Globalization gets blamed for economic woes in Midwest USA

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Well, at least his book seems to be selling well for now!

The real cause of the problem is Reagonomics/Supply Side Economics/Trickle Down Economics.

That is like blaming Wal Mart for the decline of the Ma and Pa Stores. The reason why the Ma and Pa stores went away was high prices, cramped dim little stores and lots of dust on the merchandise. Who wants to pay twice as much at a Ma and Pa store?

ruveyn

Well, that's an oversimplification.

Small retail stores could never compete with the purchasing power of the large chain stores. This was so before Wal-Mart, but the nice worked because the larger stores weren't everywhere and were sought out when you went "to town" for the big shopping trips.

When I was a kid, we went to the Mall (up to 3 of them...easily) to shop for stuff we needed. I've not stepped into a shopping mall to buy something in many, many months, if not years. Everything is limited in selection and overpriced compared to shopping online.

When Wal-Mart started moving into every town they could, it was hurting local businesses because small businesses can't compete with national corporations for lower prices. This was tolerate because much in Wal-Mart was "made in America." When Sam Walton passed and Super Wal-Marts started popping up everywhere loaded with cheap "made in China" garbage, this really hurt small businesses because now the company was utterly predatory in how they muscled low prices from vendors so they could undersell their competition.

Today, the only small businesses I see in operation niche market. They meet needs Wal-Mart (and their kind) will not bother reaching out to.

In a way, this is sad because the "food deserts" that Michelle Obama talks about are almost a direct result of this phenomena. The corner grocer no longer exists because of many factors...one being that it's not profitable to run a corner grocery store in most places that have no local grocer.

Exactly!

On the output side Wal-Mart decimates small businesses that simply cannot compete.

On the supply side strong-arming venders and dictating prices has forced manufacturing overseas.

Main Street midwest gets ripped and the industrial midwest gets ripped too.

What does Wal-Mart bring to the table? Cheap goods and bad jobs.

In effect, they're strip-mining the American economy.

The worst thing is that in an attempt to increase efficiency and profits, the large amount of jobs that once existed have now been replaced with a smaller amount with worse wages. To fill up the extra space were essentially more bad jobs based on cyclical demand. You can't just blame wal-mart though. People actually went to Wal-Mart to buy their food. And what do we have left in return with all this cheap food? A weight problem with many people so large that they make me look svelte.

Epic Meal Time I am sure counts as a small portion in some states.

I get to buy adequate merchandise at low prices. Why don't my benefits count?

ruveyn

Well, of course they do! The impoverishment of the Midwest is a small price to pay for your happiness.


Wal-Mart is about done with the US anyway. I work at a WM vendor and the marketing guys here rarely consider the US market anymore because it's dying.

All the attention goes to Latin America and Asia where the markets are growing.

I guess the upside is, once the US becomes a 3rd world hellhole, we'll get jobs making cheap crap for them.

Everybody wins!

Wal-Mart didn't kill the Midwest; in fact, it's probably one of the only businesses still surviving in the Midwest, along with Dollar General.

What killed the Midwest was the high prices they charged for labor, and the cost of doing business in general. The factories moved to places where people will work for less and where there are lower taxes/less regulations that increase the prices of manufactured products. The world's largest steel mill is now in Alabama, cars are made in Asia, and the textile mills are in Mexico.

Walmart's actions, while not targeted at this effect, amplify it a great deal.

A lot of Walmart locations are open for less than 5 years. They show up, put everybody else out of business, and then consolidate to an operation down the road.

I've seen it happen all up and down I89 in Utah. Two walmarts will pop up 20 miles from each other, then a few years later both will be closed and there will be one at the 10 mile mark between them.

Because as can be stated you don't after a period of time.

Globalization puts all workers in the same market pool. So, we now have American workers who (used to) make decent wages competing with Chinese sweat shops where people get paid $4 a day and suicide is a significant workplace hazard. So, the current "high cost of labor" is due to that. American wages have been stagnant for some decades now (2-3?), and productivity is higher than ever; or IOW, people are working harder for less. If this continues the USA will become a 3rd world nation (and pessimist that I am, I think it will be allowed to happen).

A proposal that makes sense to me is re-enacting tariffs and other taxes on imports, in order to make it more expensive for companies to move jobs out of the country. So, if a company makes BBQ's in China and ships them here it will cost the same or more as if it were made domestically by decently paid American workers.

they're trying to bring jobs back to America and the heartland can benefit if they adopt more relaxed labor laws like the south.

the average UAW worker in the heartland pulled in $75+ an hour in wages and benefits, pre-recession. That is not sustainable and Ford, GM, and Chrysler cannot build vehicles competitively in America at those wages, especially when non-labor plants in the south are only paying their workers $50.00 an hour in wages and benefits. We can be building benz's and and beamers too in the mid-west but we have to find a way to lower the cost of labor, and besides, 50 bucks an hour is a good middle-class supporting wage.

Otherwise, there is no hope of leading the world in exports or attracting national or foreign investment to the heartland.

Last time I recalled the Midwest has been the least injured by the recession. I mean, there's a freakin' megamall being built across the road from me and new businesses are popping up all over my town. I can't say this for the rest of the midwest but the recovery is definitely noticeable from my viewpoint.

This is also an oversimplification, although I agree that the US is headed for third-world status.

First of all, "globalization" has been around in some form for over two millennia. It isn't a problem at all, until is combined with governments distorting the economy. For example, when the Roman Empire bought cheap grain from Africa and gave it to its citizens for free, it put Italian farmers out of business. The farmers were able to compete with farmers across the Mediterranean...but not "corporate welfare," if you will. The same thing happened in modern times with NAFTA. NAFTA itself wasn't the problem, it was that the U.S. heavily subsidizes corn. When the borders were opened, all of the Mexican farmers went out of business. They emigrated to the US looking for work, underbidding a lot of American workers, who in turn weren't allowed to compete with the immigrants because of minimum wage laws, and so on...

The problem is neither globalization nor free markets. The problem is "crony capitalism," or certain industries being backed by government force or monopoly. In fact, a lot of the agribusiness prices still being artificially propped up by government decree are in...the Midwest. If you think the effects of factories moving because of artificially high prices were bad, wait until the farm bill money dries up.

So what? People can still go to Wal Mart and get adequate merchandise cheap. What is wrong with that. Is it a virtue to go shopping in the cramped dim Ma and Pa shop and pay twice as much?

ruveyn