tag:blogger.com,1999:blog-8817171247555815363.post6582465936116493170..comments2024-03-26T05:57:44.937+00:00Comments on True Economics: Economics 17/10/2009: WalMart/IKEA Effect, Bull Markets in StocksTrueEconomicshttp://www.blogger.com/profile/07350536454228478974noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8817171247555815363.post-15881910029864259712011-03-09T05:43:21.281+00:002011-03-09T05:43:21.281+00:00It would seem to me that the question of saving $4...It would seem to me that the question of saving $4k per household should we weighed against the the larger implications of low cost production. Sure, the small town/local business "charm" you dismiss so easily seems like a trite argument but the reality is that local businesses, jobs, and opportunities would be lost as well. Ikea and Wallmart are "efficient" in that for that volume they sell they employ only low skill workers, with low chances of advancement. Local businesses are owned by local entrepreneurs, run my local managers, and products are made by local craftsmen. So a recent high school grad who might go into the cabinetry trade and earn a significant salary, with union benefits, will instead be a cashier at IKEA, what difference is the $4K he saves on furniture when he (and the national economy) lost hundreds of thousands in lifetime earnings? <br /><br />Other problems are also imminent, IKEA and Walmart raise the barrier to entry, thereby creating monopolies; like a monoculture they create weak and unsustainable dependencies. IKEA wants into the community because the residents have the money to buy their products. Once IKEA puts the local retailers out of business, locals won't have the jobs or money to buy IKEA products, IKEA will leave, and the town will be left with nothing, no local economy, no jobs, and empty real estate, dragging down property values.<br /><br />Finally we must also ask ourselves if IKEA's low prices are really only a result of efficiency. I think if we are honest with our selves we have to admit that someone is being severly underpaid if you can buy a solid oak bed frame for $200, including materials, shipping, and retailing. That should be concern enough. <br /><br />I appreciate your insight into the individual savings, but in my view they are greatly outweighed by the losses.Anonymousnoreply@blogger.com