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> When it comes down to it, most people would rather save money and pay less than shop at small businesses. You hit the nail on the head exactly here. People

> When it comes down to it, most people would rather save money and pay less than shop at small businesses. You hit the nail on the head exactly here. People are very good at maximizing their short term situation, even at the detriment to their community. A good example is people who travel to nearby cities to buy things because they have lower taxes. They don't seem to understand that (for the most part), taxes in their own city benefit their city. Taxes they pay to a neighboring city don't benefit them or their neighbors.

mattmaroon 2y ago
Eh. Retail is only one type of business. The fraction of businesses that are small fluctuates by a couple percent here and there but isn’t on some long term decline. How is it to our long term benefit to continue paying more for goods forever? Maybe we’re just better off in a world where industries that have severe economies of scale like retail get consumed by the big guys so we all save money, and small businesses keep fixing the pipes, designing our graphics, etc.
- CubsFan1060 2y ago
  I can't back this up with data, so this is just my opinion. Economies of scale are better in almost every way, if the benefits of economies of scale are somewhat evenly distributed, and that the benefits don't come with significant negatives somewhere else. However, most of the time, the majority of the benefits of economies of scale tend to go to the wealthy. The small amount of benefits that do go to consumers/people make them think that they are the beneficiaries, and often the societal cost is masked.
  - foxglacier 2y ago
    It should be OK if those big companies are publicly traded and mostly owned by ultimately, lots of individuals, say through retirement funds investing in them?
  - mattmaroon 2y ago
    Lots of small businesses exist in areas that do not have economies of scale, and sometimes have diseconomies. Think businesses where labor is the majority of the costs. Your local plumbing company is probably a small to medium business and Roto-Rooter isn’t hurting them. Some have some economies of scale but not severe and service or quality or other things matter and there you usually find big businesses and small competing with each other. (I work in the packaged food world, it falls into this category.) And some, like retail, have such large economies of scale that a small business just can’t really compete. In the case of retail, this is largely because of logistics being such a big portion of cost of goods.
lolinder 2y ago
> They don't seem to understand that (for the most part), taxes in their own city benefit their city. They usually understand that perfectly well, but understanding that doesn't mean that they should not rationally try to minimize the taxes that they personally pay. The ideal scenario for any individual A is that A pays as little in taxes as possible and all A's neighbors pay as much as necessary to fund the government programs which A benefits from. For A, intentionally shopping locally in order to pay higher but local taxes is against their own rational self interest. Policy shouldn't be designed to only work for the collective good if every individual works against their own self interest—any policy designed that way is doomed to failure from the get go.
- throwway120385 2y ago
  I think the point being made here is not that people should work against their own "rational self interest" but that paying taxes in your local community to support infrastructure, policing, education, public services, public health, and so on is actually directly in your own self interest. But people have this idea that taxes benefit nobody so we work scrupulously to avoid them. One of the biggest socialist programs of wealth redistribution in the US is actually our highway and road system, where we pay hundreds of billions of dollars from cities to smaller municipalities and counties to maintain a system of public roadways by which those smaller municipalities can reach larger cities by car. Absolutely nobody complains about that. So clearly paying taxes on that is beneficial. And that suggests that paying taxes on other things is beneficial.
  - lolinder 2y ago
    > and so on is actually directly in your own self interest. But people have this idea that taxes benefit nobody so we work scrupulously to avoid them. But my point is that it's not. It's in your interest to have those things but not in your interest to pay for them. Having government programs such as roads is beneficial. Paying for roads out of your own pocket is not. So we should expect to see people dodge taxes wherever it's practical to do so. This has implications for how you design a taxation system. For example, there is an optimal sales tax rate that is neither significantly lower than your neighbors nor significantly higher—one where the inconvenience of shopping somewhere else is higher than the cost of shopping locally. The only way to get around the problem is to make receiving the government services contingent on paying the tax. Vehicle registration fees are a good example, as are property taxes. If roads are paid for out of a tax that you can't avoid paying if you own a car, then using the government-provided infrastructure is contingent on paying for it and it's in your self interest to do so. Sales taxes are particularly problematic in this regard because the people who pay them are often not the people who benefit from the programs paid for. (Though this is less true in small isolated towns than it is in large Metro areas.)
ensignavenger 2y ago
If they are regularly spending time in that neighboring community, then the taxes they pay their do benefit them. I think it is more a vote of no confidence in local leadership.

mattmaroon 2y ago

Eh. Retail is only one type of business. The fraction of businesses that are small fluctuates by a couple percent here and there but isn’t on some long term decline. How is it to our long term benefit to continue paying more for goods forever? Maybe we’re just better off in a world where industries that have severe economies of scale like retail get consumed by the big guys so we all save money, and small businesses keep fixing the pipes, designing our graphics, etc.

CubsFan1060 2y ago
I can't back this up with data, so this is just my opinion. Economies of scale are better in almost every way, if the benefits of economies of scale are somewhat evenly distributed, and that the benefits don't come with significant negatives somewhere else. However, most of the time, the majority of the benefits of economies of scale tend to go to the wealthy. The small amount of benefits that do go to consumers/people make them think that they are the beneficiaries, and often the societal cost is masked.
- foxglacier 2y ago
  It should be OK if those big companies are publicly traded and mostly owned by ultimately, lots of individuals, say through retirement funds investing in them?
- mattmaroon 2y ago
  Lots of small businesses exist in areas that do not have economies of scale, and sometimes have diseconomies. Think businesses where labor is the majority of the costs. Your local plumbing company is probably a small to medium business and Roto-Rooter isn’t hurting them. Some have some economies of scale but not severe and service or quality or other things matter and there you usually find big businesses and small competing with each other. (I work in the packaged food world, it falls into this category.) And some, like retail, have such large economies of scale that a small business just can’t really compete. In the case of retail, this is largely because of logistics being such a big portion of cost of goods.

lolinder 2y ago

> They don't seem to understand that (for the most part), taxes in their own city benefit their city. They usually understand that perfectly well, but understanding that doesn't mean that they should not rationally try to minimize the taxes that they personally pay. The ideal scenario for any individual A is that A pays as little in taxes as possible and all A's neighbors pay as much as necessary to fund the government programs which A benefits from. For A, intentionally shopping locally in order to pay higher but local taxes is against their own rational self interest. Policy shouldn't be designed to only work for the collective good if every individual works against their own self interest—any policy designed that way is doomed to failure from the get go.

throwway120385 2y ago
I think the point being made here is not that people should work against their own "rational self interest" but that paying taxes in your local community to support infrastructure, policing, education, public services, public health, and so on is actually directly in your own self interest. But people have this idea that taxes benefit nobody so we work scrupulously to avoid them. One of the biggest socialist programs of wealth redistribution in the US is actually our highway and road system, where we pay hundreds of billions of dollars from cities to smaller municipalities and counties to maintain a system of public roadways by which those smaller municipalities can reach larger cities by car. Absolutely nobody complains about that. So clearly paying taxes on that is beneficial. And that suggests that paying taxes on other things is beneficial.
- lolinder 2y ago
  > and so on is actually directly in your own self interest. But people have this idea that taxes benefit nobody so we work scrupulously to avoid them. But my point is that it's not. It's in your interest to have those things but not in your interest to pay for them. Having government programs such as roads is beneficial. Paying for roads out of your own pocket is not. So we should expect to see people dodge taxes wherever it's practical to do so. This has implications for how you design a taxation system. For example, there is an optimal sales tax rate that is neither significantly lower than your neighbors nor significantly higher—one where the inconvenience of shopping somewhere else is higher than the cost of shopping locally. The only way to get around the problem is to make receiving the government services contingent on paying the tax. Vehicle registration fees are a good example, as are property taxes. If roads are paid for out of a tax that you can't avoid paying if you own a car, then using the government-provided infrastructure is contingent on paying for it and it's in your self interest to do so. Sales taxes are particularly problematic in this regard because the people who pay them are often not the people who benefit from the programs paid for. (Though this is less true in small isolated towns than it is in large Metro areas.)

ensignavenger 2y ago

If they are regularly spending time in that neighboring community, then the taxes they pay their do benefit them. I think it is more a vote of no confidence in local leadership.