Posted on 11/18/2004 5:45:24 PM PST by WuzaDem
Government-Funded PBS Fails to Understand Capitalism, Blasts Wal-Mart
On Tuesday, the Public Broadcasting Service ran a scathing attack on Wal-Mart, the world’s largest retailer, on its “Frontline” series. The title of the program was, “Is Wal-Mart Good for America?” Although never stated explicitly, it is clear from the overwhelmingly negative portrayal of the company that the answer clearly is “no.”
I watched this program with special interest. In fact, it was the first PBS program I’d seen in some time. I’d stopped watching shows like Frontline long ago because of their heavy liberal bias. But I thought perhaps this one would be different because I had been extensively interviewed for it.
Over several hours at my house, I patiently explained to Hedrick Smith, the chief correspondent and producer of the program, that the main beneficiaries of Wal-Mart’s low-price policy are the poor, who could now afford products that would be out of their reach but not for Wal-Mart, improving their lives and raising their standard of living.
I was trying to make the same point that the great economist Joseph Schumpeter made about the Industrial Revolution. In his book, Capitalism, Socialism, and Democracy, he said, “The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.”
I also pointed out to Mr. Smith that Wal-Mart, all by itself, was responsible for a significant amount of the productivity miracle we have seen in this country over the last decade. In a 2001 report, the McKinsey Global Institute, a respected think tank, concluded that Wal-Mart’s managerial innovations had increased overall productivity by more than all the investments in computers and information technology of recent years.
Wal-Mart’s innovations include large-scale (big box) stores, economies of scale in warehouse logistics and purchasing, electronic data interchange, and wireless barcode scanning. These gave Wal-Mart a 48 percent productivity advantage over its competitors, forcing them to innovate as well, thus pushing up their productivity. The McKinsey study found that productivity improvements in wholesale and retail trade alone accounted over half of the increase in national productivity between 1995 and 1999.
A new study from the prestigious National Bureau of Economic Research found that Wal-Mart has a substantial effect on reducing the rate of inflation. For example, it typically sells food for 15 percent to 25 percent less than competing supermarkets. Interestingly, this effect is not captured in official government data. Fully accounting for it would reduce the published inflation rate by as much as 0.42 percentage points or 15 percent per year.
Ignoring these beneficial macroeconomic effects, Frontline focused almost exclusively on the loss of jobs allegedly caused by Wal-Mart. Acting as what economists call a monopsony, it supposedly forced countless American manufacturers to close their domestic operations and move to Asia in order to get their costs low enough for Wal-Mart to sell their products. It is also said to have caused innumerable local retailers to go out of business, further adding to the job loss. In fact, academic research by economist Emek Basker of the University of Missouri contradicts this last point, finding that Wal-Mart permanently raises local employment.
Even restricting oneself to the material presented in the Frontline episode, it is hard to justify its sweeping indictment of Wal-Mart. For example, it accuses Wal-Mart of buying $15 billion to $20 billion worth of goods from China each year, implying that this is largely responsible for our trade deficit. But since our trade deficit with China is about $150 billion, Wal-Mart can be responsible for at most 13 percent of that.
But even looking at the issue that way is stupid. If Wal-Mart didn’t buy from China, its competitors would. And if Wal-Mart had to depend only on high-cost American suppliers, it never would have grown the way it has and its sales would be far less than they are. Yet Frontline always implies that somehow Wal-Mart could have done things differently, kept more production and jobs in America, without paying a cost. No alternative scenario was presented.
Finally, Frontline relied heavily on biased sources, such as testimony from openly protectionist organizations like the U.S. Business and Industry Council and a union representative who admits to being a disgruntled former employee of Wal-Mart. In other cases, the report relies on hearsay evidence that no responsible newspaper would publish in order to make its case. Supporters of Wal-Mart and free trade were limited to a few short minutes of camera time (I got about 3 seconds), mostly by a totally ineffectual company spokesman.
In short, Frontline presented a one-sided hit piece disguised as objective news reporting. Everyone responsible for it should be embarrassed for this grotesquely unfair case of taxpayer-financed liberal propaganda. I will know better the next time they call me for an interview.
Our hero uncovered even more "scorched earth" practices such as *GASP* featuring "loss-leaders" - now for as long as I can remember companies have been advertising a few cheap products so that they can get you into their place of business, in the hopes that you will buy something else as well (or a more expensive version of said product). The way it was presented here (by the bitter union rep/ex-WalMart manager), you practically HAVE TO buy the $89.00 microwave, as opposed to the $35.00 microwave you came in to look at. I'm not sure if they threated you physically, hypnotized you or what, but evidently you have no choice once you are inside the store.
Then there was the tragic Rubbermaid story. Rubbermaid was doing very well - until they started doing business with WalMart - then they started doing INCREDIBLY well. They sold more product then they ever had in the history of the company, the stock went up and everyone was happy. Until there was an increase in one of the raw materials they used. WalMart would not accept a price increase, and Frontline made it look this was responsible for the collapse of the company - they showed one of the plants being shut down and the equipment being auctioned off. They sort of skimmed over the fact that the company was bought out by another firm (in which case I'm sure the execs didn't do badly, but PBS gave them a pass since they were using them to make WM look bad), not to mention the fact that THEY WEREN'T DOING BUSINESS WITH WALMART AT ONE POINT IN THEIR HISTORY ANY WAY. It seems WalMart has some responsibility to keep their suppliers in business.
End rant.
Maybe Wal-Mart would do better if they had a huge federal subsidy -- like PBS.
EVERYBODY. SUPPORT WALMART!
Only middle class and poor people shop at Wal Mart. Those conservatives and their SUV's go there. They're disgusting. :) HA!
Just kidding.
How DARE Wal-Mart shop around for the cheapest vendors!
Too many morons in this country (and around here) think the purpose of a company is to provide jobs to the local populace.
HELLO...the purpose of a company is to maximize profits for its shareholders! NOTHING MORE!
Progressive leftists don't understand that everybody's income is somebody else's cost.
Walmart has the best prices for books and CD's.
As for me I will keep buying stock in this successful business as I have for almost 25 years now,
Interview with Alan Tonelson (Is Wal-Mart Good for America?)
Wasn't Sam Walton a Clinton supporter?
CNBC had a better report on Wal-Mart a few days ago. Who needs PBS, anyway (You know YOU pay for it!)?
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical."
– Thomas Jefferson, Statute of Religious Freedom, 1779.
if econ were required of all students in high school and college, the democrat party would go evaporate.
Maybe; it was more than likely a matter of the usual politician's protection-racket game, which Sam had to play along with "or else," especially knowing the politician involved. Whatever, Sam's HEIRS are definitely Republicans.
Been in one Wal-Mart. Not particularly pleasant. Felt like a rat in a maze and the sales people were uninformed. I'm willing to pay a hire price for better service, at least on items that cost over $20.00
Wow! I have seen "Southern Living" exactly once and that's the one I saw.
Scary
Not it if they use anything like Paul Samuelson's textbooks (exposed HERE) instead of some of THESE!
Wait, Bartlett is whining? What about the crap the you post in the forums every stinkin'...that's not whining? Willie, you're a "Charlie-Delta", big time! What's worse is that you don't even see yourself for what you are...big government, central planning loving, suck-pump.
There, it has been said...now ping the moderator.
Yes I saw this show as well and it was obviously anti-Walmart. Most of the people they interviewed seemed to be former employees who might have an ax the grind. The only semi-valid point they made is that because Walmart uses cheap labor overseas that forces other store like Target or Kmart to also use cheap labor which may effect manufacturers in the US. They gave an example of an Ohio town (Circleville Ohio-home of the pumpkin festival BTW) that had to close some manufacturing places and many people were out of work. Thats too bad but thats the way things can go for a one industry town where most everyone does the same thing or work for one industry. If certain things happen you may have to find something else to do. Most people are usually going to buy what they want or need for the cheapest they can get it. Walmart seems OK with me!
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