Is it wrong to raise money for charity?

The Guardian yesterday reports on the struggles of independent secondhand bookshops to compete with what one of its interviewees describes as “the Tesco of the second-hand book world”: Oxfam. It may come as a surprise to you to learn that Oxfam is now the biggest secondhand book retailer in Europe (though perhaps it shouldn't given that this is not a market with many large players). Apparently many small second-hand bookstores are complaining about what they see as Oxfam's unfair competition.

To some extent, I suspect that the complaints are scapegoating. The upper end of the secondhand book market has taken a big hit in recent times, a casualty of the global financial crisis. Obviously, this alone has put some retailers under pressure, and forced many to depend on the sale of cheap mass-market paperpacks, upon which margins are relatively narrow. These facts probably account for a good deal of the reported closures and loss of business among small retailers. All this comes on top of competition from Amazon and other web-based retailers, who need not pay for expensive High street shops.

Nevertheless, it is easy to see why secondhand book sellers would be concerned about competition from Oxfam, even in the absence of a financial crisis. Oxfam gets most of its stock by donation, pays substantially reduced rates and is staffed largely by volunteers. These facts ensure that it is able to undercut rivals on price. This , combined with its lower overheads, give it a competitive advantage, and send independent retailers out of business.

But is this a bad thing? More generally, is it a bad thing when chains put smaller retailers out of business? One claim that is often made by people lamenting the “Tesco phenomenon” is that it leads to a loss of diversity in the market. To a large extent, I suspect that precisely the opposite is true:  the bigger stores have much more diverse stock than lots of small stores. Small stores tend simply to replicate the same stock over and over (I am writing from experience here: I know that to buy a philosophy book there is no point in going to a small retailer, new or secondhand. I have to go to Waterstone's in Gower St, London, or Blackwell's in Oxford).

A more sensible worry, I think, concerns employment. Small businesses employ very many people. Of course, large businesses employ more, but because of their greater efficiencies they are sometimes able to make do with proportionately fewer staff. When it is a matter of small bookshops or off-licenses, very often it is only the owner and his or her immediate family that works in the shop, so there is little difference between the harm to the business owner and harm to those the business employs. Large chains are often franchises, so from this point of view they are often no worse than the  small businesses they displace.

Of course, from this perspective Oxfam is a special case: a large proportion of its staff are volunteers. So an Oxfam shop displacing one or more small retailers may be on balance negative from the point of view of employment (though typically these shops have some full-time staff). Against this we ought to count the value of the opportunities for volunteering the shops provide, which play much the same role in bolstering a sense of purpose and self-worth (and among those who would otherwise lack such opportunities) as is played by employment.

From a consequentialist point of view, we must also factor in the work that Oxfam does. If it harms the retail trade in Britain, thereby making some worse off, that is a bad thing, but it transfers the benefits it reaps in the process to those who are much worse off. Other things being equal, it seems that it is worth imposing the costs on the relatively well-off for these purposes.

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2 Responses to Is it wrong to raise money for charity?

  • Richard says:

    “A more sensible worry, I think, concerns employment… large businesses… are sometimes able to make do with proportionately fewer staff.”

    Isn’t this a good thing? (Compare agriculture. Greater efficiency means more labour freed up to produce other goods and services.)

  • Neil says:

    At best, it causes anxiety to those who lose their jobs. Whether it is a good thing more generally depends on what is going on in the economy more broadly. In times of rising unemployment, it’s a bad thing. And given that there are question marks over the ability of labor markets ever again to provide full employment, it might be a bad thing. Note, too, that the presence of a pool of unemployed keeps wages down for those in jobs.

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