Tag Archives: poor

Walmart And The Healthy Free Market

In case you had trouble guessing: I like businesses.

If there weren’t business there wouldn’t be internet, iphones, cars, bicycles, buildings, tents, sleeping bags, fresh produce in the middle of winter, heat and A/C, in cars too, hospitals, medication, surgery…

You get the picture.

We’ve had government since the beginning of time, and it hasn’t done a thing directly to benefit or develop beneficent products and services (except nuclear energy and other war-related items).

We’ve also had businesses since the first person decided he’d rather spread and grow his wealth instead of laboring over the same rows in the same farm for his own families sustenance.

Chipotle is an excellent example of a good business.

Our wealth allows us to pay premium price for food raised and prepared in a reasonably environmentally conscious and sustainable manner.

And it tastes good, too.

Walmart is not too different from Chipotle.

The monstrous store chain that’s easy to hate until we need cheap razer blades and jeans and socks and hand towels and garbage can liners. Then everybody loves it.

Except the unions, who are never going to love Walmart until it caves to their regressive and stiflingly stupid and anti free market strong man tactics and effects.

I pray Walmart never does, and for good reason.

When Walmart enters an area, consumers win as the often cheaper prices at Walmart “encourage” the other stores to moderate their own prices.

The prices are not always better, but they are better enough of the time and for enough products to justify the crowds you normally find at these supercenters.

Does Walmart Save You Money? (read the comments, many people report savings in the $1000’s each year while others disagree with their perception of the business practices)

But enough about prices already, Walmart benefits your health!

Huh?

Indeed, studies are showing that people living near a Walmart or “club store” (Costco, Sam’s Club, etc) are lighter on average.

But don’t all the fat and ugly people shop at Walmart? No, it’s just the ugly people and me.

In an article published in Forbes Magazine, Art Carden, an Professor of Economics at Rhodes College in Memphis TN, reports on studies showing that the increased buying power people experience when benefiting from the Walmart effect has a direct and close correlation to the health of those people.

There are several reasons this may be, and the why or how is always a bit murkier than fact of correlation, but all of the possibilities enjoy sound economic sense.

Those benefiting most from the Walmart affect are…

…women, the poor, African-Americans and people who live in urban areas.

The arguments as to why and how and many, as I noted earlier, and some may find them difficult. Read it a few times if necessary.

Our evidence is indirect, but we think it shows that price changes can have subtle and sometimes hard-to-detect consequences. Any change in price results in two phenomena. The first is the substitution effect: a change in consumption mix due to a change in relative prices. If a bag of salad is $2 and a bag of potato chips is $1, then the price of salad in terms of chips is two bags and the price of a bag of chips is half a bag of salad. If a Wal-Mart opens and reduces the price of salad to $1 a bag and the price of chips to 75 cents a bag, the “salad price” of chips has risen (from 1TK2 bag to 3TK4 bag) and the “chip price” of salad has fallen from 2 bags to 4TK3 bags. In short, salad has become cheaper relative to chips.

This argument is based on basic price comparison. If the salad cost 2 times what chips cost before Walmart,  Jack and Jill are more likely to buy the salad now because it only costs 1.3 times more than the chips now.

Then there is the income effect:

If Wal-Mart sells food at lower prices–even if our incomes don’t change–every dollar can buy more. Therefore, we’re richer.

The crux of their findings is that people, when given a choice and a suitable price range, will purchase healthier foods.

Our data suggest that we buy healthier food when our purchasing power increases. There is a small increase in consumption of fruit and vegetables in places where Wal-Mart does a lot of business and a decrease–or smaller increase–in fatty food consumption relative to places where Wal-Mart doesn’t do business. That is, people might consume more fatty foods, but consumption of those unhealthy goods increases more slowly than it does for the rest of the population.

There are other facts, findings, and arguments in the article. I urge you to read the whole thing: Wal-Mart’s Weight Effect.

The point is, don’t be too quick to denigrate or disparage the current state of our free martket system.

It’s not always pretty, and it’s easy to find fault.

However, compared with any other system out there, capitalism and the free market are the best at providing escalating levels of service and product to the most people most equitably and with the least amount of downside.

It’s been proven time and again, yet we in America now are dangerously close to forgetting completely, if we haven’t already.

The free market and capitalism isn’t about the blind, mindless pursuit of money at all costs, that’s anarchy.

Free markets and capitalism are about working in tandem with those around us to maximize our return by providing the best service or product to others. It’s a mutually beneficial system.

And we’re in danger of throwing it away.

Chipotle And The Beneficent Free Market

This is a slight commentary on Chipotle (the restaurant chain) and how it symbolizes the significant superiority of the free market economy and accompanying extreme wealth and their many benefits to the world at large.

Have you eaten at Chipotle? If not, you should.

It’s not really Mexican food, per se.

It’s more like Starbucks does Mexican food. We all know Starbucks isn’t really coffee, but it’s still really good and we’re willing to pay a lot for it.

Chipotle uses fresh ingredients and a limited number of choices in an efficient and modern atmosphere to serve quality food at reasonable prices.

Kinda like Henry Ford: You can get anything you want at Chipotle, so long as it’s a burrito (not completely true, but I’m suffering under a plethora of metaphors and similes today. Sorry).

Anyway, it’s good. I like it. My wife does too. And lots of other people too.

Chipotle uses it’s efficiency structure, derived from it’s owner, McDonalds Corp’s,  excellent experience at high-volume, low-cost supply-chain infrastructure management to maintain significant profits while maintaining reasonable prices.

Unless they were making tons of money from us eager eaters, Chipotle would not be able to be such a force for good so far as the environment is concerned.

Chipotle uses it’s leverage with it’s sour cream supplier, Daisy, to make sure the cows that give their milk to the Chipotle sour cream cause are not fed any hormones of any type. A non-hormone injected cow will not produce anywhere near the same amount of milk as one who is kept hormone-high. Which means that the “cleaner” milk costs more. If Chipotle were not making tons of money, it could not afford to reqire this better milk.

I probably couldn’t taste the difference between hormonal sour cream and non-hormonal sour cream, but I’m happy to be enjoying stuff that doesn’t  cause so much trouble to the cow.

Chipotle’s beef, pork, and chicken likewise come from free-range animals not injected or force-fed. This means the amount of usable meat from each animal is much less than ones that are artificially “enhanced”, lowering the profit and raising the cost of each animal.

All because I pay 5.35 for my loaded steak burrito, all these animals are able to enjoy better lives and provide me with my enjoyment in a more natural, healthful way.

Could an eatery in a poor nation support the same level of “sustainable” resource management?

It’s not that we can compel them to behave in a certain way. If the way they raise their cows raises the costs beyond what their economy can support, they’ll starve.

In a hierarchy of needs, basic human needs come before animal comfort. If feeding the cows in destitute South American and African nations means the people will be able to afford beneficial red meat while saving more money so their sons and daughters can attend school, that’s a trade worthwhile.

As their education level rises, their production will speed, efficiency will rise, and the average wealth of their economy will increase until they can afford places like Chipotle and the less efficient, but more friendly methods of production.

So don’t hate the economy, your wealth and ease, or the rampant consumerism that drives much of our lives these days. It’s not all good, but it’s far from all bad. Americans give and give and give more, by orders of magnitude, than anywhere else on the planet. We produce more per unit of labor, and we own more per person than anywhere else, and it leads to a continued cycle of growth and giving.

By working hard and excercising a responsible or even an irresponsible level of gratitude to God for His beneficence to us in giving to those without, we cause more good.

God did not punish the men who used their business acumen to double His granted funds, neither will He begrudge you trying hard, with ethics and moral behavior, to maximize your economic potential.

Now go and sin no more. And eat at Chipotle.