barriomulas.com - The Cost of Low Prices

Nathaniel Branded in "Capitalism" notes:

A bromide commonly cited in this connection by capitalism's opponents is the story of the old corner grocer who is driven out of business by the big chain store... the chain store could give [the people] better service at lower prices and thereby let them save money. Thus both the owners of the chain store and the people in the neighborhood are to be penalized - in order to protect the stagnation of the old grocer. By what right?

I think the issue has to do with many more things than price.

Diversity. While there were once 10 grocers selling a variety of products, now there is 1 large grocer, often succeeding to sell at a lower price by consolidating product sources and purchasing in bulk.

The proliferation of McDonald's and Starbucks for example, drastically lower the product diversity available in the area.

Security. Now products and employment are limited to less and less producers and employers. A sudden decision to close shop or to relocate can effect the lifeline of the entire town, considering that their formerly diverse business culture has withered away.

Distance. Products are now shipped in from far away lands often traveling from distant and mechanized farms. Local products have less and less of a presence. Also, with centralized centers of consumption, citizens must now become dependent on automobiles. These prices are not necessarily "cheaper", for air quality, pollution, government spending on roads, deforestation, imported oil, transit police, and traffic jams subsidize those prices.

Family. Family shops can employ family members and pass through lineage. Jobs at Wal-mart cannot. There is no longer a family entrepreneur culture.

Jobs. May 28, 2003 article in the San Juan Star states that nearly 300 drug stores have closed in the past decade mainly due to the expansion of large pharmacies such as Walgreens, K-mart, and Wal-mart. The three stores at the time had opened a total of 85 pharmacies. Thus, we can suppose that for each chain pharmacy that opens, 28 local pharmacies have closed. Each of these local pharmacies employed an average of 8 persons, states the article.

I always looked at it like this: would you spend a few more pennies on a product in order to assure that your family and friends remain employed?

Vanessa said:

This is so amazing; I studied something similar in my Business class. I watched a documentary on WalMart and how they fight for the lowest prices for their consumers, I thought it was awesome... at first. Then they revealed how these practices are causing an extreme increase in international outsourcing and shutting down American companies. So yes, we get the lowest prices.. but we don't benefit from the profit either. Sadly, now we've found ourselves in one of the toughest economic struggles of this generation. I can't even afford the gas to go to work. ...whatever.

April 23, 2008 3:37 AM