Incomplete analysis

Reader comment on: Staples and Job Creation

Submitted by Fast Eddie (United States), Jan 10, 2012 09:22

How interesting that the Romney critics raise the issue of the jobs lost

at higher-priced/less efficient competitors and ignore the fact that the money

which is saved by customers shopping at the more efficient stores (Staples

in this instance) is then put into the economy as spending that would not

have occurred except for the fact that the extra money is available because

the customers spent less at Staples. In other words, given a fixed

amount of money to spend, the customer who has a Staples available will

have money left over after buying his supplies, as contrasted with the customer

who must spend more money at a non-Staples. And this 'left over' money will

then be spent on other goods and services, an act which itself creates jobs.

The bottom line is that lower prices at stores like Staples do not have a NET

negative employment effect because the money that is not spent at Staples is

spent elsewhere. It's too bad for the competitiors who, indeed, shed jobs, but

it is good that other jobs are created to absorb the money now not spent at

Staples competitors. The sort of analysis used against Romney here is

akin to that used to justify huge govt. borrowing to 'stimulate' the economy, given

that the stimulus funds must be extracted from the economy somehow, usually by

a combination of taxes and borrowing, both of which have long term negative effects

which easily offset the stimulus effect.

---

Note: Comments are moderated by the editor and are subject to editing.

Comment on this item