Walmart, Keynes, and Friedman

This article presents a good overview of the development of Walmart over the years. An important part is the links to the work of Emek Basker and others. Basker finds a Short-range drop in Price (1.5-3%), and 3-4 times that reduction in the long-term for a wide range of Products. Walmart also caters to the poorer Consumer with sustainable Product and Pricing, so the implication is contained there has been a real rise in the Standard of Living among the Poor. A blog Post by Tim Worstall comments on the savings utilized by Consumers since the expansion of Walmart. I am a Walmart shopper myself, but use other Retailers as well; knowing well that competition actually establishes the Market format.

Brad Delong, Greg Mankiw, and Tyler Cowan all comment on the differences between Keynes and Friedman. Where can I come in on this contest of the Giants? Keynes thought in terms of a relatively horizontal LM curve, which held impact along the range of the flattening aspect. Keynes viewed Business and Industry as afflicted by periods of Funds constriction, where Interest rate adjustment would not affect the flow of Funds. Keynes was correct on his acceptance of Wage and Price stickiness, Friedman never integrated the Concept of Superinflation, and that doldrums deflation could overcome Monetary policy instruments. Keynes indeed lacked faith in the Market, but Friedman and Others suggest Markets will resolve every issue–highly debatable, especially within the context of war-torn or massive destruction conditions.

Keynes was far less confident about any permanent economic fueling of the Economy on a long-term basis. He stressed stability of economic performance, rather than excessive, continuous rates of rapid economic growth. Friedman spied potential for rapid expansion of Capital Stocks, with little consideration of limitations of Resource, financial capital, or survival of personal welfare instruments. Friedman did overturn the Concept of good, viable Government intervention in the economy; outlining it’s innate flaws. In sum, both men were absolutely essential to the progression of economics, they providing the Ying and Yang necessary for economic research and achievement. Keynes was wrong in his faith in Government intervention, leading to the sorry state of Government interference today; Friedman was wrong in his ideation of simply shifting Money for economic performance. I am wrong for thinking both are relatively worthless, economic performance commanded by unified and committed labor forces intent on the betterment of life; the Process in which both Government and Markets are noted most as detractors. lgl