesses. However, this ordinance will have minimal effect on any individual business. If a company must rely on preferences to obtain city business, it will not be competitive in obtaining business in the private sector.

If the city pays a higher price for services to the local bidder, that raises the cost of running city government. Is it really fair for many citizens to pay higher city taxes so a few citizens get preferences for their businesses?

Other cities, states or nations may retaliate with their own buy-local ordinances. This will then make it harder for our local companies to compete for business in other cities and countries. Anti-trade laws such as the 1930 Smoot Hawley Tariff Act that led to the Great Depression often result in trade wars and a loss of business for all.

Councilman Mitch Harper, who opposed the buy-local ordinance along with Councilwoman Liz Brown, voiced the concern that by jumping on a buy-local bandwagon, Fort Wayne could contribute to a protectionist atmosphere in the U.S. and Canada.

This ordinance is a bad idea. It is a feel-good measure that will have minimal beneficial effect on local business. It could lead to unintended adverse consequences. The City Council should reconsider and defeat this ordinance at its next regular session.

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