Hooray for the Big Box Stores (Jib Jab's sorry attempt at misinformation)

Jib Jab became famous in the last election as a site to do parities. There most recent post is silly but in a negative way. It is called Big Box Mart - the premise is that a) big box stores exploit overseas labor and b) big box stores somehow encourage people to overconsume, c) that big box stores ultimately take American jobs and thus reduce the standard of living in the country. Normally, with something like this I would post a link to the site - but this one is so false - if you want to find the nonsense, simply Google it.

Do places like Walmart exploit foreign labor? Ultimately, Walmart and other big box retailers are examples of a good division of labor. We move jobs that we can no longer compete on out of the country for jobs that pay a lot more. Textiles moved from the US, where the domestic industries failed on two points - to keep up with technology and to regulate wages compared to what other countries were offering for the same work. The jobs went first to Mexico and then to Asia (mostly China). But if you look at my home state - the remaining jobs in the field are higher paying - LA is a design center - designs are created and then shipped somewhere else for production. The workers in the other location are better off because they have jobs that are higher paying by local standards- but ultimately so are the workers here. The American workers can purchase key items (and even some discretionary ones) for better prices. That sounds like a win-win. Sure, there are transition costs. The American workers in the industries that did not keep up are displaced. But how would the logic of the song have us solve the problem? Over pay American workers? Have American consumers over pay for their goods - when they can get them on the world market much cheaper?

Then the question of overconsumption comes in. Many of the big box stores have larger quantities of goods they sell - the Costco 40 pound can of chili is legendary. One of the assumptions originally about these stores was that bulk reduced price. What has been happening recently is a more subtle set of markets being created. The volume still produces reductions in price for many goods but the industrial sizes are no longer necessary. Would the writers on Jib Jab want to substitute their consumer preferences for those of the consumers at a big box store? Who is to say that the old distribution system - where choices were limited and prices were higher was better?

A good deal of this argument comes from the most inefficient producers or stores. I can go into my local Barnes and Noble or Borders and find almost any book. I can find a sales clerk who knows a lot about the wide range of books in the store. I can do the same thing on line at Amazon (an electronic big box). Would I be better off if I could only buy books at the small local store? Near my office 20 years ago there was a great bookstore called Levinsons - for years I would buy books from them - they did a great job at searching books out for me (obscure economics titles for example). But now I can go on Amazon and get the same level of service for a cheaper price. What is wrong with that?

Finally, there are the questions - if we continue to overpay for some types of work is the economy richer or will this movement of jobs ultimately reduce the standard of living in the country? By allowing freer trade are we worse off? The key to success in any country, in this globalized environment, rests not on the inherent kinds of protectionism advocated in the song but on the pillars of education (assuring that your population is educated), tax policy (and other governmental policy) that encourages investment in new enterprises, and open markets (that allow us to sell our goods overseas and us to find the best price for goods anywhere in the world). That is a pretty simple paradigm. If we do not follow it we will be worse off.

Ultimately, the economies where high paying jobs will be the standard, will follow those rules - not some silly notion that it is possible to hold on to a single set of economic conditions that do not apply to today.