all set with chinese chit

[detbuch]

Originally Posted by GregW

Ross,
Sadly it is the American consumer that pushed the jobs offshore. I always hear people complain that walmart has forced smaller shops out of business. If the consumer never flocked to walmart we would still have the smaller shops and the jobs to go with it. It is truly sad , and I wish more people to a look into what would help the economy and make those choices.

Actually, the consumer is not responsible for net jobs lost by buying from Walmart. The money the consumer saves by buying at Walmart will be spent elsewhere in the economy, creating or saving other jobs.

[spence]

Originally Posted by detbuch

Actually, the consumer is not responsible for net jobs lost by buying from Walmart. The money the consumer saves by buying at Walmart will be spent elsewhere in the economy, creating or saving other jobs.

I think it's a fair observation that the "big box" stores in general have had a tremendous impact on modeling consumer behavior.

They can both leverage their buying power as well as squeeze the manufacturer to reduce costs. While the consumer might see an increase in variety and cheaper prices, the flip side is lower quality products or people buying junk they really don't need...while still racking up a lot of debt.

-spence

[detbuch]

Originally Posted by spence

I think it's a fair observation that the "big box" stores in general have had a tremendous impact on modeling consumer behavior.

This "modeling" has been going on in the U.S. for well over a century. Walmart is just another in the line of department store types in which the new model finds ways to sell at lower costs. Just about all the usual brand items have gone through this selling process--even automobiles with Henry Ford's assembly line manufacturing and the growth of dealerships. And this "modeling" is based on the age-old model of haggling where the consumer tries to buy at the cheapest price. Any type of intervention to "model" the consumer into buying at smaller, single owned outlets at a higher price will have to overcome the natural and reasonable desire to save money, and will have to be done by force against free market principle. Whenever this has been done, either by price fixing or by socialist governments, economic activity dwindles, and instead of job growth, unemployment and shrinking economy results.

They can both leverage their buying power as well as squeeze the manufacturer to reduce costs. While the consumer might see an increase in variety and cheaper prices, the flip side is lower quality products or people buying junk they really don't need...while still racking up a lot of debt.

-spence

Reducing manufacturing costs should be the aim of competitive manufacturers. If lower quality results, then there will be a market for better quality producers. There are many niche products of all types that sell on the basis of quality at a higher price and they do well.

Have you been to a Walmart? Many, if not most, of the goods are brand items. It's not all junk. Most of it is not junk. And this is just a guess--I'd guess that most Walmart customers go there in order not to rack up a lot of debt, or to rack up less of it than they would if they had to pay higher prices.

[spence]

Originally Posted by detbuch

This "modeling" has been going on in the U.S. for well over a century. Walmart is just another in the line of department store types in which the new model finds ways to sell at lower costs. Just about all the usual brand items have gone through this selling process--even automobiles with Henry Ford's assembly line manufacturing and the growth of dealerships. And this "modeling" is based on the age-old model of haggling where the consumer tries to buy at the cheapest price. Any type of intervention to "model" the consumer into buying at smaller, single owned outlets at a higher price will have to overcome the natural and reasonable desire to save money, and will have to be done by force against free market principle. Whenever this has been done, either by price fixing or by socialist governments, economic activity dwindles, and instead of job growth, unemployment and shrinking economy results.

That's the academic analysis. I think what I've read in this thread is that people see the rise of Wal-Mart (and other similar stores) precisely as a product of the free market and they are concerned with the long-term impact.

Reducing manufacturing costs should be the aim of competitive manufacturers. If lower quality results, then there will be a market for better quality producers. There are many niche products of all types that sell on the basis of quality at a higher price and they do well.

I said to reduce the costs, as in total costs so they can buy at a lower wholesale cost. While some niche products do sell well, my observation is that they're increasingly being crowded out.

Have you been to a Walmart? Many, if not most, of the goods are brand items. It's not all junk. Most of it is not junk. And this is just a guess--I'd guess that most Walmart customers go there in order not to rack up a lot of debt, or to rack up less of it than they would if they had to pay higher prices.

I try not to shop at Wal-Mart often although I certainly have been inside them several times. There's quite likely a relationship between my experience and shopping behavior.

As for brand names, that's something a lot of people are concerned with.

It's very common for brand names to compromise their quality because of pressure to meet a retailer's cost targets. Much of this is hidden to the average consumer. There's a reason that same bottle of fruit juice costs 1/2 as much as the local grocery store, or that gas grill that used to be 500 dollars is now magically 250...and it's not just because of buying power. I work with these manufactures every day and see what goes on first hand...

Now obviously, a company is making a business decision to potentially tarnish their reputation in exchange for access to more consumers. But as retail is consolidated into bigger stores, there really is less freedom to do so. Yes, it's all the mechanics of the market, but back to what I'm hearing...do they see lower quality, lower wages and a proliferation of offshore manufacturing? or do people believe they're better off with convenient access to lower price products?

If the growth engine of the US economy is in small business, I'd think the market share of large corporations in retail would be an issue for discussion. To do so isn't a de facto endorsement for extreme government control, but reality is that the government does regulate commerce and quite often manages imports/exports for strategic gain.

-spence

[detbuch]

Originally Posted by spence

That's the academic analysis. I think what I've read in this thread is that people see the rise of Wal-Mart (and other similar stores) precisely as a product of the free market and they are concerned with the long-term impact.

I think there are various academic analyses that differ with each other. Don't know which one mine is like, but it is my observation ganered from sources other than academe and a little of that too--kind of irrelevant whether it's academic or this threadian. No doubt, the people in this thread think they are more perceptive than academics, and they probably are. They do often disagree with each other though. And, oh, by the way, I'm one of the people on this thread. And yes, the rise of Wal-Mart is a product of the not totally free market, and there is a long-term impact. I believe the long-term impact of companies like Wal-Mart is a corrective to artificially inflated costs, and will aid in a market driven spread of wealth worldwide. Those that fear the lower wages don't factor in the equalizing lower prices and the favorable impact that will have on American competitiveness--buying power won't diminish, may actually increase, jobs will grow, economic reason for war will diminish. What do you think the long-term impact will be?

I said to reduce the costs, as in total costs so they can buy at a lower wholesale cost. While some niche products do sell well, my observation is that they're increasingly being crowded out.

My observation is that there is the beginning of a growing specialty market, certainly in nutrition, health, personal care and fitness, entertainment, and a growth in single owner businesses, especially on the internet. I don't feel negative about prospects--just about various governments trying to squeeze more money to redistribute and the usual regulations against some in favor of others--the old winners and losers game.

I try not to shop at Wal-Mart often although I certainly have been inside them several times. There's quite likely a relationship between my experience and shopping behavior.As for brand names, that's something a lot of people are concerned with.

Yeah, well, everyone has their own individual relationship between their experience and shopping behavior. Probably, most Wal-Mart shoppers have a different relationship than you.

It's very common for brand names to compromise their quality because of pressure to meet a retailer's cost targets. Much of this is hidden to the average consumer. There's a reason that same bottle of fruit juice costs 1/2 as much as the local grocery store, or that gas grill that used to be 500 dollars is now magically 250...and it's not just because of buying power. I work with these manufactures every day and see what goes on first hand...

Now obviously, a company is making a business decision to potentially tarnish their reputation in exchange for access to more consumers. But as retail is consolidated into bigger stores, there really is less freedom to do so. Yes, it's all the mechanics of the market, but back to what I'm hearing...do they see lower quality, lower wages and a proliferation of offshore manufacturing? or do people believe they're better off with convenient access to lower price products?

If decision to lower quality "tarnishes" a reputation, that implies a negative response from consumers, which means their is room for a producer and retailer to cater to consumer positive response with quality. It is entrepenurial cop-out to fail in free market opportunity to satisfy consumer demand for quality. And it is contradictory to think business can be tarnished in consumer eyes by low quality and then think that consumers won't respond to quality. Those that see and dislike lower quality do search for better, and willingly pay more. If such quality does not exist, the opportunity is very ripe for entrepeneurs to provide it. And contrary to what you "hear," I see smaller quality outlets springing up.

If the growth engine of the US economy is in small business, I'd think the market share of large corporations in retail would be an issue for discussion. To do so isn't a de facto endorsement for extreme government control, but reality is that the government does regulate commerce and quite often manages imports/exports for strategic gain.

-spence

Government regulation, for best results, in my opinion, should be to make commerce regular, not to strive for gain. In trying to gain, free market principles are lost, creating a controlled market in favor or against so that consumer advantages derived from competition are lost. This kind of protectionism favors business interest against consumer interest. Sure, the other countries play dirty and don't freely allow us, but the reason our guys can't compete is our costs have been driven way up in artificial ways as well as natural growth. I remember a time when our manufacturers were able to avoid moving to Mexico when the cost of producing here was 4 times greater than it would have been there. When it became 7 times greater, even building the necessary infrastructure to go there made it too attractive to resist.

In the long run, as stated above, our lower priced competition can help to bring our costs more in line with our adversaries and make us competitive. Long ago, WE could deliver the goods more cheaply. Have we forgotten?

[GregW]

Originally Posted by detbuch

Actually, the consumer is not responsible for net jobs lost by buying from Walmart. The money the consumer saves by buying at Walmart will be spent elsewhere in the economy, creating or saving other jobs.

No, actually that is completely wrong. The economy is run by many factors , not just one purchase.

First example, consumer spending is often driven by confidence. Confidence is closely related to the unemployment rate. Walmart is the worse offenders off forcing companies to go offshore to produce products at the price that walmart demands. When there are massive job losses it causes a problem in two ways. Those that are laid off don't have money to spend and those that do have jobs don;t have the same confidence, therefore not spending as much money as before.

Second reason: Walmart does not pay a viable wage. When supermarkets have unions (and I am not arguing for or against them) they can not compete price wise and may be forced out. Those employees went from making a livable wage to being forced into a low wage by the only place in town.

Do you work for walmart?

[detbuch]

Originally Posted by GregW

No, actually that is completely wrong. The economy is run by many factors , not just one purchase.

I was speaking to the factor you brought up--the consumer pushing jobs offshore by spending at places like walmart. In respect to that factor, the money saved by spending there is money that can be spent elsewhere. Is that completely wrong?

First example, consumer spending is often driven by confidence.

I don't know about other consumers, but the only confidence I look to in spending is the confidence that I can afford to spend. Is your spending restricted by "consumer confidence" or by your own ability and desire? I have yet to talk to anyone who has confided that they weren't going to buy something because of some poll manufactured "consumer confidence" being down.

Confidence is closely related to the unemployment rate. Walmart is the worse offenders off forcing companies to go offshore to produce products at the price that walmart demands. When there are massive job losses it causes a problem in two ways. Those that are laid off don't have money to spend and those that do have jobs don;t have the same confidence, therefore not spending as much money as before.

Walmart has been around for many years during which time the unemployment rate has varied from low to high. So during the times that the rate was low, was Walmart responsible for the low unemployment? It seems you're implying that Walmart is part of the reason for high unemployment. If that's the case, the rate should have been and stayed high for a long while rather than fluctuating. And how does Walmart "force" companies to go offshore? Are you speaking of products that are produced solely for sale at Walmart? Is there some kind of contract between Walmart and these manufacturers wherein their products can only be sold through Walmart? If so, then Walmart is "forcing" the creation of a company that otherwise would not exist. As I mentioned to Spence above, much of what is for sale in Walmart are normal brand products that can be purchased at other stores for a higher price. If they are forced by Walmart to manufacture at a lower price, why are their products more expensive elsewhere, and is it not good for the consumer that Walmart sells them cheaper? And doesn't this lower price help those that are laid off rather than hurt them? And there are other stores, there really are, that those who choose not to spend at Walmart, can spend--with confidence. I have not seen a real correlation between Walmart, unemployment, and so-called "consumer confidence."

Second reason: Walmart does not pay a viable wage. When supermarkets have unions (and I am not arguing for or against them) they can not compete price wise and may be forced out. Those employees went from making a livable wage to being forced into a low wage by the only place in town.

So how do Walmart employees avoid starvation and homelessness? I have been going to Bowling Green, Ohio for several years to visit my son. When I first started going there, there were two large grocery stores (Kroger and a Value-something-or-other) and a K-mart. A Meier store moved in about ten years ago, then a Walmart followed. At first the Meier was the price competitor, which drove the Value-something-or-other out of business. Then Walmart created even more price competition. The Kroger is doing well and has lowered prices and maintained or improved quality and service, as well as has Meier, and a new really low-priced grocery store named Aldi has moved in. The town now has four grocery stores with varying competitive prices and quality including the super Walmart and Meier. The Kmart was in trouble and went out of business before Walmart moved in. The consumers have benefitted. There are more jobs.

Do you work for walmart?

No

[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.
And ultimately even a rumor of layoffs can instantly cripple an economy.
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.
So, you as an executive have two choices. To lay off workers and stop selling to Wal-Mart or to ship all or part of the production off shore to be able to meet Wal-Mart’s price demand. Following so far?
Now that there are rumors of layoffs, common sense would tell you that those factory workers will instantly cut back spending. This seems minor at first until you consider all the others affected by it. The local restaurants see a decrease in business, so those employees spend less. The tr#^&#^&#^&#^&#^&g company that moves the products hears of this and instantly their employees are worried and spending less. This follows suit with all other industries from real estateto the guy filling the vending machine.
Now, do you understand how this can quickly affect a lot of industries?
Now imagine it in a lot more towns.

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.

Is Wal-Mart the only offender? No, of course not. I used it as an example.
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?

[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.

[Slipknot]

Originally Posted by detbuch

Actually, the consumer is not responsible for net jobs lost by buying from Walmart. The money the consumer saves by buying at Walmart will be spent elsewhere in the economy, creating or saving other jobs.

no, they just buy a larger quantity of crap