Saturday, October 22, 2005

Plausible

I read a letter to the editor today that, at first glance, seemed terribly plausible. Here's the part that confused me for a bit:

"Elected officials continue to swallow the story that WalMart 'creates' jobs... Adding a store does not add jobs [since] there are the same number of people buying the same amount of goods. Buying them from WalMart rather than locally owned stores simply shifts jobs from one location to another."

I think the problem is the idea that businesses are interchangeable. If there were no price difference, the same number of people (who would have the same amount of money) would buy the same amount of goods. However, if WalMart is not the exact equivalent of these local stores and has managed, through economies of scale, management, etc., to create greater efficiencies, then WalMart can provide more goods for the same amount of money. So the same number of people spending the same amount of money will buy more goods (which means an improved standard of living) and more jobs for those who manufacture the goods that are being sold. What happens to the goods that are not available? They're not providing jobs for local businessmen, they're being wasted.

1 Comments:

Blogger Noumenon said...

Both the people who argue that Wal-Mart creates jobs and your commenter are wrongly focused on the visible jobs when the real jobs Wal-Mart creates are mostly not in the retail industry. They mostly mean Wal-Mart creates jobs in their community as opposed to next door.

3:02 PM  

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