August 27, 2003

Fast Food-Style Journalism

Ah. A piece of fast food-style journalism--i.e., low-quality, hastily-prepared, and bad for your brain (if not your heart)--from John Kay. There is only one possible response: it is time to break the glass, to sound the siren, to pull out the fire-axe, and to start channelling Milton Friedman:

FT.com Home US: ...there has been intensive lobbying by smaller merchants. It is almost impossible today to create new shopping centres on greenfield sites. But these self-serving arguments have been successful not because their proponents made donations to political action committees but because many French people are sympathetic to the cause. They fear the marché municipal might disappear.

I doubt if there is much justification for these fears. There are three supermarkets within a quarter of a mile of the market, which stock the same categories of goods, mostly of lower quality and at lower prices. On the outskirts of town is a much larger store with extensive parking. A 20-minute drive will take you to a Carrefour with more than 100,000 square feet of retail space and a US-style mall. In the face of this competition, the marché municipal and another daily market a mile away seem to be doing fine. All the stalls are taken and there are usually some informal booths outside where local people sell home-grown fruit and vegetables.

An economist, it is said, knows the price of everything and the value of nothing. But this is unfair; most economists would agree that value depends not only on price but also on quality - and that the quality of retailing is enhanced by a range of outlets and by diversity of product range, congenial surroundings and knowledgeable salespeople.

Nevertheless, such analysis is not what economists do. Productivity data show that the gap between Britain and the US is particularly large in financial services and in retailing. But these are industries in which output is poorly measured and British companies are successful in international competition. So we should look at what lies behind the figures before we draw conclusions.

National accounts measure not retail output but the volume of retailed goods. A dollar of sales is treated similarly whether it is made in Bloomingdales or Wal-Mart, in an haute couture salon or the marché municipal. Higher productivity simply means less retail input per dollar of sales, so the conclusion that French productivity is lower is both obvious and meaningless. We take visitors to the marché because it is fun. I suspect that if you tried to photograph the displays in a Wal-Mart store you would be asked to leave, but that the problem is not often encountered.

When will Americans realise that if the rest of the world is not like the US, that is not necessarily a problem - either for us or for them?


Let me begin to answer this by talking about all three of the ways that we buy serious meat--large chunks of beef:

First, we buy meat from CostCo: huge slabs of beef in tough, tough shrinkwrap. You then have to cut it up with a butcher's cleaver and freeze large portions of it in order to cut it down to an amount suitable for a family dinner. But it is of good quality, and very, very cheap--making good use of all the efficiencies of distribution that the modern information age makes possible.

Second, we buy meat from Safeway: more expensive, but more convenient. The meat comes in normal-size quantities, and if you are willing to wait five or ten minutes you can talk to a butcher and have the butcher do something extra to it. You don't have to go out of your way: you can buy your meat in the same pass through the supermarket in which you buy your bread (very good bread at Safeway these days, by the way, from very good Greater San Francisco bakeries), your milk, your orange juice, your cereal, et cetera.

Third, we buy meat from Andronico's--for Christmas Ann Marie bought a crown roast of lamb that turned out better than any lamb I've ever tasted (except for that served in a restaurant downstairs from the Museum of Catalan History on the wharf in Barcelona, and for that that Andrei Shleifer and Nancy Zimmermann served us one night at their house in Boston). The butchers engage you: what is this for? who is coming to dinner? what else is on the menu? perhaps you would like to try this, or this? When my mother came to visit we walked away from the meat counter with very nice (domestic) Kobe-style Chateaubriand. But you pay for it.

When the U.S. Bureau of Labor Statistics calculates that retail productivity has increased, they don't see a bunch of people who used to shop at Andronico's now shopping at Costco, divide pounds of beef (or even pounds of Chateaubriand purchased) by dollars spent, and say, "Aha! Productivity has increased!" The economists and the statisticians at the Bureau of Labor Statistics thought and think long and hard about improvements in productivity in customer service-intensive and customer service-spare kinds of retailing, and thought and think long and hard about how much of the increasing share of big box retailers is due to their offering a genuinely better deal to consumers, and how much is simply a zero-sum reduction in money spent that is matched by a reduction in the usefulness of what is bought because of the lower quality of customer service provided.

The BLS is not as stupid as John Kay implies when he writes that "...the quality of retailing is enhanced by a range of outlets and by diversity of product range, congenial surroundings and knowledgeable salespeople. Nevertheless, such analysis is not what economists do..." and that "...national accounts measure not retail output but the volume of retailed goods..." The key is that big-box customer service-spare stores have a larger market share in the U.S. today than they did a generation ago because the price gap between CostCo and Andronico's and between WalMart and Nordstrom's now is much greater than the analogous price gaps were a generation ago. U.S. retail productivity growth is not an illusion created by the sacrifice of customer service for lower prices. U.S. retail productivity growth is due to the fact that information technology has allowed customer service-spare stores to offer consumers a much better--a much cheaper--deal than analogous stores could offer a generation ago.

Now for us the opportunity to shop at CostCo does not matter much. We are far from poor, and we are not huge meat eaters: our beef is unlikely to come from CostCo, and very likely to come from Andronico's. Years sometimes go by between our trips to CostCo.

But for many not-rich Americans it does matter, and matters a lot. For them, the fact that the price gap between CostCo and Safeway (let along Andronico's) looms a lot larger than it did a generation ago plus the opportunity to shop at CostCo is a real boon: you get your meat a lot cheaper, and you can afford a weekend car trip to Yosemite Valley.

The French--and the British (I know: I've shopped in Britain)--are deprived of the opportunity to buy in the equivalent of CostCo and WalMart, and deprived of the opportunity to get lots of good stuff cheap by shopping at high-volume retailers who have taken advantage of the efficiencies of distribution offered by bar codes, POS systems, databases, and all the other information-age inventions that make it possible for retailers and distributors to keep track of stuff.

This doesn't matter much to John Kay: he doesn't have trouble financing his vacation to the Mentonnaise Riviera: "...between Monaco and Italy, the mountains and the sea, Menton is like an island where life flows serenely... Nestled at the foot of the Azur Alps which plunge into the Mediterranean..."

But there are lots of guys living in western Europe for whom the lack of an opportunity to shop at a WalMart equivalent--and thus to shave 50% off the retail margins they pay while shopping in the picturesque marché municipal--is a real loss. True, they would miss out on their "pleasant excursion[s] to pick up some produce in Menton's marché municipal and browse the FT over an espresso in the place Clemenceau." But if they paid less for produce and staples, they might use the money to pay for a better vacation of their own, or perhaps a dishwasher. They are more than picturesque background figures to entertain John Kay's eye: they are people with limited incomes, but with lives and plans of their own.

And it is not a good thing that western Europe today deprives them of their choice. They are not free to choose to shop at Andronico's, Safeway, or CostCo. Even though the fact that they are deprived of that choice does not strike John Kay as a big deal, it is. For them, it is a problem that, in this particular dimension, Europe is not like America.

Posted by DeLong at August 27, 2003 09:57 PM | TrackBack

Comments

In New Haven, I have three places from which to get a 1.5 lb lobster at very different prices:

(1) At Shaw's, the local grocery store, I can get it for roughly $7.00 if it's pre-cooked and wrapped in plastic (though I have to show up early in the morning before someone else buys them all).

(2) I can get it for about $19.00 if I get a live one from the lobster tank at Shaw's.

(3) If I go to the Rusty Scupper, the local seafood restaurant, I can get one for a little over $30.

There really isn't any big difference in the quality of the $7.00 lobster and $30.00 one, though, that I can notice. . . .

Posted by: Bobby on August 27, 2003 10:49 PM

Actually, a carrefour is a lot closer to costco than it is to safeway, or so I'd have thought. In some ways, the French are better off for that kind of shopping than the British (a correspondent who lives 300 yards from a very chichi Waitrose supermarket writes).

Posted by: Andrew Brown on August 27, 2003 11:40 PM

Actually, the British can now shop at Costco (not all of the British, but some). And I don't mean something like Costco, I mean the actual thing.

And I thought it was Americans who knew the price of everything and the value of nothing. Or are all Americans economists?

Posted by: craigie on August 28, 2003 12:19 AM

Prof Delong, poor people in Europe don't mostly own automobiles. If we're going to come that, the urban poor in the USA don't, either--they can't use CostCo and WalMart. It's the suburban middle income group and rural people who get the most out of those stores. To make big-box stores work an automobile infrastructure, large kitchens, and food-storage in every house is needed. That's not Western Europe.

To make that choice possible in Western Europe a lot of things would have to be forced on people, some of them very harsh. The history of building highways in existing US cities is replete with the destruction of neighbhorhoods. Usually the targeted neighborhoods belongs to the politically weakest minority group; think about the neighborhoods surrounding the freeways in your area and you can see it plainly. Some of these neighborhoods some of which still have not recovered after decades--again, you have some fine examples in where you live, around I-880. (For an even more awful example, look up the history of the building of the boulevards of Paris.) People's houses would have to be reshaped at considerable expense. And there would be a need to promote two major ecologically dubious practices, those of building urban sprawl and the heavy use of fossil fuel.

This is apart from the sheer hatefulness of the settlement forms needed for this--the amount of land that has to covered over with hard surfaces and the vast gashes of major roadways; try walking along some in your area if you doubt this description. I do not trust the post-World War II US suburbs as settlement forms, no, not at all--they may turn out to have as many social problems as they do ecological.

Unless I've missed some important facts about Western Europe, big-box stores don't make sense there, and I suspect they are a temporary and transitional form even in the USA.

Posted by: Randolph Fritz on August 28, 2003 12:50 AM

I second Fritz.

Our suburban, drive-everywhere culture nearly enforces obesity.

Scarcity may not be our most pressing problem.

Posted by: bad Jim on August 28, 2003 01:10 AM

Dear Prof DeLong, you forgot to take into account a couple of things in your analysis:
1) the different urban structure in Europe (Britain is actually mid way between continental Europe and the US) which favours smaller urban areas with disperse shopping facilities. No huge suburbs with millions of single-family houses with lawns and double fridges in Europe.
2) CostCo, as well as Wall Mart and the likes have huge externalities, including increase in air pollution due to car use, the destruction of the social and commercial texture of the town centres. All these may not matter much in the US since people have to use the car anyway to get to any shop and town centers barely exists anymore but in Europe they matter a lot.

Most of all what you don't take into account is that Europeans already have their own Wall Marts and CostCo (ever heard of Carrefour or Metro?) but, thanks to stricter regulations, they were not allowed to squeeze local shops out. I have shopped in the US, in Britain and in Continental Europe and, believe me, I don't have any doubt which way I prefer.

Posted by: Manfredi Bargioni on August 28, 2003 02:17 AM

In the Netherlands some regulation exists that determines that big-box stores aren't permitted to sell to private persons, only to (any sort of) company. When you represent a company you get a pass that allows you to shop there. Of course, your nephew will eventually get a pass too, and your grandma. They proceed to borrow the little van with the cheaper (for "companies") registration. No actually, everybody already has a car with a cheaper (for "companies") registration, so some earlier administration put a stop to that.

Please don't ask me why or how this construction evolved like this, egalitarianism a la Dutch is an incomprehensible muddle of compromise. Still, of course, the ones to profit from this belong mostly to the suburban middle income group.

I do not believe Fritz when he says that the European poor don't have automobiles. Holland (and the poor neighbourhood where I live) is chock-full of cars. Maybe some poor individuals (like me) don't own one, but every family has at least one.

Posted by: Sander on August 28, 2003 02:27 AM

Ask German retailer how low their margin is... the average operating margin is estimated to be below 2% - not really a very profitable business.

Walmart is trying to compete with German retailers like ALDI and LIDL and has severe problems. Meanwhile ALDI and LIDL are expanding all over Europe...

Posted by: Stephan on August 28, 2003 02:42 AM

I third fritz; could it be that while the benefits of a large number of Costcos and similar brand differentiations that are common in the U.S might seem good when looked at from the angle of freedom of consumer choice, that the achievement of this laudable goal might require other changes in society that the Western Europeans might not be happy with?

Does the existence of a wide network of CostCos require the existence of an infrastructure beneficial to them, including perhaps a cheap, undereducated labor force? Good thing CostCo is so cheap, because their employees can afford to shop there and then go to Yosemite for the weekend.

"They are not free to choose to shop at Andronico's, Safeway, or CostCo"

Well, let me tell you, I have shopped in Western Europe, I currently live in Copenhagen, Denmark, and I have lived in the U.S for over twenty years so I know whereof I speak: first off, Andronicos is a knockoff of a European shopping experience, so the part about them not being free to choose to shop there is nonsensical, there are some stores here that are pretty close to Safeway, and two stores that give really cheap meat a la CostCo. Is everything the same as in the U.S, nope, do I miss different consumer opportunities based on the U.S model, all the time, do I want to exchange the system here for the American one, coke just splattered on my monitor.

Posted by: bryan on August 28, 2003 02:42 AM

I think you've gone a bit over the top. I don't think John Kay is saying that US retail productivity isn't higher than Europe's. Nor is he saying that the statisticians at the BLS are stupid. I think he's saying that 'quality' is inherently difficult to measure, that European statisticians may not be using the same methods as their American counterparts and that badly measured productivity is an unreliable basis for stern lectures about how well off Americans are relative to Europeans.

I'm afraid I'm not convinced by the productivity data that so often impress you. And I certainly won't trust the cross-country comparisons until I'm sure that everything is being measured in roughly the same way in all countries. After all, the latest OECD data say that, indexing the US to 100, French productivity per hour is 103, Italy is 97 and the UK 77. I mean, have you been to France in August?

Posted by: skd on August 28, 2003 02:55 AM

england does have Walmart, and two good supermarkets Tesco, and ASDA [owned by Walmart], I think the George Clothing in Walmart originated in ASDA, The Economist has gone downhill since they took on an american editor in order to get more american sales.

Posted by: big al on August 28, 2003 03:38 AM

england does have Walmart, and two good supermarkets Tesco, and ASDA [owned by Walmart], I think the George Clothing in Walmart originated in ASDA, The Economist has gone downhill since they took on an american editor in order to get more american sales.

Posted by: big al on August 28, 2003 03:41 AM

"The French--and the British (I know: I've shopped in Britain)--are deprived of the opportunity to buy in the equivalent of CostCo and WalMart, and deprived of the opportunity to get lots of good stuff cheap by shopping at high-volume retailers who have taken advantage of the efficiencies of distribution offered by bar codes, POS systems, databases, and all the other information-age inventions that make it possible for retailers and distributors to keep track of stuff."

Yes here in France retailers count on their fingers. They don't have bar codes or databases or computers or any of that other information-age stuff that the U.S. has. By the way, they also don't have trains that go three times as fast as any in the U.S. And they probably still wear those stupid berets and ride bicycles to work.

Pleaze. I live in the centre of a town which borders Paris. Next to my house is a twice-a-week market, where we buy our fruit and vegetables. OK, they don't have computers, and they do cost more.

One hundred metres past the market is a supermarket. It doesn't have all the choice that the supermarkets in my hometown (Northampton, Mass.) have - maybe 20-30 cereals as opposed to (is it really? well it seems like it) 100, but they use computers and bar codes and all that other information-age stuff. I would even say that they use more of it, because labor is more expensive in France.

On the other side of town there is an Auchan, which is about three times as big as the supermarkets back home. Auchan, needless to say, is our Walmart. (It's bigger than the Walmart in Northampton, too - so there.)

Having recently passed some vacation time in Aix-en-Provence, I can report there was a supermarket even bigger than Auchan 2 kilometers from the house where we were staying.

So the French aren't deprived. They do pay more than Americans at all three levels - market, local supermarket, big supermarket (well, except that most Americans probably don't have access to a decent market and so there is no comparison at the first level). But it's not because they aren't applying information-age technology. It's because there are more regulations and labor is more expensive.

Posted by: Andrew Boucher on August 28, 2003 04:07 AM

I agree to above posters: in Europe unskilled labour is more expensive, and we don't have and don't want to have that enourmous auto infrastructure that is the bad sign of the planned part of the US economy.

Then I think Kay is partly right, what is a "genuinely better deal to consumers" is hard to measure, and is not objective either. So productivity could easily be faked. I leave the details on
http://blogofpandora.blogspot.com/
(not to shamelessly promote the site, but rather to spare this post of excessive details), but in short consider:

For instance, a cool leather-jacket might seem good value for money, especially as you know that it would be good for many years to come. You know, however that it would be out of fashion only after a year or two. Still, you might supress that knowlege and buy it anyway.

If the advertiser improves in tricking you to believe that the current year's new jacket is much cooler than last year's, he will make you throw away last years' jacket and buy a new at a higher price. The quality is not "genuinely" better, but when the statistician who performs the productivtiy measuring comes to ask you about it, your answer will be that it actually is better. Hence productivity may grow without the economy offering a "genuinely better deal to consumers".

Posted by: Mats on August 28, 2003 04:18 AM

ALDI-creator of the wealth of two of Germany's richest men, and LIDL both show that the means to cheap retailing don't have to be in massive out of town retail malls. Both are kept quite small. Both pay reasonable good wages and both have made their money from very effective purchasing and distribution strategies. Their stuff is dirt cheap and often in the city or town centre (there is one just off the main drag in Frankfurt - you can buy your Hugo Boss suits in a flashy store and then go around the corner to buy cheap tins of food)

It is pretty good quality produce too (good enough fuer eine gute buergerliche Hausfrau anyway). Nah, I think that the search for the productivity miracle has to lie elsewhere.

Related ITEM though, a BBC Radio news report quoterd some scientific study (I can't remember the Journal but it souded reputable) saying that they had uncovered the difference between French lack of obesity and US obesity and it was in poprtion sizes - despite the French prediliction for butter Croissant, buckets of Wine, Chocalate Deserts, Cream Sauces with red meat dinners, sausages etc..

Maybe John Kay has a point after all about the reliability of the Productivity data after all - i.e. the sales in the US cannot be counted as producing the equivlent amount of benefits as lower sales in Europe.

Posted by: tadhgin on August 28, 2003 04:28 AM

tadhgin, there we are again (!) measuring the "equivalent amount of benefits". A propos portion size, I came to think about these emmigrant postcards (about 1M of 5M Swedes left for the US before and around 1800). The cards - early trick-photo - displayed emmigrants handling crops where all the fruits and other products were enormous, like one potato filled an entire carriage.

Posted by: Mats on August 28, 2003 04:39 AM

Immigrant story:

My Swedish grandfather, fresh off the boat in New York, bought what he thought were the biggest oranges he'd ever imagined and so discovered grapefruit.

He liked America nonetheless.

Posted by: bad Jim on August 28, 2003 04:54 AM

I'm surprised that Brad would introduce BLS data and analysts to his comment, because official BLS data can't be the source of evidence for growing retail productivity. The BLS productivity series on output per hour in grocery stores shows declining productivity from 1972 until 1997, when it begins to grow. Positive productivity grwoth likely appeared after 1997 because that's when BLS introduced changes to the Consumer Price Index for Food at Home, and those changes should lead to lower measured inflation and hence higher measured real output and productivity growth in grocery stores. There's ample room for controversy in discussions about retail productivity precisely because the official statistics aren't very useful.

Posted by: Jim MacDonald on August 28, 2003 05:49 AM

I don't know that the three tier structure--CostCo, Safeway, Andronico's--is stable outside large cities with considerable demographic diversity.

An anecdote, but I hope an illustrative anecdote:

Twenty odd years ago, I moved to a small city. Didn't have much money so ended up in a dense residential neighbourhood between two exits of a highway. At the southern exit, there were two shopping centers. One contained a slightly downscale supermarket, the other a butcher. At the northern exit there was a shopping center which contained a slightly more upscale supermarket. Soon after I arrived, a warehouse style supermarket--restricted choice, large sizes, no bags, not enough cashiers--opened in the shopping center with the butcher. Within a year the butcher had closed.

It wasn't that simple, of course. The first thing that happened was the downscale supermarket closed. It lost too many customers to the warehouse supermarket. Those of its customers that didn't want to shop at the warehouse--didn't want long lines, wanted items or sizes not available, etc.--perforce shifted to the northern supermarket.

So why did the butcher close? When we moved in, we had asked People Like Us where to shop and were told that People Like Us bought most of our stuff at the downscale supermarket, because it was a penny or two cheaper on most items, but its meat was lousy, so you went to the butcher for that. But the meat at the more upscale supermarket was better, or at least not so bad that it required a trip between highway exits to avoid it. So the butcher lost enough custom, started losing money and closed.

There are two morals to this story. One is the familiar one that retail is a lousy business. The other is that the availability of "high-end" retail is very precarious. Changes in customer flow caused by circumstances quite beyond a retailer's control can kill him.

So it's not necessarily misguided for the political representatives of a community to resist the introduction of a new class of retail on the grounds it will harm an existing class of retail. It probably will.

Posted by: jam on August 28, 2003 06:23 AM

I fourth Mr. Fritz. I think Brad has missed the importance of a sentence at the beginning of the article:

"It is almost impossible today to create new shopping centres on greenfield sites."

No where do you take into account the value of preserving green space. The issue of big box stores is not simply one of shopping, it is one of the urban environment. North America underprices the value of green space around compact cities, perhaps because it has so much of the former. As my 11-year old said on a recent trip to the UK
"Even though England has more people, it keeps them all close together so they still have room for countryside".

Posted by: Tom Slee on August 28, 2003 06:28 AM

I feel unusual skepticism concerning some of the posts on this topic. For instance, the claim that the lack of an automobile-based infrastructure makes big-box retailing unsuitable in Europe implies that big-box stores would fail. In that case, why prohibit them?
One poster claims in one paragraph that European space use patterns renders Costco-like stores unsuitable in Europe; two paragraphs later he claims that Europeans have them anyway. Am I alone in seeing a problem here?
He and at least one other poster note that large stores are (at least in some places) regulated in such a way as not to force small stores out of business. Why do I think that these regulations result in higher prices, which matters for low-income people?
In general, I suspect that these decisions were driven by people who either 1)directly benefit from higher prices, or 2)have high enough incomes that they can afford to trade higher prices for esthetics.

Posted by: Jonathan Goldberg on August 28, 2003 06:51 AM

very primitive question, but would like someone to explain it to me:

- People employed by CostCo probably have a more unstable job than Andronico, and surely get a much lower salary for long hard working hours.
- Andronico depends only on himself, and is very motivated by his job: he may apply any idea he has on improving his business. If the butcher is Andronica, she won't get fired if she gets pregnant. If the Andronicus have a baby they can just keep it near them while they work. And they surely have more money to spend as customers.

I suspect this argument is flawed so tell me, why can't the world be like that?

Posted by: ob on August 28, 2003 07:13 AM

Fast-food journalism? No: lazy, silly season, I'm on vacation but I'll file something anyway journalism.

He should have done like Krugman, spared us the pontificating about France and show us some pictures:

http://www.wws.princeton.edu/~pkrugman/enemyvac.html

Posted by: P O'Neill on August 28, 2003 07:44 AM

Some of the posters here seem to think Brad has taken John Kay wrong. Maybe, but surely John Kay has taken economist wrong, and generalized about Americans inaccurately, however popular the generalization may be. As Brad points out, inventory and handling practices in the US make a big difference in productivity and price. Those practices need not have an impact on the “shopping experience”. If the shopping experience is different between US and European cultures (so are a lot of other things), that probably has more to do with the front end, the place where all the selling takes place, than the inventory and handling aspects. So some part of the measured productivity advantage to US retail is real, and not the product of ignoring the qualitative differences in the shopping experience.

But here’s the really stinky part of Kay’s text: “When will Americans realise that if the rest of the world is not like the US, that is not necessarily a problem - either for us or for them?” When will journalists (and quasi-jounalist bloggers and talking heads and spouters of all kinds), in Europe, in the US, where ever, stop taking their own prejudices as fact? Who told him I feel sorry for French shoppers? I don’t recall ever having that thought. I had a good two years of every Thursday street markets in Scheveningen to try out a somewhat similar shopping experience to the one he describes, with no bad effects. Isn’t Kay’s paean to French street markets just a little bit of the pot calling the kettle black? When will John Kay realize (that he spelled “realize” wrong) that if the US is not like the rest of the world, that isn’t necessarily a problem, for them or for us.

Posted by: K Harris on August 28, 2003 07:49 AM

I did enjoy the withering scorn in BDL's post, but France is a bad example as the population density there is considerably lower than the UK or Benelux, hence the greater prevelance of out-of-town shopping. As for the urban European poor (especially older people) the benefits to them of Costco equivalents has to be pretty minor, for reasons cited above. The regulation of course makes things more expensive, but the European trade-off of retaining 'social cohesion' for an increase in overall cost isn't entirely a scam by the richer Europeans to keep the peasants down. Market stalls are also a typical entry level job for 'informal sector' workers, often new immigrants - no barcodes, but no taxes either ;)

Posted by: Gabriel on August 28, 2003 08:13 AM

Allow me to subject drift a bit...since Brad titled this under shoddy media/journalism, unsual comparisons etc.

myYahoo news lists opinion columns next to the news item. Listed next to a story about a military death in Iraq was a piece titled "West Nile Virus More Deadly Than Iraq War" on the laughably name site Accuracy In the Media, (www.aim.org)
So...I read it...THE MOST INSANE COMPARISON IN THE HISTORY OF JOURNALISM!!! The comparison is (round numbers here) 300 deaths in Iraq and 300+ dead from West Nile in the U.S. No hint that 300 deaths in Iraq is from a (again, round numbers) 250,000 population, whereas 300 West Nile from a population arrox 250,000,000. He even suggest that bringing the troops home is irresponsible due to them facing West Nile.

It must be August...

Posted by: S0c7 on August 28, 2003 08:59 AM

Jam writes:
> I don't know that the three tier structure--CostCo, Safeway,
> Andronico's--is stable outside large cities with considerable
> demographic diversity.

I guess you have to define "large" here. I live in Columbia, MO (urbanized area: ~100,000 people). Ten years ago, I think they had a one-tier structure. Supermarkets varied in quality (e.g., Schnucks had better produce), location (Nowell's had the closest store to downtown, and price (Gerbes was reliably cheapest, but that was it.)

Then Sam's came on the scene to give us the "Costco" tier. Doing so pressured the supermarkets, and more pressure was added when Walmart put their first Supercenter in, although that's really just another cheap supermarket. Interestingly, the only real upper tier places appeared after another supermarket competitor (HyVee) entered the market with a gleaming new store. The smallest local chain (Nowell's) folded, and the others saw their business squeezed in a way that led to more homogeneity between them.

But then the interesting thing happened: we finally got a high end butcher/grocer (this is after the bubble burst) and a new wine store opened downtown. I think this is actually more stable than anything preceding, precisely because all of Brad deLong's niches are filled. Sam's is Sam's, take it or leave it. Supermarkets compete mostly on price in the "convenient portions" niche, and the truly good stuff is now found elsewhere. There might be some minimum size requirement
for this to happen in a given market, but I think even 100K will do it, and that now covers a lot.

The same thing seems to be happening in "department store" retail. Columbia used to be just downtown retailers; then they built the mall with a Sears, and two department stores. Then Wal*Mart became very strong, but the surprising outcome there is that this pinched the "mid-level" department stores like Sears and Penney's and Dillard's while being accompanied by a resurgence in the (now more upscale) retail specialists downtown. Now, I know this isn't how it works in much smaller places; they tend to lose everything but the Wal*mart since there is no viable high end and the middle just collapses too quickly since people can make roadtrips to the regional mall. There is a minimum size that you don't see in more rural areas, but the "tipping point" for 3 tiers is probably lower than you might think.

Posted by: Jonathan King on August 28, 2003 09:12 AM

K Harris: The point is that Europeans place value on certain things that Americans see as unimportant externalities... whether it's because of space issues, or whether it's because of culture, the difference is real and shouldn't be ignored.

Brad: I'm just echoing what everybody else here is saying- the problem with the analogy you've given is that you seem to be glossing over the enormous web of other economic and social effects of big box stores, and some of them may not be easily handled by market mechanisms. The pollution, space-wasting and increased obesity inherent in car culture, for example.

JIT delivery services and IT improvements are fine and good (to an extent... JIT is extraordinarily fragile) but that doesn't mean that Wal-Mart should be embraced by Europe, and if the European governments say "no", then that's their regulatory right.

Posted by: Demosthenes on August 28, 2003 09:18 AM

IIRC, shopping at Sam's or CostCo requires memership, and you need to show your paystub to get membership. If you're poor, you're out of luck. Also, I don't know of any of these places that has public transportation close by.

Posted by: rrh on August 28, 2003 09:50 AM

I'm glad that someone has mentioned ALDI and LIDL, which both have a fairly decent presence in the UK, and have brought along German markups (and shopping values): no real butchers' section, but cooked meat imported from Germany of very high quality.

Also, I think it's worth noting that Britain and especially continental Europe retain small specialised outlets that aren't in the 'Andronico's' mould: a quick tour of the Covered Market in Oxford shows how these outlets work.

You can sustain a small craft butcher's shop -- or craft bakery, or craft cheese-shop -- in most European towns, and in a way that doesn't seem sustainable outside the kind of American cities which are least typically American. (i.e. San Francisco and New York). And the craft butchers are actually often the first call of the less well-off, because they offer cuts that are more economical than those packed in shrink-wrap for the supermarkets. I think that's partly because most small-scale butchers buy local meat -- something that's more feasible in Europe than in the US, where the cows live in one state and the people live in another.

In short, the Andronico's experience very much exists in Europe, but usually at a fraction of the markup and 'snob value'. It's called 'shopping', and when you can get good-quality meat at decent prices, why buy half a cow at CostCo?

It's also worth mentioning that for most Europeans, the standard refrigerator is the size of what most Americans call a 'travel fridge', designed for a RV. That's because more emphasis is placed upon obtaining fresh produce than buying in bulk and freezing.

(Oh, and the British now have Wal-Mart. The Wal-Martification of Asda carries on apace.)

Posted by: nick sweeney on August 28, 2003 09:58 AM

Please folks, Europeans must all become Americans. Japanese must all become Americans. Everyone would be so much better off if they were Americans, still I have a fine time in Japan or France or Spain or Germany. It strikes me as odd that the French seldom use screens on windows, but I still like France and never feel deprived by being there.

As for Wal-Mart and Sam's. Well, I shop there but I sure find them generally awful looking and I sure would not want to be caught trying to form a union in one.

Ever wonder why it is impossible to get a good tasting cut of meat at Wal-Mart? Of course, it is cheap. Meat at Wal-Mart? Well, it has to do with a group of butchers in Texas who tried to form a union at Wal-Mart and were all fired and Wal-Mart began to order processed meats. But, Wal-Mart is cheap cheap cheap cheap cheap.

Posted by: anne on August 28, 2003 10:11 AM

Demosthenes,

"The difference is real and shouldn't be ignored." I'm a little lost here. Which difference? When I wander down to the Union Square (NYC) open air market and buy New York grown apples and New Jersey grown corn from lovely people who come to this market on the Square on a routine basis as part of their effort to keep body and soul together, am I experiencing a difference from the shopping pleasures enjoyed by Europeans or by my own country-folk just down the road at the Safeway? When should these differences not be ignored? When I read John Kay's inaccurate assumption that I think Europeans suffer from not being like the US, or when I make productivity comparisons? 'Cause, when I make productivity comparisons, I don't assume I am making quality of life comparisons, just as I don't when I make GDP comparisons.

I'm afraid your assertion that Americans don't place value on things that Europeans do borders on the same sort of broad, lump-all-the-residents-of-a-large-diverse-country-together sort of statement that Kay made. I doubt that everyone I know goes to the various outdoor markets in New York City, but I have a hard time thinking of many who don't. (I admit to having a very small circle of friends.) I know my tiny little Midwest home town has an outdoor market that gets pretty busy when the fresh produce comes in, and that through the agricultural countryside back home, what we call "farm stands" abound. Fresh food, sold by them what grows it, at higher than grocery store prices. They stay in business because their customers like those "externalities" (though, I don't think they are actually externalities if I absorb the entire cost in the goods I buy). So I'm gonna say it again, as clearly as I know how. Kay isn't talking about "Americans" (apologies to the Paraguayans whom he probably didn't have in mind), when he says he is. He's talking about some people who live in North American whom he believes hold certain views about Europeans. He doesn't know how generally held those views are, but he pretends they are widely held. In my experience, they are not. I think he is essentially creating a North American straw man. You seem to be making a broad generalization, too, not about how narrow minded we North Americans are, but about preferences. To the extent that I understand you assertion, I think I disagree with it, too.

Posted by: K Harris on August 28, 2003 10:19 AM

There was an interesting comment above that tied into what I wrote in the last WalMart thread here, which is that the technology/organizational efficiency improvements done by WalMart et al is legitimate and excellent, but that it seems to be accepted (evidently including by our host) that the evils of WalMart - loss of greenfield, labor abuses, auto congestion - _must_ accompany those goods. Yet companies like ALDI in Europe show that not to be the case. Through fairly rigorous regulation, ALDIs tend to be on non-greenfield sites, accessible to more people with less driving, and, AFAIK, less likely to imprison workers for unpaid overtime. Prices are marginally higher than Walmart, but people still see the benefits of IT and other, actual productivity increases (as opposed to merely socializing costs, which is how half of US productivity gains seem to come).

I think this also hints at the answer to those above who questioned the apparent contradiction between the statements "Europeans don't want big boxes" and "Europeans already have big boxes." Europeans do, in fact, have access to fairly modern, efficient large markets, ones that are generally analogous to CostCo. But, as Kay says, the US and Europe are different places, and this means that many of the evils of CostCo in the US have been restricted in CostCo-equivalents in Europe.

One other thing sticks in my craw. It's been hinted at, but I think not stated strongly enough. Prof DeLong loves to rhapsodize about the benefits of various job-cutting efficiencies because of the putative benefits to the poor. In the past he's even evoked single mothers blessed by the opportunity to buy Chinese sweatshop goods, suggesting that anyone supporting living wages for sweatshop workers really hates single mothers. Well, it's a similar deal here. The savings from suburban big boxes (especially on food) are almost entirely unavailable to the urban poor. More importantly, suburban big boxes actively destroy urban shopping opportunities. Middle class urbanites can - and do - drive to the strip to get their big, cheap packages of beef. Meanwhile, there's probably NO place left to get fresh beef that's readliy accessible to an urban single mother. There are millions of Americans who match this description (maybe not the single mother part...). I wonder how many Europeans have been left without access to fresh meat and produce, because the stores on the periphery have cannibalized those in the center?

Posted by: JRoth on August 28, 2003 10:21 AM

OB asked a "very primitive question, but would like someone to explain it to me" about Andronico's, seeming to think it is a family run store (wife the butcher, baby in the bassinet behind the counter). It is not. It is a high-end supermarket with a number of stores around the San Francisco bay area (I know of at least 6 locations). Actual family run grocery stores (other than convenience stores) are very rare.

Brad left out some other choices in Berkeley: there is a twice a week farmers market, although on closed streets rather than in a market hall. There is a large supermarket that specializes in produce (The Berkeley Bowl Market) -- twenty kinds or apples etc., which is where I shop -- cheaper than Andronico's, better than Safeway. (Essentially no pre-packaged meat, you ask the butcher for what you want and he/she gets it and wraps it.) There is also a cheese shop which is a worker's cooperative.

Posted by: David Margolies on August 28, 2003 10:22 AM

Who do you suppose lives more comfortably, a career worker in any particular French market or a worker in any particular Wal-Mart? Union anyone?

Posted by: anne on August 28, 2003 10:24 AM

OB asked a "very primitive question, but would like someone to explain it to me" about Andronico's, seeming to think it is a family run store (wife the butcher, baby in the bassinet behind the counter). It is not. It is a high-end supermarket with a number of stores around the San Francisco bay area (I know of at least 6 locations). Actual family run grocery stores (other than convenience stores) are very rare.

Brad left out some other choices in Berkeley: there is a twice a week farmers market, although on closed streets rather than in a market hall. There is a large supermarket that specializes in produce (The Berkeley Bowl Market) -- twenty kinds or apples etc., which is where I shop -- cheaper than Andronico's, better than Safeway. (Essentially no pre-packaged meat, you ask the butcher for what you want and he/she gets it and wraps it.) There is also a cheese shop which is a worker's cooperative.

Posted by: David Margolies on August 28, 2003 10:26 AM

I think some of you are nitpicking on the details of his example a bit too much. As he was saying, he was channeling Milton Friedman. In a true market economy with no regulation, you will have a spectrum of stores on the price/quality curve (to vastly simplify things to two parameters). He just happened to choose Costco, Andronico's, and Safeway as three points as an example. The specifics aren't THAT important.

Now, if you artificially set the limits of the curve by restricting on quality, for example, by only allowing Andronicos to exist, then you will probably shift the curve a bit (Andronico's quality might suffer a bit due to less competition), and also hurt the consumer, who now has fewer choices.

The question is, though, whether this is the situation in Europe: restricted choice through more regulation.

Posted by: ETC on August 28, 2003 11:01 AM

all these large-scale soultions that abound nowadays are killing the space for individual initiative.
Years ago any unqualified person might think of opening their own grocery, cafeteria, or any kind of retail business. Nowadays they are doomed to be minimum-wage workers and shop at CostCo.

Posted by: mindanao on August 28, 2003 11:15 AM

Where, oh where, has the New Deal gone? What I know of even the new, big-box Europe says that people there generally have higher incomes (either through work or welfare), have significantly different spending patterns than here in the US because of differential cost structures-- much more on clothing, food, etc., but maybe less on other things-- and don't shop on price alone. And they save, too.

There may be at least two good reasons why people don't shop price alone. One may be quality. Another may be an idea that it is socially good to keep incomes high and compatriots employed. Other reasons probably exist.

Here in the US we have lots of relatively low incomes (low minimum wage and many, many exemptions from it) and very high income disparities. Add to that rising costs of housing and other goods as well as rising expectations and declining common services. You get people under tremendous financial pressure (real or perceived) who feel they need to shop price above all.

Lots of these people are middle-class, however defined. Really poor people here have always had to content themselves with schlock until, very recently, some supermarkets discovered that poor people will pay a little more for decent produce.

What Western Europe is likely missing is the very bottom end of schlock that we have so much of here. That end of the market hurts everything, on the "bad money driving out good" model. Is it good, in the sense that almost anyone here can afford it? Probably. Would it be better to have higher incomes all around and less income disparity so that schlock wasn't so needed? Yes.

Posted by: Altoid on August 28, 2003 12:02 PM

Meanwhile, there's probably NO place left to get fresh beef that's readliy accessible to an urban single mother. There are millions of Americans who match this description (maybe not the single mother part...).

This is quite simply wrong. I live a couple of blocks from some low-rent neighborhoods, and there's a discount meat and fish market and a butcher within walking distance of my house that I know of, and plenty more within bus distance.

Posted by: Jake McGuire on August 28, 2003 12:21 PM

There are a number of recent public health studies that point out the difficulty of finding a range of healthy foods in a significant number of low income neighborhoods.

Posted by: anne on August 28, 2003 12:45 PM

"I do not believe Fritz when he says that the European poor don't have automobiles. Holland (and the poor neighbourhood where I live) is chock-full of cars. Maybe some poor individuals (like me) don't own one, but every family has at least one."

A good point; I think income supports and the like make "poor" less so in much of Western Europe. But you're missing something about auto-oriented development. In the US auto-oriented areas, one car per adult is near-necessary, so two per household is common. If there are teenagers of driving age in the household there are typically at least three. A less obvious point is that in such places, parents spend a large amount of time transporting children and younger teenagers, even to after-school activities and stores,

Posted by: Randolph Fritz on August 28, 2003 01:36 PM

A number of commentators correctly identify the difficulties of assigning the costs of externalities and measuring their impact. I think it is safe to say that an edge of town big box store with five acres of paving and no sidewalk to reach it creates costs that are not reflected in the cost of the beef it sells but are borne by entire communities. No one observed that the process by which externalities are evaluated differ tremendously between Europe and the US. While there are differences among European countries, local governments have very limited responsibilities and important stuff like land use is left to the national or regional governments, making decisions based on relatively well articulated values schema (however much we might disagree with them.) In the US, land use decisions are mostly made at the most local of levels. This has particular implications for big box stores that are built at the edge of cities. West of the Appalachians that means township governments and their zoning boards make most of the decisions about the siting of big box stores. Their boards are customarily unpaid, part time citizens trying to do their best. Are they susceptible to intimidation, seduction, flattery, or bribery. Will they have the expertise, values structure, or resources to pose difficult questions or to evaluate development proposals? I think usually not.

Posted by: Ray on August 28, 2003 01:47 PM

"For instance, the claim that the lack of an automobile-based infrastructure makes big-box retailing unsuitable in Europe implies that big-box stores would fail."

The US model would have failed without huge subsidies. In the US experience, the infrastructure was created by fiat. There were a number of reasons for this: a lot of money was made building the new population centers, anti-urban sentiment, much of it racist, and the automobile and oil industries got federal military funding for the national network of highways. (See Jackson, *Crabgrass Frontier*, for some of this.)

Businesspeople, by and large, are huge copycats; very few of them wish to take risks, and there are people in Western Europe who apparently want to replicate the US model, huge subsidies and all.

Posted by: Randolph Fritz on August 28, 2003 01:48 PM

"For instance, the claim that the lack of an automobile-based infrastructure makes big-box retailing unsuitable in Europe implies that big-box stores would fail."

The US model would have failed without huge subsidies. In the US experience, the infrastructure was created by fiat. There were a number of reasons for this: a lot of money was made building the new population centers, anti-urban sentiment, much of it racist, and the automobile and oil industries got federal military funding for the national network of highways. (See Jackson, *Crabgrass Frontier*, for some of this.)

Businesspeople, by and large, are huge copycats; very few of them wish to take risks, and there are people in Western Europe who apparently want to replicate the US model, huge subsidies and all.

Posted by: Randolph Fritz on August 28, 2003 02:42 PM

"West of the Appalachians that means township governments and their zoning boards make most of the decisions about the siting of big box stores. Their boards are customarily unpaid, part time citizens trying to do their best. Are they susceptible to intimidation, seduction, flattery, or bribery. Will they have the expertise, values structure, or resources to pose difficult questions or to evaluate development proposals? I think usually not."

I'd respectfully disagree. The local board probably has a much more acurate assesment of the relevant conditions, costs and benefits, then some official far away in the capitol.
If Wal-Mart was coming to my town I'd rather the city board decided on it then the folks in Sacramento, who already have other policy to screw up.

Radek

Posted by: radek on August 28, 2003 02:53 PM

Nice writeup Brad. Even though I loathe big box stores, I have to admit that you've got a good argument.

Posted by: Ian Welsh on August 28, 2003 05:39 PM

I am not an economist, but I have the impression that there is a big cultural difference between Europe and the US over what to do with rising productivity. In the US, virtually all productivity growth (which in the long run is rising prosperity) is translated into higher incomes and more individual spending. In Europe, some of the increased prosperity is channeled into non-GDP enhancing areas like longer holidays.
In the same way, if a new technology or business method (e.g. GM foods or big box retailing), which increases productivity but threatens to undermine social or cultural traditions, Europe seems to find it easier to regulate or modify them so that they 'fit' better into society, while accepting that some of the advantages will be diminished.

Posted by: Frank Visser on August 28, 2003 05:41 PM

1) in response to etc: perhaps the notion of "channeling" milton friedman is an appropriately superstitious metaphor. in any real
world there is no continuous curve offering a full spectrum of retail choices. were any number of points on such a curve to be realized there would either be a ridiculous oversupply or stores
would be so small as to lose any economies of scale and wholesale negotiating power. the unfettered power of competitive markets alone do not account for economic structure and thus for how social provision is actually effected. such a notion of a supply side cornucopia is a mythological fantasy.
2) as to the issues brought up in these posts, it is clear from the miraculous tautology of revealed preference that in general euro-peans has a somewhat different preference structure than americans on average. (and please don't take umbrage that i have failed to take account of the uniqueness of your own individual utility preference function, for the point is, contrary to methodological individualism, that such preference functions are not a purely individual matter but rather a function of historically inherited cultural tradition and socio-economic structures.) inspite of roughly equal productivity levels, euro-peans work less (35 hours per week in france and west germany), take longer vacations, prefer to pay higher taxes in exchange for much more extensive public welfare provision and prefer a more egalitarian distribution of income. and perhaps as well they may prefer a higher quality of alimentary consumption over lower prices and larger quantities, inspite of the availability of the same technologies. and for those american neo-classical types who would wish to complain of the lower productivity of the european retail sector, what of the level of productivity, the bang for the buck, in the american health care sector? i find these differences neither surprising nor reprehensible. if i had my druthers though i would prefer the euro-pean way all told. as for as i am concerned euro-peans are from earth and americans are from pluto.

Posted by: john c. halasz on August 28, 2003 06:47 PM

An interesting Gresham's point was the change in the bread baking business in Germany between about 1970 and 1990. In the 70s you mostly got your bread from a local bakery which baked maybe a hundred loaves of bread a day. Most bakeries had their own specialty, and if you had bread jones (I do) you bought different stuff at different places. Of course, many people had developed serious cases of brand loyalty and bought the same thing always. By 1990 you got your bread from a small outlet of an industrial "bread plant". There are lots of different varieties. They all taste the same, still better than wonderbread, bu nothing like it used to be. The former was better. The latter was a bit less expensive.

Josh Halpern

Posted by: Joshua Halpern on August 28, 2003 09:40 PM

I have really mixed feelings about box stores.

As an undergraduate student, when the local 24-hour box store opened on the edge of town (and let's keep in mind that I lived in a Midwestern college town, where traffic and land use externalities were mild at best), it was cause for rejoicing. Cheap food and clothing, lots of shopping in one place, we went with friends at 11 PM and had a fine old time.

I'm not sure, however, that processes that result in benefits for middle-class undergraduate students are necessarily good for the entire economy.

My grandmother now works at that box store (yes, I went to school in the same town my grandma lived in). Her wages are quite low, and the working conditions (which are generally the real achievement of unions) are poor (though of course she has the option of opting into or out of the job at her whim). Also, the development in that area, all utterly car-reliant, has spawned huge traffic problems which did not used to exist and for which there was no sensible planning. Finally, the corner grocery store died, which meant that those of my fellow students who do not happen to have access to a motor vehicle have severely limited options.

What does this mean? I really don't know; it's just my experience. But I've lived both sides of this debate, and both sets of statements have reality in my experience.

Posted by: Kimmitt on August 29, 2003 04:54 AM

>>Meanwhile, there's probably NO place left to get fresh
>>beef that's readliy accessible to an urban single mother.
>>There are millions of Americans who match this
>>description (maybe not the single mother part...).

>This is quite simply wrong. I live a couple of blocks from
>some low-rent neighborhoods, and there's a discount
>meat and fish market and a butcher within walking >distance of my house that I know of, and plenty more
>within bus distance.

Well, Jake, I'm relieved that the poor in your city seem to be better off than those in mine. Off he top of my head, the following (not small) Pittsburgh neighborhoods have no internal access to fresh meat or produce: Hill District (really 2-3 contiguous neighborhoods), Homewood, Lincoln-Larimer, Lemington. Outside city limits there are entire towns that I could add. The people who live in those neighborhoods in general do not own cars. You generously include bus access to fresh food. Do you do much grocery shopping by bus? With kids in tow? Please. People here rely on jitneys, unregulated car services run out of side door businesses. $5 round trip to the grocery store, but at least you don't need to stand on the bus with groceries at your knees and kids tugging at your sleeves.

All of which is to return to my point: these are the people that Prof DeLong likes to imagine benefitting from sweatshop labor and greenfield big boxes. And they don't. They simply don't.

Posted by: JRoth on August 29, 2003 07:19 AM

This all reminds me of the discussions with my (near-suburban chicago white middle class) family about the Sam's Club and the Costco. One problem is that the folks like my family gain individual benefits from their shifting alliegiance to these places, but do not personally experience the downsides.

Wal-Mart is the largest employer in nearly half the states. Wal-Mart, Sam''s Club, etc. are pretty universally heralded as wickedly lousy places to work. Low pay. Decreased access to ordinary civil rights. Where is the economic measurement of this? In weird "retail productivity" stats? In sales of "Nickel and Dimed?"

The difference is not the cars or the retail development patterns. The difference is the unions.

Posted by: biz on August 29, 2003 12:01 PM

All this talk about how productivity is measured has peaked my curiosity about the BLS methods in calculating national income and product. For example, how does the refinancing of a mortgage impact calculation of GDP? Of the productivity of the "service sector?" My guess there is more funny stuff going on than just BLS statisticians trying to figure out whether the quality of retail services are being maintained.

Posted by: Rick P on August 29, 2003 12:29 PM

In university town Carbondale, IL we've got a moderately pricey Schnuck's, 2 slightly cheaper Krogers, a Walmart superstore, and cheapest of all, and apparently patronized by many of the rural poor, an ALDI (which doesn't allow unions either, right?), and an "international grocery" and a warm-month "farmer's market".

Stuff is fairly cheap, like meat at Walmart that's apparently impregnated with water, and their "fresh" (actually frozen) chicken, and the big loaves of mushy white bread one can buy at Aldi for 50 cents or so, but like Joshua Halpern I like decent bread. While it's cheap it's not too good.

When I go to France, I can buy a fresh baked baguette every day, not to mention fresh fruit and vegetables all year 'round. Then there's decent chocolate. The thing is, everything tuna tastes better; even the canned tuna tastes better than American tuna.

But quality comes at a price; French food is much more expensive. And the Carrefour on the outskirts of the city isn't much cheaper.

Posted by: Charles on August 29, 2003 12:36 PM

For many years, large American cities actively resisted big-box (and medium-box -- like supermarkets) stores, much as many places in Europe still do. The rallying cry was usually that these big corporations were going to destroy the locally based smaller businesses, and this could not be permitted.

More recently, the rallying cry has been that the racist big corporations have been discriminating against poor and minorities in the inner cities by not putting stores there, forcing these people to shop at small stores that gouge them. (I don't know if it's from a new generation of activists who are unaware of what the previous generation was fighting.)

It's much like the white-flight/gentrification issue: if affluent white folks leave the city, it's awful because they're contributing to sprawl and segregation. If they move into the city, it's awful because they're driving up prices and displacing poor folk.

In large metropolitan areas (and I would include Pittsburgh in this), I don't think you can blame the lack of larger stores such as supermarkets in inner city neighborhoods on the mere presence of big-box stores in the suburbs. These areas are large enough and diverse enough to support a variety of stores.

Now that the zeitgeist has changed, the point may become moot anyway. Walmart has moved into very urban areas of LA (and probably other cities as well). Near my home there are multi-story Walmart and Target stores (with an interesting new piece of technology enablement: escalators for shopping carts).

Posted by: Curt Wilson on August 29, 2003 12:44 PM

in my small northern california town, we not only have organic farmer's markets daily, but we have 2 grocery stores that sell organic produce as well as meat raised locally that are grass fed, no anti-biotics, no chance for mad cow. of course, we also have safeway and rays, which are cheaper--even these mainline stores carry organic items. there is such a different taste and texture to organic chickens compared to regular foster farm chickens--and the eggs are recognizably different as well. you should taste the difference between organic and non-organic cream, fruit and vegetables, you'll pay the extra for good food.

Posted by: sharon on August 29, 2003 02:57 PM

I would appreciate it if everyone who talks about price would remember the large subsidies and externalities involved in the creation of big box stores. I suspect when all is accounted for, the big box stores are actually *more* expensive--certainly the auto-oriented settlement form is much more expensive than a moderate-density mixed-mode form. I don't know what the costs look like for a high-density urban form--is it more expensive to build and operate LA or Manhattan?

Posted by: Randolph Fritz on August 30, 2003 12:28 AM

I live in a low rent, mostly immigrant, neighbourhood in Tornto and I have to say that the big box, cheapo stores are nowhere within walking distance. There are some low cost supermarkets, but they still have bad, packaged meat that costs a lot more than the CostCo slabs. Doesn't prove anything, but my guess is that shops like CostCo are actually mainly a middle class phenom - the poor don't have freezers, cars and whatnot to take advantage.

Posted by: Ian Welsh on August 30, 2003 12:50 PM

>> But quality comes at a price; French food is much more expensive. And the Carrefour on the outskirts of the city isn't much cheaper.

Looking at the data, it's apparent that as a percentage of per capita income, Americans spend less on food than anyone else in the developed world: around 12% compared to 18%-ish in continental Europe.

Now, this raises a number of issues: I see that American farmers celebrate this 30-year trend demonstrating that they produce 'the world's safest, most abundant and most affordable food supply' -- in a procession ending at McDonalds, for fans of irony.

http://www.fb.com/news/nr/nr2002/nr0208a.html

But, if you run that graph against data on obesity, or especially conditions such as Type II diabetes (or Corn Syrup Sickness, as it should be known) I think it can also tell another story.

Posted by: nick sweeney on August 30, 2003 03:30 PM
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