I grew up in the poorest county in my state. It was an hour to anywhere. There were no bookstores, no movie theaters, no fast food restaurants, nothing but cows for miles. There wasn't even a public library.
It might be true that in an area with established retail, Walmart tends to put those businesses out of business. But in areas like my hometown, those businesses were already out of business. We used to have a little Sears store. It had a few things in stock, but mostly it was a place you could walk into, peruse the Sears catalog, and order with free shipping. It went out of business years before Walmart got to town. There was, at some point, a small department store as well. It had been boarded up in the 1970s.
Literally the only businesses in town that survived through the 1980s were the feed store, the gas station, the pharmacy, and an independent grocery store. The grocery store went out of business when Food Lion came to town, and nobody cried because Food Lion had a much wider selection of food products.
I think Walmart is a very mixed bag. But we aren't poorer because of Walmart.
We had 2 grocery stores and I think Walmart put one of them out of business. However, the selection was much larger and it was a boost to local businesses because fewer people needed to travel to the next town over for supplies after Walmart came to town. It also employed significantly more people. I'm no fan of Walmart and their cut throat practices, but it hasn't been all bad for everyone.
If you count total wealth rather than median income probably, since before the wealth stayed in the community with the locally owned shops and after Walmart moved in the wealth gets extracted away from the community.
That is my memory of Walmart coming to town as well: good riddance to those overprice stores with bad service and poor selection that we only went to because driving to the big city mall where we could get reasonable prices took time and so it was a big event that took most of your Saturday, while we could get into them quickly (if they had what we really needed)
Farmers and rural dwellers everywhere made regular trips to the largest city near them (sometimes a two hour drive) just to get selection. Mail order only filled some of that need (online is just mail order on the internet)
I think both of you have a perspective that is well into a more advanced phase of a degenerative process than you or even most people realize, i.e., you describe a phase when the cancer had already been eating its way through the economy, as evident by the closing of local and legacy retail stores and collapse of community economies from early onset symptoms of cancer that were dismissed like saying “just feeling down” or “just a bit of a lump” or “I’m just tied”, or even worse, “it’s healthy capitalize competition to compete with the subsidized de facto slave love of China”.
What Walmart represented was really just a kind of acceleration of the cancerous growth and metastasis throughout the body of the economy, spreading to the bloodstream. The likes of Amazon only made things that much worse, a far more aggressive and parasitic malignant cancer, or maybe even HIV of humanity that spread even faster and harder, and was able to even overcome foreign immune systems that had previously been able to hold the Walmart cancer at bay.
I fully understand why people would see Walmart coming to a town that was likely also suffering as an early indicator and outlier to the de-industrialization /globalization that wouldn’t impact more consequential lower-middle class until a bit later and would largely be experienced as benefits by the upper middle class that you also likely occupy now and for a while now.
For context, this same process seems to be unfolding at an even more rapid pace in Germany right now as the industrial small business base is being massacred and that will have the same kind of devastating effects on the dependent small, family owned businesses and retail companies that have been a moat to the likes of Walmart, Amazon, and even by extension, the Ubers and Food delivery services and digital services that serve a deracinated and shattered population in the USA currently.
I think you’re right. I’m no economist, but all non-local companies are extractive in nature - i.e. more money flows to the corporate office (and out of the community) than would happen for a local company (though even local companies send money out to buy stock to sell). It’s easy to see why Amazon is so huge - streams of profit flowing to it from every corner of the country. Not much to do about it except to help small towns produce something of value so an equal amount is flowing back into town.
Growing up, the nearest Walmart launched about 17 miles south of the town I lived in, and we slowly saw a drop in stores locally. Then the interstate was completed about 5 miles west of our town, then all the "tourist" traffic bypassed our town.
There is basically nothing left of my little hometown anymore.
In my case the interstate was put in 30 miles north of town before I was born. In the 1960s the town had been an active town due to being near the intersection of two major state roads, and actually had three large motel complexes at that intersection. But the interstate put them out of business.
Your town seems to prefer short-term gains over long-term sustainability. You might not be poorer but Walmart could be keeping folks stagnant. If they extract all wealth then the well runs dry.
I doubt the studies accounted for the time and cost savings of having a single location for purchases which would've reacquired multiple stories previously, or the benefits of having access to many items that would not have been available at all without a large store like Walmart.
That doesn't offset the lowering of wages and the shuttering of other local stores that employed more people than the Walmart did. Also each walmart store on average costs state government $1.1m in welfare benefits. https://dataspace.princeton.edu/handle/88435/dsp019s161887r#....
No one working should need welfare benefits. If they are eligible for more when working that shows me the system is broken. When my mother was on SSDI, after the first $84 earned, she lost $0.50 for every $1.00 she earned, which encourages work when possible but doesn't punish people for getting jobs.
Walmart should be paying a living wage. If you are employed full time, you should not qualify. Walmart does not pay enough, they rely on the government to make up the shortfall.
Wet streets don’t cause rain (at least not as directly as the correlated observation suggests).
If government benefits are set at a level higher than the prevailing market-clearing wage, perhaps the benefit level should be reduced, perhaps the minimum wage should be raised, or perhaps that Walmart should close its doors, which surely would increase rather than decrease government benefit expenditures.
Wishing that there were more high-paying jobs than currently are able to be supported in a local economy rarely works.
you guys are both missing the actual point in my opinion. Yes you are 100 % right if it's a competitive market, it isn't though. Walmart exercises its considerable market power to push wages, benefits, etc. down. They are wrong to argue for more government intervention with minimum wage increases, etc. though. That just opens a pathway for corruption of government. Instead, the correct solution is break up walmart.
of course they do, especially in the communities mentioned in the original article, where they employ a substantial amount of the low skilled labor. You can't look at their employee count in the context of the USA, employment, especially low skilled employment, is very local and sticky.
Breaking up Walmart is a possible answer to the US-wide influence, but wouldn’t address the local employment market.
Walmart Local Town would still be the big employer in some towns. (And, to the extent that Walmart Local Town is providing better jobs than the next best alternative for town employees, they should be lauded rather than vilified, IMO.)
But is having more items always a benefit? I'd argue not. Sometimes, people flourish with fewer choices. And in terms of going to multiple locations: that also can create opportunities, and give people some exercise too. Unlike the myopic view from computer science, saving time is not always a good thing.
That's why I avoid many automations that could save me time. Some menial work can actually bring some insight into what I'm doing (like reading over a document manually instead of using Grammarly to correct it for instance...)
That depends on the choice. When my recipe calls for coriander substituting cinnamon because that is what is available isn't close enough. I don't need 4 different brands of coriander, but I need one. There are many many other odd things that people want in life and there is no substitute.
As for exercise: you get more exercise walking through walmart than driving from small store to small store and parking in front of each - which is what really happens with small stores in small towns. (tourists will walk the street, but locals don't - they park in front of the one store and then are gone - though more likely the locals drive the the big city mall for their shopping and again get their exercise, leaving those local stores for tourists who don't realize this isn't how locals live).
Fair enough but that only means that cities should be modified to be more walkable with more green space and cars should be discouraged as is done in some european cities.
Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers.
It's very simple actually. For instance, let's assume Walmart automotive takes maybe 2-3 FT employees to operate, where this may normally be fragmented across 2-3 local mechanics employing 3-6 FT employees each. Then of course you have the 2-3 local services which catered to them (E.g. cleaning services, real estate agents, CPAs, ect). Then, multiply this for each Walmart department (Electronics, Groceries, Pharmacy, Auto, Household, ect.) and there's your town.
Walmart mechanics are no better that any other shop which is why indepndant shops are still around in cities.
you picked a bad example, in other places walmart is more efficent.
again though you failed to figure what those people do instead - there are still plenty of jobs they are just not retail and probably in a bigger city.
What jobs? Rural and suburban communities not linked to an urban area have less and less every year. The cities are growing and towns are dying: there are very few new jobs, much less “more productive” ones.
Think on it for a second: if you could work a better job than small grocery store employee, wouldn’t you have already? Why would you wait on walmart to exist?
Before the US had a rust belt, a meth belt, and opioid belt, you could go to Western Auto and put a bicycle on layaway. I think the malls out-competed a lot of the older nostalgic stores. Walmart did siphon away enough business from malls to come out on top.
FYI, Sears acquired Western Auto and most of it was put into Advance Auto Parts. The headquarters in Kansas City was converted into 101 condos.
You could tell it about any efficient business. If there's no Wallmart in town and all that profit goes to small store owners then everytime they shop outside of town or go on a vacation they "suck" the profit out of the town.
Each time a customer needs to travel to big city or order remotely because town shops don't carry what they need they suck profit out of town.
If Wallmart can come to town and employ enough people it might help keep profit in town rather than suck it out.
I think this is blissfully ignorant. Walmart's model is built on creating prices and selection that are so attractive that it is very difficult to compete. Part of the way they do that is by extracting profits out and leaving only low paid employees locally.
They still might extract less than bunch of small business they replace does. Just because they can do many things more optimally. Think of all the fuel, wear and tear and driving time (labor) if everybody in town had to shop in the nearest city, compared to a handful of large trucks supplying Wallmart.
How much money stays when Walmart is there relies on bargaining strength of employees. With weak labor laws it may suck out more. With strong labor laws they could suck out less.
Wallmart being net negative for community as this research seems to indicate is clear evidence that labor laws are too weak.
Way more. First, a small business is not just a "family". Their employees are other members in the community. And there's the cascading effect because those folks are using their pay to go to local restaurants, the bowling alley, the hairdressers. When business like WM push prices down and make it so other businesses aren't able to compete, all you get locally is the ~minimum wage salary and the tax revenue. This might be "more efficient", but it comes at a cost to community.
I don’t see how this makes sense. Walmart is consistently the cheapest grocery store around (save for Aldi but they’re not that reliable). The alternatives are mostly Kroger or Albertsons owned and their prices are just ridiculous these days. The smaller grocery chains end up having to charge a premium to stay open. I hate Walmart but when the products are the same I’m going with whoever has the lowest price. If they were around people would be spending more, period. If anything I’d blame the dollar stores for creating food deserts in already poor areas.
It potentially makes sense because Walmart employees are also part of the community, and Walmart doesn't pay very much. It also won't employ as many people as all the stores it displaces did.
Additionally, Walmart has extremely well-established multinational supply chains, and probably won't need to source much of its stock from the local community. If they do need to buy anything locally, they can pay absolutely rock-bottom prices once they've pushed out competitors and they are the only buyer.
If you shop at Walmart but otherwise have no other exposure to the retail sector, then as an individual you are probably financially better off. But looking at a community as a whole, the negative effects on retail employees and local suppliers apparently outweigh these individual gains.
Walmarts pays the same min wage as every other grocery store so that’s not it. And they employ a heck of a lot more. Vons maybe has three people at any time. WM also carries local produce and products. I’m sure there’s some cherry picked examples out there but the vast majority of cities are probably benefiting from a large anchor store.
> Walmart is consistently the cheapest grocery store around
One upside of Walmart in my area is that they have their cheap pricing up front.
Every other grocery chain here has a gamified points program that involves activating "offers" through their phone app and then hoarding points until you're able to redeem during a bonus redemption event that coincides with a sale on a product that you actually need.
> we find that poverty is still 3 percentage points higher in treated counties 10 years after the Walmart opening.
So... 10 years after Walmart opens, poverty is 3% higher, and annual household earnings decline by $4,230. Is this a huge effect? This is something like a 10 point difference on the SAT (https://www.cs.jhu.edu/~misha/DIReadingSeminar/Papers/DixonR...).
> annual household earnings decline by $4,230. Is this a huge effect?
Yes. Median household income is something around $70K, and rural households are not making anywhere near median household income. If we don't think it's a big effect, then we shouldn't mind sending them $4.5K checks every year to make up for it.
It's an effect large enough to drive 3/100 people affected into poverty.
If you are one of those who remain employed - that is you work a better job than retail in the first place you are much better off. We need better training for those who currently are working retail, but the community is overall better off.
Rural communites like walmart as they know they are something if they are able to support one. plus walmart has stuff at good prices. It is city folks who have never lived in a rural area (a 2 week vacation is not living there) who hate walmart
It's not. That's part of the research. From the article:
> "Indeed, Walmart’s many defenders argue that the company is a boon to poor and middle-class families, who save thousands of dollars every year shopping there. Two new research papers challenge that view. Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers. On net, they conclude, Walmart makes the places it operates in poorer than they would be if it had never shown up at all. Sometimes consumer prices are an incomplete, even misleading, signal of economic well-being."
Most people will read the conclusions from this research and believe we’d all be better off without Walmart. The question really is whether you think we’d be better off getting rid of all big corporations and reverting to a much much smaller economy with only mom and pop shops. It’d be a world where businesses have no economies of scale. As a result, would you be ok with a country of significantly less consumption of everything and significantly fewer conveniences (ie free overnight shipping)? I mean electronics, food, clothing, and everything else you buy today sold by Amazon, Target, Walmart, etc. I don’t have a very strong stance either way on this, but that’s the reality you have to be ok with if you believe big corporations are bad.
It's not that simple. The real question is what is the minimum efficient scale for a retail operation (i.e. at what size do they get most of the discounts and opportunities of sourcing world wide/economies of scale). It's way smaller than walmart but way bigger than a mom and pop shop. Then an ideal world would be a retail market big enough to support a whole bunch of those so they all compete and profit margins are minimized so most of the benefit flows through to the consumer. So yes, I would be very happy without walmart but I would also be very happy without mom and pops being the dominant retail vector.
I don't know if we'd all be better off without Walmart. I on the other hand am going through the exercise of unwinding myself from Amazon etc., with varying degrees of difficulty:
[easy]
Echo devices: where the UX just keeps getting worse as well.
Prime Video: now has ads as well.
Washington Post: firewall so never read it
Prescription drugs: I use a Walmart-branded drug plan serviced by a local Safeway. Better than Amazon directly, I suppose
[moderate]
Kindle: I don't really need paid ebooks vs. the library etc. but do have a Kindle library.
Kindle Unlimited: library used books sales now for cheap reads.
Amazon books: Barnes & Noble for shipping, so far so good.
Amazon Prime: do I really need more stuff, quickly?
[hard]
Whole Foods: the UX of Safeway stores is surprisingly worse
I find this a healthy exercise as it makes me less of an impulsive consumer. I haven't decided if Target, Walmart etc. should also be avoided.
No it doesn't, because "poverty" is relative to the scale of an economy. See me, living in a small Texas town and paying $500/mo for an apartment someone in Manhattan would kill to rent for ten times as much.
Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
> because "poverty" is relative to the scale of an economy
If you define poverty as being in the lowest 20% of income, then you can never eliminate poverty.
> Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
You wouldn't have an internet phone without big business. Nor a car. Nor a washing machine. Nor indoor plumbing. Nor oranges in winter. Nor a hospital. Nor air conditioning. Nor electricity. Nor sanitation. Nor fertilizer.
In fact, getting rid of business would result in the death of more than 90% of the population. And likely much more.
Again, there is an entire spectrum of human existence between medieval subsistence and modern global industrial capitalism, and you seem to be defining literally every trade since the Industrial Revolution as "big business."
Either the economy hasn't grown in any significant way over the last century, or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
> or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
Nope. It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Railroads were big business, too. You cannot have much of an economy with just horses.
Yes. And therefore, they didn't need modern industrial capitalism with global corporations to do it.
And, just noting the moving goalposts here, your claim wasn't that such amenities weren't affordable without modern capitalism, because even with it, many people struggle to afford them, it was that they were impossible at any scale other than "big business."
>It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Ford at the time of the Model T wouldn't be considered a "big business" in the modern context. Again, you seem to think any business counts as "big business." Using the same term to refer to Ford in 1910 and, say, Amazon or Wal-Mart today is ridiculous.
Obviously Ford would become "big business" but just as obviously Ford is one example of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
Sure, you can make artisan cars and artisan indoor plumbing. This will not be available to the masses, however, without the economies of scale that come with big business.
You could also make artisan steel before the big steel industry. About all you could do with it was make swords and a suit of armor at terrific expense.
> of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
Before the industrial revolution, 90% of the population worked on the farm, and famine was still a regular occurrence. There was no available work force to create artisan cars and artisan indoor plumbing for the masses. Nor was there food to feed them.
Some years ago, I toured Jefferson's Monticello mansion and estate. In the back yard there was a nailery, where the slaves operated a small forge and hammered out nails, one by one. Today you can just buy a box of nails for a few dollars, thanks to big steel and the nail making machining requiring little additional labor. I don't know how many nails could be made in a day's work by an artisan, but I doubt it is that many, and it's cost you at least $150 for that box of nails.
Nails were so valuable in those days people would burn houses down just to get the nails.
I had my roof replaced a year ago. After the roofers left, I spent a fair amount of time combing the yard to get all the discarded nails out of it. The nails were so cheap it was not worth anyone's time to pick them up. (I picked them up because I didn't want to step on them. I did anyway, driving the nail nearly through the sole of my shoe.)
I assume that "those days" refers to the 1700s, since you seem to be fixated on that, but nails were being manufactured by the 1800s and mass produced by the 1900s, and certainly didn't require "big business" to be affordable.
The problem with Walmart isn't just that it's a big chain store.
It's that it's a staggeringly, unchallengeably huge chain store, that can afford to operate a given location at a loss effectively indefinitely in order to drive out competition—including competition from other big chain stores, if they want to.
This seems to always be the issue, the visceral experiencing of prices now at the cash register versus long term effects.
“But if Walmart’s example reveals anything, it is that, in the long term, low prices can have costs of their own.”
The scale of corporation can pull many levers in the pursuit of profit and can have longer vision because it has economic means to persist, the individual consumer is weak and short sighted in comparison, always.
You don't need the production to happen in your podunk town or suburb.
Walmart will gladly import it for you from elsewhere.
If you're talking about services, if you're purely greedy, it's better for you to have more people without good jobs so you can take advantage of them having to work undesirable service jobs at lower and lower wages.
First - let's think about who thinks like this primarily:
Relatively wealthy people in suburban or rural areas (who are by no means actually wealthy by American standards).
Poverty isn't going to affect their neighborhoods. You don't go from having a $750k house on the outskirts of a suburb of Atlanta or Dallas or a $500k house in Montgomery Al or Jackson MS to suddenly being overwhelmed with neighborhood poverty because Walmart comes in or a bunch of unions in town get busted.
The affects will be felt in the suburban center where the lower middle class and poorer renters live.
The crime that follows will almost exclusively be problems for OTHER people.
If they have this thinking, they couldn't care less about crime in YOUR neighborhood.
You can bet, for sure, if crime makes its way to THEIR neighborhood, they'll immediately get more police force - probably paid for primarily at YOUR expense.
Consumers are short sighted. On this we can agree.
But are they short sighted because they are taught to be short sighted, or is this some irrevocable aspect of the human condition?
If you grow up in a society that emphases the virtues of individuality and deemphasises the impact of the social/group condition upon your own lived experience, it's not really surprising that you'd rate "immediate personal issues" above "communal" ones.
Think about the difference it would make if everyone was more aware of the personal cost to them of poverty, homelessness and so forth? In the current world, living in a place that doesn't do things the way the US does can accomplish this (at least temporarily).
I think "the tragedy of the commons" isn't universal. It's an argument for enclosure. But the commons can be run over by people who don't believe in communal good and instead want to be doing the enclosure.
Well, there are good arguments that free trade is not always a good thing, especially when there exists actors (e.g. corporations) who are the main beneficiary of the differential in economies to extract more profits. Free trade implies YOU getting a cheaper price sometimes, but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market.
The limiting case is telling: an alien race comes and offers all of our goods for 1/10th of their Earth price, made possible by their insanely advanced technology. Is that a good thing?
I have to share this. So my cousin says we need to stop treating jobs as solutions to social problems.
Here's more detail on her thoughts, which I think are kind of silly but are interesting nonetheless:
"It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
A job exists because a business needs it to perform a business function, and that's really the only reason it should exist. But for various non-business reasons, jobs are often favors to be given out and it makes the economy less efficient when you have jobs that don't really need to be done, or could be done better, but exist only as favors to people.
Putting the puritan work ethic on a pedestal directly contributes to this and harms our economy as a result. UBI and some form of guaranteed housing (or guarantee against losing your current housing) would be much cheaper than all the fake jobs needed to deliver favors."
What percentage of jobs does she believe are fake/unnecessary?
I'd agree that most workers are not particularly efficient. But I have never seen efforts to make them more efficient succeed.
So, the fact that there are eight employees doing the work of three at the grocery store does not count, because the missing efficiency is not available to the employer.
She tells me that she's seen the situation most often with older people who "have kids" or "have a family to take care of" - they either keep them in the role despite substandard performance, or covertly or overtly adjust the role expectations, and sometimes they get promoted into roles that seem to have been created for them (like "director of project management") or roles they aren't specifically qualified for (like a manager/team lead role).
She really believes any business with more than 50 people has at least 1 or 2 employees of this type, and more so if the culture of the firm tends to skew towards government contracts or older people--but when pressed for data, she said that was just her gut feeling.
> the fact that there are eight employees doing the work of three at the grocery store does not count
If you know three people could do the work of eight then fire 5 people or modify a process. The business is choosing to be inefficient, or there may be other factors. It may not really be inefficient if the cost of the 8 people is lower than the cost of automation or whatever is needed to improve the process. People are expensive in the U.S. so I tend not to assume that but it is possible.
If you only knew how bad it really is. In capitalism you have N firms "completing" so that usually means you will have multitudes people working on the exact same thing. Imagine that level of inefficiency.
> "It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
There's another point, which is even more sinister. The unemployed offer liquidity in the employment pool, which offer more flexibility for the growth of the machine. Local communities that are more self-sufficient would want to take care of their own. The emergent properties of the anonymous machine see unemployment as a variable to be optimized.
If your "business" cannot pay a person 3x [0] the going rate for an appropriate rental property in the market where it operates, then it has no reason to exist other than to extract profit from the labor of the people you hire.
Minimum wage laws would not stop you from selling your services as a programmer at any rate you want to.
[0] and yes, current minimum wages in most places in the US are actually far below even this threshold.
> then it has no reason to exist other than to extract profit from the labor of the people you hire.
My cousin's lovely response:
"So the business paying the insufficient wage and the landlord are not the same entity. The business's job is to run a business, not worry about if landlords are getting paid. It's unfair and inefficient to make businesses submit to the demands of greedy landlords in this manner. Maybe governments could step in and protect businesses but I'm unsure of the best way to do that."
Personally I think if we have a system of private ownership then charging whatever I want for rent is my right and the government should not be able to force me against my will, otherwise all property is really the governments. But I think there are grey areas when we talk about corporate/institutional property owners.
That's not a lovely response. It's a simplistic response that totally misses the point. The cost of rent is a function of many different factors, which vary depending on location in space and time. Some of the time that may include greed on the part of landlords, some of the time that may play a very minor role.
Your own response is similarly simplistic. The meaning of "property" is defined by government, at all times and in all places. The precise meaning varies, but there being limits on what rights it comes with is not a violation of your "property rights" - it is actually the very definition of what property means.
A system that allows you to make $10 when you actually need $30 to live is also a system that will frequently go to significant lengths to make sure you never make $30.
> there are good arguments that free trade is not always a good thing
Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
This is wildly misleading. Free trade in the 21st century generally refers to trade across national boundaries. Nations represent markets that are not subject to the same basic conditions as each other. Moreover, free trade (the international kind) almost always seems to involve a lack of restriction on the movement of goods, capital and profit, but rarely allows labor the same benefit.
The 21st century version of "free trade" is about expanding the scope and scale of capital markets and the movement of goods and profits across national (and thus market-jurisdictional and -conditional) boundaries. It has almost nothing to with the "old" notion of free trade within a given market.
The constitution also sets up free movement of labor among states. It works great too!
"The Law of Supply and Demand" was unknown to the Romans or various middle Eastern empires (just two examples), whose economies worked in entirely different ways from those that followed the mercantilist period in Europe, and became canonized by Smith et al.
> Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
More prosperity but often at a cost to local environments and commons that are not priced into the market. And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
Prosperous can be measured in different ways. For example, right now, I am "less prosperous" by an economic measurement, but much more prosperous in terms of free time. And I'm much happier being "less prosperous" by the economic definition.
Below the competition ins't predatory if you can make a profit off of it. Predatory specifically means that you price it at a serious loss and then jack up the price when the competition dies.
> but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market.
It's so bizzare that making things more efficient and in effect saving humans from the burden of inefficient labor is seen as negative. Tying people's survival to their ability to sell their labor is such a terrible idea in this day and age.
I grew up in the poorest county in my state. It was an hour to anywhere. There were no bookstores, no movie theaters, no fast food restaurants, nothing but cows for miles. There wasn't even a public library.
It might be true that in an area with established retail, Walmart tends to put those businesses out of business. But in areas like my hometown, those businesses were already out of business. We used to have a little Sears store. It had a few things in stock, but mostly it was a place you could walk into, peruse the Sears catalog, and order with free shipping. It went out of business years before Walmart got to town. There was, at some point, a small department store as well. It had been boarded up in the 1970s.
Literally the only businesses in town that survived through the 1980s were the feed store, the gas station, the pharmacy, and an independent grocery store. The grocery store went out of business when Food Lion came to town, and nobody cried because Food Lion had a much wider selection of food products.
I think Walmart is a very mixed bag. But we aren't poorer because of Walmart.
We had 2 grocery stores and I think Walmart put one of them out of business. However, the selection was much larger and it was a boost to local businesses because fewer people needed to travel to the next town over for supplies after Walmart came to town. It also employed significantly more people. I'm no fan of Walmart and their cut throat practices, but it hasn't been all bad for everyone.
Ha ha, so Walmart made your neighboring communities poorer.
If you count total wealth rather than median income probably, since before the wealth stayed in the community with the locally owned shops and after Walmart moved in the wealth gets extracted away from the community.
That is my memory of Walmart coming to town as well: good riddance to those overprice stores with bad service and poor selection that we only went to because driving to the big city mall where we could get reasonable prices took time and so it was a big event that took most of your Saturday, while we could get into them quickly (if they had what we really needed)
Farmers and rural dwellers everywhere made regular trips to the largest city near them (sometimes a two hour drive) just to get selection. Mail order only filled some of that need (online is just mail order on the internet)
I think both of you have a perspective that is well into a more advanced phase of a degenerative process than you or even most people realize, i.e., you describe a phase when the cancer had already been eating its way through the economy, as evident by the closing of local and legacy retail stores and collapse of community economies from early onset symptoms of cancer that were dismissed like saying “just feeling down” or “just a bit of a lump” or “I’m just tied”, or even worse, “it’s healthy capitalize competition to compete with the subsidized de facto slave love of China”.
What Walmart represented was really just a kind of acceleration of the cancerous growth and metastasis throughout the body of the economy, spreading to the bloodstream. The likes of Amazon only made things that much worse, a far more aggressive and parasitic malignant cancer, or maybe even HIV of humanity that spread even faster and harder, and was able to even overcome foreign immune systems that had previously been able to hold the Walmart cancer at bay.
I fully understand why people would see Walmart coming to a town that was likely also suffering as an early indicator and outlier to the de-industrialization /globalization that wouldn’t impact more consequential lower-middle class until a bit later and would largely be experienced as benefits by the upper middle class that you also likely occupy now and for a while now.
For context, this same process seems to be unfolding at an even more rapid pace in Germany right now as the industrial small business base is being massacred and that will have the same kind of devastating effects on the dependent small, family owned businesses and retail companies that have been a moat to the likes of Walmart, Amazon, and even by extension, the Ubers and Food delivery services and digital services that serve a deracinated and shattered population in the USA currently.
I think you’re right. I’m no economist, but all non-local companies are extractive in nature - i.e. more money flows to the corporate office (and out of the community) than would happen for a local company (though even local companies send money out to buy stock to sell). It’s easy to see why Amazon is so huge - streams of profit flowing to it from every corner of the country. Not much to do about it except to help small towns produce something of value so an equal amount is flowing back into town.
Are you me?
Growing up, the nearest Walmart launched about 17 miles south of the town I lived in, and we slowly saw a drop in stores locally. Then the interstate was completed about 5 miles west of our town, then all the "tourist" traffic bypassed our town.
There is basically nothing left of my little hometown anymore.
In my case the interstate was put in 30 miles north of town before I was born. In the 1960s the town had been an active town due to being near the intersection of two major state roads, and actually had three large motel complexes at that intersection. But the interstate put them out of business.
Your town seems to prefer short-term gains over long-term sustainability. You might not be poorer but Walmart could be keeping folks stagnant. If they extract all wealth then the well runs dry.
I doubt the studies accounted for the time and cost savings of having a single location for purchases which would've reacquired multiple stories previously, or the benefits of having access to many items that would not have been available at all without a large store like Walmart.
That doesn't offset the lowering of wages and the shuttering of other local stores that employed more people than the Walmart did. Also each walmart store on average costs state government $1.1m in welfare benefits. https://dataspace.princeton.edu/handle/88435/dsp019s161887r#....
No, it doesn’t. These people receiving benefits and working at Walmart would almost certainly be entitled to more benefits if they were unemployed.
No one working should need welfare benefits. If they are eligible for more when working that shows me the system is broken. When my mother was on SSDI, after the first $84 earned, she lost $0.50 for every $1.00 she earned, which encourages work when possible but doesn't punish people for getting jobs.
Walmart should be paying a living wage. If you are employed full time, you should not qualify. Walmart does not pay enough, they rely on the government to make up the shortfall.
Wet streets don’t cause rain (at least not as directly as the correlated observation suggests).
If government benefits are set at a level higher than the prevailing market-clearing wage, perhaps the benefit level should be reduced, perhaps the minimum wage should be raised, or perhaps that Walmart should close its doors, which surely would increase rather than decrease government benefit expenditures.
Wishing that there were more high-paying jobs than currently are able to be supported in a local economy rarely works.
The local economy supports high paying Walmart jobs in another state. If it wasn’t able to do that there would be no Walmart.
Many local communities doesn't have a Walmart, so yeah.
you guys are both missing the actual point in my opinion. Yes you are 100 % right if it's a competitive market, it isn't though. Walmart exercises its considerable market power to push wages, benefits, etc. down. They are wrong to argue for more government intervention with minimum wage increases, etc. though. That just opens a pathway for corruption of government. Instead, the correct solution is break up walmart.
Are you arguing that Walmart has some kind of outsized power in their capacity as an employer with only 1.6M employees (full and part time) in the US?
of course they do, especially in the communities mentioned in the original article, where they employ a substantial amount of the low skilled labor. You can't look at their employee count in the context of the USA, employment, especially low skilled employment, is very local and sticky.
Breaking up Walmart is a possible answer to the US-wide influence, but wouldn’t address the local employment market.
Walmart Local Town would still be the big employer in some towns. (And, to the extent that Walmart Local Town is providing better jobs than the next best alternative for town employees, they should be lauded rather than vilified, IMO.)
But is having more items always a benefit? I'd argue not. Sometimes, people flourish with fewer choices. And in terms of going to multiple locations: that also can create opportunities, and give people some exercise too. Unlike the myopic view from computer science, saving time is not always a good thing.
That's why I avoid many automations that could save me time. Some menial work can actually bring some insight into what I'm doing (like reading over a document manually instead of using Grammarly to correct it for instance...)
That depends on the choice. When my recipe calls for coriander substituting cinnamon because that is what is available isn't close enough. I don't need 4 different brands of coriander, but I need one. There are many many other odd things that people want in life and there is no substitute.
As for exercise: you get more exercise walking through walmart than driving from small store to small store and parking in front of each - which is what really happens with small stores in small towns. (tourists will walk the street, but locals don't - they park in front of the one store and then are gone - though more likely the locals drive the the big city mall for their shopping and again get their exercise, leaving those local stores for tourists who don't realize this isn't how locals live).
Fair enough but that only means that cities should be modified to be more walkable with more green space and cars should be discouraged as is done in some european cities.
Greenspace is needed in cities but as parks. Shopping should be live asia: lots of places onethe same busy street.
Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers.
> This consolidation is the root cause
Creative because they don't account for all the people who now can work better paying more productive jobs.
It's very simple actually. For instance, let's assume Walmart automotive takes maybe 2-3 FT employees to operate, where this may normally be fragmented across 2-3 local mechanics employing 3-6 FT employees each. Then of course you have the 2-3 local services which catered to them (E.g. cleaning services, real estate agents, CPAs, ect). Then, multiply this for each Walmart department (Electronics, Groceries, Pharmacy, Auto, Household, ect.) and there's your town.
Walmart mechanics are no better that any other shop which is why indepndant shops are still around in cities.
you picked a bad example, in other places walmart is more efficent.
again though you failed to figure what those people do instead - there are still plenty of jobs they are just not retail and probably in a bigger city.
What jobs? Rural and suburban communities not linked to an urban area have less and less every year. The cities are growing and towns are dying: there are very few new jobs, much less “more productive” ones.
Think on it for a second: if you could work a better job than small grocery store employee, wouldn’t you have already? Why would you wait on walmart to exist?
If you can't do better move to those cities - they need you. Rural areas need your land for more farming
Before the US had a rust belt, a meth belt, and opioid belt, you could go to Western Auto and put a bicycle on layaway. I think the malls out-competed a lot of the older nostalgic stores. Walmart did siphon away enough business from malls to come out on top.
FYI, Sears acquired Western Auto and most of it was put into Advance Auto Parts. The headquarters in Kansas City was converted into 101 condos.
https://www.apartments.com/western-auto-bldg-multi-family-ka...
From the comments here, I don’t think people understand how much small retail supports an entire local economy.
With big retail, you get the smallest possible wages and all the profit sucked out to somewhere else.
You could tell it about any efficient business. If there's no Wallmart in town and all that profit goes to small store owners then everytime they shop outside of town or go on a vacation they "suck" the profit out of the town.
Each time a customer needs to travel to big city or order remotely because town shops don't carry what they need they suck profit out of town.
If Wallmart can come to town and employ enough people it might help keep profit in town rather than suck it out.
I think this is blissfully ignorant. Walmart's model is built on creating prices and selection that are so attractive that it is very difficult to compete. Part of the way they do that is by extracting profits out and leaving only low paid employees locally.
They still might extract less than bunch of small business they replace does. Just because they can do many things more optimally. Think of all the fuel, wear and tear and driving time (labor) if everybody in town had to shop in the nearest city, compared to a handful of large trucks supplying Wallmart.
How much money stays when Walmart is there relies on bargaining strength of employees. With weak labor laws it may suck out more. With strong labor laws they could suck out less.
Wallmart being net negative for community as this research seems to indicate is clear evidence that labor laws are too weak.
If Wallmart couldn't extract capital it wouldn't come to town.
What business do you think they're in?
So 10 small businesses what does that support? 10-20 families?
Way more. First, a small business is not just a "family". Their employees are other members in the community. And there's the cascading effect because those folks are using their pay to go to local restaurants, the bowling alley, the hairdressers. When business like WM push prices down and make it so other businesses aren't able to compete, all you get locally is the ~minimum wage salary and the tax revenue. This might be "more efficient", but it comes at a cost to community.
I don’t see how this makes sense. Walmart is consistently the cheapest grocery store around (save for Aldi but they’re not that reliable). The alternatives are mostly Kroger or Albertsons owned and their prices are just ridiculous these days. The smaller grocery chains end up having to charge a premium to stay open. I hate Walmart but when the products are the same I’m going with whoever has the lowest price. If they were around people would be spending more, period. If anything I’d blame the dollar stores for creating food deserts in already poor areas.
It potentially makes sense because Walmart employees are also part of the community, and Walmart doesn't pay very much. It also won't employ as many people as all the stores it displaces did.
Additionally, Walmart has extremely well-established multinational supply chains, and probably won't need to source much of its stock from the local community. If they do need to buy anything locally, they can pay absolutely rock-bottom prices once they've pushed out competitors and they are the only buyer.
If you shop at Walmart but otherwise have no other exposure to the retail sector, then as an individual you are probably financially better off. But looking at a community as a whole, the negative effects on retail employees and local suppliers apparently outweigh these individual gains.
Walmarts pays the same min wage as every other grocery store so that’s not it. And they employ a heck of a lot more. Vons maybe has three people at any time. WM also carries local produce and products. I’m sure there’s some cherry picked examples out there but the vast majority of cities are probably benefiting from a large anchor store.
Many Walmart employees are not paid a livable wage. Walmart is a major beneficiary of corporate welfare:
https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...
https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
https://laborcenter.berkeley.edu/a-downward-push-the-impact-...
American tax payers are paying billions to make up the difference and subsidize Walmart's substandard wages.
Walmart privatizes its profits and socializes its costs.
> Walmart is consistently the cheapest grocery store around
One upside of Walmart in my area is that they have their cheap pricing up front.
Every other grocery chain here has a gamified points program that involves activating "offers" through their phone app and then hoarding points until you're able to redeem during a bonus redemption event that coincides with a sale on a product that you actually need.
> we find that poverty is still 3 percentage points higher in treated counties 10 years after the Walmart opening.
So... 10 years after Walmart opens, poverty is 3% higher, and annual household earnings decline by $4,230. Is this a huge effect? This is something like a 10 point difference on the SAT (https://www.cs.jhu.edu/~misha/DIReadingSeminar/Papers/DixonR...).
> annual household earnings decline by $4,230. Is this a huge effect?
Yes. Median household income is something around $70K, and rural households are not making anywhere near median household income. If we don't think it's a big effect, then we shouldn't mind sending them $4.5K checks every year to make up for it.
It's an effect large enough to drive 3/100 people affected into poverty.
What if that decline is more than offset by lower prices at Walmart?
If you are one of those who remain employed - that is you work a better job than retail in the first place you are much better off. We need better training for those who currently are working retail, but the community is overall better off.
You can always drive to a further store, buy a bunch of stuff, drive back home, and set up a stand selling the stuff at higher prices.
I'm sure the local community that hates Walmart will prefer to shop at your stand, supporting the local community.
Rural communites like walmart as they know they are something if they are able to support one. plus walmart has stuff at good prices. It is city folks who have never lived in a rural area (a 2 week vacation is not living there) who hate walmart
It's not. That's part of the research. From the article:
> "Indeed, Walmart’s many defenders argue that the company is a boon to poor and middle-class families, who save thousands of dollars every year shopping there. Two new research papers challenge that view. Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers. On net, they conclude, Walmart makes the places it operates in poorer than they would be if it had never shown up at all. Sometimes consumer prices are an incomplete, even misleading, signal of economic well-being."
Walmart privatizes its profits and socializes its costs: https://news.ycombinator.com/item?id=42505420
Most people will read the conclusions from this research and believe we’d all be better off without Walmart. The question really is whether you think we’d be better off getting rid of all big corporations and reverting to a much much smaller economy with only mom and pop shops. It’d be a world where businesses have no economies of scale. As a result, would you be ok with a country of significantly less consumption of everything and significantly fewer conveniences (ie free overnight shipping)? I mean electronics, food, clothing, and everything else you buy today sold by Amazon, Target, Walmart, etc. I don’t have a very strong stance either way on this, but that’s the reality you have to be ok with if you believe big corporations are bad.
It's not that simple. The real question is what is the minimum efficient scale for a retail operation (i.e. at what size do they get most of the discounts and opportunities of sourcing world wide/economies of scale). It's way smaller than walmart but way bigger than a mom and pop shop. Then an ideal world would be a retail market big enough to support a whole bunch of those so they all compete and profit margins are minimized so most of the benefit flows through to the consumer. So yes, I would be very happy without walmart but I would also be very happy without mom and pops being the dominant retail vector.
I don't know if we'd all be better off without Walmart. I on the other hand am going through the exercise of unwinding myself from Amazon etc., with varying degrees of difficulty:
[easy] Echo devices: where the UX just keeps getting worse as well. Prime Video: now has ads as well. Washington Post: firewall so never read it Prescription drugs: I use a Walmart-branded drug plan serviced by a local Safeway. Better than Amazon directly, I suppose
[moderate] Kindle: I don't really need paid ebooks vs. the library etc. but do have a Kindle library. Kindle Unlimited: library used books sales now for cheap reads. Amazon books: Barnes & Noble for shipping, so far so good. Amazon Prime: do I really need more stuff, quickly?
[hard] Whole Foods: the UX of Safeway stores is surprisingly worse
I find this a healthy exercise as it makes me less of an impulsive consumer. I haven't decided if Target, Walmart etc. should also be avoided.
One could look at how colonial America lived.
I once toured Washington's home Mount Vernon. He was probably the richest man in America at the time.
I wouldn't prefer his lifestyle, at all.
One could, but given that such small-scale economies existed within in the modern post-industrial era, it would be disingenuous to do so.
Big business drives the prosperity of the economy. Trying to run an economy with mom and pop businesses means poverty.
No it doesn't, because "poverty" is relative to the scale of an economy. See me, living in a small Texas town and paying $500/mo for an apartment someone in Manhattan would kill to rent for ten times as much.
Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
> because "poverty" is relative to the scale of an economy
If you define poverty as being in the lowest 20% of income, then you can never eliminate poverty.
> Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
You wouldn't have an internet phone without big business. Nor a car. Nor a washing machine. Nor indoor plumbing. Nor oranges in winter. Nor a hospital. Nor air conditioning. Nor electricity. Nor sanitation. Nor fertilizer.
In fact, getting rid of business would result in the death of more than 90% of the population. And likely much more.
Again, there is an entire spectrum of human existence between medieval subsistence and modern global industrial capitalism, and you seem to be defining literally every trade since the Industrial Revolution as "big business."
Either the economy hasn't grown in any significant way over the last century, or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
And the ancient Romans had indoor plumbing.
> And the ancient Romans had indoor plumbing.
Only a handful of rich Romans.
> or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
Nope. It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Railroads were big business, too. You cannot have much of an economy with just horses.
>Only a handful of rich Romans.
Yes. And therefore, they didn't need modern industrial capitalism with global corporations to do it.
And, just noting the moving goalposts here, your claim wasn't that such amenities weren't affordable without modern capitalism, because even with it, many people struggle to afford them, it was that they were impossible at any scale other than "big business."
>It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Ford at the time of the Model T wouldn't be considered a "big business" in the modern context. Again, you seem to think any business counts as "big business." Using the same term to refer to Ford in 1910 and, say, Amazon or Wal-Mart today is ridiculous.
Obviously Ford would become "big business" but just as obviously Ford is one example of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
Sure, you can make artisan cars and artisan indoor plumbing. This will not be available to the masses, however, without the economies of scale that come with big business.
You could also make artisan steel before the big steel industry. About all you could do with it was make swords and a suit of armor at terrific expense.
> of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
Before the industrial revolution, 90% of the population worked on the farm, and famine was still a regular occurrence. There was no available work force to create artisan cars and artisan indoor plumbing for the masses. Nor was there food to feed them.
Some years ago, I toured Jefferson's Monticello mansion and estate. In the back yard there was a nailery, where the slaves operated a small forge and hammered out nails, one by one. Today you can just buy a box of nails for a few dollars, thanks to big steel and the nail making machining requiring little additional labor. I don't know how many nails could be made in a day's work by an artisan, but I doubt it is that many, and it's cost you at least $150 for that box of nails.
Nails were so valuable in those days people would burn houses down just to get the nails.
I had my roof replaced a year ago. After the roofers left, I spent a fair amount of time combing the yard to get all the discarded nails out of it. The nails were so cheap it was not worth anyone's time to pick them up. (I picked them up because I didn't want to step on them. I did anyway, driving the nail nearly through the sole of my shoe.)
Nails became affordable long before modern global manufacturing. They were affordable when "artisans" were still making them. Come on now.
People used complex wood joinery in those days due to the expense of nails.
I assume that "those days" refers to the 1700s, since you seem to be fixated on that, but nails were being manufactured by the 1800s and mass produced by the 1900s, and certainly didn't require "big business" to be affordable.
Merry Christmas, or whatever.
Italy is too many mom and pop shops and not doing that great
https://www.linkedin.com/pulse/italian-smes-small-pretty-str...
There's a middle ground, you know.
The problem with Walmart isn't just that it's a big chain store.
It's that it's a staggeringly, unchallengeably huge chain store, that can afford to operate a given location at a loss effectively indefinitely in order to drive out competition—including competition from other big chain stores, if they want to.
This seems to always be the issue, the visceral experiencing of prices now at the cash register versus long term effects.
“But if Walmart’s example reveals anything, it is that, in the long term, low prices can have costs of their own.”
The scale of corporation can pull many levers in the pursuit of profit and can have longer vision because it has economic means to persist, the individual consumer is weak and short sighted in comparison, always.
Doesn't matter to many people.
They would be glad for the area to be poorer if it's better for them.
I.E. They don't get poorer, but other people do, and they're purchasing power increases.
Their larger purchasing power means that they need those people to get busy producing stuff they need so they have something to spend more money on.
You don't need the production to happen in your podunk town or suburb.
Walmart will gladly import it for you from elsewhere.
If you're talking about services, if you're purely greedy, it's better for you to have more people without good jobs so you can take advantage of them having to work undesirable service jobs at lower and lower wages.
Right those people need to move to a city where there is need of them-
Poverty often comes with crime and other problems. I don't think anyone likes that in their neighbourhood.
First - let's think about who thinks like this primarily:
Relatively wealthy people in suburban or rural areas (who are by no means actually wealthy by American standards).
Poverty isn't going to affect their neighborhoods. You don't go from having a $750k house on the outskirts of a suburb of Atlanta or Dallas or a $500k house in Montgomery Al or Jackson MS to suddenly being overwhelmed with neighborhood poverty because Walmart comes in or a bunch of unions in town get busted.
The affects will be felt in the suburban center where the lower middle class and poorer renters live.
The crime that follows will almost exclusively be problems for OTHER people.
If they have this thinking, they couldn't care less about crime in YOUR neighborhood.
You can bet, for sure, if crime makes its way to THEIR neighborhood, they'll immediately get more police force - probably paid for primarily at YOUR expense.
Sure, but as OP said, consumers are short sighted. Communal issues will always be secondary to immediate personal issues.
Consumers are short sighted. On this we can agree.
But are they short sighted because they are taught to be short sighted, or is this some irrevocable aspect of the human condition?
If you grow up in a society that emphases the virtues of individuality and deemphasises the impact of the social/group condition upon your own lived experience, it's not really surprising that you'd rate "immediate personal issues" above "communal" ones.
Good points. Social reinforcement could play a role as well, e.g. is it frowned upon to engage in certain consumer behaviors.
Not just frowned upon.
Think about the difference it would make if everyone was more aware of the personal cost to them of poverty, homelessness and so forth? In the current world, living in a place that doesn't do things the way the US does can accomplish this (at least temporarily).
Consumers want to eat cake and lose weight.
I think "the tragedy of the commons" isn't universal. It's an argument for enclosure. But the commons can be run over by people who don't believe in communal good and instead want to be doing the enclosure.
Yes, that is why the problem continues.
One can apply the exact same logic to free trade.
Well, there are good arguments that free trade is not always a good thing, especially when there exists actors (e.g. corporations) who are the main beneficiary of the differential in economies to extract more profits. Free trade implies YOU getting a cheaper price sometimes, but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market.
The limiting case is telling: an alien race comes and offers all of our goods for 1/10th of their Earth price, made possible by their insanely advanced technology. Is that a good thing?
I have to share this. So my cousin says we need to stop treating jobs as solutions to social problems.
Here's more detail on her thoughts, which I think are kind of silly but are interesting nonetheless:
"It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
A job exists because a business needs it to perform a business function, and that's really the only reason it should exist. But for various non-business reasons, jobs are often favors to be given out and it makes the economy less efficient when you have jobs that don't really need to be done, or could be done better, but exist only as favors to people.
Putting the puritan work ethic on a pedestal directly contributes to this and harms our economy as a result. UBI and some form of guaranteed housing (or guarantee against losing your current housing) would be much cheaper than all the fake jobs needed to deliver favors."
What percentage of jobs does she believe are fake/unnecessary?
I'd agree that most workers are not particularly efficient. But I have never seen efforts to make them more efficient succeed.
So, the fact that there are eight employees doing the work of three at the grocery store does not count, because the missing efficiency is not available to the employer.
She tells me that she's seen the situation most often with older people who "have kids" or "have a family to take care of" - they either keep them in the role despite substandard performance, or covertly or overtly adjust the role expectations, and sometimes they get promoted into roles that seem to have been created for them (like "director of project management") or roles they aren't specifically qualified for (like a manager/team lead role).
She really believes any business with more than 50 people has at least 1 or 2 employees of this type, and more so if the culture of the firm tends to skew towards government contracts or older people--but when pressed for data, she said that was just her gut feeling.
> the fact that there are eight employees doing the work of three at the grocery store does not count
If you know three people could do the work of eight then fire 5 people or modify a process. The business is choosing to be inefficient, or there may be other factors. It may not really be inefficient if the cost of the 8 people is lower than the cost of automation or whatever is needed to improve the process. People are expensive in the U.S. so I tend not to assume that but it is possible.
If you only knew how bad it really is. In capitalism you have N firms "completing" so that usually means you will have multitudes people working on the exact same thing. Imagine that level of inefficiency.
> "It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
There's another point, which is even more sinister. The unemployed offer liquidity in the employment pool, which offer more flexibility for the growth of the machine. Local communities that are more self-sufficient would want to take care of their own. The emergent properties of the anonymous machine see unemployment as a variable to be optimized.
People can always make their own jobs - start a business, like being a handyman, a babysitter, etc.
Minimum wage laws, on the other hand, mean a lot of employment possibilities are simply out of reach.
If your "business" cannot pay a person 3x [0] the going rate for an appropriate rental property in the market where it operates, then it has no reason to exist other than to extract profit from the labor of the people you hire.
Minimum wage laws would not stop you from selling your services as a programmer at any rate you want to.
[0] and yes, current minimum wages in most places in the US are actually far below even this threshold.
> then it has no reason to exist other than to extract profit from the labor of the people you hire.
My cousin's lovely response:
"So the business paying the insufficient wage and the landlord are not the same entity. The business's job is to run a business, not worry about if landlords are getting paid. It's unfair and inefficient to make businesses submit to the demands of greedy landlords in this manner. Maybe governments could step in and protect businesses but I'm unsure of the best way to do that."
Personally I think if we have a system of private ownership then charging whatever I want for rent is my right and the government should not be able to force me against my will, otherwise all property is really the governments. But I think there are grey areas when we talk about corporate/institutional property owners.
That's not a lovely response. It's a simplistic response that totally misses the point. The cost of rent is a function of many different factors, which vary depending on location in space and time. Some of the time that may include greed on the part of landlords, some of the time that may play a very minor role.
Your own response is similarly simplistic. The meaning of "property" is defined by government, at all times and in all places. The precise meaning varies, but there being limits on what rights it comes with is not a violation of your "property rights" - it is actually the very definition of what property means.
Definitely, making $0 is better than making $10.
A system that allows you to make $10 when you actually need $30 to live is also a system that will frequently go to significant lengths to make sure you never make $30.
Giving them $20 in welfare is more practical than $30 in welfare, and the $10 in productivity is lost as well.
I.e. minimum wage produces more of a burden on social services to take care of the unemployed.
You want a reserve army of labor, not big enough to revolt but big enough to create precarity.
> there are good arguments that free trade is not always a good thing
Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
> Free trade is just one aspect of a free market.
This is wildly misleading. Free trade in the 21st century generally refers to trade across national boundaries. Nations represent markets that are not subject to the same basic conditions as each other. Moreover, free trade (the international kind) almost always seems to involve a lack of restriction on the movement of goods, capital and profit, but rarely allows labor the same benefit.
The 21st century version of "free trade" is about expanding the scope and scale of capital markets and the movement of goods and profits across national (and thus market-jurisdictional and -conditional) boundaries. It has almost nothing to with the "old" notion of free trade within a given market.
Do you know that the Constitution set up a "free trade zone" among the states? And it works great, too!
> It has almost nothing to with the "old" notion of free trade within a given market.
The Law of Supply and Demand has never changed, and never will.
The constitution also sets up free movement of labor among states. It works great too!
"The Law of Supply and Demand" was unknown to the Romans or various middle Eastern empires (just two examples), whose economies worked in entirely different ways from those that followed the mercantilist period in Europe, and became canonized by Smith et al.
> "The Law of Supply and Demand" was unknown to the Romans
So was the law of gravity, but gravity still ruled their lives.
> whose economies worked in entirely different ways
The Law of Supply and Demand applies to all economic systems.
> So was the law of gravity, but gravity still ruled their lives.
I expected a better response from you.
> The Law of Supply and Demand applies to all economic systems.
False. Well, false for some well known versions of whatever "the law of supply and demand" is.
There are all kinds of reasons why the retail cost of goods are not an inverse linear function of their supply; ditto for the retail cost of labor.
Why do you feel this need to reduce complex systems to vapid platitudes?
> Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
More prosperity but often at a cost to local environments and commons that are not priced into the market. And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
> And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
I don't know anyone who prefers to be less prosperous.
Prosperous can be measured in different ways. For example, right now, I am "less prosperous" by an economic measurement, but much more prosperous in terms of free time. And I'm much happier being "less prosperous" by the economic definition.
Nonsense.
“Free trade” here refers to inter-country globalized trade across borders, not free markets within a confine.
There’s a much stronger case to be made that industrial policy has resulted in prosperity for Asia, ironically the opposite of free trade :)
Why do you think the Constitution instituted a free trade zone among the states?
Or gives the product away --- a certain shoe company's gifting of footwear destroys the business of local cobblers.
I'm assuming this isn't a random hypothetical but I don't know what shoe company you are talking about.
I’ve heard this about TOMS
Yes and once they have destroyed the competition, then they start charging.
Yeah, predatory pricing and its logical extreme, giving the product away, is another common strategy of big business.
There are three kinds of prices:
1. below the competition - predatory pricing, dumping
2. same as the competition - collusion, price fixing, cartel
3. more than the competition - gouging, profiteering
All three are illegal. There's no legal way to set a price.
Below the competition ins't predatory if you can make a profit off of it. Predatory specifically means that you price it at a serious loss and then jack up the price when the competition dies.
Companies have sales at a loss all the time. Would you rather they put the merchandise that doesn't move into the landfill?
> then jack up the price when the competition dies.
That never happens, for good reason. Think about all the money a big corporation would lose trying to sell below cost to drive out a mom and pop.
> but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market.
It's so bizzare that making things more efficient and in effect saving humans from the burden of inefficient labor is seen as negative. Tying people's survival to their ability to sell their labor is such a terrible idea in this day and age.
An excellent point! Perhaps unregulated free trade isn't the ultimate means of production?
We do. We just enjoy it when wages are driven down, because as investors and owners, we are the beneficiaries of that.
The way to increase one's pay is to increase one's productivity.
If your productivity is producing $100 in value for $10 in pay, other businesses will line up to offer you more money.
If your productivity is $9, expect to get laid off.
The Law of Supply and Demand is in effect, as always.
Once again nonsense, productivity has been increasing in America over the last 20 years but real wages have not.
As always, don’t confuse textbook theory with real life!
Comparing with real wages is erroneous. One has to look at total employee compensation, instead. This includes:
1. worker pay
2. so-called employer's social security contribution
3. stock purchase plans
4. 401k company benefits
5. employer provided health care
6. retirement plan contributions
7. paid time off
8. other employee benefits
This adds usually around 40-60% of wages.
Another factor is the increasing share of the productivity is extracted through government taxation and deficit spending. Big government is expensive.
It's a situation where we want everyone else's wages to be driven down. But not our own of course.