100 Most Valuable Public US Companies by Market Cap and HQ Metro; Dec 17, 2019

[mhays]

Originally Posted by JManc

You both make points; Gordo is claiming retailers don't really offer value but merely are middlemen and iheartthed is claiming a company like walmart has such a presence in human capital. Yay? Nay?

The devil would be in the details. But basically, if walmart went out of business tomorrow, we'd still need the same number of retail workers, and retail sales volumes wouldn't change much.

In populated areas, other stores would suck up walmart shoppers and staff. Suppliers would quickly make deals with other retailers once unencumbered by walmart contracts.

In small towns that have very little other than walmart, the lag time would be longer, but still quick. Especially if the existing store building wasn't tied up in bankruptcy for example.

[Shawn]

Originally Posted by iheartthed

Walmart is the largest private employer in the world. A sudden collapse would probably be at LEAST as disruptive as a sudden collapse of GM or GE. But I think we're at an impasse here because of some subjective evaluation of the goods or services that a particular company provides, which actually is not as relevant as its being made out to be when talking about the economic impact. I personally don't think that much of what tech does is a systemic risk anymore than brick and mortar retailers, but the size of a tech company could be relevant to systemic risk.

If so, and I know this is pedantic, wouldn't you have meant to say in the beginning, "Revenue is a more relevant measure of socio-economic importance"? That takes into account the human impact. Pure economics is unconcerned with human impact.

You also minimize Google's multiplier, I feel. It's affected differently than Walmart's or other giant retails'. Walmart's supply chains and vendor networks operate in tangibles which are fungible. Google's and other Big Tech / Big Pharma / Big Bio etc. do as well to an extent, but their multipliers more heavily live in the realm of R&D and new category creation. Google's IP can be snapped up if it disappears, but its aggregate imperative to invest in its chosen portfolio of multiplier receivers cannot. Retailers serve an existing necessary function and will be replaced as quickly and as efficiently as the given economic system allows; very fast, in our LME case. Google's specific R&D investments would not and cannot. This is true for any R&D-intensive vertical.

Retail is super fungible. Big Tech / Pharma / Bio are not.

[Gordo]

Originally Posted by Shawn

Retail is super fungible. Big Tech / Pharma / Bio are not.

Shawn said it better than me.

[iheartthed]

Originally Posted by Shawn

If so, and I know this is pedantic, wouldn't you have meant to say in the beginning, "Revenue is a more relevant measure of socio-economic importance"? That takes into account the human impact. Pure economics is unconcerned with human impact.

Not really, because we're talking about what is important (i.e. potentially disruptive) to the economy. If an entity that is responsible for hundreds of thousands of jobs suddenly disappeared then it would be economically disruptive. It doesn't matter what that company sells. It would cause millions of people to alter their habits and thus the economy would be effected.

Originally Posted by Shawn

You also minimize Google's multiplier, I feel. It's affected differently than Walmart's or other giant retails'. Walmart's supply chains and vendor networks operate in tangibles which are fungible. Google's and other Big Tech / Big Pharma / Big Bio etc. do as well to an extent, but their multipliers more heavily live in the realm of R&D and new category creation. Google's IP can be snapped up if it disappears, but its aggregate imperative to invest in its chosen portfolio of multiplier receivers cannot. Retailers serve an existing necessary function and will be replaced as quickly and as efficiently as the given economic system allows; very fast, in our LME case. Google's specific R&D investments would not and cannot. This is true for any R&D-intensive vertical.

Google would be replaced too. Whatever isn't replaced in a hypothetical Google collapse would have been judged by others as not having much value.

Originally Posted by Shawn

Retail is super fungible. Big Tech / Pharma / Bio are not.

How are they not?