Thursday, June 24, 2010

My Moral Defense of Wal-Mart

A friend of mine recently worried on facebook whether or not she could shop at Wal-Mart with a clean conscience. She sees Wal-Mart as evil. This point of view frequently surprises me. It strikes me that those who claim it aren’t looking deeply enough into the total effects of Wal-Mart on the community. Generally, they see that Wal-Mart comes into a community, and then long standing local businesses shut down. Putting people out of jobs. This is, of course, bad news. And they think they can make things better by just preventing Wal-Mart from being there.

But there’s another side to the story. The analysis that Wal-Mart is evil really misses a huge benefit that they bring with them. Specifically lower costs for consumers.

The simple question is this: should local consumers be forced to spend millions more on products in order to save the jobs of local businesses? When Wal-Mart is not allowed into a community, members of that community lose the cost savings that typically accompanies Wal-Mart. And instead are forced to spend more money at existing local business. By what principle should this redistribution of money from consumers to local business be forced on consumers?

Suppose Wal-Mart saves $1000 annually for people who shop there. This is not that difficult a number to imagine. If a person makes a trip to the store weekly, and saves a $20 each week, that adds up more than $1000 annually. Is it worth $1000 per year in extra costs to you to save the jobs of local business? That $1000 is money taken from your pocket and put into the pocket of the local business simply because they’re not as good at getting product to you as Wal-Mart is. If the local business came up to you directly and asked for $1000 every year, do you think you’d just hand them that cash? Well that’s what’s happening when local business demands that you protect their jobs from competition from Wal-Mart.

But maybe you do think that $1000 is worth it. You could be wealthy enough to afford it. Maybe you have friends who work in those local businesses and you can see the harm more directly and the $1000 seems pretty small to you. You’re wealthy enough to afford $1000 per year to help those people keep their jobs. OK, but by what logic do you impose that cost on the poor, who spend even more of their money at Wal-Mart than do the affluent? What makes you think it’s moral to force the poor to buy more expensive products for the benefit of local business?

If you really want to make this into a moral argument, you’d better understand that just about every decision has a tradeoff. When you weigh the decision, it isn’t that there local jobs lost on one side and nothing on the other. Instead you have losing local jobs on one side and higher prices for the poor on the other side.

If you think Wal-Mart is evil for the costs that it imposes on local business, consider what the costs are to the poor when you force Wal-Mart out. Because those are the choices. Choosing in favor of local business is also choosing to further impoverish the poor.

Now maybe your moral compass allows this. But mine does not. I find it incredibly distasteful to force the poor to subsidize local business by removing Wal-Mart as an option for them. So I shop at Wal-Mart with a clean conscience. I’m glad that they help not only me be a little less poor, but also those who are poorer than I am. I want that choice available to all. I am distrustful of local businesses when they demand that it not be allowed.

Perhaps the objection to Wal-Mart is that they hire sweatshop labor in third world countries. It's certainly true that sweatshop labor is horrible and difficult labor. But only compared to the standard of working that we have in the US. For many in the developing world, the alternative to working in a sweatshop isn't working in an office. It's working in a field. It's subsistence living. It's 16 hours of back breaking labor per day earning just enough to get food to survive the day. Compared to that, sweatshops are a step up. Which is why, when a factory in China opens up, the Chinese beg for the work.

There does not appear to be any known way to transition the desperately poor into an industrialized nation capable of producing wealth for its people without going through a phase in which sweatshops exist. The US went through that phase and it appears that others have to go through it, too. But this is only surprising and shocking to us looking back on it. For the desperately poor, stuck in subsistence living, sweatshops are a significant step up.  So, of course you have to go through that phase. In exactly the same way that if someone wants to get to the penthouse, they must first get past the second floor.

For a much better description of how sweatshops are beneficial to third world countries, read this:

Suffice it to say, I'm not convinced that Wal-Mart is evil.

Postscript: I should note that frequently Wal-Mart will come into a community and demand tax incentives from the local government in order to build. No such incentives should ever be granted to just Wal-Mart. If the taxes are too high to get Wal-Mart in, then special exemptions for them are wrong. Lower the taxes for everyone. It’s pretty likely that if lower taxes attract Wal-Mart, they’ll also attract other businesses. And you’ll likely generate at least as much (if not more) tax revenue post tax cut than before. See Laffer Curve.

Wednesday, June 09, 2010

Publicize my location & location history and somehow I win. Huh?

In late 2008, I opened my facebook account. I had heard friends talking about it and I didn’t understand it. So I cautiously created an account. After almost no time, I had figured out why people were so excited about facebook. It’s a revolution in keeping in contact with people. It makes distant friendships much easier to keep up with than email. Email focuses too much on the immediate message. Everytime you want to update via email, you have to refigure out who should get it. Facebook reverses that. You figure out your connections, and then focus on what you want to say.

Not too long after facebook, I figured that if I don’t understand something, it’s worth trying it and then maybe the experience will help me understand. So I tried twitter because that made no sense to me. I’m kind of wordy. Restricting myself to only 140 characters seemed the equivalent of trying to fit into my children’s clothes. But now I get it. Twitter is my news source. I search for things that interest me, then find the people who seem to have the best news, and follow them. From that point, I can just go to my twitter feed and get news about things that are interesting to me. Also, twitter provides a way for me to contribute to trends. I get to say the tiniest thing that is on my mind, and twitter aggregates it through search for those who are also interested in it. It helps me feel less alone in my thoughts.

Long and short: I now understand the appeal of both twitter and facebook. And a bunch of other things that I didn’t understand until I tried them. Blogs, Podcasts & RSS feeds come to mind.

But I’ve come to a service that I really don’t understand and am hesitant to try: location based check-ins. These services provide a mechanism for telling the internet where you are. Presumably the value in this is that you can figure out where your friends are and meet up with them w/out having to do the coordination thing. You know what I mean. You want to go to lunch with your friends. So you invite a bunch of them. One wants Thai food. Another wants Indian. Someone else wants Japanese. So you hem and haw for 30 minutes trying to figure out where to go. And all you really care about is going somewhere with friends.

Location based services (like Gowalla, Foursquare and Google’s Latitude) allow you to look up where your friends are and just show up, avoiding the whole coordination issue. The location service provider gets to gather interesting information about where people congregate, and then use that information for marketing. Locations want to participate so as to encourage people to congregate at their location, and buy services from them.

So, in one sense I understand location services. The problem that I have with them, and why I haven’t yet tried them, is that I’m not really sure that I want to tell the internet where I am and where I’ve been. I don’t like the idea of telling the world that, for example, I’m not at home at the moment. If I were someone interested in burglary, that’d be useful information. Especially, if (as seems common) people frequently check-in at home.

Location services just seem to provide too much information about me to the wide internet. With twitter and this blog, I am very careful not to post any personally identifying information. So far as I’m aware I have never revealed the name of my employer. Nor the names of my children or family. And I don’t think I’ve ever mentioned where I live. With facebook, it’s a little different. I reveal a lot more information, but I make thorough use of the privacy features of the site, which allows me pretty good control of who gets to see what I post.

But I can’t imagine a way to use gowalla, foursquare or latitude which doesn’t reveal too much. In particular my location.

So my question, dear Internet, is this? Do you use those services? If so, what benefit do you see from using them? Are you at all concerned with revealing your location to the world? What do you think of my concerns?