Riverwood Presbyterian Church

OK, I’ll bite. The answer is the free market and competition, especially from overseas. First of all, in 1969, there were the big three and who else? Toyota, by its own website’s admission, was only a “niche player.” VW was on the scene, but the competition was, by modern standards, incredibly limited. This is why, when the US makers failed to respond to the gas crunch of the late 70s, the Japanese makers took off. They got it, the US makers didn’t. That history is repeating itself again today.

Secondly, comparing Wal-Mart to GM is not fair. One is a manufacturer of goods, the other a service provider. Retail service jobs always pay less, because less skill is involved.

Put simply, GM was a insulated market with a business model that was doomed to the failure that we’re witnessing today, in large measure because those wages and other benefits were artificially high. Wal-Mart is much more competitive, and at least as far as we can see now, sustainable, absent governmental interference, which is attempted on a daily basis.

Comparing the economic world of 1969 with 2006 is not an apples to apples comparison.

Besides, reading Krugman on economics? Yeesh. Try Milton Friedman instead.

I haven’t read Klugman’s book (and most likely won’t) but it probbly makes a case against economic globalization. For a biting, and incisive,look at it; check out Marilynne Robinson’s essay, “Family,” in her book, “The Death of Adam”.

Clay, I’ve been thinking quite a bit about Krugman’s book— which I’ve wanted to take seriously. It has been my recent personal task to purposely read things that do not land in my traditional thinking patterns. Krugman definitely applies, here. That said, he makes quite a few other troubling statements in his book (which are pointedly used to jog apathy). So, I’ve had to do some real thinking to reconcile my loose and general agreement with a capitalistic marketplace AND the fallout long term ramifications for all strata of society.

I think you were helpful AND correct when you observed Krugman was inappropriately comparing Walmart and GM. The two industries track completely different factors— skilled labor/union/steel/competition/automation/etc….

Something else we discussed: Krugman does not reveal the extent of his data mining. In other words, the “average take home amount” very well might factor in part-time hours— which would be a gross misrepresentation of the true facts.

There are some huge questions(for me) that remain unanswered in regards to Wal-Mart. If we encourage free markets, why do they habitually enjoy land/tax grants that are not afforded to other companies? What are the consequences for feeding America with a flood of products that are made in countries that do not honor are labor/human dignity laws? (And I ask these questions in regards to the “working poor.”) Is the lowest price a directive from God to be a good steward of my money? Is efficiency necessarily a “noble” attribute? Of course, these are all good candidates for future blogs.

In summary, (and after finishing another essay by Krugman) it seems Krugman often uses facts to support his opinions, instead of sifting through the facts to form an opinion.

Krugman used to write very goods things. However, he, for the most part, does not anymore. The main reason for the difference in the salaries of the employees is that GM workers were worth more because they handled more capital. What this means is this: if I own capital, say a shovel, should I make more than someone who owns a dump truck? Obviously not. The dumptruck is worth more than the shovel because the dump truck is more productive. A GM employee’s skills are worth more because he operates more valuable capital than a Wal-Mart employee who is scanning items. In essence, Krugman is comparing apples and oranges. Now looking at the CEOs, it’s harder to compare because on average, for whatever reason (be it greed or the market working efficiently, whatever is your worldview) make more money today than in the past.