Comment by yummyfajitas | Hacker News Reader

Comment by yummyfajitas | Hacker News Reader

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This claim is ridiculous. Your mental model of the economy involves tracking the movement of a particular dollar bill and ignoring the movement of dollar bills which start at distant locations. This is a fallacy.

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.)

21st century mercantilism.

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 the global logistics infrastructure breaks down because of war/rising oil prices/political turmoil etc?

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.

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?

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.

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.

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.

Where did I say anything about tracking a particular dollar?

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.

Where did I say anything about tracking a particular dollar?

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?

As they say, the thing about common sense is that it's often neither common nor particularly sensible.

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.

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