Wednesday, June 28, 2006


Economist Jason Furman and author Barbara Ehrenreich are currently engaged in a Wal-Mart discussion at Slate. Read the entries and follow the debate; it's a solid discussion on a hot-topic, though I doubt it will change people's minds. (As those that already have an opinion are most likely to read it and least likely to be changed by it.)

I just want to quickly point out a flaw in Ehrenreich's logic after Furman discussed two very different stores: Best Buy and Stereo Exchange. Best Buy has the good prices but the less knowledgeable (and paid) staff while Stereo Exchange is the opposite. If all of the former were replaced by the latter, we would have more "good" jobs but more unempolyment. Ehrenreich responds: "If Stereo Exchange took over from Best Buy, there'd be a lot more better-paying jobs in the retail electronics business. Why wouldn't the former Best Buy workers take a lot of these new and better jobs? They're not all as clueless as you seem to think."

There's a lot of reasons why this argument is not so but let me illustrate a key idea with a story. I knew someone who used to work at Best Buy. He said one of the most annoying things about the job was when customers would ask him where stuff was. He never knew the answer so he quickly learned a fast way to handle the problem: he simply would pick the corner of the store farthest from him and confidently declare that's where the product is. (Customers, as it turns out, are incredibly gullible in this regard.)

It is not that Best Buy empolyees are all clueless: some just don't care. Some would care if they were paid more, true. But others would only care if they were paid much more and others wouldn't care at all because it's just a summer or part-time job--they have no desire to go through additional training. Both customers and the work force demand retail diversity. Why shouldn't it exist?


Tim said...

I thought that Barbara was barely coherent, while Furman at leas made sense. Nevertheless, they both completely agreed as to what should be done - more government intervention - they just didn't agree on how much, and the forms it should take.

Barbara missed out on the basic point that you can't elevate salaries to infinity at the same time while maintaining universal employment.

What I would have liked was some diversity of opinion - and while Jason was basically touching on these themes - that raising the cost of labor for Wal-Mart to match Costco, for example, would result in about half of their workforce being laid off - he's all for the intervention in principle.

Isn't there a commentator that would be acceptable that might think that many social ills directly stem from the government's monetary policy and spending? That intervention produces negative externalities? That accumulated wealth doesn't stand still?


ryan said...


I entirely agree with your basic point, but I think this is a point where you're missing the tactics. Ehrenreich is a communist. (Seriously: what else do you call someone who writes that "class war [is] a solution to poverty"?) Slate is a center-left website. To get the most bang for your buck, it's probably beset not to pit Hayek or Rothbard against her. The audience will come away thinking they're both divorced from reality (remember: the median reader is center-left) and you really don't want to tie.

It seems to me that your best bet is to have a moderate (as in, halfway between socialist and anarchist) stating his case, causing everyone to just focus on what a nutcase she is, so that they move somewhat closer to you. It seems to me that one of the big problem libertarians have in converting others is that they're too busy seeking the perfect to ever achieve the good.

Tim said...

I get what you're saying, Ryan, I agree - compromise is really necessary. Something Furman said that's probably true, paraphrased: The political support necessary for the free market is contingent to some degree on redistribution.

The happy note for me is that as time preferences increase (unlikely given our current fiscal policies), the immediate dole-out can be substituted with the trickle-down, producing long-term greater gains...

David said...

Yeah, at the time of the writing, only the first four parts were posted and I didn't know Furman put so much faith in government (especially since taxes are a larger burden on the poor than housing). It's true that libertarians need to instill a political tendency for liberty, not attempt a hopeless revolution. But this seems more like a shift in intervention, not a net drop in government size.