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How would you know? Just because it's never been truly tested in reality doesn't mean we can't stop and think about the situation. We know what corporations do

How would you know? Just because it's never been truly tested in reality doesn't mean we can't stop and think about the situation. We know what corporations do when they are given a choice (they choose profits over anything else) and we know that consumers will choose low prices over everything else as well. So, it's not hard to draw the conclusion that this will result in consolidation, economies of scale, and eventually monopolies. Exactly what is already happening. In a "free market", what is going to prevent this? Every actor here is acting in their best interest. What could possibly change their behavior other than the government telling them to?

valuearb 9y ago
Where has economies of scale hurt? ISPs are a special case because regulations make it difficult or impossible for competitors to run cable. But economies of scale turned cars, PCs, consumer electronics, air travel, etc, from rich peoples play toys into affordable products for the masses. As consolidation hit all those industries their products merely got cheaper and in most cases, far better.
- arrosenberg 9y ago
  Walmart. Walmart has destroyed thousands of businesses. Now you can argue the consumer got lower prices, but low prices don't matter when no one has money to afford them. Additionally, those economies of scale produced cheap, disposable, polluting goods that have an engineered lifetime so that customers have to keep buying the same appliance (or whatever) over and over. The question isn't when economies of scale hurt, that's a loaded question. The question is "when does consolidation no longer benefit the consumer?". I would argue many, many industries have reached this point, with ISPs being the most obvious one, but there are many examples (like the syringe one given above) where a business you've never heard of silently corners the market through consolidation and trust building.
  - valuearb 9y ago
    Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living. You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. But that ignores the fact that the smaller competitors didn't pay much better, and never had a stock option plan, so the pay difference was marginal while the customer benefit was massive. Walmart big advantage wasn't labor costs, it was scale and inventory management from day one. And it's products are as good or better as the competitors. I hate Walmart, hate shopping there, but when I have to I'm always struck by how good the products are and how amazing the prices are.
    - prklmn 9y ago
      You're off-base in almost every regard. >It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living. It's a multifaceted issue. Yes, Walmart sells cheap stuff, but that's not the company's only impact on the standard of living. The middle class has been steadily shrinking since the 70s, consistent with the rise of Walmart http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-income-_n_3386157.html http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-i... > You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. The key issue is not Walmart's employees, but rather the employees of the companies they source from. > Walmart big advantage wasn't labor costs, it was scale and inventory management from day one. Once again, it's about the cost of the goods they sell that has a bigger economic impact than their direct labor cost. What goes into the cost of the goods they sell? Labor costs of their suppliers. What did they do after their advantage of scale and great inventory management management eroded? They started sourcing products from markets that were fueled by cheap labor i.e. not the USA. Sam Walton has been rolling in his grave for years: The first true Wal-Mart opened on July 2, 1962, in Rogers, Arkansas.[18] Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street. He launched a determined effort to market American-made products. Included in the effort was a willingness to find American manufacturers who could supply merchandise for the entire Wal-Mart chain at a price low enough to meet the foreign competition. --> https://en.m.wikipedia.org/wiki/Sam_Walton https://en.m.wikipedia.org/wiki/Sam_Walton > I'm always struck by how good the products are and how amazing the prices are. You're probably one of very few
  - jpindar 9y ago
    How does Wal-mart stay in business if "no one has money to afford them"?
    - michaelmrose 9y ago
      Walmart isn't singular they are part of a huge array of companies paying shit wages. A lot of people in the same economic class as the workers are receiving government assistance meaning you are footing the bill for the food stamps that feeds the cashiers kids while ironically congratulating yourself on the good deal you got.
    - coldtea 9y ago
      That's easy to answer: it doesn't in the long run (assuming it was the only player -- of course the reality is more nuanced). But it can destroy a whole lot of value (and be the last "business" standing) in the short and mid-run. In fact as such businesses erode the working/middle class, short and mid-term they become more enticing to it than other stores, since they are the cheaper options. If a company causes a "race to the bottom" for jobs and wages by selling too cheaply and paying too little, then those whose wages are affected will mostly be able to shop at that place exactly. And if that company is one business upon many that are causing the same issues, then people wont even be able to single them out for blaming...
    - jonathankoren 9y ago
      Easy. Food stamps. https://www.google.com/amp/s/www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/amp/ https://www.google.com/amp/s/www.forbes.com/sites/clareoconn... http://www.slate.com/articles/business/moneybox/2014/04/walmart_employees_on_food_stamps_their_wages_aren_t_enough_to_get_by.html http://www.slate.com/articles/business/moneybox/2014/04/walm...
    - ubernostrum 9y ago
      They stay in business courtesy of government programs to keep people afloat enough to afford basic necessities, and by negotiating to pay reduced or no local taxes or infrastructure costs, coupled with relocating stores any time a tax-break deal expires. As long as you don't have to pay a living wage (because the government picks up the difference) and don't have to pay the cost of building and maintaining the infrastructure of your store (because the government picks up the difference), you can "sustain" an otherwise-unprofitable business for quite a long time.
  - wyager 9y ago
    Are you familiar with intelligence squared? I encourage you to watch their debate on the value of walmart to society.
  - averagewall 9y ago
    Destroying jobs is precisely how economies of scale and efficiency generally happens. If those other businesses kept employing as many people, products wouldn't get cheaper as much

valuearb 9y ago

Where has economies of scale hurt? ISPs are a special case because regulations make it difficult or impossible for competitors to run cable. But economies of scale turned cars, PCs, consumer electronics, air travel, etc, from rich peoples play toys into affordable products for the masses. As consolidation hit all those industries their products merely got cheaper and in most cases, far better.

arrosenberg 9y ago
Walmart. Walmart has destroyed thousands of businesses. Now you can argue the consumer got lower prices, but low prices don't matter when no one has money to afford them. Additionally, those economies of scale produced cheap, disposable, polluting goods that have an engineered lifetime so that customers have to keep buying the same appliance (or whatever) over and over. The question isn't when economies of scale hurt, that's a loaded question. The question is "when does consolidation no longer benefit the consumer?". I would argue many, many industries have reached this point, with ISPs being the most obvious one, but there are many examples (like the syringe one given above) where a business you've never heard of silently corners the market through consolidation and trust building.
- valuearb 9y ago
  Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living. You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. But that ignores the fact that the smaller competitors didn't pay much better, and never had a stock option plan, so the pay difference was marginal while the customer benefit was massive. Walmart big advantage wasn't labor costs, it was scale and inventory management from day one. And it's products are as good or better as the competitors. I hate Walmart, hate shopping there, but when I have to I'm always struck by how good the products are and how amazing the prices are.
  - prklmn 9y ago
    You're off-base in almost every regard. >It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living. It's a multifaceted issue. Yes, Walmart sells cheap stuff, but that's not the company's only impact on the standard of living. The middle class has been steadily shrinking since the 70s, consistent with the rise of Walmart http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-income-_n_3386157.html http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-i... > You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. The key issue is not Walmart's employees, but rather the employees of the companies they source from. > Walmart big advantage wasn't labor costs, it was scale and inventory management from day one. Once again, it's about the cost of the goods they sell that has a bigger economic impact than their direct labor cost. What goes into the cost of the goods they sell? Labor costs of their suppliers. What did they do after their advantage of scale and great inventory management management eroded? They started sourcing products from markets that were fueled by cheap labor i.e. not the USA. Sam Walton has been rolling in his grave for years: The first true Wal-Mart opened on July 2, 1962, in Rogers, Arkansas.[18] Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street. He launched a determined effort to market American-made products. Included in the effort was a willingness to find American manufacturers who could supply merchandise for the entire Wal-Mart chain at a price low enough to meet the foreign competition. --> https://en.m.wikipedia.org/wiki/Sam_Walton https://en.m.wikipedia.org/wiki/Sam_Walton > I'm always struck by how good the products are and how amazing the prices are. You're probably one of very few
- jpindar 9y ago
  How does Wal-mart stay in business if "no one has money to afford them"?
  - michaelmrose 9y ago
    Walmart isn't singular they are part of a huge array of companies paying shit wages. A lot of people in the same economic class as the workers are receiving government assistance meaning you are footing the bill for the food stamps that feeds the cashiers kids while ironically congratulating yourself on the good deal you got.
  - coldtea 9y ago
    That's easy to answer: it doesn't in the long run (assuming it was the only player -- of course the reality is more nuanced). But it can destroy a whole lot of value (and be the last "business" standing) in the short and mid-run. In fact as such businesses erode the working/middle class, short and mid-term they become more enticing to it than other stores, since they are the cheaper options. If a company causes a "race to the bottom" for jobs and wages by selling too cheaply and paying too little, then those whose wages are affected will mostly be able to shop at that place exactly. And if that company is one business upon many that are causing the same issues, then people wont even be able to single them out for blaming...
  - jonathankoren 9y ago
    Easy. Food stamps. https://www.google.com/amp/s/www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/amp/ https://www.google.com/amp/s/www.forbes.com/sites/clareoconn... http://www.slate.com/articles/business/moneybox/2014/04/walmart_employees_on_food_stamps_their_wages_aren_t_enough_to_get_by.html http://www.slate.com/articles/business/moneybox/2014/04/walm...
  - ubernostrum 9y ago
    They stay in business courtesy of government programs to keep people afloat enough to afford basic necessities, and by negotiating to pay reduced or no local taxes or infrastructure costs, coupled with relocating stores any time a tax-break deal expires. As long as you don't have to pay a living wage (because the government picks up the difference) and don't have to pay the cost of building and maintaining the infrastructure of your store (because the government picks up the difference), you can "sustain" an otherwise-unprofitable business for quite a long time.
- wyager 9y ago
  Are you familiar with intelligence squared? I encourage you to watch their debate on the value of walmart to society.
- averagewall 9y ago
  Destroying jobs is precisely how economies of scale and efficiency generally happens. If those other businesses kept employing as many people, products wouldn't get cheaper as much