The Supermarket Index – Francis Turner

The Supermarket Index

Francis Turner

 

If you want a single concept to judge how successful a modern economy is you could do worse than look at the quality and quantity of supermarkets it supports. These days, some 70 or 80 years after they were first invented in the USA, just about every nation on earth has them, with the possible exception of a few socialist “paradises” and perhaps a couple of utterly undeveloped nations somewhere. Supermarkets are, I would venture to say, one of the most influential inventions of all time and they have radically improved the lot of millions, probably billions, of people because we all shop at supermarkets if we can and we wouldn’t do that if the alternatives made sense. In fact someone has done the sums about just one chain (Wal-Mart):

There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector. Plausible estimates of the magnitude of the savings from Wal-Mart are enormous – a total of $263 billion in 2004, or $2,329 per household.
(source PDF )

However poorer nations tend to just a have a few, usually in the more middle class parts of major cities, whereas rich nations have them everywhere with different chains catering for the poor and various grades of wealthier individuals. Take the US. Most reasonably sized towns have a Wal-Mart and/or some other chain supermarket. Some will also have something more upscale like Whole Foods or Trader Joe’s and many have also more than one chain supermarket in addition to warehouse stores (Costco) and local convenience stores (7-11). The names will change and some of the offerings vary a bit, but the same is true of every country in the EU as well as Canada, Japan, Australia, New Zealand etc.

We take their offerings for granted but the successful supermarket has a lot of back end support. Each supermarket has hundreds if not thousands of different products in stock and they need to be refreshed every day, perhaps many times a day, so there must be constant feedback to warehouses and suppliers who must be able to supply more of the goods sold. And of course in most cases the goods must be fresh, hygienic etc. So the entire supply chain for every good has to be reliable in terms of both quality and availability. Moreover since no one is doing this as a charitable work, everyone has to be able to trust that they will be paid, that contracts will be honored and so on. This includes the employees, who need to be rewarded appropriately – enough so that they want to work, but not so much that the store goes bust – and need to be (in aggregate) reliable and trustworthy. In addition no supermarket will stay in business without customers who can buy things, so there’s a requirement for some level of wealth and reliability of the money supply. Finally if its customers (or employees) steal too much or loot it instead of buying its goods it will go out of business so there is a basic requirement for respect for the rule of law.

The better all these things work, the better the supermarket experience and hence the suitability of the supermarket as a proxy for economic health.

We can see plenty of evidence of the Supermarket Index as a decent proxy. Supermarkets were what most impressed every Russian who visited the west before the fall of the Soviet Union and the Iron Curtain from Yeltsin down. I saw something very similar at about the same time (late 1989 for me IIRC). I was part of a group hosting some Moscow University students for a week or so in the UK. The two things that absolutely blew them away were visiting the local Sainsbury’s supermarket, with all the varieties of everything, and the late night kebab stop on the way back from London. The supermarket so impressed them that they subsequently went into other supermarkets and convenience shops were passing just to marvel at the selection of goods on offer. They did wonder a bit at why the store had 101 varieties of a product like breakfast cereal and, particularly, why we had both Kellogg’s and Sainsbury’s own corn flakes. But, while they mumbled a certain amount about wasteful duplication and the stupidity of brandname premiums, they were very, very clear that they wanted this in Moscow. Going on this video of a Soviet food store of approximately that vintage I completely understand why they were impressed.

The same absolutely applies to developing nations in Africa, Asia and Latin America. For example, 20 years ago Kenya had a handful of supermarkets, now there are half a dozen supermarket chains with stores all over the place (and some chains have expanded to neighboring Uganda and Tanzania too). This increase in supermarkets goes hand in hand with the increase in wealth in the country and the consequent dramatic reduction in poverty. Kenya is not the only African nation to see a dramatic rise in supermarkets. As this Economist article from a couple of years ago explains, the general rise in prosperity in Africa is leading to the development of supermarkets and shopping malls all over the place.

More recently the lack of stuff in supermarkets has been a very clear indicator of a country on the skids. Venezuela is the most obvious current example though I believe I’ve seen similar articles about Argentina, Russia and Brazil in the last year or so. Just as the presence or absence of functioning supermarkets indicates the development of the country, it also suggests which regions, suburbs or neighborhoods are thriving or not. In almost all urban cases the lack of supermarkets suggests either idiotic levels of government interference/regulation or high crime or poverty (often all three). Take for example the lack of Wal-Marts in DC and the recent bitching about how Wal-Mart is going back on its committment to open some when the DC government decided to up labor costs.

Of course the minimum wage campaigners don’t really grasp the thin profit margins that the average supermarket has. They look at the gross numbers and see millions of dollars of sales per location without grasping that most of those millions of dollars go right out the door to buy stock, pay wages, rents, taxes and so on. In this article Tim Worstall does a reasonably good back of the envelope calculation to show that a minimum wage rise could take all of the profit out of a supermarket:

[T]he profit margin on sales (the net profit margin, not the gross) is some 3.2%, the return to investors is some 1.6% of sales. Another way to put this is that from each dollar spent in a Walmart the plutocratic capitalists are getting 1.6 cents. You can take that any way you want to. […]

Using that same net profit on sales we would thus say that the average Walmart store produces $2.6 million in profits to the company, or $1.3 million in payouts to the owners, the stockholders. […]

So, what’s the impact of a change in the minimum wage on that number? From Oakland again:

While most of the stores will close Jan. 28, Oakland was among those that will shutter Sunday, when the doors are locked for good at 7 p.m. When Oakland’s Walmart opened in 2005, 11,000 people applied for jobs. The store employed 400.

Again, just to keep the math simple, we’re going to be inaccurate. Assume that those 400 people all work 30 hours (to keep them part time) then that’s 12,000 hours a week or 624,000 hours a year. The difference between the California minimum wage and the Oakland one is $2.55 an hour according to that report so, the difference in the wage bill is $1.6 million.

Hmm. So, the company margin on that store in Oakland falls from 3.2% down to 1.2%. Which is going to make a bit of a difference, isn’t it? And the stockholders aren’t going to get any payout at all assuming that the company retains the same amount for reinvestment. Because the rise in that labour bill is higher than the total payout the investors can expect from that store if it is working to the average margins.

It doesn’t stop there either. Oakland is considering raising that local minimum wage to $15 an hour, another $2.45 raise on the current level. And that entirely wipes out the profit from the store altogether. And why would investors want their capital spent on doing something that makes them no return?

It is worth noting that the Wal-Mart employees at that store don’t seem to have been complaining about being underpaid but rather are upset about losing their jobs. In fact, the previously linked Wal-Mart research paper shows that even if workers are underpaid and hence harmed (a big if), then the hurt caused to them is miniscule compared to the overall benefits gained by Wal-Mart’s customers, who are generally also from the poorer strata of society. Recall that paper first estimated savings to consumers of some $263 billion. It then notes:

Even if you grant that Wal-Mart hurts workers in the retail sector – and the evidence for this is far from clear – the magnitude of any potential harm is small in comparison. One study, for example, found that the “Wal-Mart effect” lowered retail wages by $4.7 billion in 2000.

In other words the cost was some 2% of the benefit. So next time some anti capitalism campaigner or charity goes on about the evils of supermarket exploitation consider asking what the alternative is, and how much additional poverty they are willing to see by raising the prices in the shops. In the meantime pop down to your favorite local supermarket, buy a bottle of something fizzy (on special offer perhaps) and celebrate the supermarket and the success of the free market that gave it birth

427 responses to “The Supermarket Index – Francis Turner

  1. This article should be printed and re-printed on the front page of every newspaper in the US. Probably once a week for however long it takes for the simple math to enter certain mentalities. This!

  2. I grew up in Philadelphia. In walking distance from my home (mind you city folk will walk a distance, it is cheaper and faster than finding parking. ;-)) was ‘little Italy.’ Along a several block stretch of one street there are all kinds of shops, kind of like a precursor of the modern mall. It was a fun place to shop, if not the most cost effective.

    Some years ago The Daughter and I went to Chicago for A-Cen.

    While there we visited a mall that was devoted to Japanese stores — everything you would expect from groceries to household goods to books to a travel agency with a food court as well. Imagine having a specialty mall! How rich is that?

    Before we left we found we had to replace a piece of luggage. For that we went just over the city limits to a Mega Walmart. (Walmart was not being granted permits to build in Chicago.) We noticed that a great many people were taking various forms of public transportation out of the city to do the same. With the availability of a enormous range of products at very reasonable price points it made it cost effective to make the trip. I wonder if anyone in Chicago government ever gave a second thought to all the business they were sending the neighboring area?

    • I wonder if anyone in Chicago government ever gave a second thought to all the business they were sending the neighboring area?

      Yes they are aware. There is a huge campaign by the city/Crook County governments and the unions to demonize Walmart. There are billboards all over and the local media is cooperating with this too.

      So far it is failing miserably.

      • William O. B'Livion

        You can fight economics, but you can’t win.

        • I remember Connecticut raising its soda tax so high people drive to MA and RI (probably NY too but I didn’t live on that end of the state) to buy 2 liters for parties.

          The state at one point had state patrol cars monitoring people with binoculars and charging them state soda taxes at the border.

          Surprised Chicago doesn’t monitor WalMart shoppers and charge a “living wage surcharge” as people come back fromt he ‘burbs.

          • Funny you mention that. It has been proposed that Chicago PD and Crook County Sheriff’s Dept do just that, like they and the Illinois State Police do with fireworks purchasers in Indiana and Missouri, especially in the Gary In area. Cops sit in unmarked cars and take down every Illinois license plate that parks in the fireworks store and radios the info to get name and address, and then a cop is posted to greet the unwary consumer when he returns home with a fine and confiscation of the contraband fireworks.

            BTW….they usually keep the fireworks and shoot them off or sell them.

            • Singapore,small island that it is, is an oil importer. Malaysia, just across the causeway, is an oil exporter with subsidized low fuel prices. Singapore now checks the fuel gauge of all Singapore registered vehicles crossing into Jahor Bahru, Malaysia. Less than 1/2 a tank and you pay an exit fee about equal to a tank of fuel.

              There used to be many gas stations just across the Malaysia border.

              • The trucking industry deals with that all the time. Some states are jealous of their fuel taxes.

              • I wonder if they make you pop the trunk to look for empty 5 gallon cans????

                • And just how they manage that without being told “Sure; let me see the warrant for my particular car.”

                  • Except Singapore doesn’t have the 4th amendment, so the answer would be “We don’t need a warrant; the law says we can search your car. Now open the trunk, or we’ll handcuff you.”

                    We sometimes take our Constitution for granted. We shouldn’t.

                    • Duh — I thought this was something Illinois was pulling. I know, different dictatorship. 😎

                    • Don’t think that the officials here in Madiganistan have not thought about doing stuff like that. One reason for gasoline costs being higher in Illinoisy is that the state has both a flat tax and a sales tax on fuel. The sales tax takes into it’s calculation the flat tax, which means we are being taxed for paying a tax…….

      • It is likely that such campaigns are counter-productive*.

        If I am going to all the extra hassle required to shop at one of those Walmarts I am going to maximize the return on my trip, buying as much as I can reasonably haul back home. I am not simply picking up a gallon of milk, dozen eggs, head of lettuce, a couple cans of beans, a box of cereal and a six of beer. no, I’m spending most of the week’s grocery/sundries budget in order to spread the cost of haulage over as many items as possible. Which leaves me with less to buy (and less to buy with) from the few local merchants offering similar products at more convenient outlets.

        *For certain values of counter-productive. They at least give the appearance of doing something about the interloper however ineffective they are about doing a thing.

    • When I lived in Daly City, CA just south of San Francisco, there were two Target stores near me – one ‘normal’ and the other a superstore connected to a mall. The ‘normal’ one was closer and so I rarely went to the mall’s version.

      Until one day I went not only on a Saturday but the first Saturday at the beginning of the month. It was a madhouse. Not just incredibly crowded… but a vast majority of the shoppers (of all colors, ages, ethnicities, size of family groups) had their own personal wheeled shopping carts which was a thing I’d never seen in a store like this.

      Out of the blue I just happened to meet a co-worker of mine, who was there with his own wheeled shopping cart. I asked him what was up, because it wasn’t the Christmas holidays or anything.

      He explained, “This is the closest big-box store to San Franciso that you can walk to from the bus system. So everyone in the city without a car comes here to stock up. Even with bus fare, you can save a heck of a lot of money coming here instead of shopping in San Francisco.”

      (San Francisco now has what are called ‘City Target’ locations, but I don’t know what the prices/bribes are like.)

  3. “It is worth noting that the Wal-Mart employees at that store don’t seem to have been complaining about being underpaid but rather are upset about losing their jobs.”

    Easily solved. A new government employee can be created for a mere $50 an hour to explain to these folks why it is more empowering to be unemployed. Then, when the government makes the reports highlighting the benefits of a $15 minimum wage, they will show that 1 new job was created as a result.

    Okay, 2 new jobs. They’ll also need to hire a creative-accountant type to assemble the report explaining how *even more* jobs will be created with a $150 minimum wage.

    • Oh, there will be new jobs. New jobs for the person(s) at the local unemployment agencies to process the 400 or so new unemployed that come from each of those closed Walmarts. And then, of course, all the collateral unemployed.

      And, just think how wonderful that will be, those fortunate people will be able to join the government employees union!

      (Yeah, I’m being a bit snarky, ya’ think?)

    • Quizzer, the term is “funemployed”. Unemployed sounds so judgy and conservative and unhip.

      • “funemployed” is soooo 2009. We need a newer, modern, catchier, word for it. Look to Millenials to invent it. They have plenty of time, not being weighed down by jobs and whatnot. Besides, they have to contribute to society at some point. Might as well start here.

        • Well, in his book The Dilbert Principle (IIRC), Scott Adams suggested “happysizing” as a continuation of the euphemism trend that lead to “rightsizing”, and started with “fired”.

    • Three jobs – these bozos will need security as they do their govsplainin’.

  4. From a moral standpoint, harming an innocent person – even if it is to benefit hundreds – is evil. But a person who willingly – if not necessarily gladly – gets up every morning and goes in to work is not being harmed by that job. There just aren’t that many masochists.

    • The preferred term is not “masochist” but “victim of false consciousness.” Far too many people suffer from this malady, often in plain sight, desperate for the help that can only be provided by a specially trained community asshat activist.

      Hmmm, that there is a parody commercial just waiting to be produced. Maybe we can get Sally Struthers to narrate it.

      • Set up a blind organization, don’t let her see the video, and she’d probably go for it thinking it was real.

        • Yes, being a “victim of false consciousness” is a malady that, in the interest of social justice, must be corrected. Being a “masochist”, on the other hand (likely holding a whip, or at least a paddle), is a lifestyle choice that MUST be celebrated.

  5. It wasn’t that long ago that I saw the laments of the “corner grocery” fading and being replaced by the supermarket. But they are still here, in a way, for the ‘service station’ is now a thing mostly of the past and has become the convenience store – with pricing that shows that supermarkets enjoy economies of scale that the convenience store generally lacks.

    The town I grew up in and near no longer has the many small grocery stores, but a couple of the owners of those moved with the times and now have the bigger supermarkets in that town. I recall when very, very young that I was “lost” in a small grocery store (just separated from mom for few seconds, really) and due to my then size it seemed huge. After leaving town and experiencing a genuine supermarket and getting used to such, returning I went into that place and boggled, but this time at how very small it was.

    One effect of the supermarket is greater variety even in smaller places. I have a hometown recipe book that calls for cottage cheese for a lasagna, ricotta being something all but unheard of in the area not that long ago.

    • My very favorite “convenience store” – on the outside a faintly scuzzy-looking gas station is actually an Middle-Eastern and Indian market on the inside: foods, shelf-stable, frozen, canned, bulk rice, lentils and various flours and spices, cosmetics, spices … you name it, they have it. They even have home-made plates of Indian specialty dishes for take-out. We get Asian yogurt and bulk tea there. The people who run it are fantastically friendly, and always expanding the inside: someday I think I will walk in and there will be a whole Bolly-wood dinner theater established.
      It’s a specialty niche, and they are filling it beautifully, and being competitive as to prices, too.

      • Without a doubt my favorite supermarket here is the misnamed Buford Highway Farmer’s Market. It is a supermarket catering to immigrants and expats from everywhere (except the Middle East) and has a yyuuuuge variety of products (probably 60+ kinds of instant ramen). It has fresh produce that caters to all those groups which is why C and I started shopping there. It is now our prinicple source of produce and a variety of other products.

        • The Other Sean

          Here in “greater” Cincinnati, there is Jungle Jim’s, a sprawling supermarket with lots of fresh and imported products, and major atmosphere. By lots of imported products, I mean they have entire aisles devoted to a single region nation or region. As in a couple aisles for Italian, another aisle for German, an aisle and a half for Mexican, an aisle for Indian, another aisle’s worth of shelves for the various Scandinavian countries, several aisles covering various Asian countries, etc. That’s In addition to the normal supermarket staples, an organic foods section, and large meat, seafood, and bakery sections. It has its own cooking lessons. And a massive beer and wine section. The place has to be seen to be believed.

          On my first European business trip, I brought back some interesting foods from the Netherlands that my parents really enjoyed. To my delight, the next time I was at Jungle Jim’s I found that they had the same products, and was able to bring my parents more. Even better, it was without the jet lag and 16 hours of uncomfortable airplane flights through the unfriendly skies. (I had also found some of the Danish dishes my father remembered his mother preparing, but as they were ones he detested, I didn’t pick any of the Danish eel up.)

          • Our area is recognized as an major refugee resettlement area. A few years ago some savvy entrepreneurs saw an opportunity, building and opening an International Mall. Funny thing, a while after it opened some of the larger local supermarkets started carrying a wider range of international ingredients in their aisles.

            • Wal-Marts near military bases often have imported food – German stuff is what I’m the most familiar with – for the homesick spouses and others.

              • Reality Observer

                The Neighborhood Market near here has quite a selection of all kinds. Maybe because it’s a USAF base.

                I rarely look at the German section, though – I’m a very odd one out, I can’t stand most of the foods in my “ethnic heritage.” Give me Vietnamese, Mexican, Italian, etc. any day…

                • My grandpa Catelli thought tomato sauce on his spaghetti was too much. He ate it with butter. The spaghetti sauce I learned from my mother was what she originally learned from an Italian cookbook given her as a wedding present, and subsequently modified. (HER mother used a can of tomato soup, but then — Irish.)

            • Isn’t competition a wonderful thing?

          • Here in “greater” Cincinnati…

            The TV/radio stations in the Minneapolis/Saint Paul area refer to the rest of the state as “Greater Minnesota.” This amuses me as it implies that the Twin Cities are therefore “Lesser Minnesota.”

    • Watch a classic episode of The Dobie Gillis Show for a glimpse of what a grocery store used to be (Dobie’s father owned and operated one; depictions of that had to be reasonably credible to audiences of the era.)

  6. India is beyond supermarkets. Their Hypermarket chain, Lulu, rivals Walmart in much of the middle East..

  7. They did wonder a bit at why the store had 101 varieties of a product like breakfast cereal and, particularly, why we had both Kellogg’s and Sainsbury’s own corn flakes. But, while they mumbled a certain amount about wasteful duplication and the stupidity of brandname premiums, they were very, very clear that they wanted this in Moscow.

    And yet the current poll leader in Democrat primaries has openly criticized this saying we don’t need 23 varieties of deodorant. I’m sure he knows the one that will make everyone happy.

    • Yes, “wasteful duplication” has been the battle-cry for monopolists for millennia.

      • The Other Sean

        It has been the argument of monopolists of communists for quite some time.

        • Communists are simply monopolists who think bigger, MUCH bigger than a single business sector. Nay, they want to monopolize EVERYTHING under their control.

      • Well, it’s true. Look how the USSR ate our lunch.

      • I am confident that if offered a blind taste test consisting of the corn flakes made by Kellog’s, General Mills, Post, and a generic/store brand alternative I would be unable to distinguish between them. So, is that “wasteful duplication”?

        Well, if it were at least one of those would go bankrupt and be off the shelves. What such complainants fail to grasp is that the duplication is anything but wasteful — it is a form of regulatory control. If Kellog’s raises their prices, shrinks their volume or slacks its quality, the next box of corn flakes I buy will be Post, or one of the other alternates. Same thing for those whose hand goes first to Post, General Mills or a discount brand.

        The global market for corn flakes in that store is essentially fixed, so dividing it into sub-markets by brand is not duplicative, it is regulatory. That so few seem able/willing to grasp this is indicative of vast mal-education.

        • ” I would be unable to distinguish between them.”

          And why is that?

          Because the instant you could, one would eat the market share of the others.

          • William O. B'Livion

            Look at Pepsi and Coke–neither really makes much of an inroad into the share of the other, and I can taste the difference even when you use them to dilute cheap whiskey.

            Or Sprite and 7-up.

            Or Jim Beam and Jack Daniels.

            Mr. Res is not (nor am I) a corn flake connoisseur, if there is such a thing, but I’m certain that should there be one, he or she could tell the difference just as whine…er…wine connoisseurs can with a single sip distinguish between varietals of fermented grape juice.

            • I chose corn flakes as both mentioned in the essay and as the least differentiated of goods. Raisin bran, OTOH, offers another example of the regulatory effect of market differentiation.

              Some brands offer more raisins, some offer sugared raisins, some offer lighter bran flakes and others more dense flakes. These distinctions serve to gratify a broader range of taste preferences than would a single provider of raisins & bran flakes, yet each is similar enough that should the manufacturer play too much with the product and pricing consumers can readily switch.

              • There was a reason I mentioned cornflakes. It really is the same thing so I have no idea why anyone would spend the extra on the premium brand.

                You are absolutely right about raisin bran. When we lived in Californicate my wife insisted we got Trader Joe’s Raisin Bran Flakes and not anyone else’s.

                There didn’t seem to be a point in the essay where it made sense to mention it but one other thing I recall the Russians wondering about was flavoured yoghurt. Why not just buy plain yoghurt and fruit and mix yourself? When I explained that quite a few (relatively) poor students did exactly that but that the cost of buying flavoured yoghurt was only marginally above that of the combined cost of plain + fruit so most people didn’t bother, you could see all sorts of light bulbs switching on. The idea that people actually had disposable income and could choose whether to buy flavoured yogurt or beer (or books..), depending on their desires and interests was completely foreign to them. In Soviet Russia you bought what the food store had and that you could afford. That was it.

            • I know quite a few people who CANNOT tell the difference between Pepsi and Coke. I wonder how their taste buds could be so deficient.

              If you can remember that short period of time when Burger King switched to Pepsi before it switched back to Coke, they discovered something about fast food consumers, which is why they switched back. If a BK and a rival were nearby, Coke drinkers would drive by the BK to eat at the other place, because they preferred Coke. Pepsi drinkers would stop at the first place they saw- because they wanted something to eat. Don’t know if that were ever publicized, but my father worked for BK at the time, which us how I know it. And I was one of the people who drove past the BK’s.

              Fries, BTW, are the secondary decision maker on fast food stops, not the burgers. They’re a distant third. For middle tier restaurants, the burgers are the attraction. Really wish a Fuddruckers would open nearby…

              • The Other Sean

                I really wish the Fuddruckers nearby hadn’t closed. Although we do now have a couple Five Guys, plus the Smashburger I’ve never made it to.

                • Birthday girl

                  Smashburger is wonderful. Their burgers are great. And so are their salads.

                • The local Five Guys is abysmal, apparently run by absentee owners located in Antarctica and operated by swarms of unsupervised 14 year olds. (OK, maybe not 14, but they look it. And get off my lawn!)

                  The same demographic, appropriately supervised and motivated, mans all the local In-N-Out Burger locations, and the fare available there is always great.

                  There’s a lesson there somewhere.

                  • For me, the local 5 Guys is good — better than the local In and Out, anyway. I tried Smashburger once and wasn’t impressed. I do miss Fuddruckers. Haven’t seen one of them since I moved out of Illinois in 1999.

                    And yes, I really do have both 5 Guys and In and Out around here — sometimes on opposite corners of the street.

              • I’m an odd duck with the various colas. I like regular Coke, but can’t stand regular Pepsi. On the other hand, Diet Coke is *nasty* but Diet Pepsi’s pretty good. Coke Zero is drinkable, if not exactly preferred. Cherry Coke is good, Mr. Pibb is quite decent, but Dr. Pepper beats them all out. But not that nasty Diet Dr. P. Blech.

                • I have found Diet Coke w/Lime to be quite tolerable. Even better, at restaurants with bar service I order Diet Coke with a lime wedge. The lime juice squeezed into the drink conceals the chemical flavor quite pleasantly.

                  Unfortunately for me, “real” Coke (Pepsi, anything sugared) is only an option if I’ve decided I no longer wish to be connected to my feet or various other body parts.

                • I line up exactly the same, except that I rank Diet Dr. P next to Pibb.

          • There are reasons to have differing brands. I can tell the difference between the two major market brands of Raisin Bran. I won’t eat one of them. Some people prefer the lighter flakes and sweeter raisins of the bran I dislike. Let them enjoy it, meanwhile please don’t eliminate the one that I like.

            • Reality Observer

              And I’m the guy who buys the plain bran flakes (of the brand that I prefer, of course) and then adds my own raisins when I eat them. Keeps the raisin to flake ratio consistent…

          • Mary: ” I would be unable to distinguish between them.”
            And why is that?
            Because the instant you could, one would eat the market share of the others.
            Or lose it. There will be those who hate the different taste (SEE: New Coke (TM). )

            • By definition, if one eats the market share, the share comes from another, which loses it.

              • This is true on it’s face, but seems to posit the finite pie theory of soda/cereal market share.

                Under the alternate infinite pie theory, market share would vary but the new taste-identifiable flavor would increase the pie, increasing all the slices.

                Which pie theory applies to soda and/or cereal is an exercise left for the reader.

                • Reality Observer

                  I think the “pie size” for soda changed mostly with the introduction of diet and decaffeinated varieties – not so much with taste variations.

                • “Market Share” is percentage, not total amount.

                  I went and checked. 😀

                  So the pie can get bigger or smaller, without the “market share” changing (although that’s not probable); you’re probably familiar with this in the format of “book sales are (up/down)” when it’s actually “percent of books sold that are (hardback/paperback/both) are (up/down).”

                  Or the bastard cousin, “growth of market share is slowing.”

                  • OTOH, there are situations where you can gain market share without your competition losing any — selling to those who were not customers before.

                    • The percentage of an industry or market’s total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.

                      http://www.investopedia.com/terms/m/marketshare.asp

                    • Yes, and you can grow your market share by increasing the market. You can go from 50% to 75% by the simple* expedient of doubling the people who want to buy that item and persuading the newcomers to use yours. but then you are not eating the other guy’s share.

                      *note, not easy.

                • Ah, but I was not talking about market share in general, but market share between two identical brands. If one gains a marked improvement over the other, it will exactly gain share at the loss of the other.

                  To be sure, things like toothpaste are more likely to show this than food, come to think of it.

            • Reality Observer

              Re “New Coke” – that is when I switched to Pepsi and never looked back. (Although I did go to Jolt for a – rather aberrant period in my life.)

              Odd thing is that Pepsi tried the real sugar variety in my area – it was only a marketing test. Well, that went well, so they made it nationwide. Then they finally woke up from what their distributors were telling them (after several years), and realized that the stuff with real sugar was selling out rapidly and often a store was without stock for as long as four or five days.

              Now about 2/3rd of the non-diet section has real sugar, and the corn syrup stuff is taking second place (and the real sugar stuff still is always on low stock – I have to remember to hit the store within two days after the distributor gets there).

              People just seem to prefer real sugar, no matter what they grew up with.

              Now, this flatly contradicts the “findings” of the Huffington Post editors of course…

              http://www.huffingtonpost.com/2012/03/08/pepsi-taste-test_n_1327579.html

              • In some areas, during a limited period, it is possible to find kosher (for Passover) Coke products, made with sugar instead of corn syrup. This has become less possible as knowledge of it spreads.

                • In our area- upstate NY- people pay extra, a lot extra- to buy 6 packs of Mexican Coca-Cola in glass bottles. What puzzles me about that is: Canada, with real sugar in it’s soda, is less then 100 miles away. Mexico is 1600 or so.

        • I’ve always thought the conservative fight against Common Core was counterproductive. We should instead use it by requiring schools to teach things like economics and the manual of arms for US infantry weapons (I guarantee that Mortar Day would have 100% attendance among the boys).

          • William O. B'Livion

            I’m not sure that it’s counter productive (and I realize what you’re getting at), but as a conservative one is *generally* required to argue against things like common core because they are diametrically opposed to conservatism.

            OTOH, opening a second front against it by co-opting the middle…

            However, one of the stated responsibilities of the federal government is defense, and insisting that every adult in the US is at least capable of loading, firing and making safe common military firearms is not an unconstitutional goal.

            • OTOH, opening a second front against it by co-opting the middle…

              I am convinced this was what W had in mind with Medicare Part D — establishing a market-driven additive to the standard Medicare plan as a demonstration product, creating political acceptance for reconstituting the Medicare system. He clearly underestimated the hostility of his base, the cupidity of his opponents and the dishonesty of the MSM. Remember – Medicare Part D came in significantly under its predicted cost.

              Sometimes you have to put the medicine into a sweet, chewy gummy bear to get the dopes to take it.

              As for your point about “insisting that every adult in the US is at least capable of loading, firing and making safe common military firearms” — the Feds merely need to establish standards of proficiency and create pots of grant money for states to achieve such. Closely dictating the requisite training procedures (as opposed to offering an standard model, adaptable as needed) is not necessary.

              • William O. B'Livion

                I think that Shrub was a lot smarter that even most Republicans are willing to admit, but he was neither a conservative, nor particularly enamored of the sort of Liberty that I would like to see advocated. Of course he’d had more-or-less that sort of liberty as a child of wealth and power, and abused the s*t out of it, so it’s not unreasonable to see where he would be against it.

                Of course, he was a lot more liberty minded than the current resident of the White House. Or 3 of the 4 top contenders to be the next occupier in chief.

            • There’s also the argument that a gun is far more dangerous than a penis, so if sex education is a moral imperative, so is gun safety.

              We start with the Eddie Eagle rules in kindergarten and preschool, move on to the Four Laws in elementary school, cover the basic manual of arms with non-firing mockups in middle school, and do marksmanship in high school. As an added bonus, a felony conviction would ruin your ability to take the marksmanship courses, so it would be an incentive to not get into trouble. We could call it Tamir’s Law.

              • William O. B'Livion

                Dude, seriously stay out of my mind. You *really* don’t want to keep wandering around in there.

              • I had hunter safety, firearm safety, and marksmanship in gym class in junior high – 8th and 9th grade. We used compressed-air .177 pellet rifles. They used .22lr rifles just a few years before me.

                If you couldn’t handle the hunter safety and firearm safety tests in the beginning of the class, you didn’t get to shoot in the second half of the course. Never saw the lower class of student so motivated to read, study, and pass a test in all your life.

              • Forget to check the chamber as the very first action of your gun safety test, and automatically flunk out of seventh grade?

                😛

                • More like you don’t get to advance to the actual shooting part of the curriculum until you demonstrate the ability to consistently check the chamber.

          • You want the schools to teach economics? Consider what they would teach in the name of economics.

            • The standards couldn’t be written “teach economics.” They’d have to be something along the lines of “explain why free market systems are superior to managed systems.” “Discuss the knowledge problem and how it necessarily limits the effectiveness of managed economies.” and “compare and contrast Marx and Smith, include 5 examples of fundamental errors in logic committed by Marx.”

            • They already do in some states. Micro and comparative for the most part.

            • (Raises hand)
              They taught it at my school. We got hit with Michael Moore’s health care “documentary” (bleah) but the textbook was pro-free trade and free markets. (Although for some reason they believed in the Keynesian multiplier. No clue why.)

          • We should instead use it by requiring schools to teach things like economics and the manual of arms for US infantry weapons

            Having seen what the standards did to math, I don’t want to see what they’d do to economics.

            • Common Core didn’t do anything to math, the standards just laid out what math kids should be doing by which grade. The “jump up and down the number line, turn around three times and spit” methods were just another manifestation of reinventing the wheel that shows up periodically in math instruction. It would have happened without Common Core, it just might not have spread so far.

                • Yeah. Apparently there’s a group of education majors who can’t accept the fact that we’ve been doing arithmetic since the bloody Babylonians and that trial and error have had enough time to find the optimum teaching methods.

              • No, every one of the specific, stupid method differences I’ve seen in my kids’ worksheets– especially comparing the CCCompliant vs the ones from the year before– are directly tied to the requirements to demonstrate that they’re fulfilling the standards.

                For example, CCSS.MATH.CONTENT.K.CC.C.6 has the innocuous sounding requirement to understand greater/less/equal to with “e.g., counting strategies.”
                In practice, that means teaching a five year old two types of skip-counting, having them draw boxes with ten slots and marking them out, and struggling with examples that have four big piles vs seven little piles.

                Instead of the way her mother taught her last year, which was “count up to the number. The one you say first is “less.”

                CCSS.MATH.CONTENT.1.NBT.B.2 has a requirement to understand base value, which resulted in teaching kids that to solve 26-13, you first subtract the tens; this ensures that the six year olds don’t forget that the ten’s place is bigger than the one’s place.

                The stated goals of the math standards are this:
                The Standards for Mathematical Practice describe varieties of expertise that mathematics educators at all levels should seek to develop in their students. These practices rest on important “processes and proficiencies” with longstanding importance in mathematics education. The first of these are the NCTM process standards of problem solving, reasoning and proof, communication, representation, and connections. The second are the strands of mathematical proficiency specified in the National Research Council’s report Adding It Up: adaptive reasoning, strategic competence, conceptual understanding (comprehension of mathematical concepts, operations and relations), procedural fluency (skill in carrying out procedures flexibly, accurately, efficiently and appropriately), and productive disposition (habitual inclination to see mathematics as sensible, useful, and worthwhile, coupled with a belief in diligence and one’s own efficacy).

                Rather than mom’s, which is:
                Learn the basics front (and backwards), then go to the next level when that is mastered.
                So counting (counting down) leads to adding (subtracting) leads to multiplying (dividing).
                Etc.

                ********

                Look at a new specific stupid math trick, and you will find a CC compliance reason behind it.

                Sure, there are stupid fads in math; that’s no reason to embrace the latest stupid fad in education, encased in 93 pages for math alone. (PDF file available at the website, or you can browse without downloading.)

                • There’s nothing in the requirements that mandates the new ways of teaching, I would argue that your way of teaching greater/less/equal qualifies as a “counting strategy,” which is just an example of a strategy that meets the requirement.

                  The problem is that this latest fad came around at the same time as Common Core and got incorporated into the new CC-compliant texts, that’s why all the new fads match up with CC requirements. That pressured schools into adopting the new texts with the new stupid rather than go through the effort to validate that the old stuff was CC-compliant.

                  • It is A strategy, but it’s not multiple strategies, and it fails to fulfill the “discovery and inquiry” aspects– I’m actually teaching the basics, rather than ‘guiding’ her through ‘finding’ a solution herself.

                    Part of the problem with the requirements is that they are for entire classes.
                    Working one-on-one, you can work through multiple multiple methods until you find the one that works for the specific kid, so they can understand what you’re saying. In a classroom setting, you end up with the kids being lucky if they can grasp one method before they’re shown a different method.

                    • In other words, they’re making kids GUESS at a “strategy”.

                      And what frustrates kids more than anything else? Being forced to guess and not knowing how to get to a “right” answer.

                      And then they wonder why more kids act out in school.

                    • Being forced to guess and not knowing how to get to a “right” answer.

                      Oh, gads, I just realized– this is extra special hell for introverted, “smart” kids.

                      It’s public embarrassment in the very thing that they’re “supposed” to be magically good at; I have to work like crazy to get my daughter to hazard an answer when she does have a method, because she hates to be wrong (no idea where she gets that…..*whistles innocently*) and thus does not want to hazard a guess unless she is very sure.

                    • Yep. This is beating down the smart.

                • …to solve 26-13, you first subtract the tens…

                  Ox head hurt again.

          • Add critical thinking skills to that list and I’m in. I wonder if fear of guns would go down if everyone was given a basic familiarity with them instead of the only exposure being the Hollywood version of guns that blast people backwards 20 feet.

            • I’m sure. That’s why one of the first things Progressives did was start banning guns.

            • When The Daughter was a toddler the state PBS channel would run educational programming for the schools to utilize during the day. One program we enjoyed was a history, presenting the cases that led to the development of the Supreme Court under John Marshall which was narrated by William Shatner. Another was a nifty little Canadian show, titled Trade Offs, if I recall correctly. It was about choices and consequences, lovely, clearly presented and surprisingly sane. I wonder whatever happened to it?

              …I know it has been mentioned before, but the Canadian Broadcasting had a fantastic program that explained the basic principles of Physics through short cartoons that even a preschooler could grasp — but in case anyone missed it, look for Eureka!

          • The Other Sean

            I’d say conservative focus on Common Core is too narrow; elimination of the entire federal Department of Education and federal education-related legislation is a far better goal.

        • There’s another reason why “duplication” isn’t wasteful: by having a built-in amount of redundancy, we also achieve a certain amount of resilience. If a hurricane takes out Kellogg’s Corn Flakes plant, and an earthquake takes out Post’s, we can still (to the degree that Western Family isn’t Post repackaged for rebranding) buy the alternatives that haven’t been affected by disaster.

          This can give us a bit of continuity while we wait for Kellogg’s and Post to get back on line!

          • That’s also the reason why, even though extreme weather events haven’t really changed in frequency over the centuries, the western world doesn’t see famines any more. It used to be that if your country got too much or too little rain, people were going to die. Now they just bitch about the price of corn flakes.

    • one of the joys of the free market is abundant choice. The supermarket is individualistic because everyone gets to choose what they want.

      • Just one of the reasons why Progressives hate them.

        • Yep, it gets in the way of them telling us what we want.

          • It’s the same reason they loath cars. They even created an entire religion and crippled a field of science in their quest to eliminate cars.

            • The Other Sean

              They were against the cars, after they were for the cars. That is, when the alternatives were privately-owned concerns (steam railroads, trolley lines, ferry boats, privately-owned toll roads, omnibuses, etc.) the Democrats railed against such firms and their owners as corrupt, greedy plutocrats, taxed them at proportionately-higher rates than other businesses, imposed rates lower than the companies accepted in their charters or franchise agreements, and often denied the firms the ability to exercise the privileges granted in their charters/franchises. After 1915, some of those taxes often went to fund the roads. In the case of the trolleys, the paving assessments they were obligated to pay when a city or town decided to repave effectively subsidized their competition, the car. In the case of the toll roads, most were purchased by government bodies, often against the wishes of the owners.

              Only after the highways and cheap automobiles had destroyed private transit did the Democrats en mass* begin railing against the car and screaming for public funding mass transit.

              * There were a few exceptions.

          • That’s what they really want: to tell everyone else what to (and be obeyed.) Their opinions are the only right ones.

    • I wonder how many people besides me are allergic to some brands of deodorant? If they don’t pick the ones we can wear, there will be a lot of smelly people walking around out there.

      • The New Soviet Man has no allergic reactions. Allergic reactions are a symptom of insufficient commitment to the revolutoin.

      • William O. B'Livion

        It is unlikely that you’re allergic to the actual effective ingredients–if you walk down the deoderant aisle and read them you’ll find that they are pretty much identical (keeping in mind that deoderants and antiperspirants are slightly different) so the only difference is the perfumes, bases and stabilizers.

        • The New Soviet Man only needs effective ingredients. Perfumes, bases and stabilizers are all kulak products and counter to the revolution.

      • I can only use secret. Anything else just has no effect. It’s not “allergic” it’s “doesn’t work.”

        • William O. B'Livion

          Funny thing is I’ve *never* used antiperspirant or deodorant since Highschool, and never had problems without it. Yeah, after a particularly hard or hot day I’ll need a shower, but I need a *shower*. On regular days, no problems.

          Heck, now that I work from home I will occasionally not bother to..never mind, TMI.

      • Soap allergies. I’m down to two brands I can use, and one of them is now carried only at a dollar store.

        • I’m allergic to ivory soap. I wish I were joking.

          • Between the perfumes in soap that trigger the “can’t breathe” and the I-don’t-know-what that turns dirty skin into clean, dry, itching, cracking skin, I have started subsidizing small businesses and getting goat’s milk soap instead.

            This is where I adore capitalism and the internet; if I don’t like the major companies, I can just get small-batch production. Once I’ve sniffed ’em to ensure that I can breathe their particular mix of scents, I get from Siren Soaps and Alpenglow in Alaska, or Horse Creek in Colorado, or Russell’s Ridge Nubians and Balneal Gardens in Tennessee.

            • Dorothy – you might the Redken brand of soap bars. It is a PH-neutral soap that is pretty good on sensitive skin. Bar costs usually about $5.00 now, but it is a “hard” bar not a self-dissolving in water type. Find it in beauty salons. The “men’s” bar has a pretty neutral smell, the “woman’s” bar smell like strawberry IIRC.

          • You could always go full Roman, and wash yourself in olive oil.

            I don’t know if a scraper goes well with eczema, though, so you’ll have to go easy on the oil.

            • What works best is vigorous application of P120 grit sandpaper followed by a good coat of Vaseline. Not kidding!

              • cleaning myself by sandpapering my skin off sounds like a punishment to me. I don’t think that it would feel at all comfortable on skin with eczema.

          • Reality Observer

            You, too? I have found that I have to use my tar base shampoo as a body wash (fortunately, I can use the Walmart brand for that, at half the price of the brand name stuff).

            The weird thing is that every place on my body is violently allergic to most soaps – except my hands. I can use any of the dish washing detergents and have no problems.

          • That’s… impressive in a scary way. And I presume the bar soap. I know the alleged Ivory liquid has perfumes added, or my mother would be using it. She complained that it failed to be Ivory by that.

        • Free-range Oyster

          I realize it’s a bit of a hassle, but no-frills castile soap is easy to make. If you don’t want to do it yourself, there are quite a few folks online who sell it.

      • Really fun– I use body spray instead of deodorant.

        Some brands give my husband an allergic reaction…but only if I wear them. Not even close contact, just things like I borrowed my sister’s or mother’s the morning before he gets to wherever, and his eyes turn red shortly after I hug him. (I have a huggy family, so it’s not that he isn’t exposed to the same extent.)

        • Free-range Oyster

          Human skin chemistry and its reactions with things like perfumes seem to be ridiculously complex. The way scents interact with your body is so different for each person. I worked retail many (many many) moons ago for Bath & Body Works, and it was astounding just how different the same product would smell on two different people. Apparently your husband got the negative side of those reactions. 😦

          • A lot of that is because the essential oils are insanely chemically complicated (My brother’s an organic chemist and he was driving himself batty trying to figure out which pieces were critical to synthesizing the smell, especially the ones that were so ‘trace’ they had trouble detecting them.)

          • Reality Observer

            That was one place that my family always got annoyed with me when I walked on the other side of the mall to avoid. We always had to take the long way around to the outside entrance of the Borders next door. Of course, that problem is no longer an issue.

          • I was recently editing a technical document involving possible new ways to determine a person’s physical/emotional/stress state by analyzing their sweat.

            The portion dedicated to outlining the various components that might be used as proxies for various physiological states was barely short of stunning. I’m not entirely certain that some of it wasn’t made up; it’s been quite a while since my last biochem courses, and I know that various birds, fish, reptiles and plants don’t live at their old addresses, taxonomically speaking, but… I’m not sure I want to be exposed to my own sweat now.

            Idiosyncratic reactions to contact with someone else’s doesn’t surprise me at all.

        • It’s for the same reason that some perfumes work on some people and not others. The ingredients react ever so slightly with your own natural body chemistry. The results can be dramatic (a very nice smelling perfume that reeks on a certain person, or the kind of thing you’re describing.) /random perfumy trivia

          • Reality Observer

            I run into some people that I swear spray Raid Roach Kill on themselves every day…

            The perception of the results apparently also varies enormously.

        • If I wear lavendar essential oil it smells like ginger. Fairly sure it’s my skin chemistry. Fascinating stuff, that.

          • There’s this perfume-oil site (Black Phoenix Alchemy) that has gotten people to outright rejoice in the variation-with-skin-chemistry thing, in general, but one of the effects that gets universally lamented is turning to Play-Doh.

            To complicate things further, I had one that my husband said smelled of Play-Doh on me, but I thought it smelled like the cinnamon it was supposed to.

            • A while back Pillsbury’ had a Caramel Apple cake mix and frosting. I tried it and the cake was nothing special but nothing bad either. the frosting, however, hit me with the Play-Doh scent right off. Rather off putting, it was.

      • You are not alone. There is one common big brand’s “Regular scent” that I might be able to use for two days, maybe three, but I’m itchy by the 4th day. The unscented version doesn’t cause this reaction, but I tend to stay away from that brand anyway, and still go for something unscented. I like my laundry detergents and fabric softener unscented too. Soaps and shampoos can be scented, but even there are limits. That patchouli soap exists shows there is no accounting for taste – I want to smell better (and that includes “not at all”, yes) after bathing.

    • …more more than one political party, which needs only one candidate.

    • For people who supposedly support full employment, Socialist have a hard time seeing that (say) 12 different companies making the same product employ more people than one single company.

  8. If you look at the stock prices since new years – shipping and wholesale activity – they finally busted it.
    Like a huge ship it will take awhile to sink, and we’ll have government spox and paid shills like Jim Cramer telling us not to believe our lying eyes until there are just bubbles marking where it went down.
    People will experience one kind of deodorant on the shelf – or none.
    Bernie will be self-righteously happy. At that point he’ll probably shift his message to saying deodorant is an elitist affectation of those who deny their stinky humanity. He’ll reveal he hasn’t used it years.

    • They haven’t busted anything. Markets correct from time to time. Keep pushing it in a bad direction and it will correct again and again. Leave it alone and it will get back to a stable growth phase. You’ll still have corrections because fallible humans misallocate capital and tastes change, but they’ll be smaller and less frequent.

      • I’m going to disagree. You can bust a market by distoring its signals which the Fed (and the federal government in general) has been doing for quite a while. Just this month Fannie and Freddie created a new “sub” sub-prime mortgage buying program that lets people count income other than their own in qualifying.

        When Fannie and Freddie create a market to buy such mortgages some lenders will provide them to sell for a quick buck. They do that it’ll create another housing bubble (when the preceding one had yet to fully deflate). When it burst that will break the market.

        In the sense of “the market responding to signals” it won’t be broken as it will have responded to them. However, the signals it will have responded to are the economic equivalent of orbital mind control lasers. I consider a bubble created from that breaking the market and thus the burst being the end state of the failure.

        • The mere fact that Fannie and Freddie are creating these securities and then insisting that they have the same interest rates as secure mortgages is just going to break the housing market yet again. I don’t have a problem with mortgages with interest rates that reflect the risk involved, but to play games like this just hurts everybody

          • Pretty much…and the lenders will sell them because they know the risk profile is broken.

            Then again, we should move to Canadian style mortgages anyway but that’s 80+ years of FDR to unravel.

              • Decent (and not too slanted) outline:

                http://articles.latimes.com/2014/jan/16/business/la-fi-mh-canada-20140116

                The key point is in these two paragraphs:

                The standard mortgage in Canada isn’t the 30-year fixed, as it is in the U.S., but a five-year mortgage amortized over 25 years. That means the loan balance has to be refinanced at the end of five years, exposing the borrower to any increase in rates that has occurred in the interim. Prepayment penalties for borrowers hoping to exploit a decline in rates, on the other hand, are very steep.

                This looks as if it’s a clear win for banks, which are minimally exposed to increased rates and protected from prepayments. But Canadian mortgages are also portable — if you move before the five-year term is up you can apply your old mortgage to your new home. (If it’s a more expensive home, you take out a new loan for the excess.) That restores some of the balance in the borrower’s favor.

                • I think I’d rather see Free Market Style: the market is free to give you a loan, or not, depending on what the bank evaluates the risk to be, regardless of what a “Federal Reserve” might claim the interest rates should be.

                  Borrowers have a certain balance in their favor: they can shop around for the best interest rates, or they can save up a good portion of the cost of the house, to reduce the size of the loan they’ll have to take; alternatively, the homeowner can pay a special insurance to assure that the bank will get money back, if the borrower defaults.

                  Bubbles are generally caused by governments fiddling with the insurance rate–usually, by forcing it to be lower than it should be–and as a result, everyone develops a false sense of confidence in the economy, until the expansion of credit causes inflation to set in, and everyone realizes that they can’t really afford what they set out to do…

                  (The last housing market was this, on steroids…)

                  • With the steroids being government policy encouraging banks to loan to “traditionally underserved” (i.e. bad loan prospects) communities in an implementation of cargo-cult economics. “Middle class people are generally homeowners, so if we make more homeowners we’ll have more middle class people” is precisely NOT how it works.

                    I disagree that bubbles are caused by interest rate manipulations. There have been plenty of bubbles throughout history and many of them have been long before central banks started playing with interest rates. I think the biggest factor in the huge bubbles, the Dutch tulip bubble, South Seas bubble, the dot-com bubble, and the housing bubble, is novelty. People in the market don’t really know how the investment – commodities, joint stock companies, tech companies, mortgage-backed securities -performs so they tend to be wildly optimistic. That causes artificially high returns that prompt optimism in others, which causes artificially high returns that prompt… Functionally it’s the same as a Ponzi scheme with the same failure mode: eventually everyone realizes the investment is overvalued and tries to get out before the price completely collapses. Manipulating interest rates can prolong a bubble by injecting money into the system, but you can never inject money fast enough to keep up. Especially if you don’t want to trigger hyperinflation.

                    • I could see how novelty can cause some bubbles, but I can also see how artificially low interest rates cause them too. I would expect that the bubbles caused by artificially low rates are a significant factor in most modern-day bubbles.

                      Having said that, describing the concept of getting people into homes will get them into the Middle Class as “cargo-cult” economics is fantastic. (And this can certainly be said of those who see that a lot of middle-class people are educated, so we need to ensure a College Education to everyone to ensure that they be in the middle class…)

                  • Actually, there is very little regulator basis for this compared to the US 30 year amortized. The later is very much the product of early 30s government policy.

              • I think he’s talking about the 5-year loan amortized over 25 years. You get a 5 year loan for the house, at the end of five years you get another loan for the remaining amount. Repeat 5 times and you’ve paid off your house. It’s basically a 25 year mortgage with an interest rate that resets every five years.

                Canada also has some weird policies. You can’t pay down your mortgage early (well you can, but it will cost you) but the mortgage isn’t tied to the property. If you want to buy a new house, you sell your current house, take your mortgage with you and buy the new place. If it’s a more expensive house you get a new mortgage for the difference. I’m not sure what you would do if you bout a smaller house given the prepayment penalties – having the cash sitting in your account is usually going to earn you less in interest than the bank is charging for your mortgage.

                • On the other hand, it’s only five years, and that if you sold shortly after your first mortgage. For your second, you would use the money to get a smaller mortgage.

                • That reset and the weird differences are all reflective of very real concern banks have in long term loans in real property (commercial real estate mortgages in the US look a lot like Canadian home mortgages). They are genuine market solutions to those issues.

        • You can distort a market all day long – or as long as your pocketbook holds out – but eventually the market will correct. Remember the market isn’t a machine, it isn’t even an organism, the best analogy is a gas. You can channel and compress it, but it will exploit any gap in its containment.

        • An even surer way to bust a market is to constantly vary the signal distortions generated by regulatory changes. Left unmolested a market will eventually find equilibrium, but those determined to make the market dance to their tune rather than achieve its natural dynamic balance will eventually drive out all market entrants in search of more stable climes.

        • Now that I think about it, this reminds me of an epiphany I had about “peak oil”. Sure, I used to be a peak oil denier…but with government regulations being the way they are and/or can be, I realized that it is a very real possibility…and this, even if we have plenty of oil and/or other energy sources.

          Years later, I learned about liquid thorium reactors, and discovered that even though thorium is more plentiful than uranium, we’ve reached peak thorium even before we’ve started taking it seriously as a fuel!

          • Of one thing you may be confident: we are not approaching peak government.

            Would that we were, as many here undoubtedly believe we’ve already surpassed that.

  9. … we all shop at supermarkets if we can and we wouldn’t do that if the alternatives made sense.

    And sometimes, the alternatives do make sense for certain products. For example, if there’s a farmer’s market in your area, you can usually get much better tomatoes there than at the supermarket.

    BUT you’ll still shop at the supermarket for all the other stuff: laundry detergent, canned and frozen food, milk, and so on.

    The free market at work. Isn’t it great?

    • Given the choice between a tomato or shipped red mealy fruits … I’ll take the tomato whenever I can and forgo the mealy fruit when I can’t.

      • When I do have to buy tomatoes at the supermarket, I always go for tomatoes on the vine when I can. Still not as good as freshly-picked, but at least they taste mostly right.

        • SheSellsSeashells

          I will eat those if I have to, but cherry tomatoes work much better for me. There’s not as much difference in taste and texture between winter and summer. (Why no, I wasn’t going through three pints a week last February in my GIVE ME SPRING DAMMIT MUST GARDEN NOW phase, why do you ask?)

          • I like cherry tomatoes from the supermarket. The most important factor for me is the convenience. They can be just dropped in a salad. And they can be bought at the conveniently close supermarket. I have found farmers’ markets to be quite inconvenient. The hours that they are open are few and are inconveniently far away from me.

            I’m all for farmers markets, I just feel about them like some do about chopped liver. I’m glad you like it. You can have my share too.

            [Not being snarky]

            PS I love chopped chicken livers.

            • When I was stationed at Hill AFB, there was a sort of farm-stand/ grocery just off the road that I took on my commute home; they had seasonal farm produce, local milk from a dairy which reused their glass bottles, eggs from a monastery up in the mountains. I THINK it is still there, called Sacco’s. Loved that place. It looked to have grown from a roadside stand which had just been added onto, and enclosed. Small, but everything it carried was choice, fresh and local.

    • Free-range Oyster

      *sigh* I miss good farmer’s markets. A friend managed a group of them in CA that were strictly limited: either produce the vendors had grown, or products made by the vendors from what they had raised themselves. There was a dairy out of the Bay Area that had the most amazing cheeses… Here the “farmer’s markets” are mostly crafty folks selling overpriced kitsch, and prepared food vendors (okay, the Navajo tacos are great, but still). On the bright side, it was at one of the markets that I found Utah has a bunch of grass-fed beef ranches that sell directly. I still need to lay hold of the freezer space and cash for a good half beef. Oh, and beekeeping seems to be a popular side business up here, so getting good honey is pretty easy.

      • Next time any of y’all go to LibertyCon, you should know there *are* farmers’ markets approximately everydangedwhere along the Southern Appalachians. Good stuff, too. Real wildflower honey (not the canary yellow, sourwood stuff- I mean the rich dark tasty good fer ya stuff), fresh veggies, apples to die for across the mountain from Cloudland orchards, sweet yellow/white corn on the cob that goes *great* with steaks… Yep, we’re ‘specially blessed down here. *grin*

    • My grandmother-in-law is getting pushed into using Amazon Pantry, because it costs less than her being driven to do the shopping twice a week.

      They might get her to cut down to once a week. Maybe. She’s… a good predecessor to my husband. 😀

      • I like Amazon Pantry. A lot. I wrote up a review of it not long ago if anyone’s interested.

        • Our daughter-in-law and son work long hours, and they’ve taken to occasionally ordering some groceries from local stores. It usually works out OK.

          A couple weeks ago, she ordered green beans, along with a few other items. What they received, along with the other items, was a neatly wrapped bundle marked “green bean”.

          With a single green bean.

          I haven’t heard how they resolved the issue yet. It bids fair to be entertaining.

    • In Japan our local supermarket is also the local farmer’s market, as they have some agreement where they resell local veggies (and label these as coming from a particular farmer). You’ll see (say) cabbages from Nakamura over here and Suzuki over there and so on.

      Its also effectively the local fisherman’s market too. We get fish and squid caught the night before from fishing boats out of the local port(s). It’s almost as fresh as catching it yourself and the prices are extremely reasonable. The only real problem is that I’m ruined for fish and seafood sold anywhere else in the world

  10. … idiotic levels of government interference/regulation or high crime or poverty …

    I suspect that if one drew a Venn diagram of those, the area designated idiotic levels of government interference/regulation would be almost entirely contained within the second. I recognize that there are high crimes which do not involve government idiocy, but it is rare government idiocy is not accompanied by high crime rates.

    Poverty, of course, is always relative. Anybody who gives it a moment’s thought (admittedly, that eliminates about half of the American populace) would likely prefer being poor in D.C. to being Middle Class in Kenya, Zaire, Turkey or most of the rest of the world.

  11. Reblogged this on The Arts Mechanical and commented:
    Watch the supermarket index. It’s a good measure how prosperous a country is.

  12. I suggest that the figure quoted at the top of this article — the one attributing to Walmart a per household savings of $2,329 — understates the actual amount saved.

    Because Walmart offers so many low-priced groceries, the competing super-markets are limited in what they can charge for the products they carry. There are many items I only buy at my convenient chain super-market when on sale — and on sale at a price I know is low enough to not justify the extra couple miles/few minutes it would take to drive on up to the nearest Walmart. Otherwise I only buy those things, store brands, which Walmart doesn’t offer.

    And you can d-well believe the management of that chain supermarket knows it, too. That is one reason they frequently have sales offering “buy one, get one free” (which suggests to me that their normal price is nearly twice what Walmart wants for those Birdseye frozen broccoli florets) and “2 for $5.00” deals (which I am well aware does not require I buy two of the item to get it for $2.50).

    So, as much as Walmart directly saves money, it also saves money by offering a lower price alternative to what the convenient chain super-market would like and forcing them to control their costs more thoroughly as well. While such indirect savings may be difficult to calculate (especially with Walmart so ubiquitous) I have no doubt they can exist and are in fact measurable (I imagine Kroger or Piggly-Wiggly know to the dollar what effect a newly opened Walmart will have on same-store sales figures.)

    • That is one reason they frequently have sales offering “buy one, get one free” (which suggests to me that their normal price is nearly twice what Walmart wants for those Birdseye frozen broccoli florets) and “2 for $5.00” deals (which I am well aware does not require I buy two of the item to get it for $2.50).

      Not necessarily…such items are often loss leaders. They are also often responding to producer incentives (which is why you see the same BOGOs are multiple chains at a given time).

      • A loss leader is only as effective as its encouraging me to buy other, over-priced goods.

        I have a good memory for the prices of products I routinely buy, and rarely opt to overpay for canned corn just because the frozen pizza is on sale.

        Salad bars, OTOH, … for a person who consider a pound and a half of salad, broccoli, cauliflower, carrot, celery, onion, sliced meats and shredded cheeses a “light salad” those salad bars are a money trap for me.

        • A loss leader is intended to get you into the store. Once there the store layout is cleverly structured to entice you into purchases you otherwise would not have made.
          Folks such as you and I who will enter a store and only buy the loss leaders are not highly thought of by retailers, much the same as banks consider we who pay off our credit cards religiously every month are called freeloaders.

          • You should hear what they say about those of us who pay extra principal each month on their mortgage 😀 Captain America would be *appalled*!

            • Hey, people who pre-pay their mortgages help justify a large part of my job so Im’ good with them.

              That said, banks spend a lot of money modeling pre-payments (which includes additional payments, refinancing, payoff due to sales, and foreclosures) to help control risk. It is a pain in the arse.

          • I had heard that the inside term for those who pay off their cards each month is “deadbeats,” since they do not pay any interest, seen by some in that industry as their natural due.

            The fact that card issuers also get a cut on the back end from the seller is conveniently skipped.

        • Remember, just by being aware of the concept of a loss leader you’re ahead of 90%+ of consumers. They build you into the expected loss.

    • Perhaps it is different in other areas, but my local Wal-Mart’s prices average out. For every item I can buy cheaper somewhere else, the next costs more.

      I call it the “gambler effect.” People tend to get tunnel vision on the money they saved and forget all about the items they paid more for.

      Wal-Mart used to be cheaper on almost everything, but that changed after Sam died. And when the local K-Mart finally closed, their prices notched up again.

      • “And when the local K-Mart finally closed, their prices notched up again.”

        Ah, that Capitalism thing again!

        I’ve never fully understood why, but I’ve disliked Walmart’s selection. I think part of it *may* be because when I was young, I never saw a Walmart Supercenter; it was only a few years ago that the local Walmart expanded to include a grocery section. Seeing food in Walmart still weirds me out a little bit…

        • Er, no, not Capitalism, so much as Competition. Why don’t I notice these things *before* I click on the button?

          • Walmart often charges a premium for large ‘economy size’ packages. A two lb package of lunch meat costs 50¢ more than two one lb packages.

            • That’s bizarre. I find that it’s the other way ’round. larger packages are cheaper. That’s why hubby and I buy family size items and freeze half of it.

              • It depends on the market being catered to; if there’s more demand for the “one or two people in the house will use it every so often” size, that will be more expensive; if there’s more demand for the “family of six brown-bagging it every day, plus the teen boys have a snack when they get home” size, that will be more expensive.

                Our base exchange actually has a .2c/unit increase for the big jars of peanut butter vs the little ones.

                What I get a kick out of is folks who will complain that a store is trying to “trick” you…when the price per (weight, volume, whatever unit) is *right there,* math already done for you.

    • You may well be right. Apart from anything else the data is 12 years old now. It’s also quite a hard thing to measure so any result is going to have error bars about as big as those on climate change graphs. But even so it is certain that the savings and hence increases in disposable income are big enough to make an Obamaacare premium almost affordable

    • Reality Observer

      Good point. Excellent point, in fact.

      Walmart began opening their Neighborhood Market stores in this city – and I suddenly began seeing far more sales at my supermarket (Frys, which is Kroger elsewhere).

      On the other hand, I don’t get the “buy one get one free” deals – I get the “buy one get two free” deals. The local manager hates to see me coming when they have that on sirloin – he always has to come over to override the cash register when I “save too much.” (Yep, I have about 40 pounds in the freezer right now…)

  13. If you don’t like Walmart, ask Winco to move into your area. What’s that, you leftists hate Winco? But lower prices, higher wages . . . oh, it’s because the employees adamantly refuse to unionize? (This is where, if you know anything about Winco, you boggle.) Maybe that’s because Winco is what you leftists always say you want: collectively owned by the employees. What would be the purpose of unionizing to collectively bargain with yourselves?

    At least part of the key to Winco’s ability to keep prices down and wages up is their refusal to accept credit cards, so they don’t have that overhead. But their store is cleaner than their competitors, their employee turnover (at my store, at least) is negligible: I’ve seen the same folks working there long enough that even I can recognize them.

  14. Been following the announced Walmart closings in the local news. It appears that the vast majority are Walmart Express stores which IMO was an ill conceived attempt by them to penetrate an already saturated market suring an economic downturn.
    But on consideration it makes a certain sense that they would make such a mistake given that we’ve been told by the administration how exceedingly well our economy is doing, and that significant pressure was being exerted on American businesses to establish a foothold in urban areas that were under served. I suspect the additional cost of insurance in such high risk locations had at least some effect on those stores’ bottom lines.

    • Only two Walmarts are being closed here in Colorado. One of those is a Neighborhood Market, where there’s another, larger Neighborhood Market less than two miles away as the crow flies. (Both are close to where I live.) Walmart probably made a mistake in opening the second one, which is the one that’s closing.

    • The Wal-Mart Express concept was probably something they tried to copy from the UK/Europe – Wal-Mart owns Asda which is one of the 4 big UK chains. In the UK these mini-supermarkets have been extremely successful but it seems to me its all about location, population density and the fact that people in the UK tend to walk a bit more than people in the US. Not that people in the UK walk much but the idea of walking, say, half a mile to the pub/shops is common and possible. Outside of some dense Eastern US cities it doesn’t seem to be either in the US. I think the UK/Europe got the idea from Japanese Convenience stores and Japan is even more densely populated.

  15. Walmart will also hire people that you’d never see working at Safeway– the disabled folks who aren’t pretty, the guys with a couple of criminal charges– and then promote them if they do the job.
    There’s a lady that runs the site-to-store in my favorite nearby one that you’d be very unlikely to see hired to work with the public anywhere else because she is, well, extremely unattractive …but she’s polite, can hold a conversation, and knows exactly where the stuff that came in got stuffed so that it gets out there stat.

    I sometimes think the biggest problem some people have with WalMart is that people who aren’t pretty are actually visible there. Not supposed to exist, much less work and shop.

    • Penn showcases the typical SJWs reaction and his summation is perfect:

      • There’s another issue that was touched on in the video, but not addressed by Penn and Teller. “Walmart is bad for the community! It destroys local stores!”

        I still remember a Reader’s Digest article about a little community about to absorb a Walmart, and rather than lay on their backs and curl up like dead bugs, the local shops re-evaluated their businesses.

        A hardware store, for example, decided to jettison their make-up lines, realizing that there was no way that they could compete with Walmart on cosmetics…but beefed up their lawn mower selection, realizing that Walmart couldn’t compete on that.

        The local shops in that community *thrived*.

      • Oh, my… you want to see some epic flailing, look up hel-mart and pen and teller; they have an epic whine that has such relevant items as 1) Penn is an atheist, and 2) they were interviewed by producers, not the two famous guys.

        Reading between the lines, I’d guess that they assumed that P&T’s BS would be on their side. 😀

        What nasty minded twerps. Glad I don’t have to deal with them.

        • Oh, Penn’s reaction was mild compared to mine when I saw them.

          I have worked multiple jobs in my life at several levels and these two need to spend a little time working at something real.

    • “I sometimes think the biggest problem some people have with WalMart is that people who aren’t pretty are actually visible there. Not supposed to exist, much less work and shop.”

      See the whole “People of Walmart” exercise…

      It’s funny how people who are so big on the distinction between “punching up” and “punching down” don’t seem to have a problem making fun of poor families who need to shop where there are low prices.

    • Reality Observer

      You know, I never noticed that before. But you are absolutely right.

  16. I did not read all 100 of the previous comments, so, if you said this earlier, please forgive me.

    The idea of increased wages destroying supermarkets (i.e., “choice”) is not an unintended consequence. The left wants everyone on their knees before the State, begging for what they need (food, water, shelter, education, medical care, etc.), with no other source.

    Don’t make the mistake of believing the Bureaucrat cares for anything except expanding the Bureaucracy.

  17. I suggest that Walmart is not a great example for what the writer wishes to prove.
    It is the Walton family’s right to make as much money from their business as they’d like. However, when the family closes presumably profitable, needed stores to retain $100X million stock dividends, it stains the company’s claim of civic-mindedness.
    A smaller chain of groceries like Kroeger, Acme, or Food Lion may provide a more competitive, less wince-inducing example.

    • Have you read the post?

      • Just re-read it, thanks.
        1. Supermarkets are indicators of wealth.
        2. Lack of product and supermarkets indicate poverty.
        3. Forcing a retailer to raise minimum wage increases operating costs, which causes stores to close and raises unemployment.
        I still think there are better examples of low profit margins than using Walmart.
        In small towns, Walmart has used economy of scale to crush smaller competitors and demand tax abatements, which removes incentive to pay more for workers.
        In a debt driven society, basics can still be purchased without immediate income, so prices have less incentive to reduce. Those thousands of dollars owed by the average American aren’t owed for luxuries.
        All of us want capitalism and our nation to thrive.
        The question should be “What are Costco and Winco doing that Walmart isn’t?” Their employees are so happy, they don’t want to unionize.
        Is it better managed growth? More mature expectations?
        Walmart is experiencing free market pushback that the other two are not.

        • “What are Costco and Winco doing that Walmart isn’t?”

          Costco is hiring a lot fewer people, for one.

          • Costo is getting their profit upfront. If you look at their annual reports their net profit is almost identical to the income from membership fees. The stores operate pretty close to cost.

            • which would explain the fewer employees right there

              • No credit card service fees. We shop mainly at those two stores. Both take debit cards. Costco takes only their own particular brand of credit card. WinCo takes no credit cards at all. WinCo posts it right up front: To keep prices down, WinCo does not accept credit cards.

                • It’s more than just credit card fees. There is also no risk of chargeback on credit cards. While you can also get them on debit cards it still cuts the risk somewhat.

            • Costco (and Sam’s) are also warehouse clubs. They sell on more of a wholesale than retail basis, don’t cay nearly the variety of items that a Wal-Mart does, don’t have such things as changing rooms, etc.

        • In a debt driven society, basics can still be purchased without immediate income, so prices have less incentive to reduce. Those thousands of dollars owed by the average American aren’t owed for luxuries.

          That very much depends on how you define luxuries. Are they in debt to buy dry rice and beans and pay rent? Are they in debt to buy hamburger to substitute for dry beans as protein? Are they in debt to buy prime rib to substitute for hamburger? Are they in debt to pay for their MARTA card? Are they in debt to own a beater instead of taking MARTA? Are they in debt to drive a brand new Buick instead of beater?

          When in those is the line between luxury and need?

        • “free market”. Is that what you call government wage and benefit requirements?

          “You know, I’m rarely speechless, but F*CK!”

          • Walmart uses its influence for tax breaks and government protections. I’ve heard that called “Free market” as well. If you don’t like that either, then we would probably get along.

        • > tax abatements

          I turned against Wal-Mart when they told my local city council they were going to close the store and move to the next town if they didn’t get a pass on taxes. As in, 100% tax-free.

          By then they had crushed every local merchant except for a small grocery store and a few 7-11s. They already had it all, but they wanted even more.

          So the city council, instead of pulling their business license and telling them “sayonara”, caved in and gave them what they wanted. Without a public vote, mind you.

          So now I subsidize Wal-Mart with my tax money.

          Funny, their prices went up *again* after that…

          • And I’d have no problems with this, if they had demanded that *every* store operate tax-free. But the problem with big businesses is that they have a lot of influence to wield, and the problem with government is that they are either in cahoots, or they have no spine to stand up to them.

            Which leads us to the classic Progressive Paradox: Corporations control our Government, so we need a *stronger* Government to reign in the Corporations!

            *Sigh*. As evil as corporations can be, big government isn’t going to fix them! Particularly if government is merely a puppet of corporations…

            (Incidentally, I refuse to knowingly buy anything GE, because I’m still dismayed that they were so instrumental in banning incandescent light bulbs. Sure, I kindof like LEDs, but they are still an experimental, unproven, expensive technology, and I would have liked to experiment with them on my own terms, and not be forced onto them because the CFLs are considerably worse…)

          • Tax abatements are an example of corrupt governance — a local government opting to visibly “do something” when doing nothing would better serve the public interest because that allows them to appear “proactive” at little direct cost (the tapayers, OTOH …). It also avoids newspaper editorials about “do-nothing” governance and election challenges from loud-mouths promising to “act in The People’s Interest.”

            Which is not to say such abatements are always bad policy — it is conceivable that the net proceeds from employee payroll, sales tax, property tax and whatever other levies are assessed might still exceed the amounts abated. YMMV and general cases should not be confused with specific instances.

            Which is why such policies are generally bad — the analysis of their net benefit usually depends on who does the math.

        • If they demand tax abatements- tell them no. Easy. Everyone in a same or similar business needs to be on the same level playing field. So they build elsewhere. So what. At the same time, don’t penalize Wal-Mart as DC has done with a law tailored to tax only them.

          Needs to be applied to the NFL and major league baseball. If they demand taxpayers money for a new stadium- tell them no. Taxpayer funded stadiums and arenas have proven to be a net loss for every city that’s built one. Green Bay Packers are different- they’re owned by the community. Notice the NFL rules no longer allow that…

          • I’d also point out the only NFL team to have built its own stadium this century is the most successful team this century.

          • Indeed! “But a stadium is so beneficial….” And if it was as good as they claimed, they’d be able to sell shares of it and have investors clamoring to get on board. Hrmm…

            • The argument is that the stadium brings visitors, who pay for parking and food and geegaws outside the stadium. The city and state get taxes from the parking and food and geegaw vendors, as well as all of the employees inside and outside the stadium. So naturally the city and state should plow some of that money back into the stadium. For some reason no other industry gets to make that argument, even though it applies just as well to a factory as it does to a stadium.

              • Lots of manufacturers do but to justify tax holidays for X years. It is a different gift they want but the arguments are pretty parallel.

          • Los Angeles managed to tell the NFL ‘No’ for decades.

            But it looks like they’ve finally caved…

            >.<

    • The Other Sean

      They wouldn’t be closing so many stores if most those stores were bringing in profits. It is the lack of profits at many if not most of those WalMart Express stores that is causing them to shutter them.

      • Now that I think about it, what do these store closings represent? That Walmart was experimenting with a concept, and that concept failed. It’s sad that the experiment failed, but experiments sometimes do that. They enable us to discover what will work and what won’t.

        One thing that occurred to me recently, however, is that *everything* we do is an experiment. Even something as simple as sitting down to watch the sun rise or set is an experiment, to see if the Earth is still rotating. Some things are just more reliable than others, so we expect certain outcomes to be reliable….while others don’t have as much experience behind them, to know what will happen…

    • … presumably profitable, needed stores…

      “Presumably”? On what do you reach this determination? Self-evidently they do not offer the same return on investment as other applications of that money, else why undertake the costs of closing stores?

      “Needed”? By whom? If there were no alternative shopping venues for their customers it seems likely those stores would have returned higher margins and not been closed.

      Presumably you are applying metrics other than economics. Is it “civic-mindedness” to waste money on stores that fail to meet a comparable ROI as bank CDs or other investments?

      Me, I think being “civic-minded” means offering a good product at a good price, and anything else is just camouflage for over-pricing (or hiding kickbacks to special interests.)

      • See Uncle Lar at 1:24. Also, look up “Walmart Express”. Hence “presumably”. Since when do we take every essay and study at face value?
        Have corporations closed profitable facilities before to enhance the bottom line? See GM Auto. Have corporations closed profitable facilities to spite unruly workers? Coal companies had.
        I recall once upon a time that a business took pride in being a part of their town, donating to charities…
        http://giving.walmart.com/apply-for-grants/local-giving
        Their bottom line is surely grave.
        Hence their being a bad example for the essay.
        A business is more than economics. Cities and towns are collapsing in part because we have forgotten that.

        • I hear there is a Dominos near you that needs a driver. Are you going to give up hours at your day job to help them meet their labor needs even though that use of your labor pays less than your current day job?

          • Is the company going to reduce its sales projections or reduce stock value? Similar result.

            • Is the company going to reduce its sales projections or reduce stock value? Similar result.

              Which company? And why should they. Shouldn’t you continue to provide them the same amount of value even though you are receiving less? Are you are refusing to engage in supporting the local community by helping this business by substituting lower valued labor for higher valued labor while also producing the same amount of higher valued labor?

              Where is your civic mindedness? Why should you be allowed to optimize rewards at the expense of your community? What makes you special and thus exempt from your moral scheme for Walmart?

              • Dominos. And they don’t have to do anything.
                You’re the one who thinks they need volunteer help.
                I said no such thing.
                You and I engage our communities by being good neighbors. Good neighbors optimize rewards by helping their community. Even Walmart agrees!
                http://giving.walmart.com/apply-for-grants/local-giving
                The point of the essay was that profit margins for markets are so narrow, Walmart had to close a store due to a law for higher wages. That Walmart has a grants program (and donates a $100M museum and more to their AK town) gives lie to that idea.
                I say “If they can afford to be that generous, why not just give their employees a raise?’
                They don’t have to do anything.
                But they also get to hear criticism.

                • So you’re saying that Walmart should give up their grant-giving so that they could keep a store open, that they consider to be less profitable? And, by “less profitable”, they may even be losing money…

                  Of course, if you think about it, a store that loses money is a parasite on other stores in the chain that make money. At what point do they have an obligation to the other stores, to close their doors so that the other stores can be profitable?

                  If I’m not profitable to my employer, do they have an obligation to continue to pay me? Or do they have an obligation to the company to let me go, so that the company can remain profitable, and continue to employ my fellow co-workers?

                  • What I say, Alpheus, is “do not put words in my mouth, especially purposefully stupid ones”.
                    I answered those questions already by saying “Walmart has the right”. I reinforce that by saying “They have the right to ignore their local communities by paying less for labor. It is their right.”
                    Your whole second paragraph is now useless, because CEOs and boards make those presumably informed decisions, providing they are not Enron and just crater the company. At what point do you find acceptable that as a Walmart investor should endure money taken for museums and not used to pay your neighbors? Don’t you care about people?
                    Re paragraph three, if a worker is injured on the job, can they take him out back and shoot him?

                    • That was phrased harshly. My apologies.

                    • >>>What I say, Alpheus, is “do not put words in my mouth, especially purposefully stupid ones”.
                      I answered those questions already by saying “Walmart has the right”. I reinforce that by saying “They have the right to ignore their local communities by paying less for labor. It is their right.”

                      Sure, Walmart has the right, and you have the right to criticize Warmart for their actions…but it sounds to me that, if you were on Walmart’s board, you would be demanding that they give up their donations to local communities so that they could continue to employ people at unprofitable stores.

                      And I fail to see how observing this negates my second or third paragraphs. Last I checked, laying off workers is NOT “taking them out back and shooting them”. Companies have every right to association, up to and including releasing people who can’t profitably provide services.

                      I cannot speak as a Walmart investor, but if I were one, I wouldn’t see why they shouldn’t donate to museums: they are important institutions that help us remember our history and culture. And I *certainly* would be concerned about a store that’s open, but losing money. At what point do you admit your mistakes, cut your losses, and move on?

                      If I were to take your concern to its logical conclusion, my father should never have been let go from his work after he had his stroke, because the company should have cared about him, when his entire relationship with the company centered on his ability to perform duties that helped keep the company running. And I find it despicable that you’re suggesting that I am implying that my father’s company should have just taken him out back and shot him!

                    • I accept your apology. Even so, I find this idea that company employment is more than just “I provide a service, and you provide me money and maybe benefits” to be rather odd.

                      (I say maybe benefits, because I’m interested in freelancing, and if I successfully freelance in something, money is my *only* benefit.)

                    • Corporations have volunteer days all the time, where employees go out en masse and help build playgrounds and clean up streets.

                    • Corporate volunteer days are PR crap and indicative of the general sloppy thinking driving many cities and towns (and corporations) into collapse.

                    • “Corporations have volunteer days all the time, where employees go out en masse and help build playgrounds and clean up streets.”

                      I used to work for a corporation that had these; I liked them. The corporation that did this also let me go because I wasn’t being productive. A couple of months later, I was diagnosed with mononucleosis.

                      Do I wish that they had pulled me aside and asked, “What’s wrong with you?” Perhaps. But I didn’t realize at the time anything was wrong with me.

                      I’ve moved on, and to the degree that I’m working as a developer with a better salary, I cannot complain. To the degree that I wish I can work as a mathematician (and I was working at a developer at that corporation, even though they were using analytics and employing mathematicians), I’m still somewhat miserable….

                      But then, to be fair, I haven’t yet figured out how to be a freelance mathematician, so to each his own, I guess…

                    • I have a similar problem as a freelance corporate accountant — no matter how I try, I am unable to profitably account for myself.

                    • Being a freelance mathematician is easy. It is getting paid for it that is hard.

                    • Serious answer on being a freelance mathematician: automated day trading…a lot of mathematical research is in finance related areas. Get up to speed on the papers, build an algorithmic trading model, and turn it lose.

                      If you want resources on learning the quant stuff I can point you to them.

                    • >>>If you want resources on learning the quant stuff I can point you to them.

                      I think I would like to see those resources. I’m currently looking at open-source material from BYU that is pointed towards applied math (which is good, because I’m a pure mathematician wondering what to do next…) but it’s been rather slow, due to full-time plus work and a lack of energy.

                      Even so, I would appreciate information on directions I can go!

                    • Quantstart (https://www.quantstart.com/) has some great reading lists as well as hints on career paths. The owner sells two of his own books on algorithmic trading but I have not read them (I’m considering picking up the first).

                      Coursera has some quant courses. Financial Engineering and Risk Management 1 (https://www.coursera.org/learn/financial-engineering-1/home/welcome) and 2 are self-paced and will get you up to speed on basic discount pricing and risk if you’re new to finance. Computational Investing is also good (https://www.coursera.org/learn/computational-investing) and would give you a start on algorithmic trading. Introduction to Computational Finance and Financial Econometrics (https://www.coursera.org/course/compfinance) is very popular in my office. We’re a pricing and swaps shop more than an algorithmic trading shop though. I am thinking about taking the next section of Mathematical Methods for Quantitative Finance (https://www.coursera.org/course/mathematicalmethods).

                      For books beyond the reading list at Quantstart the one everyone in my office has on there desk is Hull’s Options, Futures, and Other Derivatives (http://www.amazon.com/Options-Futures-Other-Derivatives-John/dp/0131499084?tag=duc08-21). Some good mathematical background for it is Shreve’s Stochastic Calculus for Finance II: Continuous-Time Models: v. 2 (http://www.amazon.com/Stochastic-Calculus-Finance-II-Continuous-Time/dp/0387401016/ref=sr_1_1?s=books&ie=UTF8&qid=1453430655&sr=1-1&keywords=Steven+E.+Shreve). There is a volume one which covers the same thing in a discrete format. It is not necessary to understand Vol. 2 but might be worthwhile if you struggle with volume 2. I learned a lot of basic finance I needed to understand my job from The Investor’s Guidebook to Fixed Income Investments (http://www.amazon.com/Investors-Guidebook-Income-Investments-Markets–/dp/0735205310/ref=sr_1_fkmr0_1?s=books&ie=UTF8&qid=1453431154&sr=1-1-fkmr0&keywords=The+Invester%27s+Guidebook+to+Fixed+Income+Investments) and its related books on stocks, derivatives, and non-traditional investments. Start with fixed as it introduces some key ideas. Finally, for some real basic math which can get you up and going The Math Behind Wall Street (http://www.amazon.com/Math-Behind-Wall-Street-byTeebagy/dp/B004A2HZU2/ref=sr_1_3?s=books&ie=UTF8&qid=1453431070&sr=1-3&keywords=The+Math+Behind+Wall+Street) is a relatively easy read.

                      There are a lot of mathematical finance journals. Check your local university library. Some classic papers are available free online (The Pricing of Options and Corporate Liabilities by Black and Sholes is here: http://www.cs.princeton.edu/courses/archive/fall09/cos323/papers/black_scholes73.pdf).

                      I think someone with mathematical talent can do some basic background and then build their own models. They could publish or build a “personal hedge fund” if they have the base capital to risk. You could also get a job in the industry but that’s not freelance.

                      All of this is buyer beware. I’m a modeler in a hedging shop and do more programmer of designs from our mathematicians than designing my own work. However, I am learning as I go and do plan to start dry modeling my own strategies at some point (ie, simulate purchases) and hopefully, if I have the capital at some point, to do my own trading (probably after I leave this job as I have significant trading restrictions).

                      It’s just an idea of what freelance mathematics or self-employed mathematics could look like.

                    • @Alpheus, I just posted a big reply and it got stuck by too many links. Do you have somewhere I could send it?

                • So, let me if I understand this correctly. Because Wal-mart has had the profits to engage in the occasional one-time splurge and to provide grants and such, it should continue to engage in unprofitable business practices, because good neighbor policy.
                  The fact that continuing to engage in such practices will eventually lead to them not having profits is irrelevant.

                • Walmart has a grants program (and donates a $100M museum and more to their AK town)

                  I presume you are aware that that grant is a deductible business expense, probably charged against “promotions and public relations” and thus costs Walmart somewhat less than the named figure?

                  It is amusing to see someone such as you arguing out of one side of your mouth that Walmart needs to be “a good neighbor” and from the other side demanding that Walmart eschew such public relations acts as you cite as evidence of their being a “good” neighbor.

                  Seems it’s “Heads I win/Tails they lose” with your complaints about Walmart.

                  • Thanks for bringing that up! So it is no expense at all for Walmart, so they do have more wherewithal to increase wages. Hooray for Free Market!

                • The point of the essay was that profit margins for markets are so narrow, Walmart had to close a store due to a law for higher wages. That Walmart has a grants program (and donates a $100M museum and more to their AK town) gives lie to that idea.

                  How does that give lie to that idea?

                  That Walmart in aggregate has profits sufficient to allow such endowments says nothing about the profit margin of an individual store or that store’s ability to absorb labor costs increases. Keeping them open when their margin doesn’t support the increased cost of labor created by fiat basically requires stores that can support their local labor costs subsidizing those that cannot. A company might choose to do so for a variety of reasons but that is the company’s choice just as you choose how to spend yor resources.

                  Given the location of the stores in question they probably demonstrate a higher shrinking cost as well. Wouldn’t it be more reasonable to tell people in the neighborhood to quit stealing from the store to subsidize the higher wages for the local employees than demanding consumers in another area subsidize it via their profitable store.

        • There are also examples of businesses going out of business to spite unruly workers. Sometimes workers have very good reasons to be unruly…but sometimes workers can be a bit too unruly, too…and sometimes both management and workers are so pig-headed that the entire edifice collapses, for some value of edifice.

          I spent a few years in a union, and the thing that I despised most about that experience, was this attitude that Employers are Evil, and everything We want is Good. At what point do we recognize that worker demands can be harmful? That even community expectations can be harmful?

          Finally, I would propose that cities and towns are more than just governance, and there are many cities and towns collapsing because they have forgotten that.

          • Unions can be combative and corrupt, absolutely.
            And I agree that combat and corruption are in governance, absolutely.

            • The thing is, when you bring up cities and towns collapsing, the entity that comes immediately to mind is Detroit…and then I recall that, while the companies may not have been pure as the wind-driven snow, union policies and laws on all levels–both city, State, and Federal–had a lot to do to with Detroit’s destruction as well.

              We have too much of a tendency to look at companies and demand that they contribute to the community, and forget the roles that everyone else has in doing their parts as well. One of those parts–if we want a Walmart to remain in business, we had darn well be shopping there on a regular business!

              (I find it difficult to mourn K-mart’s closing of stores, for example, beyond the fact that we only shop there when they are experiencing their “Going out of Business” sale, or the yearly trip to get new earmuffs because my old ones broke…I mean, sure, abstractly, a giant I remember from childhood died…but then, I can’t miss them *that* much, can I? Other than wondering where I’ll get my next pair of earmuffs, at least…)

          • A lot of cities, towns and states are going bankrupt because of “worker’s” demands for benefits such as health care and pensions exceeding what is available in the private sector. I don’t hear much about “give backs” or even increasing their own contributions to preserve the fiscal health of those governments.

          • Exelon closed the Zion nuclear plant back in 1998 because of both inter-union and union-management strife. The steam generators needed to be replaced, which would take a couple hundred million and a long 90 day outage to accomplish. There had been a lot of incidents in the previous several years that landed the plant on the NRC’s shit list. The company came up with a plan to re-staff, since maintenance hated operations hated management hated security, blah,blah,blah. The unions threatened to go on strike at ALL of the nukes in the fleet. They thought management would never shut the plant down, but the did, and the IBEW and other unions lost over 1000 well paying jobs.

        • The comment of Uncle Lar which you cite (@1:24) does not support your claim. You were the one presuming facts not in evidence, while Uncle Lar deduced conclusions based on facts available.

          You confuse “profitable” with adequate return on investment. “Profitable” means more than simply: sales exceed cost of good sold + overhead.

          Companies are also reasonable to close “profitable” facilities in anticipation of their becoming less profitable or even unprofitable. (See: cutting losses and quitting while you’re ahead.)

          A business is more than economics. Cities and towns are collapsing in part because we have forgotten that.

          An opinion and an unsupported conclusion do not constitute a valid argument.

    • “presumably profitable”

      Such presumption. Sane people presume that the store’s owners know more about the profit than they do.

    • The thing is, everyone doesn’t automatically go for the lowest price. Technically, McDonalds should be squeezing out the good restaurants in town (and should themselves be squeezed out by Taco Bell) because they’re cheaper.

    • You need to learn about economic profit. A store is making money doesn’t mean that the resources that go into that store cannot be put to better use. If the opportunity costs of a store – what the company could get out of the resources by using them somewhere else – exceed the financial profit of the store, then closing the store and diverting the resources to the more profitable endeavor is the best thing to do for the community.

    • Are you suggesting that Wal-Mart not make a profit? Are you insane? I’m pretty sure that all the people who have Wal-Mart shares would disagree with you quite firmly.

      You did read the quoted bit from Tim Worstall? The bit where he makes clear that Wal-Mart has extremely thin profit margins? 3.2% on average with half of that being retained for future investment?

      Think about how little margin for error that leaves. If anything goes wrong that will quickly turn into a loss not a profit and no company can maintain losses for a sustained period unless someone is subsidizing them (in which case they aren’t making the loss someone else is).

      I don’t claim Wal-Mart is perfect, in fact it certainly isn’t, but it was chosen partly because some academic had done the research on it which they haven’t done on Kroger, Food-lion etc.

  18. “So next time some anti capitalism campaigner or charity goes on about the evils of supermarket exploitation consider asking what the alternative is, and how much additional poverty they are willing to see by raising the prices in the shops.”

    I’m sure that Marie Antoi-left will just say, “Let them shop at Trader Joe’s.”

    (Yeah, I know she never said it, but it was just too good a comment to pass up).

  19. Michigan raised their wage, and my aunt and uncle had to get rid of the employees they had. What used to employ several kids every summer, now has none.

    • Yeah, the slow disappearance of employment opportunities for teens is a pretty terrible thing. A summer job is often a better teacher than the official education establishment.

      • Which is why Democrats keep agitating for increasing the minimum wage. Nothing breeds an underclass dependent on government and incapable of standing on their own two feet like knocking out the first few rungs of the employment ladder.

        • 1. You gave the answer yourself…they don’t want people independent.

          2. Union contracts are often minimum wage + x or minimum wage x y instead of a quoted value. It is a way to get unions pay raises.

          3. In CA they’ve tried to get employers who are unionized minimum wage exemptions to the state or city minimum. It’s a variant on the “nice business, would hate to see what happens if it doesn’t unionize” tactic.

  20. I remember reading once about Wal-Mart and COLA’s. Let’s say Wal-Mart moves into an area with nothing but small family run stores, where the cheapest toothpaste tube is $1.49, and Wal-Mart sells that same tube for $1.00. It doesn’t affect COLA calculations for that area- because Wal-Mart’s price moving in was $1.00. And when Wal-Mart subsequently raises that to $1.05, it’s a 5% price increase for toothpaste in the area, although it’s $0.44 less then it was two years earlier.

    One of the many reasons to doubt official economic numbers put out by the government, ours or any other.

  21. Christopher M. Chupik

    I saw a short on TCM from the 1940s which laid out basic economics in terms clear enough that a child could grasp them. Nowadays we get explanations of economics that seem to have been written by children.

    • I always thought the Uncle Scrooge story “A Financial Fable” was great (https://en.wikipedia.org/wiki/A_Financial_Fable). It is an explanation of why minimum wage increases will, in the long run, do nothing because it explains how money is just a store of value and not value itself.

      • I loved the “Analysis” bit on the Wikipedia page about how the story was “right-wing” and “a defense of the capitalist system.” I’d like to ask those people, “So what do you think would happen if everyone in town was suddenly given a million dollars without any increase in things that can be bought?”

        • Why wouldn’t there be more things to be bought…there is more money thus there are more things to buy…it’s magic.

          • The premise supposes a closed system. But with a somewhat open system (like, say, a country rather than a town) you get all the negative effects that ClosedTown would see, and a trade deficit too.

        • Well, it depends. Was there a lack of currency in town, such that it was insufficient to faciliate trade, or not?

          One big problem is that the first description is “most of human history” and the second is “the modern day.”

        • Feather Blade

          I think the town would very quickly run out of alcohol.

          The thing about that situation is that there would be some people who kept working, or who didn’t dare spend the money for fear that there was some kind of mistake, or who used it to pay of their debts.

          Or who saw a business opportunity in undercutting “Uncle Scrooge.”

  22. Apropos of nothing at all, we’re running low on treats for Fluffy. *rattles canister* Where’s the refill bag?

    Now please excuse me, I fear my fur is still smouldering. I said she could have two. Apparently two is not enough.

  23. I took two semesters of undergrad economics at a state college. Best tuition money I ever spent. Simply getting a dispute to be discussed in economic terms is difficult these days.
    Economics is considered one of the humanities because it is about the study of human values. “Leisure time’, for example, has value. No one can say whether a person values his or her leisure time correctly, but we know that every individual does determine the value of his or her leisure time.
    Many people who consider themselves conservatives have strange ideas about how people get rich. Brother, in a free market, economic profit approaches 0%. Most of the people who get rich — defined as millions and millions of dollars — is they make cost + by setting up barriers to entry to competitors. Copyright, trademark, and patent laws are barriers to entry. On average the wealth of individuals is tied to overall economic growth. Many people think the 19th century was terrible for most people — robber barons, sweat shops, wholesale environmental destruction — but world GDP went up by a factor of about 40 between 1800 and 1900.

    • conditions in a sweatshop were for many better than conditions on the farms they left.

    • Most of the people who get rich — defined as millions and millions of dollars — is they make cost + by setting up barriers to entry to competitors. Copyright, trademark, and patent laws are barriers to entry.

      By that definition, so is the concept of any ownership, or any consequence from prior events at all.

      That’s a fine definition, you just have to be very clear about what it is; if people get to a market early and all the slots are filled, then that is a barrier to entry as well. The question is if it’s a just barrier, which a lot of people tend to skip simply because it’s a barrier.

      Trying to balance the rights of people to their ideas with the societal good is what gives us both property ownership and adverse possession; both copyright and fair use.

      On average, we don’t want people to be able to sell a cat claiming it’s a pig, especially if they mislead people to do so (trademark, property ownership[the famous “selling a bridge” fraud, the less famous “guy comes back from deployment and finds someone sold his house”]); on the flip side, we don’t want to protect the dog in the manger, either, even if the hay does make a nice warm bed for him. (expiring intellectual copyrights, adverse possession rules)

      It’s not simple; this is actual an example of real social justice, the attempt to form a society to promote justice– people getting that which they are due, even if they are not individually powerful enough to take it. (The irony of “social justice” being most commonly used to describe actions that are inherently unjust is a hobby horse of mine.)

      • Yes, he should return the money he paid for tuition.

      • Nothing I wrote contradicts what you’ve written, Foxfier.
        Legal ownership of anything is a type of monopoly granted by the state. Using legalisms like copyright, trademark, and patent to make money is not necessarily a bad thing, but it is a way to make an economic profit over and above a normal profit. Copyright law, in particular, is not very old. It’s not like common law. We can see how it was developed in 17th & 18th century Britain.
        Money and effort influencing the government on political matters is driven by market economics. Investing a million dollars in lobbyists and political contributions may have a better return than investing a million dollars in expansion, particularly in a slow growth economy. Sometimes the highest marginal return comes from taking the bigger slice of an existing pie rather than increasing the size of the pie.
        This is straight out Adam Smith’s <Wealth of Nations, esp. his comparison of the wealth distribution within the nations that made up Europe, China, and the New World (I sometimes think that I am the only person who has actually read Wealth of Nations from cover to cover). If the economy does not grow, the greatest return on investment comes from transferring wealth from the poor from the rich. The rich can do this because they have more investment capital than the poor. That is an economic fact, not a moral statement.
        Another way to describe gaining wealth by innovation is to say that a person who creates a new thing gets exclusive rights to the sale of that new thing, for a period of time determined by lobbyists working with politicians. How can we expect the length of the monopoly granted is economically or morally correct? That’s not what lobbyists and politicians set out to do.
        How much was the value of the Disney trademark increased when Clinton signed the DMCA?

        • Nothing I wrote contradicts what you’ve written, Foxfier.

          You might want to read again, because you seem to be under the impression that I claimed it did.

          I pointed to equivocation potentials and points of judgement/conclusions drawn from the statement.

          Legal ownership of anything is a type of monopoly granted by the state.

          Roughly, defensible in the statement of the facts, though rather too close to argument by special definition. At the very least it depends far too much on specially defined and designed vocabulary.

          The implication, however, is indefensible. It’s the kind of thing one says when one is going to ignore that legal ownership is there to recognize a pre-existing moral truth, to equivocate, or to get attention for statements that follow by seeming to say an outrageous thing.
          *****
          To put it bluntly:
          If you’re going to be using careful definition and precise language, you really need to pay attention to what the people you’re responding to actually wrote.

          • I am sorry that I misread you, Foxfier. I sometimes get called a commie on forums like this simply for reminding people that Bill gates didn’t get rich by creating a popular PC operating system, he got rich by leveraging copyright laws (which he had every legal right to do).
            There is similarity between the evolution of intellectual property laws at the turn of the 21st century and the evolution of water rights in the American West in the late 19th century. In both cases there were powerful economic forces that saw that controlling the way the laws were written was key to increasing the economic value of their holdings.
            It is difficult to discuss complex economic ideas in a limited space. I would describe market economics in the same terms Churchill described democracy: it’s the worst economic system that has been tried, except for all the other forms that have been tried from time to time . . .

            • You get called a commie because you are using the rhetorical flourishes of that ideology, and you aren’t demonstrating that you recognize the assumptions built into it.

              Again, I’ll point to the problem– you are looking at it exclusively through how the rights are secured.

              That’s insane, and why people call you a communist. It’s not (just?) that you’re promoting communism but you are accepting the philosophy as accurate and going from there. You are arguing from the assumptions that are required for communism to be acceptable, and don’t even seem to recognize that they are assumptions.

              It’s sort of like the people who oppose “violence” or “religion.”
              There is a massive difference between me shooting a guy who is trying to kill me, and that guy trying to kill me; or contrast incredibly devout Catholic activists (mother Teresa, the folks that marched for Life in DC this week) with incredibly devout Muslim activists (that mother who was interviewed being ecstatic because her child committed suicide killing other children).

              • If saying that property is a creation of the law is a commie rhetorical flourish, well, I got it from Adam Smith. The question is where does the law come from? Does the law recognize natural rights, create new rights, or destroy natural rights? It can do all three and still be the law.
                “Again, I’ll point to the problem– you are looking at it exclusively through how the rights are secured.”
                If by ‘it’ you mean property rights, well, that’s because the topic is economics. This is defined by economists as the study of the rationing of scarce goods. You can’t separate economics from how economic rights are secured.
                Anyhow, I wrote that market economics is ” the worst economic system that has been tried, except for all the other forms that have been tried from time to time . . .” That makes me the opposite of a communist, since communism has been tried in near infinite variation, across cultures and across time, and has produced nothing but poverty, death, misery and poisoning of the human spirit.
                I am against any system that reduces human beings to mere economic actors.

                • Terry, your perspective as stated is a hell of a lot closer to communist than to anything else. I seriously doubt that Adam Smith considered property to be a creation of the law. People have possessed property for a hell of a lot longer than they’ve had laws.

                  As soon as you start defining who is allowed to own what, you’re in communist territory. They tried to ban private ownership of everything and failed miserably. Some of them are still trying.

                  About the only just laws with respect to property are the ones that affirm a person’s existing natural right to keep what he owns, and the ones that ban slavery (because people *are not* property, despite the repeated attempts of governments to define them as such). (And by “property” I mean what normal people mean. Stuff I own. Stuff I made myself, or purchased, or was given. Do not try to finesse this with legalese or economist-eze.)

                  You keep using communist terms and communist arguments. You argue for ownership as a “created” right. I humbly submit you need to read Marx and find out just how much of his ink you’ve been fed by people telling you they were teaching economics.

                  • This nation’s Founders drew upon the work of John Locke, as did Adam Smith, and Locke wrote of Natural Rights to Life, Liberty, and Property. It seems to be generally accepted (at least for the moment) that the primary distinction explaining the relative success of the USA and Canada in contrast with the problems of Latin (and South) America is the Northern nations’ stronger recognition of property rights.

                    • Yup. As I recall there was serious argument over whether it should be “Life, Liberty, and the pursuit of Happiness” or “Life, Liberty, and Property” as the great natural rights.

                • That’s strike three.

                  Three times, I spoke to you with increasing bluntness; three times you responded by ignoring what was said to bounce off in a lecture.

                  I don’t know if you’re unable, or just unwilling, to engage; I just know that your behavior is not identifiablly different from a dishonest pretense of conversation.

        • Just a quick note, what exactly is a “normal” profit, particularly as regards intellectual property?

          • A normal profit is cost, including the cost of all labor and entrepreneurial talent. That is, if you are a business owner, and you work 16 hours each day working at your business and trying to increase its value, the cost of that labor is included in a normal profit (since presumably you could sell that work ethic and entrepreneurial talent to an employer).
            An economic profit is profit above all costs. If you own a liquor store where the number of liquor stores is legally limited, and you make a $100k/year profit more than you would if that liquor store was in an area that allowed competition, that extra $100k/year is an economic profit. You can also make an economic profit by taking advantage of market inefficiencies and economies of scale.
            No business wants to be stuck with making only an economic profit.
            Economics is incredibly interesting. It basically describes how the economic part of being human works. The courses I took were intended to be taken by business majors. They were free market oriented. The first chapter of the text (a standard undergrad textbook) described how and why market economies produced more goods and were more efficient than command economies.

            • Sorry, should be: “No business wants to be stuck with only making a normal profit.”

              • That is an (odious) opinion, not a demonstrated fact. I would argue that many businesses would be content to make only a “normal” profit if only they were free to do so unencumbered by excessive regulation or competitors “blessed” by the government.

            • No. I can see why they call you a communist. you should definitely ask for tuition back on those economics courses. you’ve drank the Marxist theory of value koolaid. Try again.

              • I don’t think he has, or at least not to the point where he’s anywhere close to socialism. Note the addition of “entreprenurial talent” into the mix, which the labor theory of value nixes.
                Furthermore, I will even go so far as to say that there normal/economic profit distinction is legitimate, even though it is not particularly relevant. (I would also like to inquire as to how Bill Gates manipulated copyright law in order to become fabulously wealthy.)
                However, he has expressed himself in vaguely Marxian terms, and in terms vaguely hostile to businessmen. The fact that he did not define his terms in the original post that started this kerfluffle did not help.

                • I agree – his problem has been that he has built a kernel of knowledge into a snowball of opinion. His arguments improperly conflate a variety of property rights into a single concept. I trust he would not argue against all property rights, so that passers-by could harvest the tomatoes grown in Terry’s garden through Terry’s efforts?

          • Well, at some point “you’ve made enough money” — pfui.

            • The Other Sean

              Indeed, double-pfui even on the “you’ve made enough money” meme.
              I was reading something on Huey Long the other day, and Long had argued much the same thing in his lefty “Share Our Wealth” campaign, which included taxes on both principal and interest. It was a bad idea then, and a bad idea now.

              What scares me these days is how many people support similar ideas, and at much more modest levels of wealth than Long’s proposal. That is, modern progressives demonize and target people at a much more modest level of relative wealth than Long and his supported ever did. I’ve heard modern progressives argue for a 100% tax on all income over $75,000 annually, another bunch argue for steeply increasing taxes on income over $250,000, and others arguing for confiscatory taxation of principal above certain levels that are ridiculous even compared to Long’s arguments.

    • No. You are 100% wrong. Most people who get rich get rich by innovating. there is no barrier on competing with Amazon in ebooks, for ex. there is only that they offer the BEST, most accessible program. Etc.

      • Amazon is very good at leveraging economies of scale. It also has a very aggressive intellectual properties strategy. Amazon patented ‘One click to buy,’ for example. Amazon has pursued a ‘growth over profits’ strategy. This works great, as long as you can attract new investment.
        I love Amazon. I live in a geographically isolated market. Amazon allows me to buy more products at lower prices (esp. with prime) than I would otherwise be able to buy.
        Bezos is not a rags-to-riches guy. He came from a family that owned a lot of land in South Central Texas.

        • “Bezos is not a rags-to-riches guy. He came from a family that owned a lot of land in South Central Texas.”

          Again with the “you didn’t build that.”

          What’s missing from your analogy is that there was nothing to prevent Bezos from sitting on his front porch drinking a beer Nothing said he had to build a company that provides a great deal of value while making him money. Just as nothing said he HAD to succeed instead of losing it all. He’s earned EVERY dollar he’s made.

          • Who the fuck cares if he was rich. Only commies care. Good LORD.

            • Certainly not me. I was replying to Terry, who needs to read the parable of the talents sometime.

            • Sometimes personal prosperity comes from working hard, living modestly, saving, and investing wisely.

            • I think what Terry meant was that we would all be better off if Bezos had spent his money on booze and floozies, like Ted Kennedy did with his inheritance.

              Capital has to come from somewhere, and investors have a peculiar habit of demanding returns on their investment in the short term. I s’pose Amazon would have been much better if Bezos hadn’t been free to invest his own money (however arrived at) in Amazon but had been forced to resort to borrowing money from venture capitalists or the government.

              While Terry has certain basics right he has walked his hippo of an argument out onto a rather weak reed. The fact that some have inappropriately profited from cronyism and barriers to markets can seem to be an argument that a right to property is illegitimately conferred by government.

              Terry’s failure to closely define his terms is what causes his argument seem to be one against property rights as illegitimate profiting from government protection.

              • I think that you and I are close to agreement, Res. Again, it is hard to put forth longish arguments in a small space. I think that the shortest I could make my argument is that while personal property exists in the absence of law, mortgage backed securities don’t.
                I’m not certain that real estate exists as property in the absence of law. Sure, you can take and hold a piece of ground, but that’s not what it means to own land these days. In theory, if the taxes are paid, I (or my estate) owns the lot my house is built on for all eternity. How does that fit in with ideas about natural law?

  24. “Again with the “you didn’t build that.””
    So Bezos worked at being born of a wealthy family?
    I’ve never heard anyone refer to a person born to great wealth as being a self made man before. I’ve never heard anyone say that it was not a disadvantage to be disadvantaged.

    • Oh, please. Read what people are actually saying. Bezos might have come from wealth. He did not inherit a proto-Amazon. He built that. That is entirely his. His family’s land wealth has bugger-all to do with Amazon.com – his willingness to take risks and build something nobody else had even thought of is what matters.

      Whether Bezos had a bit of a head start or not he did build that.

  25. Terry, do you honestly think that having taken two economics classes in college and having read “The Wealth of Nations” makes you an economic expert??? Hell, by that standard, I’m Karen Dynan, and you’re a snot-nosed middle-schooler who just read the front page of yesterday’s Wall Street Journal!

    It’s cute how you think you’re the only one who read Adam Smith, and that having read “Wealth of Nations” somehow makes you an economic expert, and how you immediately point to him whenever someone challenges your ideas. The arrogance is unreal! The effectiveness of economic policies is best examined by taking into consideration everything from industrial and technological revolutions to societal models to governmental ones. Societies make laws to protect individual rights – one of the most basic ones being the right to property. That’s where copyright and patent laws come in. Man created the state as a means of defense against violation of his rights. Protecting what you developed, created, invented, etc. is not at all equivalent to barring entry into the market. That’s protection from theft. The fact that you cannot comprehend the difference is why people call you a communist.

    Yes, there are inspirational and very real rags to riches stories. The choices they make, their labor and innovation, and the risks they take entitle them to the fruits of their labor. Howard Schultz’s parents were dirt poor. He grew up in the projects, and his father drove a truck. As much as I despise Sheldon Adelson, he grew up in the poor house with his parents and siblings and started out selling newspapers. Have you read JK Rowling’s story? She was destitute.Sam Walton got a small loan from his in-laws. On and on and on.

    People who understand economics work on maximizing net profits by finding most efficient ways to provide goods and services that are in demand. Period.

    • Clarity of thought counts as more than the data being thought about.

    • Why the hostility, Nicki? I don’t think that there is anyone commenting here who believes that capitalism and free markets are beyond criticism. Yet my relatively minor criticism of capitalism and free markets — all of it in the mainstream on the right — has gotten me called a commie.
      For example you wrote:
      “Terry, do you honestly think that having taken two economics classes in college and having read “The Wealth of Nations” makes you an economic expert???”
      I have not ever claimed to be an ‘economics expert’ (whatever that is). I certainly know more about economics than people who have not taken college coursework in economics, and I know more about _Wealth of Nations_ than people than people who have not read it.
      Learning more about economics does not you more ignorant about economics until you enter grad school 🙂
      People who understand economics make money by maximizing ROI. Sometimes this is done by creating more efficient means of producing goods and services for which their is a demand, sometimes not.
      The sad truth is that while man as a whole is better off if people work to increase the total amount of wealth in the world, any particular person may be better off by simply transferring wealth from others to him or herself.

      • “You’re angry/why the hostility” – check.

        I’m basing my assessment directly on what you’ve written and how you’ve written it. “Sometimes I feel like I’m the only one who has read The Wealth of Nations” *insert put upon sigh here* Do yourself a favor and re-read what you said and how you said it.

        I also explained to you why you sound like a communist. No one has claimed that the capitalist system is perfect. No one has claimed that it’s infinitely easier for those with existing assets to start a business than those with not, your assumptions to the contrary.

        Economics, politics, sociology, and psychology go hand in hand.

        “The sad truth is that while man as a whole is better off if people work to increase the total amount of wealth in the world, any particular person may be better off by simply transferring wealth from others to him or herself.” — which is why many people vote as they do.