An Interesting Thought Experiment
Ever since I read The Wal-Mart Effect, by Charles Fishman, I've had a half-thought nagging at the back of my mind. I think today is the birthday of that thought; I think I can finally put it into words. The problem I have with Wal-Mart - and every other national chain store I've read about, including Walgreen's, Best Buy, Target, Home Depot, and others - is that it abstracts the economy away from you and me. What do I mean by this? That's the hard part, the part I've been trying to articulate to myself for a couple years now.
Think of an economic exchange between some supplier and some consumer on a face-to-face basis. It may help to think about a waiter at a local restaurant, for example. If the waiter is lazy, and the service is horrible, then from an economics standpoint, you should give him a lower tip than if he performed stellarly, or even up to expectations. This is basic vote-with-your-dollar free market economics. The bad waiter is discouraged from participating, the good waiter thrives, and the market adjusts toward providing a valuable product - good wait service. Assuming you don't have an over-developed sense of empathy, you should feel no guilt from giving the waiter what you think is a fair rating in the form of a tip.
Most of the time, we leave the tip with the ticket, and can avoid looking the waiter in the eye when he finds out just how much - or little - we gave him. But, what if we always had to look him in the eye? If everyone is fair-minded about the exchange, the tip value would stay the same. Now, consider giving the waiter an unfairly low tip. Knowing you have to look him in the eye and perhaps justify it, could you low-ball a waiter like that? My guess is that most of us would squirm pretty hard at the prospect, and this thought preserves some of my faith in humanity.
Now, back to Wal-Mart. Wal-Mart's whole reason for being is to provide rock-bottom prices to the customer. All of their marketing material reinforces that mission. In fact, as Wal-Mart has grown, they've started throwing their weight around to put even more pressure on suppliers to drop prices. In the aforementioned book, Fishman relates a story of how jeans seamstresses in Thailand (I think) are slapped across the face with inferior jeans that they produce, as punishment for wasting the resources. This punishment and pressure brought to bear on third-world producers and their employees is done on behalf of the Wal-Mart customer, to deliver the rock-bottom price. So, let's do another little thought experiment, kind of like the one with the waiter above:
Suppose Wal-Mart couldn't import the jeans from Thailand, and couldn't store their goods in a warehouse. Suppose they had to import the Thai workers (working under the same conditions with the same pay, of course, how else will they keep prices down?), who had to make the jeans in the store. When you go into Wal-Mart to buy jeans, one of these workers hands you a pair, and you hand them the price of your new jeans. If you could see the management slapping workers in the background, could you look into the eyes of the seamstress who made them and pay your $14.94? (see the online product page). Could you respect yourself for making that decision?