Dan M wrote:
>> Dan--
>>
>> I read Krugman regularly, and usually agree with him.
>
> The quote of his is at:
>
> http://economistsview.typepad.com/economistsview/2005/12/paul_krugman_wa.htm
Dan--
Looks familiar. I bet I read it when it first came out.
The gist is that Wal-Mart does not create retail jobs.
It's more efficient than the smaller stores it replaces,
so the result is fewer retail jobs overall.
Now is that a bad thing, per se? Efficiency is usually
good, it means the work gets done faster. I'd hope no
one is proposing that we create jobs by having people
work inefficiently?
To me, the problem is that there simply aren't enough
decent jobs to go around. So we're left with a pool
of underemployed people, who compete for the low
quality jobs that remain. While this keeps labor costs
down, I'd argue that it's a bad way to set up a society.
>> Let's see: "evil" does not have much explanatory power
>> or actual meaning, and as for "greedy", corporations
>> usually have to be greedy, or their shareholders object.
>>
>> Different business sectors tend to have different profit
>> margins. That explains some of it.
>
> Sure it does, and I'm fully willing to state that the difference doesn't
So "Sure it does" claims that "evil" has explanatory power?
I remember an argument with Gautam along these lines a while
back. His line was something like "Terrorists are evil because
they do horrible things. Terrorists do horrible things because
they are evil." To me, that says no more than "Terrorists do
horrible things."
Back on topic, I'd guess that Wal-Mart is not actually evil.
All you get is that it is amoral and greedy.
> But, the question I want to ask is "does the average lower income person
> gain." Articles and analysis like the one by Kerry's advisor address the
> subject. If there are other factors worth considering, I'd be interested in
> seeing them. But, at the moment, his argument looks pretty
> persuasive....especially since I think I can do a simple economic model that
> illustrates the underlying principal.
A more careful formulation would be: "Is the average quality of life
of lower income people better after a Wal-Mart store comes?"
Now "quality of life" is slippery to define, so we may have to fall
back on utility. This would give: "Will the total utility of the
lower income people in a region be greater after a Wal-Mart store
opens in that region?" That's still imperfect, but I give up.
For example, consider a change that puts half the population
out of work while giving the other half a bit more than twice what
they had originally. The average income could go up, but I'd
argue that total utility would go down. It's worse to lose one's
job than it is good to earn a bit more than twice as much.
Another wrinkle is that the unemployment could be both unavoidable
and temporary. So Wal-Mart could produce net harm in the short
term, while producing net good over a longer period. (When and
if the people who lost retail jobs find other work.)
---David
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