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Aug 18, 2006


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I'd want to get a notion of the extent that the cost-savings of Walmart are due to their pushing of costs off onto others.

One of the key policy reforms I'd like to see is a $.60/hour global min wage for all goods/services for final US(and EU and other Developed Country) consumption or intermediary goods.

That ought to be manageable and make a difference...


Michael Kruse

I am curious about $.60 wage. Why this amount?

It seems this might have an impact where something is manufactured and then sold directly to the US. However, when something is a component, of a component, of still another component, that is assembled elsewhere and then sold to the US, it seems like enforcement might get a little complex.


$.60 is what is needed for someone working 3000 hours a year to make about 5 dollars a day. The goal is to put some pressure on PRoChina, but not too much. Their GNI per capita: US $1,740.

I agree enforcement on intermediaries would be more complicated. We'll need some rules of thumb and, of course, randomization for enforcement and temporary tariff penalties.


Michael Kruse

Gotcha. That makes sense. I remember reading somewhere recently that when GNI gets to about $2,000 is when people begin to turn there attention toward issues like property rights and rule of law. The big question is when this happens in China will we see postive reform or totalitarian crackdown?

I fear that China may be allowing some freedom (Hong Kong, Beijing, etc.) in some areas in order to generate economic growth for the state while still keeping a large majority in totalitarian domination. I think China is as big or bigger worry in the future as Islamic fanaticism.


Benjamin P. Glaser

As someone who grew up in small towns Wal-Mart more than anything has made an immeasurable impact on the way people live in those small towns. They have been "urbanized" in a sense by Wal-Mart. Before Wal-Mart (early to mid-90's in WV) if you wanted most products you either had to drive to Charleston or buy it from a JC Penney Catalog Store or pay twice as much at a mom and pop store. With the advent of Wal-Mart you could now buy twice the product you could at the mom and pop store with half the cost. Not to mention wages for a part-time or even full-time worker at Wal-Mart was more than at a mom and pop store. So not only did it bring steady and available employment but it brought mass materialism to areas that had never been able to afford it before.

Michael Kruse

Thanks Benjamin. I have heard countless others tell the same story. I think the issue for many is that Wal-Mart often means the end for a way of life that included mom and pop retail stores. The set of reltionships lost is often real and deeply felt. Yet the economics of it aren't practical and will likely cause the community to fade if perpetuated. My sense is similar to yours, at least for rural areas, that Wal-Mart, on balance, has been a major plus.

Denis Hancock

I don't know if this is a significant observation or not, but it seems that the anti-walmart signs are far more common in the affluent sections of town than in the middle class areas, and very difficult to find in the poorer sections. Odd...

The Slate article you reference (Is Wal-Mart Good for the American Working Class?) gives a clue when it states:

The single most careful economic study, co-authored by the well-respected MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn't mean much for those of us in the top fifth of the income distribution—we spend only about 3.5 percent of our income on food at home and, at least in my case, most of that shopping is done at high-priced supermarkets like Whole Foods. But that's a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food.
Michael Kruse

I think it is very significant Denis. My observations are the same. I see anti-Wal-Mart stickers on cars in the more avantgarde neighborhoods where I live in Kansas City, MO. However, I see very little of this in more blue-collar Democrat areas like Independence or Kansas City, KS.


Yeah, well, if we had the global min wage, it would cut down on our deficit with PRoChina and give us another policy lever to use against them....

It would subvert some of their ability to divide and conquer in their country that you described. I think we need to get a bandwagon going on this matter.


Michael Kruse

dlw, you take the reins on the bandwagon. I'll ride shotgun. :)

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