How America became uncompetitive and unequal

> Okay, so you've double turned yourself... Competition is good.

What? This isn't a double-turn at all. I'm not defending uncompetitive environments and monopolistic exploitation, I'm asserting Wal-Mart as example uncompetitive environment is, in the general case, nuts.

> Of course, this ignores that many of those poor are the ones in the factories, warehouses, trucks and behind the cash registers.

Not ignoring that fact, NOTWITHSTANDING THAT FACT. No one is better off if one person working minimum wage pay extra money to have another person working minimum wage drive a truck further (and burn more fuel for that matter). Recognize a simple truism: no group gets better off by engaging in waste. (You could make a case that someone-else making substantially more than minimum wage paying extra for that would increase overall well being by paying more for these services, because of diminishing marginal utility of that richer person's wealth, but making groceries cost more is a freakishly regressive sort of way to attempt to redistribute wealth... and wealthy people aren't shopping at Wal-Mart anyway, they're all at Target or Whole Foods...)

Personally I specialize in warehouses because with the coming levels of automation, increase of robotic productivity and loss of jobs, there will be so many products and so few customers that only bigger warehouses will be the solution :)

I am pleased to see that all of the comments up to now deal with the "uncompetitive" aspect of the article and none with the "unequal" aspect. Indeed, it seems to me that "inequality" (the word appears 9 times in the article) was thrown in after the fact to decorate a piece about the adverse effects of monopoly, because post-Piketti it's stylish to talk about inequality. These aren't the same subject; the discussion of inequality is focused on person fortunes, not industrial domination. The former doesn't require the latter.

I appreciate your engagement in this discussion. I think the notion of a competitive market as you define it [0] is inherently flawed. To quote:

> all participants are price takers, i.e., passive agents incapable of changing the market price

That makes no sense. If all participants cannot influence the price, then where does the price come from?

Logically speaking, once you abstract away from all sorts of fluff, everything that happens in a market is ultimately the result of the action of one or more of its participants. That is, if participants were unable to change the market price, then why would the market price ever change? Why would there be a price in the first place? The fact is that participants are necessarily able to change the market price, whether you want that or not. The only question is how this power is distributed and what the consequences are.

Having competitive markets in the sense of low barriers to entry etc. is clearly a good thing. But in the sense you've defined them, they are either useless or self-contradictory.

Interestingly, for every market, somebody has the (or at least some) power to set prices. Despite of what you write, most transactions are mutually beneficial anyway. Why is that?

I believe this is actually because the vast majority of markets aren't efficient in the efficient market hypothesis sense, and transactions aren't happening at the margin. For obvious transaction overhead and opportunity cost reasons, most transactions are only ever realized if they increase the total welfare not just by some epsilon, but by a significant percentage.

The really interesting question is how this large benefit is distributed between the transacting parties, and I would wager that the power to set prices does actually have a big influence there. That is, whoever actually gets to set the sticker price (for example) is bound to capture a larger fraction of the benefits than the other party, even if the transaction is overall still beneficial to both.

For this reason, I think the problem isn't even so much that transactions leave people worse off. That only happens comparatively rarely. The much more significant problem is when unequal power relations are exploited to give somebody a benefit that is deemed to be unjustified. [1]

The prototypical example would be the millionaire in the desert who is near death by thirst. If she signs over her entire wealth in exchange for a bottle of water and a ride out of the desert, then clearly, this is a transaction that is beneficial to both parties. Yet only the most psychopathic internet-libertarians would ever think that such a transaction was okay in any sense. The problem was not a lack of mutual benefit, but an exploitation of unequal power relations.

[0] And I suppose others define it in the same way, perhaps even a large group of economists.

[1] By the way, this is the root of the classical criticism of capitalism: that the surplus value of labor is siphoned off by capitalists, leaving workers with only a small amount. Even though employment contracts are typically mutually beneficial in the narrow, technical sense, there is the fact that the employer often exploits the reality of unequal power relationships.

You certainly can steal, threaten the staff, or set the place on fire. To the extent that shop and its people are recognized and protected by laws and government agencies such as the police, you'll likely face serious repercussions. But say the shop is liquidated in Chapter 7 proceedings by Bankruptcy Court, appeals exhausted, ownership of all assets transferred, the building condemned. The shop no longer exists, and in fact may be lawfully demolished.

You could setup a table in the middle of a busy intersection, put some items on it, and declare it to be a shop. That does't make it a shop (or for that matter yours).

What is "ownership" absent law? Is it something you can measure, like gravity, velocity, field strength, pH or temperature? Without the law, a manifestation of government, ownership is simply a belief (which is the antecedent of the law).