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ARE AMAZON AND WAL-MART LOCAL ECONOMY-WRECKING EVILS?



Comments left upon web pages can reveal how what many believe. Today, for a story about Amazon's recent stock run up, which has given Amazon a market valuation higher than Walmat I came across these gems:
"Cheap people support Walmart to knock out small businesses. Cheap and lazy people support Amazon to knock out Walmart and their peers. People who would have worked for small business owners would have been small businesses owners themselves have become Walmart employees. Now Amazon is taking over with their robots. Some people are going away indefinitely."

And this one:

"Everyone talks about supporting their local economy claiming everyone should be willing to pay more to support local economy. Always they say they hate cheap, job-killing imports, but then they buy from Amazon.
"I patronize Amazon because I can get things there that I cannot find sold in my local stores. I agree however, that Walmart and Amazon are part of the trend to destroy local economies. In the old days, you would go to a half dozen local businesses to buy supplies, which today, you can buy at Staples. Profits stayed local, in local banks. Today, profits go straight to the big Wall Street banks which are not interested in the small piddling deals offered by local economies."

Alas, these comments reflect a slew of false beliefs. First, in the days of money — coined metal by weight and fineness — during the growing seasons of farming, money was shipped to the money centers, deposited with money center bankers, who then lent against those reserves to speculators of all kinds.

Local economies would grind to standstills during those times. When harvest time came, money would be recalled from money center banks. Only then would the local economy see activity.

In the days of horse-and-buggy, the blacksmith, the wainwright, farrier, saddler, wheelwright, each held monopoly in their respective towns.

As everyone else had little capital, there were few wages to be had. Most children were stuck on farms, wage-less. Plowmen had to bargain with these skilled monopolists who held bargaining power.

With the advent of the automobile and factory production methods, first tools and then machinery — both are capital — replaced handmaking. Because of profits on that capital, wages could be paid.

Boys and girls grew up and left farms for wages. Their living standards grew with gaining wages. Wherever capital sprung up, people's lives improved.

But wherever capital sprung up, the local economy monopolists — the blacksmith, the wainwright, farrier, saddler, wheelwright — lost hold of their bargaining power as their methods were replaced by machinery and partitioned methods.

Amazon and Wal-mart free up resources in local economies so that specialization can arise. Those who lose to Amazon and Wal-mart must find new ways to earn their living.

Everyone else who earns their living by another way get richer by spending less for the same products. Amazon and Wal-mart increase the profit for everyone else.

With more profit from the same effort, the beneficiaries of Amazon and Wal-mart now can spend their new found profit on same earnings in other ways, locally on new the products of new ventures, locally investing in those new ventures, or elsewhere.

It's odd how these Luddites fail to lament the rise of mechanized farm equipment, which led to the displacement of millions of Americans from working as farmers. Would they rather have Americans walking behind horse and plow, living at bare subsistence with meager earnings.

If Americans still lived that way, we wouldn't have the Internet, television, wireless smart phones and millions of other products. Living would resemble American life in the 1700s.