[detbuch]

Originally Posted by GregW

Is my spending influenced by confidence? Yes 100%. For example if I feared losing my job my spending would instantly be cut back. That is just common sense.

I agree. Confidence would be a personal issue, not something manufactured by a poll. If you didn't fear losing your job, would you cut back spending because of a drop in the so-called consumer confidence index?

And ultimately even a rumor of layoffs can instantly cripple an economy.

Actual layoffs will immediately dampen the flow of money toward those that sell. But that happens all the time and economies adjust. Rumors can scare those who fear being laid off, but not so much others. Downshift in the economy is not, in the short run, good, but can lead to stronger economies (creative destruction). But Walmart (and similar Companies) have been there in good and bad times. Do they get credit for the good times , or only blame for the bad.

Here is an example for you. You are a manufacturing company that employs production workers. Wal-Mart, one of the larger purchasers, says that they will now only pay $7 for a product you were recently charging $10 for. A foreign company will make it for that price. To answer your question: why were they charging "so much more?" , is because the company pays American citizens , American wages and also pays research and development , while foreign companies will copy the product changing one minor thing and then selling it to American markets.

If the company is "forced" by foreign competition to manufacture at a lower price in order to accept Walmart's offer, then they can sell at Walmart price to Walmart's competitors. Then Walmart's competitors can sell for competitive prices to maintain sales and not lose customers to Walmart. Then you will have prices drop on a large scale which would boost "consumer confidence," increase spending, create a booming economy, lower unemployment, and, coincedentally, strengthen the dollar since a smaller number of dollars would be required to buy goods. With a stronger dollar, wages would actually be boosted, not suppressed, even though the actual dollar amount would have been lowered, thus raise the standard of living.

Now, the other issues. Is the money saved by purchasing cheaper goods at Wal-Mart, and then pushed back into the economy? Not necessarily. And even if it is the value of the dollar is greatly effected due to the problem with the economy.

Yes, necessarily, the money will be spent back into the economy, unless it was stuffed under a mattress, which very few people do. And money that is so stuffed would be removed from the economy, thus making the dollars still circulating more valuable since the number of dollars would be reduced by the amount stuffed. The problelm with the economy is not Walmart or companies like it, but government manipulation of the money, either in taxes, borrowing, or excess printing.

If you think Wal-Mart has nothing to do with unemployment, then tell me how many manufacturing jobs it supports, and how many jobs it has sent overseas?

Walmart has to do with its own employment. And it employs a great number. That is the only thing it controls or should be expected to control. If its competitive methods are successful, others can do likewise. What is "apparent" here is the proverbial short-term vision. We tend to see short term, immediate effects and not the long term consequences. In the long term, Walmart type competition will bring all prices in this country down--including, by "force" of this, manufacturing, if manufacturing wishes to exist here. The short term lowering of wages will, in the long term, be a maintainance or a raise in wages because the value of the dollar will increase due to the lower prices, and, therefore, lower wages will buy as much or more than now. And the American worker, because of lower wages and production costs, will, in the long term, be able to compete with foreign workers. That is the only way that competition can happen. Protectionism will not work. Government intervention will only exascerbate our economic problem.