The Local Rights Movement

John Galt misses the point. The essential question is not about price relativity. I am in New Zealand and we have a chain like Walmart called The Warehouse. When you go into such a place you realise that there is virtually nothing there that you would ever want. Getting to this state of mind is the issue, not fussing about the relative price of the stuff on offer. To me shopping is a dead issue, literally. I have not been into a mall for so long I can't remember when I last did, and I have never really bought much at the local strip shopping centre either. If spending a high proportion of your income on shopping in one form or another is your thing, then yes, making savings by buying cheap does make sense. But if all you buy at the local super market is, for example, olive oil, wine, eggs, rice, poultry, fish, and plenty of fruit and vegetables from your local greengrocer, and a bit of red meat now and then from your local butcher, what does it matter if the price is a little higher than it might be in some mall which, incidentally usually has a much higher petrol-cost to get there? And if all you buy for any department store is the odd pair of underpants every five years, and this and your food costs are but a fraction of your income, just how big are the savings of doing business with at the fabled mall? Dear Mr Galt, the only sane future is to vote with your feet and stop shopping! Shopping is like booze: one should not abandon it totally, but more than the minimum is a total pain in the arse not just for yourself because of the excruciatingly boring time involved and the money wasted, but for all humanity because of the the destruction of the environment that unchecked consumption inevitably causes. All those cheap plastic geegaws and the whole carbon-to-stuff nightmare, of which they are the immediate outward manifestation, are leading us quietly but decisively into the fifth mass extinction of life as we know it. Many say we are beyond the tipping point and that there is nothing we can do to avoid this outcome. Given that it is all probably going to end in tears, why bother with buying more stuff? If this is too hard and you want to fuss about the price of things as though the future does not exist, start pondering that old economic saw about the value versus the price of water and how the law of diminishing returns will apply to shopping as water shortages screw most of India, South East Asia and half of China, not to mention Africa. You will soon see that Walmart is but a pimple on the bum of a fading Asian dragon... Paul Downunder

John, you're wrong. In fact rather than stereotyping the people that run corner shops and complaining that it's inefficiencies that create higher prices (it's Wal-Mart and the other supermarkets putting the squeeze on their suppliers, as covered in Naomi Klein's No Logo), why not look at the positive things that would come out of the scary higher prices? Firstly the living wage would have to rise, and people spending money locally owned shops keeps that money circulating in their community rather than going to the investment fund of some billionaire stockholder who doesn't really mind whether he pays you £5.75 an hour to work in his store or lets you become homeless.

And it's interesting to note that GM, RBS, Woolworths (here in the UK) and so on are failing despite their sophisticated distribution models and economies of scale, but small ethical businesses are flourishing, as reported by the BBC: news.bbc.co.uk/1/hi/business/8063984.stm

Sorry Rev., whether you, or much of the world, disagree with me is not the issue. The laws of Economics, like the laws of Physics, are universal and immutable – whether we like it or not. Most of the world once believed in Socialism and, centuries earlier, most of the world believed that the sun circled around a flat earth. Both were wrong.

There is no need to wait to see what happens, we have plenty of historical precedents. The “lemon Socialism” that America is embarking on today [the virtual nationalization of GM, Fannie Mae, Freddie Mac, AIG, and the bank bailouts] has been tried decades ago in the U.K and Scandinavia – and we will experience the same failures.

The economy is not crashing because of laissez-faire capitalism – it is crashing because people have attempted to alter the market with unscientific “social engineering” experiments. A major cause of our economic demise has been the meltdown in sub-prime mortgages. How did this happen? Well, I will tell you how it happened. Politicians, both Democrats [ Clinton ’s “Community Investment” laws] and Republicans [Bush’s “Ownership Society”] decided that it was a “civil right” for every American to own a house – whether they could afford it or not. It was immoral for a bank to refuse a loan, or to charge higher interest, simply based on the fact that a person had bad credit, no down payment, no assets, and was a generally bad credit risk. When this was applied to groups of people, who were refused mortgages at relatively higher rates than other groups, it became "racist". Everyone is supposed to be absolutely and empirically equal under our misguided ideology.

So, banks gave loans to anyone - even to people who could never afford to pay them back – and largely to minority borrowers. The banks really didn’t care about risk because these mortgages were bundled, insured, and sold off as securities. At the end of this charade, banks were giving NINJA [No Income, No Job, No Assets] loans because they didn’t want to be accused of racism and red-lining. The ratings agencies gave these securities AAA ratings regardless of the underlying risks so that banks could continue to make these shakey loans. Of course, the banks avoided charges of racism in the short term by giving loans to unqualified minority borrowers only to be latter accused of racism because they did give these loans! Now banks are accused of "reverse red-lining"!

By distorting the market, government policy makers attempted to defy the laws of Economics. Expecting people who were high credit risks with low [or no] incomes to be as credit worthy as a person with good credit and income is as silly as a person believing that he can fly off of a building by flapping his arms. The result is the same - SPLAT!

As clever as it may sound, I do not measure the economy in “dollars and cents and no sense”. Money is not the same as wealth. Simply put, wealth are the goods and services that an economy produces and this wealth can either be consumed or it can be used in production of more wealth [capital]. Wal-Mart does not hold its wealth in the form of mountains of money. Wal-Mart’s wealth is held in the form of capital - wealth that is used to produce more wealth. This includes buildings, trucks, distribution centers, and inventories.

If we did not have capital, we could only produce what we could make with our own hands.

If companies are permitted to keep and invest their wealth in additional capital accumulation, the economy’s wealth-creating ability increases as well as real income. If you want to forcibly tax away capital, and redistribute this wealth to those who consume their wealth - future wealth creation will be sacrificed for higher current consumption. Everyone will end up poorer.

I called your "sentimental" attachment to “ma and pa” stores unworkable because that is the way that it is. These stores never really existed in reality, but are a memory of things that never were and never will be. Small stores were in trouble decades ago with the advent of the 5-10, which were replaced by down-town department stores, which were replaced by malls, which were replace by “big box” stores.

The areas that have stayed clear of Wal-Mart, such as Queens New York, pay significantly higher prices for products and have less real income as a result. Also, as for “sweatshop goods”, the local stores on Queens Blvd. sell a lot of clothing made in Bangladesh and Guatemala . Who made this clothing Rev., bored American tourists? The products sold in local stores are also over-packaged, over-advertised, have been transported even longer distances [and much less efficiently distributed compared to Wal-Mart], create greater personal debt [since most of these items cost significantly more than at Wal-Mart], and create street parking and traffic problems on local streets and in local neighborhoods.

I am not here to defend Wal-Mart, there are a number of problems with this company. However, your model of neighborhood economies is not sustainable in a world of 6+ billion people. Efficiency and economies of scale are the keys to our future.

John Galt

Well Gitardood, What could be more unstable or skewed than the climate, world-wide, at present? If this is the result of laissez-faire economics applied to material progress based on carbon-to-stuff conversion, and if this really is the prelude, as James Lovelock says, to a period - starting about 2020 - of sharply increased global heating which will result in the mass extinction of about nine-tenths of all living things by say 2100, then what have you got to say for laissez-faire economics? Or is this attachment to "fridim", as George Bush said, just an article of faith, sustained by denial of the reality of the future we all face? If our only hope is to take very definite control of our negative behaviour towards our environment, it would seem non-laissez-faire might well be the order of the day... Paul Downunder

No, a firm can produce on a large scale and be economically inefficient – General Motors for example. The problem with a small business is that it cannot generate economic profits [revenue which exceeds the opportunity costs of the inputs] because of scale. No new production is added to the economy by re-selling merchandise.

I am not familiar with Tesco – although this firm plans on expanding its operations in the western U.S. , under the name “Fresh & Easy”. Small firms can compete with larger firms in areas of customer service, quality, and convenience. The problem, on a global scale, is that a planet with 6+ billion people cannot support and feed itself with neighbor markets and gardens. It would be nice to live this way, but this is largely the fantasy of the white urban upper middle class – who can afford to buy organic goods at the local Whole Foods. For example, in the India ’s state of Punjab , there are a number of organic “sustainable” farms which produce high-quality produce. The problem is that these farms produce less than half the output – per acre than industrial [pesticide and fertilizer using] farms. What would happen to the 1+ billion Indians if all of India ’s farms adopted this strategy? Many would starve to death.

If you extrapolate this to the entire planet, we would have to convince about 4 billion people to leave this planet in order for us to enjoy our “small and local” economy.

Also, if the “big box” stores sell things that people don’t want, then who is forcing these people to buy these things?


John Galt

For one thing, you can “challenge” employers by not patronizing their companies. Also, how do you intend to raise wages while “defending” the so called "rights" of illegal aliens who drive down wages while they impose higher taxes on the rest of us because of the social services that they require? Aside from state coercion, how to you intend to build your society?

This reads a lot like the Khmer Rouge manifesto! Where would you suggest that your “coalition” of Churches and NGOs raise their money? Many of these institutions are struggling to get by.

Finally, I do not believe that I can ever be forced to have an “obligation” to anyone.  This is not freedom and it is not moral.
 
The community that you envision is one where the unproductive enjoy unearned rewards at the expense of the productive who would be burdened with unrewarded duties. I believe in the Morality of Reason.
 
It is perfectly good and proper to pursue one's own happiness as one's principal goal in life. I do not consider the pleasure of others to be my goal in life, nor do I consider my pleasure the goal of anyone else's life. It is not proper for me to help someone if he demands my help as his right or as a duty that I owe him. It is proper if, and only if, it comes from me free choice based on my judgment of the value of that person and the validity of his problems.

This country was not built by men who sought handouts.

John Galt