Monday, 6 September 2004
Saving the Village with Wal-Mart
In BusinessWeek, Chris Kenton brings us a thoughtful piece about the Faustian bargains that localities are making in the name of progress;
[A]t the end of the day, we are giving up a society in favor of an economy. When every decision — even decisions that cut to the core of our community — are dictated by the most immediate profit opportunity, it makes sense to tear down a city in order to build a mall. It makes sense a few years later to build big discount centers to undercut the mall. Cross every bridge when you come to it, and let every decision be driven by the shortest break-even point on the balance sheet.
This illustrates one of Galbraith’s points very well, I think; if you put the long-term interests of a community into the hands of managers with shorter-term goals — whether it be a developer who wants to make a quick buck or a politician who wants to get re-elected next year — the community suffers. We’re effectively incenting our managers by allowing them to pillage.
The only problem I have with Kenton’s characterization is blaming it on “an economy.” The market is a tool, and a good one, but it’s still the responsibility of a society to decide how it uses the lessons economic thinking has taught us. We can decide that we want to live somewhere with pleasant streets and local shops, and enough of a social safety net that people aren’t desperate enough to rob us on the street. For that matter, we can decide that our community should be paved over with high-speed freeways, if that’s what really floats our collective boat (as it seems to in America).
These are all “good economics.” A free market is not a goal in and of itself, it’s a means to an end. Saying “I believe in the market” is like saying “I believe in Microsoft Word;” that’s nice, and of course it’s important to choose a good tool, but what are you actually doing with it?