August 22, 2006
Ambassador Young's Gaffe
I teased Ambassador Andrew Young, in a post last week, for his racial slurs. It's always fun to hear a civil rights icon blasting other minorities.
I got to thinking, however, that Wal*Mart really comes out well in this. Michael Kinsley said "A gaffe is when a politician tells the truth," and there is a bit of truth in Yong's comments. The small urban grocers, irrespective of race, did not provide good prices or service to their customers. There is also verisimilitude in Young's assertion that differences in race exacerbated this tension.
The WSJ Ed Page defends these shopkeepers.
To his credit, Mr. Young has distinguished himself from much of the black left by not siding with Big Labor, environmentalists and other liberals who would happily deny minorities the jobs and low-price goods that big-box stores have to offer. Which makes it all the more unfortunate that Mr. Young's economic analysis is so off-base.Businesses charge more in low-income, high-crime areas in part because it costs more to deliver goods and services in those areas. Inner-city grocery stores have higher operating costs and tend to be smaller than their big-box suburban counterparts. Taking advantage of economies of scale, the latter are able to offer more brands and sizes at lower prices. Urban supermarkets also typically have less competition, which allows them to charge more than they otherwise could. Wal-Mart's ability to offer more selection and lower prices is due to scale and efficiency, not virtue.
Fair enough. But a Wal*Mart would provide far more to the community. Young essentially made a point that Wal*Mart never could have, and highlighted the fact a Wal*Mart would do a lot more for a community that the beloved mom and pop shop.
Economics and Markets Posted by jk at August 22, 2006 10:24 AM
Here is a horrible thought: Big Box stores are easier to rob. You will less likely end up with a shot-gun blast to your back when lifting product from a store that is set up to survive that sort of thing. A corner store Owner may just get fed up enough to let you know that robbery will not be tolerated. Likewise, a big-box store is NOT run by people with a vested interest of tracking every penny of inventory. Shrinkage happens in large stores by the hands of employees and customers. Little store cannot handle it.
Posted by: mdmhvonpa at August 22, 2006 2:14 PMOn the other hand, Wal*Mart has the resources to install sophisticated surveillance equipment and inventory control items.
When I was a starving 19 year old musician, I worked a Christmas stint at Target. They'd lock us in the store all night to stock toys. They tolerated breakage, horseplay (bicycle races down the main aisles were my favorite) and much questionable behavior. Yet I was accosted in the parking lot by Security when they suspected I had not paid for a box of day-old doughnuts (I had).
I think a big-box, depending on its culture can be very sensitive to theft. Target was never afraid to let me know how serious an offense that was.
Posted by: jk at August 22, 2006 3:33 PM | What do you think? [2]