Assuming the foreign workers are not being exploited or abused, I don't understand why it is any more or less moral to channel your commerce to them as opposed to people in your own country.
This is only the case if no one who gets money, either directly or indirectly, from Wal-Mart wants to buy any of the stuff your local economy was making. Think of all the people all around the world who get money from Wal-Mart. If none of these people want to buy anything you and your fellow townsmen make, then you are absolutely right that the money leaves your local economy forever.
But this points to a deeper pathology. You want something people outside your community provide (through Wal-Mart or whatever), but you refuse to give back an equal amount of value for what you extract. Because of this expectation, you rail against anything non-local. This is how trade deficits get started, and the solution to them is not to scream for a reemergence of isolationist economic policy, which is essentially your concept of a self-circulating local economy. The solution is to realize that other people want you to do things for them when they do things for you, and to get over this quaint notion of historic mainstreet town life if you really want the things that a big box style economy provides. You can't have both unless you want to go broke.
I also think local merchants are more likely to sell goods/services that are better for their local economy than a big box retailer that is completely disconnected from the local economy.
Can you back this up, or are you waxing sentimental?
As far as the flow of capital is concerned, a big box retailer provides a lot for a local economy because people spend a lot of money there. They're winning as far as cash flow goes, which means they are giving people what they want, even if they whine about getting it.
If nothing else, I think this shows that local economies aren't as special and unique as people claim they are; it's like the Lake Wobegon Effect for retail. Your local economy is not that special, your locality is not that special, and your fight to remain isolated in all the ways you think matter while becoming interconnected with other communities in all the ways you are willing to tolerate is going to backfire, because you come across expecting more from others than they are allowed to expect from you. If you want that money back, then do something that makes people want to give it back to you. It's as simple as that.
Why would I even want to discuss something with someone with such an unnecessary rude and snarky attitude?
Yes, I can back this up... go into your local pizza shop/taco stand/burger joint/Italian restaurant/seafood shack and get a pizza/burrito/burger/pasta/fish and compare the ingredients to Pizza Hut. One is made out of a bunch of "edible food-like substances" (to quote Michael Pollan) the other is made with actual food.
Quote:
Wal-Mart sells cheaply and uses fewer workers partly because it is a technological and organizational innovator, but its success depends even more on its relentless pressure on workers and suppliers, and its extraordinary market power is by far the dominant retailer of many goods. The corporation is likely to control 35 percent of all U.S. food and drug sales by 2007.
Wal-Mart also shifts many of its costs to taxpayers (or other businesses that indirectly pay costs of Wal-Mart’s underinsured employees). A recent study by Good Jobs First, an organization that monitors economic development policies, found that state and local governments had given at least $1 billion in subsidies to stores and distribution centers. Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid. According to a recent study by the University of California at Berkeley Center for Labor Research and Education, California alone spends $10 billion annually to subsidize Wal-Mart and similar low-wage employers. Congressional Democratic staff calculates that federal taxpayers pay $2,103 per year in subsidies for the average Wal-Mart worker.
Source: http://www.inthesetimes.com/article/the_wal_mart_effect/
Because once we poison the well, only then can we have a fruitful discussion about this. Let's not drop this to the level of throwing about "frankenfood" type labels; those convince for entirely bogus reasons.
And I have had some absolutely asininely terrible food from local restaurants that would make a chain look worthy of Michelin stars by comparison. I'd argue that is what you lose more of with chains; you don't get the variance that allows for the highs, but you are also somewhat covered from that same variance giving you some really dismal lows. Sometimes, predictable but mediocre is more desirable than variable and possibly outstanding or complete crap.
Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid.
FWIW, I think the subsidies given to Wal-Mart are a bunch of crap. If you dislike those, talk to your government; don't damn the recipient for taking what they've been given.
But Wal-Mart isn't entirely to be damned for the rest of this either. The presumption under all of this is that the people who are employed by Wal-Mart have no other options. Is this true? Yes, I know; of course it's true. But, is it true?
Either way, things are rather bleak. Either people aren't exercising their options to their own advantage, or they are trapped in a position with absolutely no bargaining power.
But we won't solve this by killing Wal-Mart; these problems are merely exposed by a big box store forcing the economics we've been ignoring for a long time for the sake of social harmony and idealism. Products were sold at marked up prices to support marked up sales staff, and we look back and argue all of that was to preserve a milieu that is considered an unquestionably good thing.
The same thing in the past has happened to a ton of other professions. In every case, we moved on. In a way, all of these subsidies prevent us from doing so.
I wonder if the reality is much more mundane and non-idealistic; we didn't care much either way, but didn't know until Wal-Mart and the like came along that it could be done cheaper.
As a footnote, I'm not pro-Wal-Mart. I'm just someone who is alternatively interested in and confused by people's reactions to economic forces.
Not every local restaurant sources local organic farm-to-plate food.
If you shop at Walmart, that particular dollar bill is put on a truck and sent to Walmart Secret World Headquarters hundreds of miles away, and it eventually makes it's way to producers a world away from you. On the other hand, Walmart (and other businesses located hundreds of miles away) will buy goods from your locality, ship them to other distant locals, and send you a different dollar bill in return.
The fundamental issue is whether gains due to comparative advantage > shipping/logistics costs. As a result of shipping/logistics costs dropping rapidly (walmart has been a pioneer here), the non-local goods have won out.
(Granted, none of this has anything to do with the morality of giving a job to a guy named Jose instead of a guy named Joe.)
One problem with the modern system is that it seems to be an unstable equilibrium - it's more efficient, but what happens if the global logistics infrastructure breaks down because of war/rising oil prices/political turmoil etc? It seems that we (meaning communities/regions/the US) have given up self-sufficiency in exchange for this increased efficiency, which surely has some sort of cost.
What happens if some local infrastructure breaks down in a way that that the local community is put to a standstill until things get fixed?
A good example of this: a major highway bridge becomes impassible in a way that is not trivial to repair. The lack of this bridge becomes a huge expense and drain on quality of life in the region. You can either ride of self-sufficiency to get this bridge rebuilt, or you can rely on the efficiencies of volume producers of raw materials, machinery, and whatever else you'll need to build that bridge back up.
Self-sufficiency, in the sense that you exchange with few or no other people for your own wants and needs has huge costs as well; but, because most of us aren't self-sufficient in that sense, we tend to romantically gaze in that direction and only remember all the good that comes out of being self-sufficient. The trade-offs are not that obvious and one-sided.
In a non-networked world, the problem is limited to the local community. In a networked world, everyone is harmed.
It's pretty easy to see that there are tradeoffs to be made between reliability and efficiency. As we become dependent on products which are centrally produced (very efficiently) and widely distributed, we all become vulnerable when a disaster strikes the producers.
I personally believe that the efficiency gains outweigh the reliability losses, but that doesn't mean the tradeoffs don't exist.
True, and I tend to underestimate just how centralized the production of a lot of things are, since what I do isn't really based that heavily on geographic location.
My counter to that, though, is that there is usually at least a couple of producers of most products, and that sometimes -- though not always -- they are geographically separated enough that the risk is somewhat mitigated. Other times, though, geographic constraints sort of mandate that every supplier be located within a small number of miles of one another; suppliers of natural resources (coal, oil, etc) come immediately to mind.
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy. Whereas, by going to the local restaurant the money will go back into the local economy. For every one job Wal-Mart hires, it kills 1.5 jobs in the local economy. It's called the Wal-Mart effect and several studies have shown this: One 1999 study reported that 1.5 jobs had been lost for every job that Wal-Mart created. A recent projection by the University of Illinois at Chicago’s Center for Urban Economic Development concluded that the proposed West-Side Chicago store likely would yield a net decrease of about 65 jobs after that Wal-Mart opens, as other retailers in the same shopping area lose business. A study cited in Business Week as showing modest retail gains after Wal-Marts open actually reported net job losses counting effects on warehousing and surrounding counties. http://www.inthesetimes.com/article/the_wal_mart_effect/
But “Walmartization of America has a broader impact than just retail workers,” says Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers. “Wal-Mart probably has had more negative impact on manufacturing than on other jobs in the United States.” Wal-Mart also squeezes American consumer goods producers, forcing them to cut labor costs, move overseas or be replaced by foreign suppliers. Accounting for 10 percent of all U.S. imports from China in 2002, the corporation even pressures wages downward in poor countries, from El Salvador to Bangladesh. It also drives competitors to import more, pushing the True Value hardware store cooperative to boost imports from less than 1 percent of its products to 18 percent.
It's moral not to put my neighbors out of business and look out for one another. You are your brother's keeper, I think is the phrase. (I am completely atheist, but I still think this is true.) Sometimes what's in your own self-interest is also moral, there's no reason those two qualities are mutually exclusive.
How is this so controversial? It's common sense.
Your entire post discussed the circulation of money in the local economy, and said nothing whatsoever about money coming into the local economy. Unless Walmart plans to keep providing your local economy with low cost steaks forever, and get nothing in return, money will eventually need to return. But it might be a different dollar bill spent by a different purchaser.
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy.
If the money leaves your local economy, that's a good thing. It means you traded some inedible green paper for a delicious steak. Your community has gained, the outside world has lost. If, in turn, someone trades green pieces of paper for products produced in the community, you gain less - you gain 1 steak but lose some eggplants. (Of course, the community with a surplus of steaks and a shortage of eggplants considers the opposite trade a gain.)
It wouldn't surprise me if walmart destroys retail jobs - they are fantastically efficient. Computers and the internet have also destroyed many jobs (newspapers, for example). Money no longer circulates around the local economy. Is this also a bad thing?
Destroying jobs through increasing productivity is generally a good thing.
I've discovered a very enlightening way to think about such questions: explain the harm in terms of goods and services, without mention of green pieces of paper. E.g., "the housing bubble was bad because we labor and materials building houses we didn't need." Can you provide a similar explanation of the harm caused by walmart?
It's moral not to put my neighbors out of business and look out for one another.
Why is it moral to put a much poorer Chinese person out of business? Is the Mexican farmer selling goods to Walmart somehow less of a human being than your wealthy neighbor?
Why does physical proximity equal morality in purchasing decisions? I can understand your argument from a perspective of _greed_ (as in "I believe that if I spend my money locally it is more likely to enrich the people in my community and therefore me.) But it doesn't make any sense to intentionally _mis-allocate_ resources by making spending decisions on a non-economic basis, then justify that decision on moral grounds.
From a moral standpoint, it seems to me that you should allocate your spending to the group that is producing value most efficiently, since that improves everyone's situation. If guys in China can make a product more efficiently / cheaply than your local maker, shouldn't they get that business? Why is an American more deserving of your purchase than someone in Indonesia? Essentially, you're saying that one human is more valuable than other due to their proximity to you.
If $0.50 of pay makes a bigger difference to the quality of life of a worker in China than $1.00 does for your neighbor, isn't the moral thing to do really buying the product from China? It results in a larger net improvement in quality of life.
(Note that I'm not advocating buying foreign. I'm just taking issue with the idea that buying local is necessarily more "moral" because it benefits people near you.) It's like those who argue you should block immigration because people already in the country have a moral right to those jobs.
I don't see any reason why a local merchant would be interested in selling goods/services that are somehow better for their local economy. They will attempt to sell what sells best. As will the big box store.