Claremore Daily Progress

Community News Network

December 18, 2013

Is Whole Foods inflation or growth?

WASHINGTON — Stephanie Strom's New York Times article about how Whole Foods is finding success in markets like Boise that are a bit outside the stereotypical yuppie corridors reminds me of a wonky point-one important reason to think central banks should focus on nominal income and nominal GDP rather than inflation is that "inflation" is harder and harder to define the more you move to an advanced service economy.



For example:

              

Two years ago, when Whole Foods announced that it wanted to expand to 1,000 stores from a little more than 300 and open in places where it was assumed that consumers had never heard of kale and wouldn't dream of spending $6 for a pound of humanely raised pork, some investors scoffed. Its traditional grocery store competitors snickered at the strategy. And even those on Wall Street enamored with the chain's success expressed doubts that its forays inland into smaller, less urban markets would succeed. . . . Anne Madsen had come hoping to find baby artichokes for a recipe she wanted to try. She was not disappointed. "I do shop at regular groceries, but I like organic products and often am looking for things that are a bit unusual," Ms. Madsen said.

          


On a conceptual level, there's a huge economic difference between people buying more expensive pork because the more expensive pork is better and people buying more expensive pork because the price of pork is rising. But the question of whether or not humanely raised organic pork is "really" better than factory farmed pork does not strike me as especially something the Bureau of Labor Statistics is well-equipped to answer. From one vantage point, rising interest in local sourcing, organic production methods, and other snazzy fads is just a negative supply shock to the economy - people are turning their backs on efficient production methods. And naturally if that happens you'll see a rising price level, and stagnant living standards. But if you think these fads are popular because they're better, then it's a sign of rising living standards.

You can try to sort of recursively define this in the sense of "if people are shopping there it must be better." But that's not right. When I lived on the same block as a Safeway, I very occasionally shopped at Whole Foods. Now that I live two blocks from a Whole Foods, I shop there much more often and my grocery costs have risen. I'm paying more, and the product is arguably higher quality, but I'm not paying for the quality - I'm paying because I'm lazy.

There is a lot more organic food being eaten in 2013 than there was 25 years ago. Has that improved or lives or just been a waste of time and money? I don't think there's an unequivocal answer to that kind of question, which is a reason for policymakers to put more weight on broad nominal variables and less weight on the statistical calculation of the price level.

 

1
Text Only
Community News Network
  • Fast food comes to standstill in China

    The shortage of meat is the result of China's latest food scandal, in which a Shanghai supplier allegedly tackled the problem of expired meat by putting it in new packaging and shipping it to fast-food restaurants around the country

    July 28, 2014

  • wd saturday tobias .jpg Stranger’s generosity stuns Ohio veteran

    Vietnam War veteran David A. Tobias was overwhelmed recently when a fellow customer at an OfficeMax store near Ashtabula, Ohio paid for a computer he was purchasing.

    July 28, 2014 1 Photo

  • Screen Shot 2014-07-28 at 1.33.11 PM.png VIDEO: High-dive accident caught on tape

    A woman at a water park in Idaho leaped off a 22-foot high dive platform, then tried to pull herself back up with frightening results. Fortunately, she escaped with only a cut to her finger.

    July 28, 2014 1 Photo

  • How spy agencies keep their 'toys' from law enforcement

    A little over a decade ago, federal prosecutors used keystroke logging software to steal the encryption password of an alleged New Jersey mobster, Nicodemo Scarfo Jr., so they could get evidence from his computer to be used at his trial.

    July 25, 2014

  • cleaning supplies Don't judge mothers with messy homes

    I was building shelves in my garage when a neighbor girl, one of my 4-year-old daughter's friends, approached me and said, "I just saw in your house. It's pretty dirty. Norah's mommy needs to clean more."

    July 25, 2014 1 Photo

  • 072214 Diamond Llama 1.jpg Llama on the loose corralled in Missouri town

    A llama on the lam cruised Main Street Tuesday before it mistook a resident’s fenced backyard for a place to grab a meal and freshen up.

    July 22, 2014 2 Photos

  • NWS-HB0713-HowardMartin-004.jpg Airman laid to rest back home in Indiana six decades after death

    The mystery of what happened to a military transport plane that disappeared in the fall of 1952 into an Alaskan glacier was solved two years ago when a helicopter crew spotted the wreckage. But it took another two years to retrieve the remains of Airman Howard Miller and 16 other servicemen passengers. Saturday, Miller was laid to rest in his hometown of Elwood, Ind., with full military honors. Hundreds turned out for the funeral and burial services.

    July 13, 2014 2 Photos

  • New York to offer free lunch to all middle-school students

    New York's $75 billion spending plan for the fiscal year that began last week includes the first step toward offering free lunch for all 1.1 million students, expanding a program now reserved only for the city's poorest children.

    July 9, 2014

  • Screen Shot 2014-07-09 at 11.24.10 AM.png VIDEO: Pilot buys pizzas for storm-delayed travelers

    A Frontier Airlines pilot went above and beyond the call of duty when a recent flight from Washington, D.C. to Denver was diverted to Cheyenne, Wyoming due to bad weather.

    July 9, 2014 1 Photo

  • Why North Korean cheerleaders may soon descend on the South

    When you think of North Korea, "cheerleaders" may not be the first thing that springs to mind. The Hermit Kingdom is perhaps better known for less savory things like gulag-like labor camps and leadership purges.

    July 8, 2014