Comment by clock_tower | Hacker News Reader

Comment by clock_tower | Hacker News Reader

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If I were to guess: Wal-Mart has a very bad reputation for sucking the wealth out of a community; money spent at a locally-owned store is more likely to circulate in the community, while with Wal-Mart the money's spent once and no one but the Waltons ever sees it again.

Amazon might be a little bit like that: a fountain of wealth for Seattle (and check out real estate prices there if you think that's an exaggeration), but pumping that wealth out of all the rest of the globe.

But I see a weakness in this argument: Wal-Mart mostly displaced existing chain stores, which had similar wealth-pump effects -- and which had much higher prices than Wal-Mart, partially because they wanted higher prices but mostly because they didn't have Wal-Mart's hyper-efficient supply chain. And the old corner groceries and general stores had supply chains that were even worse than the previous generation of chain stores, and therefore even higher prices and even smaller variety...

So: you hear the wealth-pump argument, wealth pumps do sometimes exist, and I'm pretty sure the previous poster was accusing Amazon and Wal-Mart of both being wealth pumps; but I'm not entirely sure that that's what's going on with either business. If it is going on, of course, it's a problem. (Have there been any studies on Wal-Mart's effect on areas where it opens?)

> money spent at a locally-owned store is more likely to circulate in the community

This has always been a silly argument. Locally-owned businesses tend to be in the service industry. Their primary expenses are wages, paid to people living nearby. This is also true of internationally owned service-industry businesses.

Retail businesses tend to sit at the end of a long supply chain. Their primary expenses are the goods they buy from upstream. Local staff are a minor bit of overheard, like the air conditioning or the internet connection for the credit card terminals. This is true whether the retail business is locally or internationally owned.

yes, but where do the profits go in each case?

To the local store owner, or to remote owners/shareholders?

The point of the local argument for me is that local owners are more likely to invest in locally owned businesses and create more local owners, whereas remote super-owners are more likely to create remote super-owners who further create more remote super owners, the net effect being that the ownership within the local community over time erodes.

The concrete facts of walmart et al as an example only support this argument..

In many lines of business, retailer profit margins are so thin that it doesn't really matter. But let's suppose it does.

Growing up, we had some family friends who were local business owners, albeit in the service industry.

The first place money will go is the local housing market. As a renter, this is incredibly destructive. If shopping at national chains reduces what my competitors can bid, all the more reason to do it.

The next place it'll go is luxury SUVs. As a (sometimes motor)cyclist, it might help me to get more drivers into Volvos with their safety sensors, though I do prefer to share the road with smaller vehicles. Neutral on this one.

Then it'll go to international travel. None of that money is local.

Then it'll go to investment accounts at national brokerages into multinational stocks on New York-based exchanges.

As far as I know, there is no forum where the local computer parts store proprietor and grocer invest in each other. Maybe some local philanthropy - they might be at Rotary together - but most of the philanthropy around me was driven by the handful of national companies headquartered locally.

Are your neighbors automatons? Otherwise, the first place the money will go to is the grocer and restaurants. From your description, I'll extrapolate and predict that it goes to some high end, organic food farmer's market.

Next, it'll go to Geetika Miller, formerly known as Karen, who went to India to study and came back as an enlightened yoga instructor :D

Come on, you're being a bit disingenuous. Keeping money local isn't some BS concept that has no history or evidence of success, it's how certain immigrant communities have thrive in a new country. I've seen this personally in the Detroit with the Chaldean (Iraqi Christians) community but you can also look at the history of Jewish immigrants in the US and Chinese emigrants anywhere really.

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