All entries for Monday 27 June 2005

June 27, 2005

Tesco worries

The BBC reports on the growing number of special interest groups complaining about the growing dominance of Tesco.

There is a growing coalition raising questions about how global giants, including Tesco, affect independent retailers, producers at home and abroad, and the environment.

Tesco, which is the fastest growing supermarket group in the UK, has become a target for campaigners.

On Thursday, an anti-Tesco website – Tescopoly – was launched by a coalition of eight campaign groups.

Read the full article here.

One argument highlighted by the article is the increased funds flowing to ‘big national or multinational chain[s], rather than to local traders’. As Don Boudreaux has said in the past, it makes little difference whether the salaries of local residents are being spent at the local corner shop or at a shop several times larger because it’s impossible to keep money within a given locale. To do so requires a people to live in isolated autarkic communes. Such communities would produce everything required for sustenance locally, choosing not to engage in trade with others. Such a system is a throwback to a time we’ve long outgrown.

Do these protesters genuinely think the UK would be a better place if all money held by Liverpool for example, stayed within Liverpool? Or if all money generated in Birmingham stayed within Birmingham? We have all benefited from being able to purchase clothes cheaply, thanks to low cost textile production in China. We’ve all benefited from being able to purchase low cost DVD players and televisions from producers in South Korea. If the movement of funds between countries is of little relevance, why should movement within the UK be any different?

Spending money at a local store doesn’t increase the likelihood of funds remaining in a given area anyway. A local, independent food store may still purchase its fresh produce from another region or country, just as a local hardware store will look to the region/country that offers the cheapest inputs. Choosing to spend money in a local store simply delays the inevitable movement of money elsewhere, reducing efficiency in the process.

Overall, the desire to keep money ‘locally’ is misplaced. One’s salary is better spent at the firm offering best value for money, regardless of who owns it or where it chooses to send profits.

June 2005

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