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This debate, posted on Slate, features Jason Furman (currently a grad student at NYU's School of Public Service) questioning some of the major assumptions that Barbara Ehrenreich makes in her (in)famous diatribes against the corporatization/Walmartization of the American economy.

I'll echo better people than I am when I express disdain at both Ehrenreich's paternal rhetoric towards the poor and her shoddy understanding of economic principles. But it's late at night and I'm too tired from thinking about statistics to go into more detail on the argument; any thoughts from anyone else?

Oh, and Furman's paper here. Not a terribly fantastic paper, but a first glance seems to indicate it's worth at least a cursory read.

And has anyone heard from Bo?


I'd like to make a broader point and extend the debate to more polemical territory (I think that after reasoned debate, it's very difficult to credibly support Ehrenreich's criticisms of Wal-Mart).

Proposition: Popular notions of "corporate responsibility" are misguided and lead to sub-optimal policy outcomes.
They are misguided because they fail to recognize the inherent collective action problem. If all the corporations were nuclear families and collectively ownd a plot of land and their animals grazed on it without any legal obligation to refertilize and replant it, which of the following options would you choose:

(a) a torrent of rhetoric asking the families to behave responsibly, or

(b) a centrally planned policy that surgically eradicates the externality.

Because of the incentive to free ride, option (b) is preferable. If only Wal-Mart raises wages, it faces threats from companies that don't, raise margins, out-compete Wal-Mart, and force them to either (a) cut jobs or (b) reduce wages back to original levels. Income redistribution policies need to be targeted, effective, and broadly speaking, consistent (a large variance in "aid" income, over time or across companies) is bad news for anyone seeking to make rational decisions.

The analysis is more complex for corporate pollution in the developing world because of greater intertemporal effects (global warming fucks the future not the present) and the feasibility of constructing international regimes to regulate it, weighed against the enormous benefits such pollution producing industries provide to the third world. Given these difficulties, I'll refrain from comment here.

Finally, I'm very skeptical of charitable giving from corporations. Without going into details, I'd much rather see the evolution of a social norm in America that when you get ridiculously rich, you hoard your money until your last and dying days and give it away. The incentives just work a lot better: you're more likely to make sure you're giving to a cause that's likely to produce a high return if you're giving a shit ton of money at once than skimming off the top of profit margins over time.

I have high hopes for ripple effects from Gates and Buffett, but this has gone pretty far from the point.

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