WAL*MART WILL NOT BE THE CAUSE OF CIVILIZATIONS COLLAPSE BUT IT IS A GOOD BELLWETHER ON THE CURRENT TRAJECTORY
Two comments on the recent post NOTE ON WAL*MART require further consideration.
On 5/28/09 at 3:49 PM TooManyTaxes said:
“I’m not sure whether this one has been asked before. If so, I apologize.”
No need to apologize TMT, it is hard to tell in the midst of all the baseless filibuster.
TMT asked about Wal*Mart’s subsidy. Before EMR responds to the specific questions it is important to note that TMT put his / her finger on one of the most important overarching problem facing contemporary society:
NO ONE is YET paying the full cost of contemporary, technology and competition-driven human ‘civilization.’ The current debt is overwhelming and grows every day.
EMR plans to address the consequences of the failure to acknowledge the size and scope of this negative balance in a future post.
In the meantime, here is a quick summary of four Spheres in which US of A citizens are going into debt to pay for unsustainable contemporary lifestyles and settlement patterns:
1. Total Debt – public and private: The numbers run from around $50 Trillion to over $70 Trillion for the total debt depending on ones assumptions. Total debt has grown steadily since 1973 when everyone should have known it was time to tighten belts. It has grown exponentially since 1980. Currently every Household of four owes about $675,000 to pay off public and private debt.
2. External Debt – the part of $50 Trillion to $70 Trillion Total Debt that is owed to those outside the US of A – is $13.7 Trillion according to the table Larry Gross cited recently. That is 99.95% of GNP which is not shrinking. It is immoral to pass Total Debt on the future generations without the resources to repay it or any benefit from the ‘investment.’ It is impossible to ignore debt to those outside the US of A. Jim Bacon recently asked the question: When will the Chinese stop loaning the US of A money to pay for deficit spending?
3. The cost of burning through Natural Capital is a far larger amount than Total Debt. This debt includes the cost of both non-renewable resources but also hard to renew resources. The cost of the Mass OverConsumption is stupendous. Even if citizens and their Agencies had the money, there is no place to ‘buy’ replacements. The debt is not quantifiable because the total cost includes the price of consumption of as yet un-calculated impacts. The Total Cost of the unsustainable trajectory is beyond current comprehension.
4. The infrastructure deficit. Infrastructure has been allowed to deteriorate without reinvestment. There is also the problem that the existing infrastructure – including most of that to be repaired with ‘stimulosus’ funds – supports unsustainable settlement patterns.
If one wants a chilling experience and a rude awakening, thumb through Kirkpatrick Sale’s book Human Scale published in 1980. Sale provides a comprehensive list of the reasons why there needed to be Fundamental Transformation in 1980. None of his examples are new but Sale provides a very comprehensive summary of what MIGHT happen from a 1980s perspective. It turns out to be a listing of what DID happen since 1980.
1980 was just after what Reich calls “The Almost Golden Age.” A lot of folks were living quite well, thank you – but the trends were already running against those in the bottom half of the Ziggurat.
In 1980 the Total Debt (Sphere 1. above) was around $12.5 Trillion in 1980 dollars – one fifth of today’s total.
In 1980 there was a positive trade balance (Sphere 2. above) and it had not been long since the US of A stopped being a net exporter of energy.
In 1980 the resources to support an advanced civilization were in much better shape (Sphere 3. above) ground water was not depleted and contaminated, marine resources were not in steep decline and more petroleum was being discovered that consumed.
In 1980 the infrastructure (Sphere 4. above) could have been much more easily evolved to support functional human settlement patterns.
Sale was not alone in seeing the cissies on the horizon but his listing of the components is compelling. EMR did not know Sale but shared most of his concerns at the time and had since the 1973 Wake-Up call.
Readers may recall the 1980 was the year the citizens elected a president that declared “Morning in America” and ridiculed all who were concerned about the trajectory of “American Exceptionalism” – “there you go again…”
The comments concerning population (by TMT) and on having passed the tipping (by Larry Gross) on the Climate Change Post of 30 May are on point. Larry may be right – it may be too late to salvage civilization as we know it. More on that in a later post.
Now to the specific questions that TMT raised:
“Let’s assume that Walmart does NOT pay its full locational costs. Who pays those costs?”
We go into this in detail and cite sources in PART FOUR – THE PROBLEM WITH CARS Chapter 10 – Learning From Big Boxes. The short answer is that to the extent these costs are now being paid by ANYONE (and not just piling up in the four Spheres noted above), the majority of the costs are picked up by all tax payers to pay for transport, infrastructure and training and by customers. (Customers do not account for the time and resources they expend to secure the “bargains”)
“How do we know that? How much do they pay?”
Actually there are simple calculators on line to calculate “the cost of a Wal*Mart” – one plugs in their Community and Region numbers and reads out the Wal*Mart costs. These back-of-the-envelope calculations document that if one added up ALL the costs the deficit would be very substantial.
“Does Walmart keep its subsidy? Or does it pass it along to its customers?”
They “pass along” only enough to maintain the APPEARANCE of offering bargains. After all, Wal*Mart is an Enterprise and Enterprises have been successful spending more on advertising the ILLUSION of a bargain than in passed on real savings.
“If, the latter is true, is there any overlap between those who pay subsidies to Walmart and those to whom Walmart passes along the subsidies?”
There is some overlap but not nearly enough to cover the costs – see note on drug costs below.
“Please note that I am not arguing for subsidies. I just want to understand EMR’s position.
“TMT”
Footnote: Since the Wal*Mart post last week, EMR had a conversation with a woman who had just completed a comprehensive comparison of the costs of Drugs for a couple on Medicare. Both Wal*Mart and the on-line drug company which was the “preferred” vendor of the drug supplement coverage provider were calculated. When a real market basket of drugs was evaluated the local Safeway was cheaper than Wal*Mart OR the on-line source. Now consider the elderly folks who drive miles to get to a Wal*Mart to “save money” on their drugs. While they are there, they will buy a lot of other stuff that is not a bargain either.
On 5/28/09 at 7:33 AM Larry said
“The problem I have with EMR’s stance on Walmart is this.
“He does not acknowledge the validity of a worldwide logistics supply network for goods and services…”
Larry, please document ANYPLACE EMR has EVER indicated he does not acknowledge the existence or ‘validity’ of long supply chains. The issue is NOT ‘validity,’ it is paying the full cost.
See EU environmental group T&E’s calculations on fair allocation of both surface and air freight. Long supply lines mean high costs, Period. These costs, and other location-variable costs are subsidized in many direct and indirect ways.
The higher energy prices go, the more Regional import replacement makes sense.
“it appears that there is absolutely no version of any kind whatsoever of a WalMart that is acceptable under any circumstances.”
All EMR asks it that those who ship long distance pay the full cost of their activities – level the playing field.
“In other words, the concept itself is unacceptable.”
If you mean the concept of living off subsidies in unacceptable, you are right. See prior comment on the value of debt racked up to pay for Mass OverConsumption.
“If he objects to the underlying concept that WalMart exploits to maximum advantage…
then, he’s also essentially rejecting any other retailer than also bases their business model on the same concept”.
That is true.
“So.. you can wipe off the map… Target, Home Depot, Lowes, McDonalds, etc, etc, just about every national chain that one can think of.”
Unless they pay the full cost of their activities they are eroding the potential for achieving a sustainable trajectory for civilization.
“He touched on this a couple of times before and what I got out of it was that he thinks that virtually all products need to come from the NUR and the USR but he’s always been mostly murky about what USRs are (and are not) and what the logistics supply functionality looks like between the USR(s) (?) and the NUR(s).”
Not ‘murky’ at all, Larry has just never bothered to read or try to understand.
“and perhaps the most paradoxical is the fact that the modern logistics supply network.. is a couple thousand years old and always evolving and optimizing. We find jugs of wine ..that old in the Mediterranean that were on their way from somewhere to somewhere else … as opposed to being grown locally and consumed locally.”
Larry has already forgotten that EMR is familiar with the history of trade and the importance of the emergence of Regional Neolithic Trading Villages 10,000 to 13,000 years ago and the extensive trading systems that have evolved since that time.
If buyers are willing to pay the FULL cost for items shipped long distances – no problem.
Those wine jugs “in the Mediterranean” went down with vessels that carried a knowledgeable wine buyer. Wine buyers had direct relationships with those from whom he bought the wine. Further if the person to whom he sold the wine in Rome, got sick he might lose his head. Those relationships do not now exist with current long supply lines.
Footnote: To keep perfumed wine fresh it was stored in airtight lead lined jugs and that resulted in lead poisoning of the elite who could afford imported wine. Testing for lead poisoning was not available in Imperial Rome so some wine merchants got off the hook.
It is clear that only a few in Rome or Carthage enjoyed imported wine. Most got their wine from the Region.
The bottom line is that if all the cost of transport and of monitoring, inspections, testing and enforcement to insure a safe product were added to the costs of the goods they would not be cheap. Ask the owners of those sick and dead pets or those exposed to toxic chemicals in manufactured products what sort of testing they would like to see.
“Just about every port in the world ..is an integral part of the settlement pattern it is part of.
sometimes.. the settlement pattern itself came second…and actually grew up around the port….”
Not sure what this has to do with the real price of tea or pet food.
“such ports are definitely not New Urban Regions… they are very clearly the ORIGINAL Urban Regions..with grid streets, shops at street level with living space above… etc..etc…”
Again Larry is lost in scale. Worse, he has never bothered to understand what a New Urban Region is. The only possible rationale for this statement is that Larry thinks ‘New Urban Region’ has something to do with Cluster-scale, Neighborhood-scale and Village-scale projects designed by New Urbanists. It does not.
Places that were major ports historically – even those that were silted in like Brugge – are now integral components of New Urban Regions. For example Ostia in the Roma NUR.
“virtually everything that NEW Urban Regions seem to be trying to emulate now days..”
?EMR has no idea what this means?
“EXCEPT when it comes to the logistics supply network… of which…advocates such as EMR are mostly mute and when they do speak of it.. they do in broad terms… with opinions that WalMarts ..are NOT..the Correct Way to do it.”
“so.. I ask….
“what is…
“and the silence is deafening.”
If one chooses not to listen or to learn…
EMR