With all the Black Friday hype I got to thinking .... who, if anyone, is Black Friday helping?
We are told that consumer spending drives the economy ... and therefore one would think that all this hype, and wanton spending, would be good for the economy. Well you are probably right, except the question is ... who's economy is being stimulated?
I never ever ever ever shop at WalMart. I refuse to even go through the doors, but for research purposes I decided to look through the Black Friday WalMart flyer.
So what do I see. http://www.black-friday.net/...
Page 1 is all electronics and a lot of big ticket items. Lots of Emerson and Samsung products from TVs to computers to monitors to BlueRay players to cameras. Now of course since I do not go into WalMart I can not verify that these product are not made in America ... but I think in these cases I am on pretty solid ground in making that assertion, although there was one camera on page 1 branded as Kodak (so probably not a clean foreign sweep - but damn close). So for Page 1, I think the stimulus has to go to China and likely Korea (Samsung is Korean but they make a lot of stuff in China).
Page 2 is more electronics and printers and game systems and a lots of cheap movies. Obviously the electronics are likely imported, but the movies will at least have some money flowing back to Hollywood ... so a little American stimulation here - though when movies go for $5 or $1.96 I'm thinking not a lot of cash is heading to Hollywood.
Page 3 - bikes, scooters, and toys. I'm going out on a limb here and thinking that this is probably almost a complete China sweep for the actual labor making the stuff, unless Vietnam, Thailand or Indonesia has managed to sneak in a few items. Of course the brands of the toys (Mattel, Fisher Price etc) means that at least some of the money is staying in the US at head office, so not a total blowout.
Page 4 - bedding, household appliances, and clothing. Again we see that there are some nominally US brands in the household appliances, though almost all the products are made in Asia or Mexico. I can't vouch for where the bedding is made, but I'd bet the clothing is from Asia or Central America.
Page 5. More clothing and a few tools. Similar these, clothing from offshore and tools branded with a US name, but most likely made overseas.
Page 6. Since we are talking WalMart we have to have the obligatory guns (rifles, pistols and ammo) placed so discretely just below the lovely heart warming, Peace to all Men, Christmas decorations ... how bloody appropriate!
The point: So what is the point? Simply that all consumer spending is not created equal. Money spent on imported products bought at discount retailers (about all anyone can afford these days) is actually not good for the economy. It merely ships dollars overseas, leaking them out of the American economy. It would be far better if this money were never spent.
Spending that will help the economy is spending on goods and services that are local, where the money stays in the economy. For example a restaurant meal of will probably pump up the local economy more than a big screen tv purchase for a lot more money. In the case of the meal, pretty much all of the money goes to food, labor, rent and profit. In the TV case, the only money that stays is the profit, and a small allocation for rent and minimal customer service. Much of the gross goes to the foreign manufacturer, and the costs of shipping it to the US.
On this cheery note I want to leave you with two more points:
1. Turn OFF the dang TV. It is designed to turn you into a consumer of shit you do not need. In fact we now have hard evidence that the introduction of TV actually increased spending and increased debt (using research going back to the introduction of TV in the 40's and 50's). http://financeaddict.com/...
“Households in markets with access to television [were] 3.2 percentage points more likely to have borrowed to purchase durable goods. [...I]ndividuals with television access [were] 2.9 percentage points more likely to hold nonmortgage debt of any sort.”
2. No one says it better than Carlin when it comes to consumerism.