Friday, September 12, 2003

The Onion Strikes Again

This Onion take on the retailing industry really is hilarious, and it does a great job of capturing the various factors, like price, convenient parking and a greater range of offerings, that give megastores like Walmart such a competitive advantage over the typical Mom-and-Pop operation.

The Onion piece also does a nice job of capturing the more personal side of the story - change can make for losers as well as winners - as well as the hypocrisy of most talk about "loyalty" and "community values" when it comes to commerce. If people really did value these things as much as they like to say they do, far fewer small retailers would go out of business. That things are different is due entirely to the fact that people vote differently with their dollars than they say they will - in economist lingo, their revealed preference is for Walmart-like megamarts. If Americans thought quaint middle-American family farms genuinely worth saving, they'd pay over the odds for the produce these farms grow, and the fact that American consumers choose not to is proof that farm subsidies are utterly unjustified.*

It is also worth noting that the same is true for globalization and its' critics; contrary to the opinion of many on both extremes of the political aisle, people are not slaves to advertising and television, and McDonalds, Disney and the porn industry would not be doing such brisk worldwide were there no genuine demand for the products they have to offer. If Jose Bove dislikes the "McDonaldization" of his beloved France so much, he ought to blame his fellow Frenchmen for their love of "le Big Mac", rather than trading organizations like the WTO.


*The skilled logicians amongst you may notice a peculiarity in my argument; if it seems to you to imply that farm subsidies are never justifiable, then you are undoubtedly correct. Any economic argument that sets out to justify subsidies must lead to the conclusion that the subsidies should not be necessary, as long as we accept that customers reveal their preferences in the choices they make in consumption. At best, one might argue that customers lack sufficient knowledge to make informed choices, but this would be an argument for giving them better information, rather than for subsidies per se.