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comment by kleinbl00
kleinbl00  ·  2438 days ago  ·  link  ·    ·  parent  ·  post: Apples and Walmarts

"Do you agree that this one, specific effect, lower prices when Walmart comes to town, is good for the locals?"

Alice, Bob, Carol and Dave live in Plainsville, USA. Alice owns a general store. Bob owns a gas station. Carol runs a daycare. Dave is a gardener.

Alice sells $1 worth of dry goods to Bob, Carol and Dave every week. She grosses $3 a week.

Bob sells $1 worth of gas to Alice, Carol and Dave every week. He grosses $3 a week.

Carol takes care of Alice, Bob and Dave's kids for $1 every week. She grosses $3 a week.

Dave tends to Alice, Bob and Carol's gardens for $1 every week. He grosses $3 a week.

We have no cost of goods sold and we're oversimplifying, but Plainsville has a GDP of $12 a week. It is a closed economy where everyone is break-even.

Now let's say Edward comes to town from Bentonville, Arkansas. He's going to open a general store to compete with Alice. His dry goods cost 50 cents on the dollar what Alice's do because he buys it by the container-load from China.

Alice is no longer making money. She grosses $0 a week.

Bob sells $1 worth of gas to Carol and Dave because Alice is broke. Bob grosses $2 a week.

Carol takes care of Bob and Dave's kids because Alice's kids are staying at home. Carol grosses $2 a week.

Dave is still doing the gardening for Bob and Carol but Alice can't afford him anymore. Dave grosses $2 a week.

Alice is assed out. Bob, Carol and Dave have taken a 33% hit on their income. Fortunately, Edward is selling for 50 cents on the dollar so they're actually coming out 17 cents ahead. Plainsville's GDP is now $7.50 instead of $12... except Edward is sending $1 of his $1.50 back to Bentonville because that's the whole point. So actually, Plainsville is at $6.50.

Alice is out her entire income - $3. But Alice's town is down more than her entire income, even though Alice's neighbors are saving 17 cents.

_________________________________________________________________________________________________

"If there are no public benefits, workers will have to make do with whatever salary they can get."

For once and for all, why do you think that's a good thing?

Had a friend. Her name was Jae Poon Rat. She lived in Bangkok. Here's her garden.

Jae Poon Rat lived in a 2-story warehouse. The upper floor was a sweatshop. She employed 50 people to make knock-off clothing. They made about 400 baht a day, or about $12. And I was assured they were happy. After all, you can get a meal on the street for about 100 baht. Per capita income in Thailand is about 550 baht a day and there are plenty of people who do much worse.

But the public benefits in Thailand don't include fire codes so when a fire broke out and the trucks couldn't get to the warehouse, all 50 people were unemployed. And they don't include healthcare so when Jae Poon Rat got breast cancer she just up'n'died. But over there, workers make do with whatever salary they can get.

By the way, Jae Poon rat owned a sweatshop because she received a large inheritance. 50 people worked for her for 400 a day because they didn't.

This is the atrium of the Central World Mall for the Queen's birthday in 2007. They had an orchid show in her honor.

Here's Central World after the government shelled it to get the Red Shirts out in 2010.

Allow me to quote from the article again:

    If you want an apple and you pick it off a tree in the wild, that’s not economics because no one else is involved. If you want my apple and you stab me and take it, that’s not economics either. If you want me to give you my apple, we have entered the realm of economics.

Some of us are advocating for a living wage because it discourages people from stabbing you for your apple. And some of us are advocating that just because you don't see any owner of the tree doesn't mean there isn't one.

I actually don't mean to beat you up this time. I know that you can make better arguments than this. I simply don't see why... I don't see why.

I don't see why workers should "make do."





goobster  ·  2437 days ago  ·  link  ·  

    I said: "Step 2: Offer prices too low for any local competitor to meet."

    You said: "Do you agree that this one, specific effect, lower prices when Walmart comes to town, is good for the locals?"

No! Low prices are NOT good for people.

And that's the point you are missing.

The price of an item needs to account for raw materials, manufacturing, regulatory compliance, corporate taxes, shipping, and the salaries/benefits of every individual involved along the way, from the picker in the field to the factory worker to the delivery truck driver.

If at ANY point along that way someone pays less, then someone else has to make up that deficit.

For example: Senator Buttcheese gets Widget Factory to open their new factory in Senator Buttcheese's state capital of Sandusky. This is a big win for Sandusky, because there will be 500 jobs to fill at the factory. But to get Widget Factory to move to Sandusky, the Senator agrees to give them a 10-year break on taxes.

STOP.

Read that again: "...a 10-year break on taxes."

Widget Factory can now lower their prices BECAUSE THEY ARE NOT PAYING TAXES.

So retailers start buying Widget Factory widgets, instead of the old ACME Widgets, because Widget Factory's are cheaper, and paying less for products increases the profits for the retailer.

10 years later.

The roads in Sandusky are destroyed. Potholes EVERYWHERE. Especially around the Widget Factory, which is booming and now employs 1000 Sanduskyites.

A local ballot measure for road repair gets passed, adding a $1.00 surcharge to all automobile licenses issued in Sandusky.

Now the 1000 workers at Widget Factory are paying increased taxes to repair the roads that have been destroyed by Widget Factory trucks, because Widget Factory is NOT paying into that fund, because of their tax break from Senator Buttcheese, who died several years ago. Dippy McShithead now runs for Senator Buttcheese's seat, on a platform of "Cutting Taxes!" to ease the tax burden on poor Sanduskyites. (And you have the last 30 years of the Republican Party, in a nutshell: Create a problem, blame someone else, and claim tax cuts will fix it.)

So no, low prices are NOT a good thing. For anyone. They are short-sighted, and wind up hurting people in the long run.

wasoxygen  ·  2438 days ago  ·  link  ·  

I kinda lost hope in our ability to have a useful conversation that time you made a clear and plausible argument about charity, I responded, and you said I completely misunderstood your point.

Though your statement that "The world will be a tyrannical and biased place if aid is determined by the charity of individuals" makes more sense to me now.

    For once and for all, why do you think that's a good thing?

I don't think it's a good thing. I think it's a true thing.

kleinbl00  ·  2438 days ago  ·  link  ·  

    I don't think it's a good thing. I think it's a true thing.

So in other words all this progress over the past 400 years - the betterment of conditions for workers, the increase in the well-being of the middle class, the decrease in infant mortality, the gains in longevity... is all that stuff fruitless? Is all that stuff pointless? Is all that stuff an affront to capitalism?

WHY?

Why.

Should.

Workers.

Make.

Do.

wasoxygen  ·  2437 days ago  ·  link  ·  

"If there are no public benefits, workers will have to make do with whatever salary they can get. Additional public benefits make them somewhat more comfortable, so they can be somewhat more choosy about employment, and if they receive sufficiently generous public benefits, they might choose not to work at all, unless they were offered a very high salary to make it worth their while."

It's just a thought experiment, I am not advocating anything in this paragraph. My intuition initially was that getting some public benefits made workers more comfortable, so they would accept lower salaries. To check my intuition, I imagined extending the size of the benefit to extremes in both directions, from "zero" to "very large," simply to make the consequences more obvious. It's not a proof of anything, nor a recommendation of anything.

kleinbl00  ·  2437 days ago  ·  link  ·  

Okay, thank you. We'll go ahead and leave that question unanswered.

Next question, why are you reliant on your intuition and thought experiments? I mean, you're basically attempting to imagine "Sweden." This isn't quantum mechanics we're talking about, it's economics. People study this shit for a living, using economic data and empirical experiments.