“Being a conservative is supposed to be about things like tradition, community, and, yes, aesthetics,” says Steve Bainbridge, in his post on the conservative case against Wal-Mart. “If I'm right about that, it's hard to see why a conservative should regard Wal-Mart as a societal force for good…” To steal a line from his post, let me say that I respect Steve a lot, but on this one I think there's a plausible counter-argument to be made; indeed, that one can make a plausible conservative case for Wal-Mart.
But first, let’s examine some of Steve’s objections:
First, the data show that entry of a Wal-Mart store into a community has only a very small positive impact on county-level employment. According to a study by Missouri economist Emek Basker, "in the first year after entry, retail employment in the county increases by approximately 100 jobs; this figure declines by half over the next five years as small and medium-sized retail establishments close. Wholesale employment declines by approximately 20 jobs over five years."
After delving deeper into Basker’s paper I have to disagree with Steve’s conclusion. Basker only measures the impact of county-level employment on a few key areas, noting that “Restaurant employment increases slightly; there is no change in employment in manufacturing or in automobile dealerships and service stations.” Since Wal-Mart doesn’t affect these non-related industries, Basker concludes that county-level employment must not increase. Such a conclusion can hardly be based on such paltry evidence.
Second, the data also show that Wal-Mart's entry into a community has a downward impact on overall retail prices of certain core consumer commodities.
The cited paper measures the decrease in prices on such items as shampoo, toothpaste, and laundry detergent. Why is paying a higher price to control dandruff or tarter considered a “conservative” position?
Third, objective data on the impact of Wal-Mart's entry into a community on prevailing wages is difficult to find, but one suspects it is not positive. (Timothy Noah points out that Wal-Mart's CEO distorted Wal-Mart's wage picture in his speech by using average rather than median salaries.)
Because the presence of a Wal-Mart is unlikely to affect the salary of the local bank president or tax attorney, drawing conclusions about wage comparisons – whether using the median or an average – is unlikely to be of much value. The only affect that Wal-Mart would have on wages is on similar retail-type jobs. Most of these jobs are already low-paying, if not near the minimum wage, so no single corporation is likely to have a significantly negative effect.
Fourth, entry of Wal-Mart typically results in exit by at least some local businesses, as suggested by the fact that the increase in employment is smaller than the number of positions Wal-Mart fills.
The idea that a large business that hires an average of 150-300 people could move into an area an immediately cause a net reduction in jobs seems rather counter-intuitive. The reason is that Basker’s research, on which Steve’s point is based, does not begin counting the loss of jobs when Wal-Mart opens a new store but five years before. Naturally, this would cause a problem which Basker admits:
Another difficulty in assessing the impact of Wal-Mart entry on the level and composition of county employment is the possible endogeneity of Wal-Mart’s entry decision with respect to retail employment. There are two dimensions to this potential endogeneity: Wal-Mart may select the counties it enters non-randomly, and it may choose the timing of entry non-randomly. [Emphasis added]
I think it is a rather safe to assume that Wal-Mart does not randomly select the location and timing of entry of their stores. In fact, I would think that Wal-Mart might actually choose to build a store in an area where other large retailers are closing shop. In fact, Basker notes that there is a “decline of four retail establishments within five years of Wal-Mart entry, three of them within two years of entry.” Basker assumes that Wal-Mart is the cause of the store closings rather than simply being a corporation that is taking advantage of a reduction in competition.
Fifth, even if the subsidies given Wal-Mart by many local communities to encourage opening a store are not as large as Wal-Mart's critics claim, does anyone seriously doubt that Wal-Mart often gets breaks on things like zoning, property or sales taxes, and other regulatory issues that small business competitors don't receive?
If Wal-Mart receives breaks on zoning, property, and sales taxes as an incentive to open a store, it is because the local citizens – including small business owners – realize the benefit to them. I once interviewed the mayor of Gun Barrel City, TX for the local newspaper and asked what she thought of Wal-Mart.
The mayor candidly admitted that if it wasn’t for the store the town would have probably “dried up and blown away.” Wal-Mart, she noted, provided 33% of all tax revenues for the city, providing monies that were able to build more roads, better schools, and hire more fire department personnel. The local business owners may not have received the same breaks as the large retailer but they benefited immensely from the revenues generated by the store.
By trampling small businesses underfoot, through its mix of volume pricing and subsidies, Wal-Mart and its ilk undermine the possibility of "wide participation in businesses." Prospective entrepreneurs are thus pushed out of fields like retail.
Let’s assume that Wal-Mart does push prospective entrepreneurs out of the fields of retail. Why should this matter? If Wal-Mart is able to provide retail services that are preferred by customers, why should we want entrepreneurs to squander valuable capital resources in order to offer an inferior product? Shouldn’t we prefer that they use their skills and money to open a business that would be a value-added benefit to the community? GM and Ford prevent “prospective entrepreneurs” from opening automotive factories but that is not viewed as “trampling small businesses underfoot.”
Outside the most heavily urbanized areas, Wal-Mart typically builds on the edge of town, putting up a huge (and butt-ugly) big box building surrounded by acres of bare concrete parking lots. There are few sights in the American scene less attractive or appealing to the eye.
I’ll agree that most Wal-Marts are unattractive. But so are most businesses. The blight caused by businesses – whether small or large – is as much a product of bad zoning laws and community standards as it is of the businesses themselves. If communities were willing to turn such aesthetic decisions over to local government then we might all live in such tightly controlled cities (i.e., Hilton Head, S.C.). But turning such power over to government isn’t a particularly conservative ideal.
But what positive reasons would a conservative have for supporting Wal-Mart? Instead, of presenting a detailed list of statistics and clearly detailed arguments, let me share a part of my own personal history with the company.
I was in high school in Clarksville, TX the year Wal-Mart opened in our town. The impact on our community was immeasurable and only slightly less disruptive than when the Kalahari bushman found a Coke bottle in “The Gods Must Be Crazy.” Life in our small town would never be the same.
The biggest change was that we now had choices. Before, if we needed consumer products we had to travel thirty miles down the road to Paris. The members of the local retail oligopoly offered a limited range of products at outrageously inflated prices (that seems to be forgotten in the hagiographic idealization of small retailers). Options that were taken for granted by people who lived in urban areas – the ability to buy a Sony Walkman and the latest Duran Duran cassette – were completely closed to our rural community. Sam Walton, though, changed all that.
In fact, it would be hard to underestimate the impact of “everyday low prices” had on how rural Texans. Even low income families like mine were able to afford items that were once considered luxuries. For example, I was able to purchase a weight lifting set for less than $20 dollars which allowed me to transform within a matter of months from an 85 pound weakling to a 98 pound he-man. On the surface, such changes may seem inconsequential. But when viewed on a macro level the broadening of consumer choices had an incredibly transformative impact.
The role of Wal-Mart in creating economic conservatives should also not be underestimated. Employee profit-sharing was a foreign concept for most citizens of Clarksville. For many people, the first stock that they ever owned (that didn’t come with hooves) was that of Wal-Mart, bought while working for the company. People who had formerly viewed stocks as the province of “Republicans” and other wealthy folk suddenly began to take an interest in Wall Street. The concept of company ownership suddenly became a reality for people who had previously never considered it a possibility.
Many rural Americans would disagree with my friend Steve. They would argue that the net effect of Wal-Mart has been as a “force for societal good.” Sam Walton’s company gave many of us options and opportunities that we had never known. True, Wal-Mart mirrors much of the rest of American – big, brash, and butt-ugly. But it also straddles the line between local community and global commerce.
As Russell Kirk claimed, “the thinking conservative understands that permanence and change must be recognized and reconciled in a vigorous society.” For all its flaws, Wal-Mart balances that tension between permanence and change as well as any large corporation in America. And that, in my opinino, is enough to make Sam’s conservative company worthy of admiration.
Related:
James Joyner clears up a point of confusion:
We seemingly have a Bizarro World, with a prominent lefty blogger arguing for laissez faire economics while a prominent righty blogger argues for statism. (Add to that, a long discussion thread at Drum's that is actually readable. What is this world coming to?!)
Actually, though, we don't. Bainbridge (who ultimately rejects a statist solution to the problem) is arguing from a true, classic conservative position, citing Russell Kirk and everything. Hewitt, while labeled a "conservative" in the current American discourse, is actually arguing from a small-L libertarian (or, if you prefer, Classical Liberal) perspective. Drum is also relatively libertarian on economic issues, although more inclined toward governmental regulation to smooth out the vagaries of the market than those of us on the libertarian right.
1
Since Wal-Mart doesn’t affect these non-related industries, Basker concludes that county-level employment must not increase. Such a conclusion can hardly be based on such paltry evidence.
Wal-Mart's great for Chinese manufacturing. That's a given...
Because the presence of a Wal-Mart is unlikely to affect the salary of the local bank president or tax attorney, drawing conclusions about wage comparisons – whether using the median or an average – is unlikely to be of much value. The only affect that Wal-Mart would have on wages is on similar retail-type jobs...
BZZT! Wrong-o.
Here's how Wal-Mart affects everyone:
1. By being stingy with benefits they force people into Medicaid or charity, or rely on emergency room visits that are ultimately passed on to... you the non-Wal-Mart employee, or you as non-Wal-Mart business.
2. Wal-Mart often gets a break on real-estate taxes. Guess who picks up the difference?
In fact, I would think that Wal-Mart might actually choose to build a store in an area where other large retailers are closing shop.
Not at all. I can see why business... ah, scratch that... Wal-Mart builds their businesses based on where they see a density of people living somewhere.
Wal-Mart famously does not build in inner cities, which, if your hypothesis were true, they'd always do.
Know why?
Because it contravenes their business model.
This is a bit close to me, since they may build one of these near my house, when what's really needed is a high class Italian joint...
2
Does Wal-Mart treat employees humanely?
Does Wal-Mart treat suppliers humanely?
Does the Wal-Mart model make it easier or more difficult for shoppers to consider these questions as part of their decisions in shopping?
I don't know the answer to these questions, but they seem important to me.
posted on 02.25.2005 10:11 PM3
I am reading Frederic Bastiat's Economic Sophisms right now and am enjoying it. Solomon was right, there is nothing new under the sun.
posted on 02.25.2005 10:30 PM4
WalMart is a bane to Americans. They have done more to ruin U.S. small businesses than any other company in America.
Their business practices cripple their vendors, their employees, and any competitors.
Their business practices of using primarily Chinese made merchandise has help to put thousands of Americans out of work.
Sadly, American's would rather save a buck than spend a little more to help preserve manufacturing within our borders.
Our countries greed is killing us.
I am very conservative, but WalMart is the perfect example of profit being the god of shareholders.
My family stopped shopping there 2 years ago. It has been inconvenient and more expensive to do so but I sleep better knowing I did SOMETHING that helps to reduce the amount of dollars flowing to China who is using them to build a military and industrial machine that will dwarf ours.
As you can see, this is a drum I like to bang on...
5
For once I have to say I agree with MUMON!
Hopefully, God won't strike me dead for doing so!
:O)
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Lisa here,
Rarely do I say anything on this blog but I must tell you, I LOVE WALMART!!!! We recently switched from Costco to Samsclub, not because one of better than the other, but because I LOVE WALMART!!
posted on 02.26.2005 4:52 AM7
Ok, I'll take this a point at a time...
WalMart is a bane to Americans. They have done more to ruin U.S. small businesses than any other company in America.
On the one hand, you can say certain local busineses become community institutions. On the other hand, they are BUSINESSES. They provide goods and services and are subject to competition like any other business. If Wal-Mart provides better/cheaper goods and services, then what is the problem?
More over, if those small businesses in question are community institutions, then maybe a strict supply/demand dynamic doesn't apply. Aslo, doesn't Wal-Mart fill something of a market niche? So how many small busineses are getting displaced?
Their business practices cripple their vendors, their employees, and any competitors.
How? The vendors are making money selling them the inventory, the employees are getting paid to do a job (either being paid a higher wage than previously or simply finding a job they didn't previously have) and either Wal-Mart provides better/cheap goods and services or competitors find better or different business practices.
And other businesses will also want to challenge Wal-Mart hegemony, wanting to get at the market share. That means more choices.
Their business practices of using primarily Chinese made merchandise has help to put thousands of Americans out of work.
You do realize that by having fifty States, jobs and businesses move across the border all the time? You also realize that we are shifting over to service economy because the average education level is so high?
As businesses ship jobs over seas, the savings means more money to invest in more ventures, which means more business, which means higher paying jobs like management positions State-side. The job of a business is to make money, which means finding ways to do more business, not screwing people over.
That being said, I agree about the issues with China, but here is the flip side: That economic growth is lowly choking out Communism in China. In trying to create some type of mixed system, the Party in China is hastening its own death. But on the flip side, they also use slave labor. So, there is an ethical decision to be made there.
Sadly, American's would rather save a buck than spend a little more to help preserve manufacturing within our borders. Our countries greed is killing us.
Did I mention that foreign trade has always been heavily present in the US economy?
But, more crudely, a rising tide raises all ships. You seem to assume this idea of foreign trade or manufacturing is a new trend. In archeology, one sign of a metropolitan culture was the presence of foerign made goods. This has gone on for thousands of years and obviously there economies functioned.
I am very conservative, but WalMart is the perfect example of profit being the god of shareholders.
Yeah, people find it a very good way to pay for things like their kids' educations. Don't want those greedy shareholders doing that, do we?
1. By being stingy with benefits they force people into Medicaid or charity, or rely on emergency room visits that are ultimately passed on to... you the non-Wal-Mart employee, or you as non-Wal-Mart business.
This is an interesting theory, because if Wal-Mart's wages are higher than those paid out by other businesses and they charge less than other businesses, then that means the average person should have more money left over...to pay for their own benefits.
2. Wal-Mart often gets a break on real-estate taxes. Guess who picks up the difference?
Wal-mart stimulates the local economy, guess who picks up the monetary benefits?
Wal-Mart famously does not build in inner cities, which, if your hypothesis were true, they'd always do.
Know why?
Because it contravenes their business model.
It is called a market niche. They go where they can make money. If I'm selling air conditioners, I'm not going to try and sell them to Eskimos.
Note to Everybody: If there is a problem with American popular and community culture, then economics might not be the place to look. I'm thinking that instead of blaming the market for doing what it has always done, maybe we should be looking at how WE, not some nebulous them, have screwed the pooch and become culturally bankrupt.
posted on 02.26.2005 5:10 AM8
David Marcoe:
Did I mention that foreign trade has always been heavily present in the US economy?
Actually, America's trade used to be primarily export oriented until the last 1/2 of the 20th century.
We used to have high import tarrifs.
Yeah, people find it a very good way to pay for things like their kids' educations. Don't want those greedy shareholders doing that, do we?
You're assuming the distribution of Wal-Mart Shares is tilted towrds the middle class. Proof?
As far back as I've seen stats, the controlling interest of all major US corporations has always rested in the hands of the very wealthy.
While ordinary people may own a piece of them in 401(k)'s and IRA's and through mutual funds, there are reasons why companies like Wal-Mart are famously non-responsive to middle class shareholders. And it has to do with who owns what, and the middle class is at the short end of the stick here.
t is called a market niche. They go where they can make money. ...
Yes, that's true, which therefore falsifies Joe's point here:
In fact, I would think that Wal-Mart might actually choose to build a store in an area where other large retailers are closing shop....
Part of the reason is that many times cities would demand that Wal-Mart actually - gasp!- kick in to alleviate the cost of social services, schools, etc. rather than further erode the tax base. Wal-Mart- as well as some other outside businesses- has traditionally been parasitical to the local tax base. That's good for their business model, but bad for everyone else in the locality.
One other thing: we are the market.
People speak of "the market" as though it's some force outside our control, some deity like the Wind Kami, but it's really us.
And free people can use their economic power, in a free market to create a regulated market.
If you can't do that then you're not free.
And therefore, it's part of being free agents acting in a free market that we would- and should- regulate Wal-Marts.
9
I have mixed feelings about Wal-Mart, but I do want to make one simple comment. Small time business operators may seem to offer goods and services at vastly inflated prices (quote from somewhere above) but I believe their profit margins were not huge. In many cases the mass merchandisers can sell product cheaper than the Mom and Pop stores can buy the same. The little grocery store my grandfather started back in the 1940's was closed in the late 80's basically for this reason, the third generation owner (a first cousin) could simply not compete in the market place.
"Progress" happens, and there is nothing we can do about it. The benefits of having a Wal-Mart in a community may definitely outweigh the negatives; I am not knowedgeable enough to know. But there are negatives.
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Wal*Mart does not completely avoid poor central city areas. The Wal*Mart in Milwaukee where the old Capital Court shopping center was is not in a particularly great neighborhood, and they do advertise some of their other stores that also were built in less than desirable neighborhoods.
While I cannot say anything about the quality of their clothing, I have found that most of their other products fall into the 'you get what you pay for' category, so I rarely shop there. I have found for myself that buying cheap products is more expensive in the long run than buying good products (not the most expensive, but high quality without a name premium) that will last far longer. Sadly, the quality of many housewares has dropped so dramatically that the best place to buy them is at rummage sales.
I'm also disappointed that companies like General Electric allow Wal*Mart to put their name on very low quality items like coffee makers (the one I bought was broke out of the box).
I am not impressed with the way Wal*Mart treats its employees, apparently breaks the law to keep unions out and breaks the law when dealing with wages and hours and child labor. I can see why social welfare agencies are very disappointed to see people collecting benefits when they have what is effectively a full-time job. As I noted above, I do think there are excellent personal economic reasons not to shop for most stuff at Wal*Mart, but I don't think that trying to shame customers will ever work.
It saddens me to see that a very wealthy family is willing to keep others unreasonably poor so they can become even more wealthy. That seems to be what all of America is coming to, however.
posted on 02.26.2005 8:40 AM12
Walmart takes advantage of tax breaks. I do too, when I can get them. If I don't like the tax breaks they get, I need to blame the government that permits them, not Walmart.
Have any of you complaining about Walmart's treatment of employeeds actually _talked_ to the employees? Because I have, and they like working for Walmart. The Walmart in our town employs more people than all the small businesses that may or may not have gone out of business because of their existance.
Some small businesses perhaps went under, though I don't know of any. Others simply revised their market and their product- adjusting to the market conditions in the time honored fashion, like the gift shop where the owner told me they quit carrying books because they couldn't compete with Walmart, but now carry more of other things in areas where they do better than Walmart.
Wanting to save my money is hardly 'greed,' either. You have no idea what we do with the money we save.
posted on 02.26.2005 11:16 AM13
Mumon,
The town I live in is dominated by incomes around $17,000 a year or less. 25% of our population are college students and on top of that we have a lot of lower income families. Walmart has been a blessing for our town because we have 2 super walmarts in a town of less than $60,000 so they actually end up competing with each other. Walmart hasn't given out Food Lion (we have several), Krogers, Kohl's, Costco or any other competitor.
Here's a lesson for you in why local businesses often do get driven under. You go to our local computer stores and typically the stuff they have there is AT LEAST MSRP if not higher. They frequently go over a reasonable price on RAM, motherboards and hard drives, but more than anything else, CPUs. So people go and buy them elsewhere because we can buy those parts online, at Walmart, Circuit City, Staples, etc. for a lot cheaper. A DIMM of DDR that might cost me $60.00 at Circuit City or Staples (close enough to Walmart) would cost me $75-$80 at a locally-owned shop.
Movies for example, are soooo much cheaper at Walmart and do you honestly expect someone who is either a college student or a working stiff to pay $15.00-$20.00 for a movie they can pick up for
Many of my friends who are townies like me, but don't go to college, would agree with me that Walmart keeps money in their pockets.
Some of these criticisms are fair. They need to be held accountable for how they deal with their vendors and how much they buy from China, but they provide a good service to many lower income areas. So please, stop bitching about a store that actually does help people save money the way they do.
If these mom and pop shops want to compete then they should do stuff like... innovate and find ways to build a niche that walmart can't attack.
posted on 02.26.2005 11:55 AM14
Wal-Mart sales clerks made an average of $8.23 an hour—or $13,861 a year—in 2001. That's nearly $800 below the federal poverty line for a family of three. (Source: Business Week)
In Georgia, Wal-Mart employees are six times more likely to rely on state-provided health care for their children than are employees of any other large company. (Source: Atlanta Journal-Constitution)
Reliance on public assistance programs in California by Wal-Mart workers costs the state's taxpayers an estimated $86 million annually. (Source: UC Berkeley Study)
In the first decade after Wal-Mart arrived in Iowa, the state lost 555 grocery stores, 298 hardware stores, 293 building supply stores, 161 variety stores, 158 women's apparel stores, 153 shoe stores, 116 drugstores, and 111 men's and boys' apparel stores. (Source: Iowa State University Study)
Every year Wal-Mart purchases $15 billion worth of products from China. (Source: Washington Post)
Today Wal-Mart uses over 3,000 Chinese factories to produce its goods—almost as many factories as it has stores in the U.S. (3,600). (Source: L.A. Times)
All else being equal, U.S. counties where new Wal-Mart stores were built between 1987 and 1998 experienced higher poverty rates than other U.S. counties. (Source: Pennsylvania State University Study)
http://walmart.purpleocean.org/answer/f1f2fc8dd839a1f191378589acb521ae
http://www.anti-walmart.com/badwalmart/index.html
http://laborcenter.berkeley.edu/lowwage/index.shtml
http://www.destinys-darlin.com/thoughts/walmart.html
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Guess what liberals can do if they hate WalMart? Hmmm. How about, don't shop there? And does their hatred of WalMart also extend to OfficeMax or Office Depot, Staples, the Home Depot or Lowe's? Megaplex movie theaters? Sears Roebuck? Microsoft? Ford and GM? Dell? CNN?
Every single business that is in business today must be competitive, and bring something to the marketplace that didn't exist before. Montgomery Ward back in the fifties was criticized for putting a lot of the mom and pop business out of business. But they failed to stay innovative.
Funny. If liberals don't shop at Wal Mart, who the hell is driving all the cars that are parked in the lots 24 hours a day? And, be honest everyone--what is the point of paying an extra ten bucks for a car battery or a tent or a pair of pants when you don't have to? Or why over-pay for milk or cheese or butter or chips or steak? Or, for that matter, why overpay the cashier who is basically just running your merchandise through a bar-code scanner, just so you can feel good about how much a clerk should make?
posted on 02.26.2005 12:45 PM16
Kevin W,
I am with you that the best way to protest Wal-Mart is to not buy from them. However your example falls apart when you pull from a myriad number of different companies, some of whom are actually very good such as Staples.
In regard to Microsoft, it is safe to draw a direct comparison between Henry Ford's support of Nazi Germany and the Soviet Union and Bill Gates' support of the People's Republic of China. Many of the biggest statist, anti-freedom, anti-property people have been business leaders. Wasn't it Adam Smith who said that the greatest enemy of the free market is in fact the business man? There are such things as companies that use their wealth and influence to take away civil liberties and hurt others. My biggest complaint about Wal-Mart has always been their abuse of eminent domain laws and their sucking off the Laogai tit to save a few bucks.
posted on 02.26.2005 6:06 PM17
Walmart has made a lot of changes to economic life of this country, both good and bad. I think the bottom line is that Walmart costs some people their jobs, but if you're not one of those people, then you benefit, perhaps significantly.
Paying low wages to cashiers and building ugly stores were common practices in retailing long before Walmart. What Walmart does differently from the K-Marts and Woolworths of the past is put relentless pressure on suppliers to cut wholesale prices. That leads to a lot of outsourcing since the only way to meet Walmart's pricing demands is to use cheap overseas labor. The decline in manufacturing in this country is very bad news for people without a college education who want to be part of the middle class. Some people aren't cut out for the service economy.
The benefit to this pressure on suppliers is, of course, lower prices for consumers. That has some positive ripple effects beyond just stretching the household budget. Walmart by itself is given credit for shaving at least one percentage point off the U.S. inflation rate. Low inflation means low mortgage rates, so you can say that Walmart has had a hand in the home ownership boom in recent years.
I like the low prices but I wish that Walmart would pay its employees more. Maybe Walmart could follow the lead of Starbucks and set up tip jars. I would contribute.
posted on 02.26.2005 9:44 PM18
Did I mention that foreign trade has always been heavily present in the US economy?
Actually, America's trade used to be primarily export oriented until the last 1/2 of the 20th century.
Yeah, our exports make up a quarter of the world's grain supply, among other things. And it wasn't uncommon to ship laundry to China in the 19th century because it was cheaper than having it done here.
We used to have high import tarrifs.
Which didn't prevent foreign suppliers from threatening Standard Oil's monopoly.
Yeah, people find it a very good way to pay for things like their kids' educations. Don't want those greedy shareholders doing that, do we?
You're assuming the distribution of Wal-Mart Shares is tilted towrds the middle class. Proof?
Employees own stock and the stock is publicly traded. There are a lot more middle class people than there are rich people and I want to make as much money as possible. Profit by volume.
As far back as I've seen stats, the controlling interest of all major US corporations has always rested in the hands of the very wealthy.
Which is why fifty percent or more of the country owns stock?
While ordinary people may own a piece of them in 401(k)'s and IRA's and through mutual funds, there are reasons why companies like Wal-Mart are famously non-responsive to middle class shareholders. And it has to do with who owns what, and the middle class is at the short end of the stick here.
Let me use your question. Proof?
Those mutual funds, 401(k)s and IRAs are run by private companies. If they don't do right by their customers and make bad investments, customers are going to withdraw. In turn, those companies are going to drop Wal-Mart stock, if it stinks. So, in short, Wal-Mart follows the money, and they don't care where it comes from.
It is called a market niche. They go where they can make money...
Yes, that's true, which therefore falsifies Joe's point here:
In fact, I would think that Wal-Mart might actually choose to build a store in an area where other large retailers are closing shop....
Not at all. They have figured out a way to provide goods where other businesses have failed. And I dobut it is every case they recieve the benefit of deregulation for every store opened.
Part of the reason is that many times cities would demand that Wal-Mart actually - gasp!- kick in to alleviate the cost of social services, schools, etc. rather than further erode the tax base. Wal-Mart- as well as some other outside businesses- has traditionally been parasitical to the local tax base. That's good for their business model, but bad for everyone else in the locality.
How, if they pay for their own construction, create a net gain jobs, and provide goods at less money than competing businesses?
Stimulating the local economy means people have money, ere go, more tax revenue. If anything, it demonstrates the soundness of the idea of slashing taxes to encourage business, which stimulates the economy all the more, raising the amount of of tax revenue yet again. Market forces, creating wealth, far outstrip simply raising tax rates.
One other thing: we are the market.
People speak of "the market" as though it's some force outside our control, some deity like the Wind Kami, but it's really us.
Exactly my point. We blame business "the market"/"them"/"those people" for the problems we create for ourselves. The market is merely the social and information network that arises from the sum total of exchange interactions.
And free people can use their economic power, in a free market to create a regulated market.
If you can't do that then you're not free.
And therefore, it's part of being free agents acting in a free market that we would- and should- regulate Wal-Marts.
Mumon,
Let us consider the logic of this statement. We have a free market, we allows us to freely make choices, so we should invite the government regulate, taking away the choices we had before. Yes, I can freely surrender my freedom, but then I am not free to take it back up again, am I?
How about this, I'll vote with my dollar. And in the Great Progressive Tradition, we can disseminate information in to the public square and give people an informed choice. As a nation, we then choose to spend our money at Wal-Mart or we don't.
And now to address Cosmo:
Wal-Mart sales clerks made an average of $8.23 an hour—or $13,861 a year—in 2001. That's nearly $800 below the federal poverty line for a family of three.
That is a salary for one person. Why would you assume (1) that a person would only hold that one job and (2) that a family of three would only live on the income of one parent? And guess what, that is a fairly normal wage for that job sector.
In the first decade after Wal-Mart arrived in Iowa, the state lost 555 grocery stores, 298 hardware stores, 293 building supply stores, 161 variety stores, 158 women's apparel stores, 153 shoe stores, 116 drugstores, and 111 men's and boys' apparel stores.
Mark Twain's famous quote: Lies, damn lies, and statistics...
You fail to place this in any context. I can't even know if there is so much as a correlative relationship between the two because you quote one set of figures. So let me place it in context...
Over TEN YEARS, this is expected. About 90% of all small businesses fail. And the are businesses leaving and entering the market all the time. How many new businesses came in to being during this decade? What year did Wal-Mart eneter the Iowa market? has a cause-effect relationship been established between Wal-Mart's entry and these business failures? Until you can answer those questions, this figure is laregly irrelevant.
Every year Wal-Mart purchases $15 billion worth of products from China.
I'll explain it again, in a basic diagram. Savings in cost = more money for reinvestment = more business = more people to hire = more jobs in long run.
Today Wal-Mart uses over 3,000 Chinese factories to produce its goods—almost as many factories as it has stores in the U.S.
See above.
All else being equal, U.S. counties where new Wal-Mart stores were built between 1987 and 1998 experienced higher poverty rates than other U.S. counties.
That is because they build in depressed rural areas. Here is a catch-22: How to their businesses succeed in these areas if they creating poverty? What would be more useful to measure is the rate of poverty before and after the entry of Wal-Mart in to the surrounding region.
Clawpack:
The decline in manufacturing in this country is very bad news for people without a college education who want to be part of the middle class. Some people aren't cut out for the service economy.
I don't have a college education (yet) and I work at a car wash. Personally, not having Black Lung or my fingers sheared off in heavy industrial machinery seems a fair trade off.
posted on 02.26.2005 11:04 PM19
The main reason that people hate Wal-Mart is that Wal-Mart forces change. In that, it is no different than any other kind of technology.
If tomorrow, someone invented a super-safe over-the-counter cancer vaccine pill that prevented all cancers, all of a sudden we would put tens of thousands of radiologists, medical professionals, and hospitals out of business. Tens of thousands of very good paying jobs would be eliminated and replaced by a lot fewer lower paying jobs of people simply distributing the miracle pill. People that went to college for decades and devoted their life to cancer research and care, would find their skills obsolete overnight. Meanwhile, the person or company that invented the pill would be richer than Bill Gates.
So a miracle cancer pill would be great news for the huge majority of the population as well as for the company that discovered it. It would be bad economic news for all the people currently employed in the cancer field of healthcare who would have to find new careers.
Wal-Mart is really no different. It is great for consumers and Wal-Mart shareholders. It is not great for people that used to sell similar merchandise as Wal-Mart at higher prices.
The real issue is not Wal-Mart, it is technology. Technology is creating a situation where a relatively small percentage of highly educated and highly skilled people with capital can produce a large percentage of the goods and services for the entire population at low cost. That leaves a large percentage of the population, which has low(er) skills, without an obvious career choice where they can earn a higher standard of living.
posted on 02.27.2005 12:03 AM20
If tomorrow, someone invented a super-safe over-the-counter cancer vaccine pill that prevented all cancers, all of a sudden we would put tens of thousands of radiologists, medical professionals, and hospitals out of business. Tens of thousands of very good paying jobs would be eliminated and replaced by a lot fewer lower paying jobs of people simply distributing the miracle pill. People that went to college for decades and devoted their life to cancer research and care, would find their skills obsolete overnight. Meanwhile, the person or company that invented the pill would be richer than Bill Gates.
Not entirely true. In many cases, they would simply migrate to different fields or find other areas of research. In other cases, some would be retained--radiologists in particular--to test and scan for cancer. In other cases, the firm who developed the pill would hire researchers to develop derivative drugs from the medication.
But the profits from this company also mean more profits for supporting businesses and industries. In the long run, the businesses grow, absorbing the difference and creating a net gain for everyone as the number of jobs created surpasses the jobs lost.
The introduction of robotics in to the automotive industry didn't turn auto-workers in to a new welfare class. It created new, higher-paying skilled positions for the supporting industries that arose from the use of robotics; technical jobs like programmers and mechanics.
This is not to say that people aren't closed out of certain jobs or industries by a change in the economic winds. No economy can escape scarcity, but by and large, the market adapts to the disparity by creating new jobs, often paying more than what came before.
The real reason people hate Wal-Mart is that they see this economic change and instantly assume it to be entirely negative, instead of mostly positive. It is a net gain for society, not a net loss.
posted on 02.27.2005 12:45 AM21
:::Wal-Mart sales clerks made an average of $8.23 an hour—or $13,861 a year—in 2001. That's nearly $800 below the federal poverty line for a family of three:::
Wal-Mart Sales clerks may not be the only wage-earners in their families.
They may not be part of a family of three at all- they may be single or part of a couple.
They may be retired and this is supplementary income.
They do get health insurance.
The federal poverty line is not so very poverty stricken- people living in so called poverty in this country are people with indoor plumbing, television, running water, and 3 squares a day.
People in this country, for the most part, really don't know what true poverty is.
We don't know what other jobs were available in those towns or how much they paid. Making 8.33 an hour might have been the best job in town. Where I'm living, quite a few people would think that was pretty good. The grocery store across the street from Walmart pays its clerks about 6.00 an hour.
All jobs are not equal. Nobody is tying people up and forcing them to work for Wal-Mart. If they don't like Wal-marts' pay scale, they can work elsewhere, go into business for themselves, move to a better area, go back to school to get better skills, get promoted to management- Walmart is an option- not a forced choice. There is no reason to assume that everybody working at a job is entitled to earn enough to support a family of three- not all jobs merit that kind of pay.
Lots of jobs pay less than 9.00 an hour, because that's what they are worth.
My dh is retired Air Force. He has another full time job now. It does not pay enough to keep our family above poverty level, but it doesn't have to because it's not our only source of income. He has his retirement, we make extra selling stuff on ebay, we raise some of our own food, we actually shop more at thrift shops than at Wal-mart. In my part of the world, most of us make these kinds of choices- we make do, make sacrifices, trim here and there, and that's fine, because we know we are responsible for ourselves.
posted on 02.27.2005 3:02 PM22
sorry for sniping, but one comment by "freelunch" seemed noteworthy...
I am not impressed with the way Wal*Mart treats its employees,...
i know a few employees at Wallyworld. they seem about as happy as i was working at Meijer (another retail store, which is of comparable size, and is varyingly popular in the Midwest).
... apparently breaks the law to keep unions out...
but are unions really a good thing at this level of business? i worked in Meijer, which does have a union, and to be honest i didn't care for the even-scale pay raises they negotiated. i want to be compensated fairly if i'm doing an above average job.
... and breaks the law when dealing with wages and hours and child labor.
this i'd have to see evidence for, since local and state governments tend to be very strong on child labor.
23
I know from a family member's experience that the claim that Wal-Mart is notorious for making people work off the clock is probably true. One common tactic would be something like requiring people to clock out at 10PM but before they could go home they would have to 'clean their area' which would be impossible to do in less than an hour or two.
I like Professor Brainbridge's overall conclusion. Wal-Mart should be allowed to operate but governments should not cut Wal-Mart any special favors that they don't do for any other type of business. Wal-Mart is not some type of magical economic growth engine that is worth special breaks.
posted on 02.28.2005 11:38 AM24
Evan,
And therein you have the seeds of a socialist revolution. Wal-Mart doesn't make very heavy use of technology, they user their incredibly large buying power to control the market. They do use a lot of decision support systems to help them gear their stores to local markets, but that is hardly new or innovative.
If Wal-Mart continues to put pressure on its vendors then American industry will continue to go under. Many American producers have gone out of business by buying from Wal-Mart, and all of those jobs went to China only to fuel the rise of a Communist power hostile toward us. Maybe this is what Stalin meant when he said "the capitalists will sell us the rope we will use to hang them with."
posted on 02.28.2005 12:35 PM25
The only way Americans can compete with Chinese manufacturing is if Americans were content to live with a Chinese standard of living. That is work for peanuts and live in a hovel. You will notice Germany is building cars over here because their socialist government is making it too expensive to build them in Germany.
If we produced all our own products and put tarriffs on all imports, everything in the stores would cost 2-3 times as much. That would mean you would need to earn $25 an hour to buy goods the minimum wage now gets.
We must abandon labor intensive work and go high tech. Produce products and services the rest of the world wants and needs. Socialistic tariffs would protect American manufacturing jobs but increase the cost of living by 2-300%. Our standard of living would plummet.
Socialist solutions always sound good but the only thing they redistribute is want.
26
New York City is keeping Walmart out. The Blue state governments want it's people to pay outragiously high prices. Walmart is a great blessing in my community.
posted on 02.28.2005 3:10 PM27
"Rarely do I say anything on this blog but I must tell you, I LOVE WALMART!!!! We recently switched from Costco to Samsclub, not because one of better than the other, but because I LOVE WALMART!!"
What a pathetic retard.
posted on 02.28.2005 6:20 PM28
Some idiot wrote
"The federal poverty line is not so very poverty stricken- people living in so called poverty in this country are people with indoor plumbing, television, running water, and 3 squares a day."
WOW!!!! That is truly amazing. Indoor plumbing AND running water!!!!! And a TV, too! Who could ask for more???? Life's parade right in your living room.
3 squares a day, too. How often is the vegetable a french fry?
Really, I just don't know what poor people in America could possibly ever complain about. America is a goddamn paradise. All you have to do is not get sick.
posted on 02.28.2005 6:30 PM29
Larry, I think you missed the part where we have lived below poverty level, and I have never fixed french fries. We were on food stamps for a year, and we ate very well. Not steak, but not french fries, either.
30
Recently I had a poem (that been dubbed "a walmart love poem") published at Adrants.com Then attack was then ON! Rare is the constructive POINT that could be made (though a few were) but quite commonly were the personal attacks on me along with immature language. Naturally, my defenses went up.
I find it interesting that so many people have reacted to ONE little poem. You may find it interesting as well. Check out all the hate at Adrants.com, and my personal responses to it.
posted on 03.02.2005 1:33 PM