Anti-market fallacies pt. 1

People unfamiliar with economics often make simple fallacies that skew their reasoning on such issues, and which often lead to odd ethical implications that they are unaware of. Let's take a look at one of those fallacies.

Claim: Big corporations such as Wal-Mart and Home Depot put small businesses out of business, and this is immoral.

Reality: Only consumers can put small businesses out of business. They do so by freely choosing to spend their money at Home Depot or Wal-Mart instead of at the small business. When a large corporation moves into town, no is forcing you to shop there, so if the residents of a town do not like the fact that the big bad corporation is trying put the small business out of commission, then it is merely a simple matter of the community refusing to spend their money at the corporation that will save the small business.

The fact that people freely chose to shop at the corporations shows that the corporation offers goods and services that are more highly valued than the ones offered by the small business. The corporation probably has a larger selection and cheaper prices.

If the selection is larger, than the lives of the residents are benefited by having more options at their disposal to improve their lives. If the prices are cheaper than the residents can receive the same or complementary goods and have more money left over to spend on other things which again improves their lives. When this extra money is spent on the next most valued goods/services of the consumers it increases the demand in those areas which increases the need for jobs, making up for the loss in jobs from consumers no longer shopping at the small businesses. All jobs lost by the shifting preferences of consumers will be reassimilated.

Ethics: The claim that it is immoral for the big-corporations to put small-business out of commission cannot be true because as I have just shown it is actually the consumers that put the small business out of business. So, does the anti-capitalist mean to say that it is immoral of consumers to shop at large corporations? If so, they must believe that people do not have a right to spend their money where they please, they only have the right to spend their own money where the anti-capitalist wants them to spend it. Are the anti-capitalists our mommies and daddies?

But the anti-capitalist is going to say, "but those poor people in the small business won't have jobs. That's just wrong!" The anti-capitalist is making the mistake that all bad econimists make: looking only at what is seen, and not what is unseen.

If the corporation is offering more selection, but the anti-capitalist gets their way and prohibits the corporation from setting up their business, then the workers who make the products that the small-business doesn't carry will be out of work. If the corporation is offering lower prices, then they are destroying jobs that would of been created by spending the extra money in other avenues. Because the anti-capitalist has only looked at what is seen, they have in fact destroyed more jobs than are lost with the small-business closing up!