Kristian Niemietz Blog

published on the Institute of Economic Affairs (IEA) blog, August 2009

Machynlleth, a small town in Wales, is under attack from a vicious superpower. The Guardian’s local correspondent reports first hand from the heart of the combat zone:

“it’s only now, when I’m caught in the middle of it, that the full force of this injustice hits me. Like everyone else here I feel powerless, unstrung as I watch disaster unfolding in slow motion.”

The “disaster” has a name: Tesco plans to open a store in Machynlleth. That, in itself, does not yet sound very spectacular. Tesco opens new stores every now and then, and we don’t usually hear about it. But Machynlleth is not just any small town. It is the hometown of George Monbiot. And he will not surrender without a fight:

“If this monster is built, everything that is special and precious and distinctive about this town - the quirky shops, the UK’s oldest farmers’ market, the busy community - falls under its shadow. Tesco will suck the marrow out of us.”

However, Monbiot’s war diary takes a strange turn when he begins portraying the locals’ resentment against the store. If nearly the whole town rejects Tesco anyway, one wonders, then why all the hassle? Surely this means that the new branch will be near-empty most of the time, so why not lean back, and wait until the head office has to close down the notorious loss maker? McDonald’s, for example, withdrew from Bolivia after realising that most locals would not accept them. Monbiot’s confidence in the “right” moral sense of his fellow townsmen cannot be all that strong. Trust is good. Control is better.

Monbiot’s rejects the branch opening for both cultural and economic reasons. He believes that Tesco stores destroy jobs, because “independent shops employ five times as many people per unit of turnover”. This is a vivid example of what Bryan Caplan calls the “make-work bias“, the confusion of work creation with wealth creation. If a high ratio of employees to turnover was a good thing per se, why not achieve an even higher ratio by prohibiting the use of scanners and electronic tills at the checkout counter? And if the use of lorries was prohibited so that each article had to be carried to the stores by foot, then virtually the whole town could be employed in retail. But, as Caplan explains,

“Every time we figure out how to accomplish a goal using fewer workers, it enriches society, because labor is a valuable resource.”

Admittedly, I know nothing about the local economy of Machynlleth. But I would be very surprised if there was no sensible work that could be done there. Outside the Garden of Eden, there has never been a place where nothing useful could be done. So maybe George Monbiot should simply be a bit less worried about where his neighbours do their shopping.