Your first question is difficult to deal with in any practical way in the world as it exists today. The U.S. Midwest produces food for a much greater population than lives in the Midwest. On the other hand, New York City produces very little of the food its population consumes.
Matching population to local food production would be a matter of reducing the population of Manhattan to perhaps a few thousand and cutting food production in the Midwest by two thirds (or perhaps moving the population of Manhattan to the Midwest). It’s hard to see how difficulties of these kinds are to be resolved.
In your second question, I’m not sure what you mean by an “artificial understanding of things like food production” and I’m not sure who the “us” is that has this artificial understanding. If you’re referring to the fact that people generally fail to see the connection between food production and population growth, I’m afraid I don’t see that “the ideas of global trade and competitive advantage” contribute to it.
It’s a bit too late to be disturbed by supermarkets; given the arc of our cultural history, these were inevitable developments. Farmers’ markets serve an enduring purpose (and are found in most cities in some form), but as presently constituted, few modern cities could survive on what local farmers produce. It would take a major social and economic revolution to replace supermarkets with farmers’ markets (though such a revolution is not unthinkable and could conceivably have far-reaching benefits).
updated: 13 Sep 2003