Bellerbys Economics - Mr Stephenson

Friday, May 12, 2006

Don't Forget the Popcorn!!

Another batch of good economics films just about to hit cinema screens near you. The best of these is 'Wal-Mart - the High Cost of Lo-Price' which looks at the way in which Wal-Mart dominates American food sales and is moving rapidly into other countries such as the UK (Asda) and China.

There are many criticisms that can be made of Wal-Mart under the heading of corporate governance (module 5) such as the low wages they pay - this forces many of their workers to claim welfare benefits from the state - so in effect the American people through their taxes are subsidising Wal-Mart's profits and growth. Also, an analysis of company structure shows that it is very unusual for women or people from ethnic minorities to gain promotion within the company. Then, of course, there's the slightly unusual slogan 'Bringing America Home to Americans' that you find all over their shops when 80% of their non-food items are made in China.

On the other hand, of course, as the film 'The Corporation' released last year suggested, you can't really blame them - in a world of competitive market economics, businesses will do whatever they need to do - or whatever they can get away with - in order to maximise their profits. If you don't grow as a business, you will shrink and die.

So corporate governance theory tells us that the role of government becomes one of establishing the rules of the game - a regulator - just like in football - so that competition is encouraged but the rules ensure that the net effect is a positive one for society and not a negative one.

Other new films to watch out for soon include 'Fast Food Nation' - a look at how fast food businesses are distorting the US economy and 'An Inconvenient Fact' which looks at the US government's response to global warming.

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