Localized Economics in San Francisco

Not a very catchy title, is it?  Sorry about that.  I spent some time in San Francisco recently visiting an old friend and laying the groundwork for potential jobs.  There were plenty of things about the city that interested me, but one of the most intriguing was the pervasive notion that San Francisco should be a sustainable city unto itself, and not just in an agricultural or industrial sense. 

The term coined in the article linked to this entry is "locavore," but the author moves the argument into the economic realm, contending that to weather the national (probably global) economic storm, SF ought to take measures to keep economic livelihood within the greater city itself.  In and of itself, I think this is an appealing idea, but the economic principles that are delineated in the article give me some pause:

• Require banks to set aside funds for local business loans.
  
• Local companies should be given a strong local preference on city contracts.
  
• The city should use tax policy to discourage out of town chains that "strip mine" SF
  

Commenters on the article take the sentiment even further, suggesting that city employees such as police be required to live within a certain radius of their precinct or be required to spend a certain amount of time in town when off duty, finally ending with the rousing battle cry "...the sky IS falling... we intend to use the ashes of the economic and ecological collapses to create something viable, sustainable, and green."

I find myself strangely drawn to areas where neoclassical economics appears unable to come to grips with or indeed find solutions for our current, dynamic situation, but its disheartening to me that the knee jerk reaction of many (and indeed SF is a more "liberal" city than most) is to immediately move to enact socialistic policy instead of stepping back and examining the situation from a perspective placing value on individual liberties and property rights.  Could it be that these interventionist ideas are largely responsible for the situations that we find ourselves in, and perhaps aren't the best suggestion moving forward?