The unfairness of bargain prices

by Walter Olson on March 31, 2011

Don’t know whether to laugh or weep: why one local activist thinks Washington, D.C. would be better off without Wal-Mart [Mark Perry]

{ 7 comments }

1 Ben S 03.31.11 at 12:04 pm

He who does the most volume wins, and to hell with everyone else?

2 James 04.01.11 at 1:02 am

I wonder if Walter has ever been to Germany, where managed growth is the order of the order of the day? The result is attractive towns with a minimum of blight, a healthy ecosystem of small and large businesses, and, while products cost a bit more, the overall effect of avoiding the ‘race to the bottom’ is a positive one. Indeed, WAL*Mart had to quit germany because of a combination of such mandates and a conscious german understanding of letting such a lout and tactless american houseguest make himself at home. I wonder who amongst us looks at germany and says that they’d be better off with WAL*Mart there?

Or, does deep down inside, Walter find sympathy with this sort of comment (found from the comments after the article)?:

“If I may be politically incorrect for a moment… Conservatives are like the man of the nation and liberals are like the woman. The woman nags, bitches, whines, makes minor issues seem important, complains, and remembers every little grievance. But when bad shit happens it’s the man who fixes it and keeps the woman safe so she can go back to her bitching.”

3 John Burgess 04.01.11 at 7:04 am

He who recognizes a market and fulfills the customers’ demands wins. To bankruptcy, he who fails to learn the lesson.

4 E Garland 04.01.11 at 10:54 am

I’ve been overseas (Europe and Asia) and have noted the features thatJames reffered to…however, I have to disagree with his “products cost a bit more”…by my reckoning, they cost quite a lot more…

The same is seen here in the U.S…while I would have liked to have kept giving my business to a local small hardward store, the fact was that they had to charge 25% to 30% more to stay afloat…

It’s bad enough that the government already plays a large role in business, but for it to step in and start favoring smaller (and more expensive) businesses over larger and more efficient ones brings up a question of who is being served…for many people on small or fixed paychecks, cheaper is simply better…

5 James 04.03.11 at 7:17 am

E Garland: if you want even less government role in business, move to Somalia – the true libertarian paradise!

So, just to make things clear – you apparently think that a 20-23.5% discount on goods is a sufficient tradeoff for the loss of community and local business that the big box stores of the world inevitably engender. That’s entirely your right to do so, even though from where I sit, as one who consciously took my family out of the USA and moved to Europe because of the unchecked materialism that your type of thinking implied, clearly disagree. Don’t get me wrong – I’m not “anti-market” – I’m both a graduate-trained economist with an MBA from a top program and a business owner. However, I think the price Americans have paid for this illusory discount has been in every way too great.

I think what people like Watlter and yourself fundamentally don’t fathom (I agree with Walter’s ‘overlawyered’ sentiments, but not his libertarian ones) is that in markets, “externalities” are the rule, not the exception.

E Garland – your point of comparison seems to be “people or small or fixed paychecks.” Fine – then ask yourself – where to such people live better – in Western Europe or in the USA? By almost every conceivable standard such people live better in Europe. Clearly, if your concern is for such people, then you should be embracing sensible management. I’m not saying that the US should sink into some of the worst excesses of european busibodiness, but certainly there’s something to be said about careful management of the societal ecosystems in which we all live… and the USA right now looks like a hell of aggressively for-profit medicine, aggressively for-profit education, aggressive for-profit lawyering, and aggressively for-profit retailing whose net effect is the end of American exceptionalism.

6 William Nuesslein 04.04.11 at 7:25 am

E Garland says that European prices are a lot more. I think that the value added tax is what makes goods more dear in Europe.

7 E Garland 04.04.11 at 10:31 am

James,

While I’m fortunate enough to make enough money that a “20 to 23.5 percent discount” isn’t as necessary, I have a large number of relatives and in-laws who do not – many of whom dearly wish Wal-Mart would set up in the regions where they live…

The “careful management of the societal ecosystems” on the other side of the ocean you mention is direct result of “European busibodiness” – the two are deeply interconnected. Who determines what businesses should be carefully managed? Once government begins to pick sides in business, there’s no end to what they may do in our name…

I like the feeling of community that comes from a small business as much as the next person – but I recognize that this comes at a different cost than you note. The small hardware store I mentioned had four people working for them – at less than Wal-Mart paid…and without even the level of health care that “Wally World” provides – yet their prices HAD to be higher due to their lack of economies of scale…

For that store to have done better, they would have needed access to a pool of wealthier customers, membership in a collective group of similar stores to increase their wholesale buying power, or a governemnt willing to penalize the area’s other residents…

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