Tuesday, August 29, 2006

Wal-Mart: A Top 3 Issue?

Tim Worstall’s TCS column provides some “toddler economics” instruction on the price and demand for labor at Wal*Mart v. Costco.

From Mr. Worstall:

“National Review's Jonah Goldberg notes how cross The American Prospect's Ezra Klein was with his recent Los Angeles Times piece and, as is his right, makes fun of him. However, I do so hate to be contrary but I think Ezra is actually correct in this matter. As he says:‘I'm of the opinion that how to handle WalMart is among the two or three most important issues facing the country.’

He's right you know. Whether we handle WalMart and the attendant issues as intelligent adults, capable of reasoning, or we do so as whining three-year-olds with all the attendant knowledge of incentives, utopian wishes and economic consequences such a three-year-old might possess is, indeed, one of the important questions facing the country.”

There’s another aspect to considering Wal*Mart as one of the top 3 current issues (beyond the Augean task of increasing economic literacy). The key aspect, is “How do we foster an environment that creates more Wal*Marts?” Highly profitably companies, employing millions, and improving the economic well being of the poor and middle class? That’s a big issue.

Further BMD commentary on Wal*Mart here and here.

If you want the backstory, here’s the Jonah Goldberg column, and Ezra Klein’s response. So, in effect, Worstall is responding to a response….

Bonus Worstall commentary on the Minimum Wage:

“…When the price of something is raised people use or buy less of it. Now, we've been told endlessly that this isn't true, that raising the minimum wage won't mean job losses, or reductions in hours on offer, that companies will simply use their labor force "more efficiently". Which is exactly what we've been saying. Increased efficiency means using less labor to reach a certain goal. As the price of labor rises, companies will use less of it, as, again, we've all been trying to beat into the dulled synapses of the progressives like Klein.”