March 11, 2009

The Laugher Curve

Tom Maguire does his best not to collapse in giggle fits while critiquing an "orthodox progressive" understanding of market economics. (Bolding mine.)

Shut Up, She Explained

I GUESS THE WALMART GUYS MISSED THIS IN B-SCHOOL: Former Hollywood producer Jane Hamsher takes time from her schedule to explain to WalMart management how they can boost their bottom line:

Even Bank of America admitted in an internal memo that increased wages for working people would mean "increased spending power of lower income consumers," which would mean that even if Wal-Mart was successfully unionized -- a big if -- they could make up the cost of higher wages with an increase in sales.

I am afraid that any response would spoil the moment; I want to savor this "Walmart could earn more if they just increased their cost base" theorem a bit longer.

OK. Since Ms. Hamsher is an orthodox progressive we can easily imagine her reaction if presented with the notion that the government could increase its revenue by cutting tax rates (another firedog favors "crazier notions of supply side economics" as a description of the Laffer Curve). Yet now we live in a world where WalMart can increase its profits by increasing its costs - can we call this "the Laugher Curve"? Why haven't WalMart's managers and owners figured this out for themselves? I blame false consciousness!

Sure, they'll lose a little on each sale, but they'll make it up on volume!

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