Buying Local Comes with Risks 🇳🇮

Añadido: 2026-06-03

[00:00:00]I'm Scott El Miller. This is my life living in Leo, Nicaragua. And in a recent video, I talked about the joys and the benefits and all the opportunity that there is both for yourself and to help the community and country in general by buying local in Nicaragua.

[00:00:12]Now, that's a great way to look at any place that you're living, whether it's Nicaragua or abroad, that you can make a positive impact. And boy, it's, you know, as as someone who lives here, I find it so beneficial to just my enjoyment of the place, my experience of the place by learning about local products and and where they're made, not just Nicaragua versus Honduras, but also what's made in Madagalpa, what's made in Leyon, what's made in Managua, and so forth. It it's educational, it's it's cultural, and it's culinary in the case of food. So, that stuff's great. But this also brings up an important thing that we also need to consider, and that is that we shouldn't be buying local blindly. And I know this seems to fly in the face of what we just said, but there's a real risk that comes from this mentality. So, I want to talk about that as well. So, we're going to dig into when local actually becomes a dangerous thing or maybe just a neutral thing without the benefits right after the B.

[00:01:22]Growing up in smalltown America, we always heard this adage, buy local, buy local, right? Support Main Street, not Wall Street. And there's a lot of sense to that, right? Build your communities, shop where you are, reduce logistics. So that's not generally what people actually mean when you dig under the hood. There's something more insidious being said, and that is to prioritize that something is local over whether or not it is a quality product or a wellpriced product or if the employer is a good one. That last one is a little bit difficult for people to dig into and it's easy to manipulate people on, but I want to give a really solid example from my own childhood that I think gives a lot of example of what I mean. It doesn't take much to explain why buying local has benefits. When you're walking down Main Street in your town or you're walking around the roads of your bario here in Nicaragua, when you shop local, you can see the results of your shopping, keeping little shops open, making it easier to walk across the street and get a soda rather than having to travel to a supermarket and so forth.

[00:02:22]Those things are very tangible, right?

[00:02:23]And moving back to the United States, if you were to do so, you would instantly notice, wow, I have to drive minutes to be able to get most things. But if I was living in Nicaragua, I could spend less time walking than I spend driving in the US to go get eggs and flour and ketchup and bottled water and a soda and chips and some basic necessities, right? And so that is pretty easy to see how local purchasing, in this case, super local purchasing is creating positive impacts for you in your local community. So it's it's not hard to see that and not hard to understand why that's good. But where could it be negative? So, I grew up near Jennisio, New York, and that's where I'm going to be and probably where I will actually be as you watch this video because I'm going there to visit my father who moved to that town a number of years ago. My first house was there.

[00:03:12]But growing up, I grew up in the uh the the hill, the range, one hill, uh one valley uh to the west, so we could see Jio off uh uh in the distance. And when I was a little kid, up until uh my early teenage years, we didn't have any large employers in the region. I we had large local employers, right? We had a university. They obviously employed a lot of people. We had a salt mine. They employed a lot of people, but they were all local businesses uh that had sprung up or the university, however you want to consider that. But we didn't have any really big national players with any sizable employment. Oh, sure, we had a McDonald's, but you know, that's different. Well, when I was a teenager, Walmart moved in and we were in a region where when Walmart moved into Jio, New York, we didn't know what Walmart was.

[00:03:57]Believe it or not, when I was a teenager, we didn't know Walmart yet.

[00:04:01]I'm from the part of the country that was like at the very tail end of getting Walmarts. So, while they were already the largest uh uh retail conglomerate in the universe, we were still learning who they were. We still had Ames and Kmart and C. Penies and Sears uh at that time.

[00:04:16]So big shift for me, but that was a big change for our local community. We had never had to deal with a large national employer on any scale before, especially not for normal people, right? If you were uh an engineer, there was Eastman Kodak far away. People would commute ways to go to jobs like that. And there were a few people who worked for the craft factory making uh Cool Whip was made locally uh with us. Um now Barilla pasta is made there, but it didn't exist back then. But so when Walmart came in, mostly they were employing people who had been otherwise employed by small local businesses or unemployed previously of course, but most of them it cannibalized other businesses. And the local businesses were in an uproar.

[00:04:59]They're destroying Main Street. They're taking away our employees. They're doing all these terrible things. They're ruining our culture. There's something to be said for that, of course. And it's easy to get riled up. Big companies evil. small businesses, they struggle so much. But living there and being part of the group of people who had uh had to work those local jobs and now were potentially offered those Walmart jobs, unfortunately, I missed out. Walmart came just after I was doing my local employment. So, I did all of my stuff local. But I had lots of friends who made that transition. And one thing they always said was everybody fought to get the Walmart jobs. There's a reason that Walmart took those jobs away from those other places. It's not because the other places shut down and fired people and Walmart picked up the slack and, you know, played this game of putting everyone out of business and taking their employees. Absolutely not. They paid higher and provided better benefits and gave uh HR oversight. They actually protected their employees to some minimal standard. But those main street companies weren't doing that. They were paying often completely minimum wage.

[00:06:07]Walmart paid more than that. They had no healthcare because they weren't required to because they were small businesses.

[00:06:12]They got a pass on all those things that would protect employees, making it unfair for the employees to have to work there. It was very difficult for someone working at those little main street companies to do well even while the owners did pretty well. It favored the business owners over the workers. But at Walmart, yes, the owners, the investors were favored pretty heavily, but at the end of the day, the workers were treated much, much better and had government protections. they had laws that protected them, not just an employer doing the best out of the goodness of their heart and not having to do the minimum. So in our case, we found that that big national company, now maybe not under their own valition, but because they were a big company, they actually were providing higher paying jobs, more protections, you weren't stuck in a position where uh you could be fired for just anything, right? There's an HR process. There's a way to appeal. There are standards and rules and you were able to to know how to do things and you couldn't be manipulated so easily. Like someone trying to steal from an employee. Well, there's protections against that. I'm not saying that bad things never happened at Walmart, but the experience of people who worked at Walmart was vastly superior to people who were working main street jobs. Maybe not restaurants, but at stores. And so Walmart primarily was displacing those places because now shoppers were given options that they simply didn't have before. There's things they wanted to buy and couldn't. The main street stores weren't meeting the needs of the shoppers, nor were they meeting the needs of the employees. But there was no other option. They were essentially a monopoly. Even though they were a bunch of small companies, they were working essentially as a group to leverage their power by owning Main Street into not, you know, allowing employees to advance.

[00:07:53]And there was no future, right? You couldn't move up as an employee. Owners were owners. Normally, they were wealthier families who had owned businesses always, and they would continue to do so. And employees were locked into an employee role. Once Walmart was there, there was an opportunity to become a supervisor or a manager. And it created careers and also gave mobility. Employees were not trapped in the town. They could move to another Walmart in another city pretty easily. There's a lot of employee protections. We can think of it however you want that came with that. Well, let's apply that model to more things.

[00:08:25]And real quickly, I come from a business background and we have a thing called the church problem. The church problem has actually nothing to do with churches, but it's uh called that because it's often found in uh church congregations. And this is when someone wants to hire somebody. The last place that you want to go to hire someone, say a plumber or a handyman or someone to just do work around your house or you're finding a business to do business with, the last thing you want to do is find it through your local church or importantly other close-knit civic organization, right? It has nothing actually to do with churches. Churches just represent the most common form and example of close-knit community civic organization.

[00:09:06]Okay, just to be clear, the problem arises that when you do this, it feels emotionally to the person who's engaging with them that by choosing local, they are giving preference to someone who helps their community and people will be really, really good to them. They'll treat them well. They'll take them seriously because they're local. We're all in this together. But that's not how it feels to the person providing the service. To the person providing the service, it feels like they're not being selected. And by feels like it means this. They're not being selected for the quality of their work or the cost effectiveness of their work. They're being chosen based on a property they likely don't control or have already done, such as joining a congregation or living in a specific community. So, they perceive that their value is already obtained by being in that position. If you're the plumber in that church, you're going to get a certain amount of work because you're the plumber in that church or because you are the store on that corner. People will come to you just because of your location. You hear people say location, location, location.

[00:10:12]Well, this plays into it. Why give good value on the things that you're doing?

[00:10:16]Why do a really good job? Those things don't make sense from a business perspective. And as much as you want to say, "Oh, people don't think that way.

[00:10:24]All people think this way." If you think someone doesn't think this way, you're crazy. Because sure, you may not start out that way when you set up your business. But once you're receiving customers and you're starting to do work and you realize that the thing you're being chosen or paid for is your membership or your uh location, the accent that you have, the place that you grew up, the place that you ended up living or so forth, you start to one kind of, you know, hate the fact that you're not being selected for being good at what you do. And we all know that all the parties know this. Even if they're not they're not prepared to express it.

[00:11:03]We all know that that's the case, right?

[00:11:05]And so you're not being judged based on the quality of you. You're being judged based on something you probably didn't control or only kind of controlled like where you were born. And so the same thing plays into racial discussions, right? And you can see where it comes from. If you're getting a job because of the color of your skin or because of your accent or the country of your birth and that's the thing that gives you value, something outside of yourself, it diminishes our personal value. And while we generally don't express that outwardly, inwardly it feels terrible.

[00:11:39]Now, of course, the people who are being discriminated against also feel terrible for trying really hard and not getting the job anyway. But the people who do get the job also feel bad because they know they didn't earn it. And so everybody feels icky and everyone loses, including the person hiring you. But at least they're the ones who made the decision, so they it's their own fault.

[00:12:00]No one can feel badly for them. But so we call this this this church problem because when you use these close-knit civic groups, studies show you get the highest cost, lowest quality of work, and the most likely to be defrauded or stolen from. So it doesn't hold like it does the logic if you really stop and think about it completely holds up in studies that that's how it works. So people who study business and understand it and think about it this is a normal thing and we always say you in business you don't want to buy local. The chances that the best vendor or the best person for you is local is extremely low to the point where you almost want to rule it out so that you're not accidentally influenced by the fact that someone is already local or a business appears to be local. But of course, that's such an emotional draw that most businesses give into it anyway. Okay. All of that is to say, we want to be careful when we're looking at helping the country by buying local. Yes, having a local farmer produce some potatoes and you buy the potatoes from them, that's great. Having that local supply chain has the most benefit uh potential for sure, but it's easy to overlook what's really happening and to not dig into how things really work. And in many cases, like the discussion we had the other day in the expat community, uh people were, you know, suggesting, well, maybe buying at a local store is a really good thing to do. And that's not really what they meant, but that's where the direction that the conversation ended up going.

[00:13:25]But it brought up an important point that people were discussing, and that is that quite often local stores uh here in Nicaragua are going to be just like those main street stores, right? They may be in a position that they have access to uh uh import or they have an exclusive lock on some kind of market or they have customers who simply don't know any better and they're taking advantage of them. This isn't always the case. You just have to be aware of it.

[00:13:46]And so they may be providing products at a very high markup because they assume their customers have no idea how else to get them or can't figure out how to do it, how to actually logistically do it or whatever. Uh or uh they may be uh simply providing lower quality products and giving bad advice, right? And so you need to be uh willing to evaluate local businesses as well. Just because they're local isn't enough. In the case that we're talking about, yes, certainly consider local businesses. Don't just knee-jerk jump to avoiding local stores, local products, local food. No, definitely evaluate them and give them preference. All other things being equal, absolutely buy local whenever you can. But if and if it's close, probably lean towards local cuz there are reasons to support your community. But as soon as it becomes egregiously overpriced or the selection is just ridiculously bad or the store isn't giving you good value as a store or whatever, don't feel obligated to buy local. And in many cases, by not propping them up because that's what it basically becomes is a donation. If you go out and buy in a more competitive way, you are allowing market forces to help rein that in. If someone is, for example, selling a product on the local market and taking advantage of the locals, you don't want to prop them up by basically making a donation so that they can continue to corner that market. Instead, you want to figure out where to buy something better. And someone who has less markup or provides a better service ends up surviving instead. I'm not saying that your personal purchase is going to make all the difference, but if we all acted this way, we would all get better prices and better service on better products, right? It's a it's a way that the market can work. And so, you want to be careful not to disrupt that too much by uh favoring local over all other things.

[00:15:33]Just be reasonable about it and and realize that in many cases, buying local could be not the benefit that it seems like and may actually carry negative consequences at an extreme uh case. So yes, anytime it's close, buy local. I'm very serious about that. But evaluate, right? This local product is no good.

[00:15:53]Stop buying it. This local product is too expensive. Don't buy it. And we say for most things, and this is true, expats are going to order online and have shipped in from the United States or from China or wherever. Yes, that's true. Mostly because those products are coming from abroad anyway. And the only thing that is existing in Nicaragua is an unnecessary middleman who's making money for doing nothing in many cases or nearly nothing. It is worth noting that there is some value to stores and things that do nothing but bring products in and sell them to you. I don't want to make it sound like there's no value to that, but there is less than people perceive and often middlemen doing almost nothing end up being the piece that makes the biggest profits uh in a great number of cases. If you look at what it takes to manufacture a computer for $350 and then the $10 it takes to ship it into Nicaragua and then you look at stores here that are selling that for $700, they can be making a 100% markup for just buying a a computer and selling it. And as someone who doesn't run one of those stores for a reason, I understand often you buy something and no one buys it. Uh there's reasons why the markup has to be really high. I get that. But that entire business is unnecessary if everyone knew that they could just buy online and get it for $350. We're not helping the Nicaraguan economy by having that person do nothing and make all that money. The economy would do better if they just weren't in the way and they were being paid by the state. And I mean that literally.

[00:17:14]They're actually harming the economy in that example. And everyone, if they were doing better, would eventually create more jobs. and that person would be employed anyway, but in a fruitful way where they're benefiting the economy rather than just taking advantage and causing every single other person to be a little bit poorer or every business to struggle a little bit more. We can get into the details of how those economic mechanisms work some other time. But the point being stores on their own do not have the benefit you may perceive. And just because a a business creates jobs doesn't mean they're not taking those jobs out of the economy somewhere else.

[00:17:47]And just because a a business takes away jobs doesn't mean it doesn't create them somewhere else. So you have to evaluate the expected large picture in any given situation. Um and normally we isolate that because it's very hard to think about the big picture. But when it comes to something like middleman reselling things, big picture is really all we have because it always seems like they're creating jobs and most of the time they're destroying them in the long run. So thanks for joining me. Like and subscribe. If you'd like to help support the channel, you can buy me a coffee at buymeacop.com/scottalmiller.

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