How would you know? Just because it's never been truly tested in reality doesn't mean we can't stop and think about the situation. We know what corporations do when they are given a choice (they choose profits over anything else) and we know that consumers will choose low prices over everything else as well. So, it's not hard to draw the conclusion that this will result in consolidation, economies of scale, and eventually monopolies. Exactly what is already happening.

In a "free market", what is going to prevent this? Every actor here is acting in their best interest. What could possibly change their behavior other than the government telling them to?

Where has economies of scale hurt?

ISPs are a special case because regulations make it difficult or impossible for competitors to run cable. But economies of scale turned cars, PCs, consumer electronics, air travel, etc, from rich peoples play toys into affordable products for the masses. As consolidation hit all those industries their products merely got cheaper and in most cases, far better.

Walmart. Walmart has destroyed thousands of businesses. Now you can argue the consumer got lower prices, but low prices don't matter when no one has money to afford them. Additionally, those economies of scale produced cheap, disposable, polluting goods that have an engineered lifetime so that customers have to keep buying the same appliance (or whatever) over and over.

The question isn't when economies of scale hurt, that's a loaded question. The question is "when does consolidation no longer benefit the consumer?". I would argue many, many industries have reached this point, with ISPs being the most obvious one, but there are many examples (like the syringe one given above) where a business you've never heard of silently corners the market through consolidation and trust building.

Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it. But that ignores the fact that the smaller competitors didn't pay much better, and never had a stock option plan, so the pay difference was marginal while the customer benefit was massive. Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

And it's products are as good or better as the competitors. I hate Walmart, hate shopping there, but when I have to I'm always struck by how good the products are and how amazing the prices are.

You're off-base in almost every regard.

>It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

It's a multifaceted issue. Yes, Walmart sells cheap stuff, but that's not the company's only impact on the standard of living. The middle class has been steadily shrinking since the 70s, consistent with the rise of Walmart http://www.huffingtonpost.com/2013/06/06/middle-class-jobs-i...

> You can argue that Walmart hurt the standard of living of the Americans (less than 1% of US employees) who actually work for it.

The key issue is not Walmart's employees, but rather the employees of the companies they source from.

> Walmart big advantage wasn't labor costs, it was scale and inventory management from day one.

Once again, it's about the cost of the goods they sell that has a bigger economic impact than their direct labor cost. What goes into the cost of the goods they sell? Labor costs of their suppliers. What did they do after their advantage of scale and great inventory management management eroded? They started sourcing products from markets that were fueled by cheap labor i.e. not the USA. Sam Walton has been rolling in his grave for years: The first true Wal-Mart opened on July 2, 1962, in Rogers, Arkansas.[18] Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street. He launched a determined effort to market American-made products. Included in the effort was a willingness to find American manufacturers who could supply merchandise for the entire Wal-Mart chain at a price low enough to meet the foreign competition. --> https://en.m.wikipedia.org/wiki/Sam_Walton

> I'm always struck by how good the products are and how amazing the prices are.

You're probably one of very few

When a Walmart opens, it knocks out about half the jobs in a small town. It doesn't replace that number. It also pays so low many of its employees are on welfare. Companies like WalMart are subsidized by the taxpayer. Repeat that across thousands of stores to get enormous impact on economy.

Add downsizing, consolidation, price gouging (i.e. Koch's, oil), and offshoring to get an even bigger one across the board. The Recession was a given with buying power always going down while costs always go up.

Walmart has certainly not been a huge boon to the middle class, if they have been, we have not seen any evidence of it. The middle class is shrinking. So if this is true, that means the middle class is doing MUCH worse than realized.

From what I've read, Despite the cheaper prices, there was a net loss in jobs and significant damage to small business-resulting in higher losses in the local economy than gained from cheaper product. I don't know if there's enough evidence of all of that, but it seems logical.

Also you're ignoring the local economic impact of closing small businesses. It's not just the small retail store employee that loses out. Small businesses close-that means there's less need for accountants, cleaners, advertisers, real estate, etc. Walmart does all of this at the corporate level. This results in even more, well paying job loss, and sets off a spiral that destroys these communities.

> And it's products are as good or better as the competitors.

Sounds like confirmation bias to me. Nothing I ever see or buy from walmart has ever been quality, but I couldn't present that as evidence.

>Walmart has been a huge boon to the middle class. It's inarguable that consumers got lower prices, substantially lower prices. That's increased their standard of living.

Only when thinking in first-order effects. How about the city businesses it destroyed, and thus the standard of living associated with the families that owned them and the whole support system? How about the power it affects upon manufacturers -- and thus to the people that work there?

I think Walmart has damaged the economy a lot. Maybe smaller companies are less efficient but Walmart has destroyed a lot of small business that provided fairly stable jobs to middle class people.

Are you familiar with intelligence squared? I encourage you to watch their debate on the value of walmart to society.

Destroying jobs is precisely how economies of scale and efficiency generally happens. If those other businesses kept employing as many people, products wouldn't get cheaper as much

How does Wal-mart stay in business if "no one has money to afford them"?

That's easy to answer: it doesn't in the long run (assuming it was the only player -- of course the reality is more nuanced).

But it can destroy a whole lot of value (and be the last "business" standing) in the short and mid-run.

In fact as such businesses erode the working/middle class, short and mid-term they become more enticing to it than other stores, since they are the cheaper options.

If a company causes a "race to the bottom" for jobs and wages by selling too cheaply and paying too little, then those whose wages are affected will mostly be able to shop at that place exactly. And if that company is one business upon many that are causing the same issues, then people wont even be able to single them out for blaming...

They stay in business courtesy of government programs to keep people afloat enough to afford basic necessities, and by negotiating to pay reduced or no local taxes or infrastructure costs, coupled with relocating stores any time a tax-break deal expires. As long as you don't have to pay a living wage (because the government picks up the difference) and don't have to pay the cost of building and maintaining the infrastructure of your store (because the government picks up the difference), you can "sustain" an otherwise-unprofitable business for quite a long time.

Walmart isn't singular they are part of a huge array of companies paying shit wages.

A lot of people in the same economic class as the workers are receiving government assistance meaning you are footing the bill for the food stamps that feeds the cashiers kids while ironically congratulating yourself on the good deal you got.

Easy. Food stamps.

https://www.google.com/amp/s/www.forbes.com/sites/clareoconn...

http://www.slate.com/articles/business/moneybox/2014/04/walm...

At least to me it looks like making the market more "free" by means of deregulation would only exacerbate the problems mentioned above.

Free market != deregulation

Sadly, it often does in the realm of public discourse as directed by politicians and the average voter who engages.

Making the market "monopoly and oligopoly free" by regulation, as a synopsis.

>We haven't had anything approaching a free market since the early 20th century

Hong Kong is often held up as a fairly free market that has worked well. The government does get involved in health care and the like but commerce is pretty free.

http://www.cnbc.com/2016/02/01/hong-kong-is-worlds-freest-ec...

There were powerful monopolies in the late 19th and early 20th century like U.S. Steel and Standard Oil that the government broke up.

Always found it interesting that the middle class in the US grew immensely wealthier during the period US Steel and Standard Oil were "monopolies".

How do you figure? Most historians credit the rise of the middle class to the post-war boom in the 50s. Standard Oil and US Steel were broken up during the Roosevelt and Taft administrations in the early 20th century.

When JD Rockefeller was growing up, the average American rode a horse (if lucky), never traveled more than a few miles from home, few had even been on a train. Sailing ships were the main and dangerous form of sea transport. 95% of Americans worked brutal farm labor jobs. Homes were lit by candle and whale oil, and heated with firewood.

By the time Standard Oil was broken up, railroads were everywhere, steel ships ruled the sea, cars roamed the roads. Homes were lit by electricity. Energy consumption had skyrocketed because the costs (esp. the cost of oil) had plummeted. Labor saving devices increased productivity and the standard of living, and were made possible by cheaper steel as well as cheaper energy.

That's great, but I don't see why you credit that to those companies being monopolies. There's no reason to think these positive things wouldn't have occurred for consumers just the same if there was more healthy competition in the steel and petroleum market. That just happens to be the technological change that was sweeping the world at the time.

It reminds me of Microsoft receiving credit for computers becoming pervasive and useful in everyday life, as if they deserve special recognition, or thanks, for brutally clawing their way to the top of a very profitable industry and ruthlessly suppressing competition, even when it meant scuttling superior technology. Clearly someone else would have made an OS for home and small business computing if Microsoft didn't.

And the same thing happened in other countries without Standard Oil and US Steel monopolies.

>How would you know? We haven't had anything approaching a free market since the early 20th century

We know exactly because of that. That there's the theoretical free market and the "really existing" one, and the really existing one is exactly what we get in practice if the big players get their way.

This is exactly the same argument people make in favor of socialism..

The thing is, societies that were close to ideal free market capitalism have done extremely well, whereas societies that were close to ideal socialism have generally done very poorly (in the long term). On account of local linearity, I think it's probably OK to use societies that were almost like what is proposed to judge the proposal.

The US isn't even close to a free market (although it used to be very close), so I don't think the current performance of the US economy is a reasonable basis on which to judge free markets.

Similarly, many people used countries that were barely socialist to judge socialism, which is also a bad idea.

When has a close to ideal free market existed?