The highly-intelligent-but-requiring-a-good-dose-of-Don-Boudreaux Ezra Klein writes:
My guess is that Wal-Mart’s size and might is having much more profound effects on our economy through the demands and strains it places on suppliers than through their lowish wages and benefits for direct employees (although those labor standards give them a competitive advantage over chains with higher standards, and so we race to the bottom…). So much as I want the latter to go up and unionization to rush across the land, I’m more worried that Wal-Mart’s size and status as the indispensable outlet for products, when coupled with their virtually maniacal (though fully understandable) demands for lower pricing, are pushing down wages and work conditions all throughout [sic] the land and, for that matter, the world. Suppliers simply can’t pay better and push the marginal cost to consumers — Wal-Mart will drop them faster than you can say "Always low prices."
If our economy had more pockets of sluggish monopoly power, those highly stable and visible firms might be more unionized. But unionization is not desirable per se. Keep in mind, a well-functioning antitrust law raises real wages rather than lowering them. Wal-Mart, by squeezing suppliers and lowering prices, does the same. Wal-Mart suppliers are still selling at "price above the appropriate measure of marginal cost," albeit by less than before. Asking for higher prices and higher monopoly profits — not as a spur to innovation, but in the hope that monopolizing suppliers will share those profits with their laborers — is a bad way to elevate the American standard of living.
I worry more when Wal-Mart acts to keep prices up.
I think it’s extremely obnoxious to add in [sic]s when you quote people, and especially so when there is no mistake. You might argue with the phrasing, but it it is not objectively incorrect. (Using “their” instead of “its” is slightly more objectionable, but that’s still just a stylistic choice with which I disagree).
I’ve been doing some casual reading on monopsonies and it’s raised a question that I am too ignorant to answer, and too lazy to attempt to answer via Google, Wikipedia etc.
Namely, given the problems with monopsonies and monopolies, is there a Pareto optimal number of firms for a given market, or at least a method to estimate that value?
Can you explain, “a well-functioning antitrust law raises real wages rather than lowering them.”?
I thought the opposite was the case–at least in the industry where the trusts exist.
So economies of scale trumps market-driven competition most of the time. Yeah, there must be a reason that most economic activity occur in corporations, rather than on markets.
Tyler, I guess this mean that you have embraced single-payer universal health care?
Personally, my problem with Wal-mart is not that it deflates prices, my problem is that it restricts choice.
Dan Karreman: “my problem with Wal-mart is not that it deflates prices, my problem is that it restricts choice.”
How does WalMart restrict choice? Are you meaning that WalMart drives out competition because it offers what the majority wants? and leaves the minority without an alternative?
WalMart has lots of competition. If enough consumers wanted other choices, those competitors would serve their needs. If anything, it’s the consuming public that restricts choice by favoring price over variety.
Walmart’s business model is to charge lower prices, right now at least. It wasn’t so long ago that a big part of their business model was to offer American made goods.
First off-why is everyone so worried about Wal-Mart?
People talk about the consumer-driven mind and how everything is all about “Wal-Mart” and complain about it, yet it’s all people worry about.
Honestly-I hate Wal-Mart. I hate dodging the crowds. I dislike unfriendly cashiers and Wal-Mart greeters.
But-the point is, I can still sleep at night even after I spend hundreds of dollars eery year at Wal-Mart and get treated like crap.
There are things in the world that actually matter. Not Wal-Mart.
How about people focus on the upcoming elections in their districts and get out there and vote instead of grumbling about who got into office if you yourself didn’t try to go out there and make a difference.
Don’t complain about Wal-Mart dominating everything and every business if you are going to go out there and spend all your money at Wal-Mart.
Save that money to buy yourself a calling card to call someone who cares.
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