I’m going to disagree with the senerio here. I’m sure you’ve simplifed it to fit a whole book into one post, but it doesn’t happen like that. Assuming that there are more than one bakery, (otherwise the *last * one wouldn’t close) then when one bakery goes under, and if the majority of the customers want to buy from these great little shops, then having one shop fold would actually help these other little shops.
Assume that there are 5 small bakery shops, each with equal shares (20% for the mathmatically challanged ) and Big Bad MegaGrocer (BBM) moves in and takes 8.3% of the business. The small bakery shops get hurt, and the first goes under. If 91.67% of the purchasing power want’s to remain with the small bakery shops, then the remaining 4 shops each now have 22.9% of the business, so they actually are better off with the BBM. (Except for the one guy, but no one ever said capitalism makes everyone happy.
To be fair to Mangetout’s scenario, a lot of posters are missing the point. The point is that even while the majority of people value main street, the shops can still go under from the pressure of mega-shopping centers. So those of you posting things about capitalism not being about niceness and business owners having no instrinsic right to be open are flogging a straw man.
It seems paradoxical that in a free market a shop that offers a commodity valued by a majority of people could go under. What the scenario outlines, however, is a situation in which the majority still value that commodity, but value their time and convenience more. If it comes to having to go to the Megamart anyway, they don’t want to have to go to main street and the Megamart. This is entirely possible in a free market situation, and I think makes sense.
But the scenario clearly hinges on one essential commodity no longer being available in small shops. As TokyoPlayer points out, this might be naturally averted:
This is a good argument. But it still seems plausible that under some circumstances an essential commodity does become available only in the Megamart. Maybe there was only one good fishmonger to begin with, or something like that.
As for the real world, there are obviously more factors on both sides of the equation. But it isn’t as simple as people “voting with their feet.” Mangetout’s scenario doesn’t take into account the prices of local wholesalers, the effect that megamarts have on where municipalities spend money, or the various external costs associated with losing main street. All of these effects are usually ignored by oversimplified “voting with their feet” explanations.
Then that is a entirely different kettle of fish (ouch, sorry about that ).
The posed scenerio claimed as such doesn’t work. For your scenerio, are you still saying that there are at least two fishmongers and only one of them is good? If so, then we’re back to my counter argument but it actually works out better for the one “good” fishmonger. Two stores, each with 50% of the business. They lose 8.33%, one guy goes out of business, and the other store winds up with 91%. She’s happy and we all still get good fish.
If there is only one fishmonger. Good, bad, doesn’t matter, just one. I’m not buying the fact that losing 8.3% of the business will put him/her under. Business fluctuations are greater than that. If the store went under, then there is more to the story than what we’re hearing.
The book is called Shopped. It doesn’t just deal with this singular aspect we’ve been talking about here, but also argues that, with captive markets, the large retailers are able to actually reduce choice, the way in which suppliers are unethically bullied (the whole ‘buying power’ thing), the way in which staff are treated and the political pressure that large corporations are able to exert upon planning agencies.
I found it to be an interesting read and quite well-researched; it is somewhat repetitive in making its point and I think in places it has probably exaggerated and/or engaged in excessive speculation in order to drive a point home.
I just wanted to say a bit about this; there already exist a number of perfectly reasonable constraints upon capitalism; things like minimum wages, health and safety regulations, restrictions on monopolies and cartels; why wouldn’t it be reasonable (assuming it can be quantified and that we can even work out a system of constraint) to impose constraints upon social impact?
No, that’s specifically not what your example states. Unless what you are stating is that once the bakeries all close, people are forced to do all of their shopping at the grocery store.
They aren’t. If they choose to do all of their shopping at that grocery store, it’s because whatever other benefits the “high street stores” offer don’t outweigh the convenience of shopping at a single larger store.
I suggest that people who lament the loss of the high street stores but never actually shopped at them due to the convenience of the grocery are crying crocodile tears.
That’s a fair comment, and the quote in the OP is a fair summary of how tipping a market at equilibrium may cause it to settle into a new equilibrium that is deficient in certain things that many consumers would value.
The problem is that rectifying such ‘market failures’ (which is the typical language used) requires:
[ul]
[li]some noble selfless person to ascribe a value to each and every feature of the grocery market (prices, opening times, package sizes, quality, service, locations, selection, etc.)[/li][li]designing constraints to maximise the total value delivered to consumers as a group by the total grocery marketplace[/li][/ul]
I think it is fair to say that experience of such regulation has not been that great, and in general it’s easier to just let people spend their money where they want and then bitch about Wal-Mart killing all the nice shops they used to spend their money in. Being naturally cynical, I think if you got ten critics of ‘mega-corporations’ and ten advocates of local shopping/consumer choice/small businesses/whatever and locked them all in a room together, they would be squabbling about how to regulate the contents of your shopping basket until they died of old age.
I’m not certain that people did value Main Street, at least not enough to do anything about it. This may be a bad thing, but it is true. It may be partly inspired by the relative mobility of Americans now. You are unlikely to care about a main street when you were born on another coast and moved to get a different job, thus having no local ties.
Well, for one, because it’s supposed to be a free country. You are esentially saying that I can’t open a better store because it might, well, be more attractive than older stores. I can’t have a new way of doing business because you like the old way of doing business.
More to the point, you seem to assume that you have the majority on your side, and that the economic predicitons made in that book are correct. Let me give you a different scenario: A local businessman opens a huge new supermarket in the town completely unconnected to any huge national chain. We’ll even be generous and state that this store takes not merely 8.3%, but 33% of the local revenue! What is the virtue of the store? How does it become more virtuous having local ownership?
I’m not even sure what ‘free country’ is supposed to mean in this context; corporations aren’t free to do absolutely whatever they like.
Local ownership is actually a fairly small part of the issue; the kind of small, local shops I’m talking about are those that:
-Specialise in one kind of merchandise and have the expertise to advise on their products.
-Offer products that are more likely to have been produced locally; this has several implications:
—reducing the environmental implications of shipping cucumbers halfway around the world
—supporting the local economy, particularly with regard to employment
—sourcing their produce on a small scale from local suppliers typically offers a greater variety of choice for the consumer (as opposed to produce grown on massively industrial scale), it also means that the person selling you the produce is more intimately connected with it’s provenance.
—sourcing locally, and not having to endure packaging means that the produce can be picked closer to ripeness, as well as allowing varieties to be selected for qualities like flavour, rather than resilience during machine handling and shelf life.
There’s a lot more to it than that, but there’s a start.
But that doesn’t matter. When the 25% move on, things are still fine.
The difference comes when you reach the “after the last bakery closes” point. You’ve waved your hands over the point from “25% move on” to “enough move over that all the bakeries close,” so I assume that’s not the point you’re talking about “something the majority didn’t want”. If it is, I’d like more actual data on what caused the bakeries to all close, because you don’t have any.
But anyways. So now everyone shops at the grocery for their bread. To directly quote from your OP:
Now that they’re going to the supermarket anyway, the extra effort of going to the high street for the items they can still obtain from the small shops is hard to maintain… The result is that the presence of the large supermarket has caused the demise of the small retailers, but it happened without anybody explicitly choosing it
Which is in and of itself the contradiction I’m point out.
If the high street shops were something that people wanted to keep in business, there is nothing preventing them from actually going to the high street shops. They make the concious choice not to go to the high street shops because the extra time and/or cost isn’t worth it. Therefore, the statement “without anybody explicitly choosing it” is completely wrong, as everyone who shopped at the grocery for all of their needs due to the price and convenience were, in fact, making the concious choice to not shop at the high street shops.
It may be that by being forced to go to the grocer anyways for bread, the threshold of inconvenience was lowered enough to make it more worthwhile to go there than to the high street stores. But every one of those shoppers still made the concious choice to shop at the grocer for vegetables and milk and beef along with their bread rather than to get bread at the grocer and then go to the high street stores. You cannot then claim that those high street stores closing down was something “a majority did not want” without making a proof that only a minority ever shopped at the grocery for all of their needs. The example doesn’t do that; again, the example engages in extreme hand-waving to get from “25% move to the grocery” to “the last bakery closes”.
OK, perhaps it should be modified to ‘nobody saw it coming’. Point is that in the end, nobody got what they really wanted; the market isn’t actually meeting the requirements of the consumers, but it got to that state by means so subtle that nobody saw it happening, or if they did see it, knew what to do.
Again, if people are shopping solely at the supermarket, how is that not “what they really wanted”? They are making the specific choice to shop there as opposed to the high street shop; therefore, it must be what they want!
The only way “nobody got what they really wanted” is valid is if:
Consumers want a shop as friendly and as local-culture as the high street shop, but only want to pay supermarket prices and be able to shop as conveniently as they do at the supermarket; because no such store exists, people do not get “what they really wanted”, but at least were blissfully ignorant of the supermarket’s low prices and high convenience before it showed up; or
You are part of the minority that only wants to shop at the high street shoppes, and extrapolate your own wishes as being what “everybody else” wants because you want it, even as a large majority of shoppers prove otherwise by shopping at the supermarket.
How is it not? It seems to me that the supermarket is offering the same goods for lower prices. What “requirements” aren’t being met? The only thing you’ve proven so far is that the supermarket can offer comparable goods for much lower prices, and at a better convenience for shoppers. None of these things strike me as a “failure” of the market.
Deserve might be the wrong word. A business can still fold even if the owner has a good business plan, decent accounting skills, and is knowledgeable about whater product he’s pushing.
If he can’t compete the way he’s used to competing then he has to adapt or go out of business.
Actions speak louder then words. What people say and what they do aren’t always the same thing.
We get the point just fine. Those who actually do value the high street shops and actually patronize those places will continue to go to those stores. If the high street shops cannot survive on that business alone, well, too bad, they are not offering a significant value to the market. Those who lament the passing of the high street shops, as already posted, are crying crocodile tears. If they truly valued those services, they, too, would visit those shops. The fact they aren’t patronizing is clear evidence that the high street shops are inefficient, and the market reacts as such.
Well, they must not really value it if they are not patronizing it. People have limited resources, time is one of them. Voting with their feet is the same as voting with their wallet as the same as voting with their watch. Economists sum all these into one unit of measurement, called utility.
So, you agree then? John Corrado makes a fine explanation of what is really happening.
And, if people value that commodity more, they are only seeking to maximize their utility. If that means doing all the shopping at Megamart, then the high street shops better have something of value to offer or they will not have a place in the market.
Yes, it’s that simple. To recap, people have limited resources, notably time and money. Markets, like people, maximize their efficiencey. If they value something that puts a dent into that efficiency, they make an internal measurement based on the preceived utility they gain.
I disagree, people make these assessments internally. If they really cared about the high street shops, they would have gone there, regardless if they were aware of the economic impact of choosing to go to Megamart. The fact that they didn’t make a conscious decision about choosing to go there, or even give thought about patronizing high street only goes to show that they did not value it as much as they thought/said they did.
The orinal post posits a scenario where the majority of the people still shop at the high street shops, but because a minority of people now choose to shop at the Megamart the high street shops can no longer stay in business.
To then say that people who lament the passing of the high street shops have only themselves to blame is somewhat ingenuous. They still shopped there. It is only that some customers have stayed away and their margins have been squeezed too much. Fine if the majority of people choose to shop at the megamart, but in this case the minority have won out.
[mentally insert Mage’s list of things he/she wants in stores and state are advantages to having small stores]
Then if these things are big enough advantages, small stores would be in no danger of loss to big stores. Since this is clearly not the case, the big stores clearly have more market advantages.
Again, it appears as though you assume the things you want are th things that most people want, or even everybody wants.
More to point, your list reads like a feudalist tract. You are essentially advocating the removal of nation-wide transport goods. You are calling for local manufacture. But Knoxville can’t make its own camcorders and computers. It can’t have a software industry worth noting. Most goods can’t be locally made without vastly increasing time and expense required. Which goods will we be allowed to transport under your new legal regime? If it’s limited to high-tecy stuff, can I no longer buy fruit out of season? Can I buy fruit that doesn’t grow around here?
Look, we can demonstrate our position, but we can’t argue against yours if we don’t know what it is. What, specifically, do you want to see and why?
[mentally insert Mage’s list of things he/she wants in stores and state are advantages to having small stores]
Then if these things are big enough advantages, small stores would be in no danger of loss to big stores. Since this is clearly not the case, the big stores clearly have more market advantages.
Again, it appears as though you assume the things you want are th things that most people want, or even everybody wants.
More to point, your list reads like a feudalist tract. You are essentially advocating the removal of nation-wide transport goods. You are calling for local manufacture. But Knoxville can’t make its own camcorders and computers. It can’t have a software industry worth noting. Most goods can’t be locally made without vastly increasing time and expense required. Which goods will we be allowed to transport under your new legal regime? If it’s limited to high-tecy stuff, can I no longer buy fruit out of season? Can I buy fruit that doesn’t grow around here?
Look, we can demonstrate our position, but we can’t argue against yours if we don’t know what it is. What, specifically, do you want to see and why?
No. The OP claims, erroneously, that a small reduction in business to the main street shops (I’m American, not British ) will result in them closing. It’s unlcear why they won’t either simply become smaller, but still viable, businesses, or why they won’t respond by offering more value than they did before.
) and Big Bad MegaGrocer (BBM) moves in and takes 8.3% of the business. The small bakery shops get hurt, and the first goes under. If 91.67% of the purchasing power want’s to remain with the small bakery shops, then the remaining 4 shops each now have 22.9% of the business, so they actually are better off with the BBM. (Except for the one guy, but no one ever said capitalism makes everyone happy.
).
) will result in them closing. It’s unlcear why they won’t either simply become smaller, but still viable, businesses, or why they won’t respond by offering more value than they did before.