One of the silly notions loose in America is that there is some virtue in buying local — preferring sellers simply because they’re located in “your area” (city, county, state, country) over those located elsewhere. In other words, geographical discrimination is, supposedly, good.
Governments and governmental agencies often promote this idea because it sounds nice and the costs are widely dispersed among the taxpayers, almost none of whom will notice the increase in cost or decrease in quality.
Now the University of North Carolina may get into the act. Its Board of Governors is considering a measure that would require the system to adopt a rule that in-state contractors will have preference over those located in other states. In today’s Martin Center article, Anthony Hennen looks at this idea and finds it both strange and unsettling.
It’s strange because in-state vendors already win the large majority of contracts with the UNC system. Why add this rule? When Hennen tried to get an answer, no one deigned to provide one. The resolution asserts that it would benefit “the state,” but that’s baloney. What benefits the state’s taxpayers is getting the most value for each dollar spent and a local preference rule gets in the way of that.
Moreover, it’s possible that the rule could boomerang. Suppose that other states adopt similar rules for their university systems? Then we just get a decrease in competition and that hurts everyone except the vendors. Hennen writes,
If a contractor needs to beat out only three competitors instead of nine, the pressure to keep costs down diminishes. And, even worse, the resolution could increase the possibility of unethical collusion. If a handful of companies dominate the process, it is easier to coordinate what work to compete — or not compete — for. One begins to wonder, when such a resolution is introduced, who stands to benefit?
Perhaps one or more members of UNC’s Board of Governors will read Hennen’s article and then explain to the rest of the Board why this “buy local” rule is a lousy idea.