2. So...cheap food means scale it up really big (agrabusiness)
3. And cheap non-food mean outsourced manufacturing (because people want big salaries to buy lots of cheap crap)
...and perhaps that's where it started, that last bit:
People want big salaries (or paychecks, or pay - whatever), so they can buy more stuff (there's also the whole "easy credit" thing - but that's another discussion). They want that stuff cheaper. So businesses searched for ways to make it cheaper: Scale stuff up, have fewer employees (or pay them less), and outsource manufacturing.
One is made out of a bunch of "edible food-like substances" (to quote Michael Pollan) the other is made with actual food.
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.
Increased profits come from somewhere. Nothing is ultimately good for consumers, they are just misled to believe it is.
Increased jobs, in the case of walmart, come at the price of workers having to apply for foodstamps to live. Cheaper prices come at the cost of driving local stores out of business. Google and amazon are shitty companies too, no matter how much they pay for good PR.
That's only true in some instances for some combination of high margin, not easily reproducible, or low volume products that serve wealthy purchasers.
The reason Walmart killed everyone was because purchasers valued saving a few dollars rather than being taken care of by employees. Similarly with airlines, which Branson wasn’t really able to expand beyond the wealthy NYC-LA-SF routes.
Don't forget:
10. Wal-Mart and Friends: Paying your employees an extremely low wage with unpredictable shifts (so they can't get a second job). The end result being that your employees need food stamps to survive, so your profits are ultimately subsidized by tax payers.
How do you explain Walmart (low quality goods, at the lowest cost possible, while paying the lowest wages possible, going so far as to show your employees how to use government benefits programs because you don't pay enough)?
First of all, consumers get lower prices at Walmart, it doesn't just have the effect of higher profits.
Second, the real danger in both cases (though people only see it in one, hence my point) is that you're killing off the OEMs this way. No one wants to bring innovative new products to market if some monopsonist will just force them down to the mandated n% profits.
Walmart is able to provide cheap goods because it can strong-arm providers into taking a loss or operating at a break-even point just for the chance to sell at Walmart. It can also provide cheap goods because they pay their workers jack shit and instruct employees to use government subsidized healthcare and insurance.
It's totally possible to provide good pay, healthcare, etc... to employees, still have healthy enough margin % to make Wall Street happy, keep the C-Suite well paid, all while providing a great service at competitive prices to consumers. Maybe not enough to enrich the owners to a quarter trillion dollars in net worth, but plenty enough to keep the ship going. Case in point: CostCo. Whole Foods prior to Amazon was another.
This sounds vaguely like the observation that retail checkout employees get stupider when the economy is good, because everyone with 2 brain cells to rub together moves to more gainful employment, and walmart has to really start scraping the bottom of the barrel
I cant believe you're serious. People didn't vote with their dollars. They needed to eat so they sacrifice the long term for the short.
companies like Walmart are able to leverage their miniscule effective tax rate compared to mom and pop stores to offer cheaper goods, combined with the FACT that they artificially lower prices to a point where an individual store loses money all for the sake of driving the local competition out of business which has no other operations to soak up losses.
Walmart has innovated in logistics and supply chain management but make no mistake they offer poor quality goods which exploit cheap foreign labor at the long term expense of our middle class
Because their prices weren’t competitive, it’s that simple. Shopping at Walmart is not fun. People flock there because it’s cheaper than everyone else.
You’re suggesting that poor people lose more money by going to Walmart than they would shopping locally, which is just ridiculous. It implies poor people have no basic math skills on a average, which isn’t the case.
Walmart doesn’t crush local competitors with shitty warehouse lighting and angsty employee vibes. They do it by being far cheaper with their massive logistics.
Poor people shop where the money will go the furthest, full stop.
And what happens when enough work becomes mechanized or automated and enough people are out of jobs that it doesn't matter how low the resulting price of the product is? I call this the Wal-Mart effect. The idea is that you don't have to pay higher wages, or provide better benefits, or otherwise ensure that the increases in productivity track with increasing real wages. Because everyone can just shop at Wal-Mart!
Everyone was raising wages, so everyone’s prices also went up, and Walmart still likely has the best cheap:convenient ratio. Point is Walmart can’t choose to raise everyone’s wages 6%, unless everyone else does too, because the whole reason people go to Walmart is it’s the cheapest.
Costco targets people with more disposable income, so not exactly a comparable market.
I am no fan of Walmart but you can't pin this on just them by the time they were pushing suppliers the damage had already been done.
It wasn't always this way. Walmart used to proudly display banners with 'Made in America' on them.
But as companies left the county, the poor and then the middle class downsized as well.
Companies left looking to lower costs, the public was wooed with lower prices and the idea that you could get more now and the politicians made promises that the affected sectors would be retrained, first we would have a service economy then it became knowledge workers.
It turns out that the service economy is fickle and doesn't pay well for the most part. Not everyone can be a knowledge worker and that is not outsource proof either.
Now we are in a trap where companies can not return because they would have to raise their prices and reduce profits and the people who used to work for them can't afford to buy their products now.
1. Walmart - always lower prices (people want cheap crap)
2. So...cheap food means scale it up really big (agrabusiness)
3. And cheap non-food mean outsourced manufacturing (because people want big salaries to buy lots of cheap crap)
...and perhaps that's where it started, that last bit:
People want big salaries (or paychecks, or pay - whatever), so they can buy more stuff (there's also the whole "easy credit" thing - but that's another discussion). They want that stuff cheaper. So businesses searched for ways to make it cheaper: Scale stuff up, have fewer employees (or pay them less), and outsource manufacturing.
Classic death spiral.
/I know I am over-simplifying things here...
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