Thursday, February 16, 2012

Why (some) liberals are wrong about Walmart (among other things)

A lot of people I know criticise Walmart for its so-called evil influence on society (as opposed to places like Safeway that sell exactly the same products, at a higher price). This is my attempt to address some of these falsities that can be broadly divided in the following manner:

1) Walmart's quality is bad:
Irrelevant. Even assuming that is true, it is a free market. If Walmart's quality to price ratio were not adequate for the consumers (including me-- I literally live in Walmart), it would not be the biggest retailer in the world. Clearly, consumers choose Walmart. Are you really going to tell these millions that their choice in products is wrong and you know what is best for them better than they do?

2) Walmart is bad for suppliers: Another argument is that since Walmart is so huge, it can pressure suppliers and squeeze their profit margins, to their detriment. Well, I don't know how contracts work in socialist and crony capitalist hell holes, but in America, all such supply transactions are voluntary. Hence, such deals take place only if they benefit both Walmart and the suppliers adequately. If any suppliers feel that the profit margins are not adequate, they can simply refuse to deal with Walmart. If no suppliers agree to deal with Walmart, then the giant would be forced to increase the price it pays to its suppliers. The very fact that these deals continue to exist, and the fact that suppliers clamor for such contracts with Walmart even now, points to mutually beneficial relationships. Please stop telling these willing suppliers that the profit margins they are OK with are too low.

3) Walmart does not pay its workers enough: How do you define "enough"? If its workers were indeed worth more than what Walmart pays them, why can they not leave the job and get a job that pays what they are worth? Again, the worker-Walmart employment relationship is based on a voluntary contract that is mutually beneficial to both. The truth is, a fair salary is determined by the free market, and is equal to the amount of value a worker adds to the economy and not what a liberal feels it should be. As a corollary, if Walmart did not exist, what would these people do? Safeway (or Whole foods, or any organic mumbo jumbo store) cannot hire them, since if they could, they would have done so already.

4) Walmart leads to local businesses being shut down: So? Why is it OK for some people in the local economy to benefit from rent seeking behavior, by pricing their products at above-efficient levels, but its not OK for consumers in the same local economy to benefit from lower prices? What makes businesses (which are nothing but a certain category of people) special? Again, some argue that the level of service that such businesses provide cannot be matched by Walmart, so these businesses should not shut. My counterpoint is that if society actually valued these "elevated services" so highly, they would continue to buy from the local businesses, despite Walmart's lower prices. The fact that they don't makes the level of service an irrelevant point, despite, again, the "feelings" of the bleeding heart liberals.

Rationality is precious. I suggest all people use it.

Saturday, February 11, 2012

The meaning of a free society

This is also my entry to a capitalism conference scheduled to be held this summer at Clemson University, SC:

"Man is not free unless government is limited. There's a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts."
- Ronald Reagan

Different people have different interpretations of freedom. Some deem it as the right to do whatever one wants, whether self-destructive or otherwise, while others interpret allow the word to encompass the perverse incentive of income security, leaving the beneficiary “free” to pursue their “dreams”, however economically unproductive or socially unappreciated they may be.

While the constitutions of many countries guarantee freedom to their citizens, without a consistent interpretation the word would have no meaning. In my opinion, a free society begins and ends with the concept of self-ownership, implying rightful jurisdiction over one’s physical existence, allowing it to act under the control of the mind. As a corollary, this also means total ownership of the consequences of any such action and the restriction of said action up to where the same freedom begins for another person. For example, freedom cannot include the right to enslave someone, since freedom, by definition, is the right to not be enslaved.

My life experiences have been within the context of two societies that ostensibly claim to be free in their foundations, India and the US. While I was brought up to believe that India was a free society, I now feel that  the existence of the word ‘socialist’ in its constitution has led to the meaning of freedom being usurped. Faced with blatantly left wing governments since its foundation, Indians have been conditioned to believe that freedom means cheap food and gas and “rights” to education and medical care, of course at the expense of the evil industrialist. I, now, understand that such rights can only be provided by the government by laying claims on the labors of those that actually produce such goods. As Ayn Rand said, the smallest minority is the individual. Without freedom for the individual entrepreneur to do what he chooses with the fruits of his own capital, we cannot have a truly free society.

The United States is, obviously, head and shoulders over India in terms of freedom, thanks to its stress on the individual. Individuality was bolstered after Reagan’s coming, after decades of slow decline over the Kennedy and Carter administrations. Recently, however, in the panic emanating from the recent recession, capitalism and individualism are under attack again. People forget that when money and industry seem to have obtained a grip on government, it is government that has gotten too big so as to give the wealthy an incentive to try and influence politics. While the economic crisis is undoubtedly a pity, it is but a natural result of government meddling in financial markets, apparently to bring to fruition the noble goal of “increasing home ownership”. This has all but been disregarded, “greed” being blamed instead. Mortgage bailouts and nationalization of losses are merely examples of the government allowing entities to avoid ownership of the consequences of their bad financial decisions—antithesis of a free society, since such public largesse has to be financed by expropriation of the results of good decisions taken by others.

In short, while a free society cannot exists without political freedom, a.k.a. democracy, economic freedom is, perhaps, even more important. The John Galts, and indeed Eddie Willers, of society should be allowed to use their physical and mental capital in any way as they deem fit, while at the same time, retaining the results of such deployment, whether good or bad.