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Here’s a letter to the Washington Post:
Princeton University sociologist Rebekah Peeples Massengill argues that Wal-Mart is “exploiting” poor Americans through its “relentless cost-cutting” – a practice that, presumably, reduces the demand for, and wages of, low-skilled Americans (“Five myths about Wal-Mart [2],” July 12).
Prof. Massengill’s belief that reducing production costs harms poor people should lead her to laud the phenomenon lamented elsewhere in your pages by Barry Ritholtz – namely, government’s failure to improve America’s infrastructure (“Rising interest rates could mean the window to fix infrastructure on the cheap is closing [3],” July 12). After all, more and better roads, bridges, harbors, and other pieces of well-designed infrastructure cut costs and make much labor redundant.
Smoother highways, for example, reduce the rate at which goods are damaged in transit from factories to retailers. As a result – because American farms and factories then get by with producing less output than they would if roads were a bit bumpier – farms and factories employ fewer workers. Similarly, wider bridges and renovated harbors lower the costs of importing goods, many of which are sold in direct competition with goods made in America and many others of which are inputs for constructing labor-saving machinery such as robots. Here, then, is yet more harmful “relentless cost-cutting” unleashed by improved infrastructure.
If low-income Americans in fact are significantly damaged by the cost-saving efforts of Wal-Mart – one lone private firm – we will soon be poorer than Haitians if cost-saving infrastructure projects are pursued extensively and in earnest by governments at the federal, state, and local levels.
So I say let’s follow sociologist Massengill’s advice to stop this madness of increasing the efficiency with which the American economy produces goods and services!
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030