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Does Wal-Mart Destroy Communities?
Club For Growth ^ | [Posted May 31, 2004] | William L. Anderson

Posted on 06/02/2004 7:26:39 AM PDT by .cnI redruM

In a recent poll on the CNN website, viewers were asked the "poll" question of whether or not they believed that Wal-Mart stores were "good" for the "community." Perhaps it is not surprising that a large majority answered "no."

Now, this by itself does not mean much, since these online "polls" are not scientific and reflect only the views of the moment by people who choose to participate. What is more significant, however, was the anti-Wal-Mart content of a speech recently given by Teresa Heinz Kerry, John Kerry's wife and an influential person in her own right. Speaking at a Democratic Party rally, Mrs. Kerry declared that "Wal-Mart destroys communities."

Indeed, Wal-Mart bashing is in vogue. Whether one journeys to the sight of Sojourners Magazine or reads even mainstream news publications, the charges against Wal-Mart abound. According to the consensus of the critics, Wal-Mart is guilty of the following:

Paying low wages to workers, and generally abusing them.

Intimidating shoppers by having them "greeted" by an elderly person at the door. (As one writer said, the real purpose of that greeter is to let shoppers know that they are being watched.)

Putting small stores out of business, as shoppers stop patronizing the little "mom-and-pop" boutiques for the big box, thus "destroying" the look of "Main Street" in small towns and cities.

Purchasing low-priced goods from abroad, which puts American workers out of jobs.

Contributing to that allegedly harmful disease known as "consumerism," in which Americans are constantly purchasing goods that the Wal-Mart critics insist that they really don't need. As the bumper sticker of one of my faculty colleagues proclaims: "Mal-Wart: The Source of Cheap Crap."

Of course, what really bugs the critics is that people choose to shop at Wal-Mart instead of the places where they would want people to spend their money. (Activists on both left and right often will invoke the name of the "people" when their real goal is to restrict the choices of those "people.") Yet, while up front I question the real motives of the Wal-Mart haters, it still behooves us to answer the charges using economic logic, since many of the arguments against this chain store also appeal to economics.

In a recent article, "Always Low Wages," Brian Bolton declares that Jesus would not shop at Wal-Mart, since the company's employee pay scale is not up to Sojourners' standards. Furthermore, he all but declares it a "sin" for Christians to patronize the store because it imports cheap goods made by people who make even less money than Wal-Mart employees. As Bolton writes, "lower prices equal lower wages."

Nearly all of us would accept higher payment for our services, and Wal-Mart employees are no exception. Yet, that condition alone hardly makes a company's pay scales illegitimate, as Bolton and other critics contend. If my employer were to double my pay tomorrow (which is highly doubtful), I doubt I would object, although I'm sure that most of my colleagues would see the event in a different light. That Frostburg State University does not make that offer to me does not make my current salary illicit, nor does it make my employer the second coming of Silas Marner.

The point is this: payment for services involves mutually agreeable exchanges. They are not manifestations of power, as some would say. No one is forced to work at Wal-Mart; people who choose to work there do so because they prefer employment there to other circumstances.

At the local Wal-Mart where I shop (contrary to Bolton, I do not believe that shopping at Wal-Mart violates the Holy Scriptures), I have noticed that many employees have stayed with that company for a long time, and there does not seem to be much turnover there. Furthermore, from what I can tell, they seem like normal people, not the oppressed slaves that the critics claim fill the ranks of Wal-Mart workers.

Now, my personal observations hardly constitute proof that Bolton and the other Wal-Mart critics are wrong, but unless they can repudiate the opportunity cost argument, they have ground upon which to stand. Wal-Mart is not engaged in a grand conspiracy to push down wages in any given market, and twisted logic cannot prove otherwise.

For example, Bolton writes that part of the problem faced by recent striking union grocery store workers in Southern California was that Wal-Mart super centers in the area paid lower wages, which placed pressure on the other grocery stores. Thus, he reasons, it was Wal-Mart that ultimately kept workers from receiving "just wages" for their work.

No doubt, Bolton can appeal to the anti-capitalist mentality of many people, but his work stands economic logic upon its head. By paying lower wages, Wal-Mart makes grocery stores like Vons and other places that pay union scale more attractive to workers (although labor unions do not exactly welcome some potential employees with open arms). The success of Wal-Mart does not have to do with the pay scale of its employees, but rather with the perception by consumers that the store will have the goods they want at an affordable price.

Bolton claims that Wal-Mart can charge lower prices and still be profitable because it pays its employees less than do other companies. As anyone with even cursory training in Austrian Economics knows, such an argument is false. As Murray Rothbard points out in Man, Economy, and State, economic profit exists because of temporarily underpriced factors of production. Over time, as the owners recognize their position, they will either refuse to sell their factors at current prices and look to other options, or accept the current price because the opportunity costs of selling to other buyers may be higher than they wish to incur. If it is the latter, then one cannot say that these particular factors are even underpriced, as their owners are not able or willing to do what is necessary to gain higher prices for their employment.

In places like Southern California, where there are numerous employment opportunities, to say that workers are "forced" to work at Wal-Mart for "slave wages" is ridiculous. As noted before, the fact that workers there would be willing to accept higher pay is not evidence that they are enslaved. That they would prefer more to less simply means that they are normal, purposeful human beings.

One can easily dismiss the charge about the "greeter" at the door—unless one truly is intimidated by the presence of a diminutive 60-year-old grandmother. (What I have found is that if I select merchandise and actually pay for it, then no one there bothers me at all. If activists are upset that Wal-Mart does not like individuals to steal goods from their shelves, then they are advocating theft, and one does not have to pay attention to their arguments at all.)

The "Wal-Mart destroys the community" charge, however, needs more attention. It goes as such: Wal-Mart enters a geographical area, and people stop shopping at little stores in order to patronize Wal-Mart. The mom-and-pop stores go out of business, the community is left with boarded-up buildings, and people must leave the small businesses and accept lower wages at Wal-Mart. Thus, while a shiny new store full of inexpensive goods is in the locality, in real terms, most everyone actually is poorer.

Again, these kinds of arguments appeal to many people. For example, all of us have heard of the theoretical owner of the small, independent hardware store who had to close his shop when Wal-Mart or Home Depot moved into his community, then suffer the indignity of having to go to work at the very place that put him on the streets. The former owner has a lower income than before, which is held up as proof that the "big boys" create and expand poverty.

A few items need to be put in order. First, no one forced the hardware owner to close his shop; he closed it because it was not profitable enough for him to keep it open. If the new chain store meant that many of his former customers had abandoned him, that is not the fault of the new store. Instead, consumers faced with choices and lower prices that they had not previously enjoyed freely chose to patronize the new store.

Second, while the owner of the smaller store has suffered a loss of income, everyone else has gained. Third, if the employees of the smaller store go to work at the new chain store, it is almost guaranteed that their pay will be higher than before and they will enjoy new benefits that most likely had not been available to them previously.

Third, the presence of Wal-Mart means local consumers will pay lower prices for goods than before, and also will benefit by having a wider array of available items than they had previously. (And they save on time by being able to stay under one roof while shopping for different items.) Whatever the reason, we can safely assume that consumers in that particular locality are exercising their free choices, choices that they perceive will make them better off than they were before the store existed. Activists may not like their reasoning, but that is irrelevant to our analysis.

Having dealt with the "Wal-Mart" creates poverty argument, we now turn to the more nebulous claim that the chain store "destroys" communities. Now, I have never seen a place that has been severely damaged or "destroyed" by Wal-Mart. (I have seen places that have had their quality of life spoiled by rent controls, "urban renewal," and other statist interventions that so-called activists have championed, but that is another story for another time. Suffice it to say that activists are unhappy that individuals freely choose to shop at Wal-Mart, and they want to restrict their choices in the name of "community.")

In fact, I would like to make a reverse argument; Wal-Mart and stores like it add to the quality of life in large and small communities because they provide consumer choices that otherwise would not be available. Take the area near Cumberland, Maryland, where I live, for example.

Cumberland is something of a time warp, a place that 50 years ago was a manufacturing center and was the second-largest city in Maryland. Today, most of the large factories are long shut down and the population is less than half of Cumberland's heyday numbers. Furthermore, the area has a relatively high unemployment rate and many jobs do not pay very well.

The presence of Wal-Mart and Lowe's (a large hardware store), along with some large grocery chains, however, means that people here can stretch their incomes farther than we would if those stores did not exist. If they suddenly were to pull out, one can be assured that our quality of life here would not improve in their absence. Furthermore, the fact that Wal-Mart and other large stores are willing to locate in smaller and poorer communities also makes these areas more attractive for people who wish to live here but do not want to have to give up all of the amenities of living in a larger city.

Others on this page and elsewhere have dealt with the charge that Wal-Mart destroys American jobs by purchasing goods from abroad, where the goods often are manufactured in what activists call "oppressive" conditions. (In fact, Sojourners elsewhere has openly stated that Third World peoples should simply be supported by American aid, and that the West should do all it can to make sure that the economies of these poor nations do not grow, all in the name of environmentalism. In other words, none of us are poor enough to satisfy the anti-Wal-Mart activists whose real goal is to eviscerate our own standards of living and "turn back the clock" to an era when life expectancy was lower and people generally were more deprived.)

The last objection—that Wal-Mart helps create "mindless" consumerism—is easily refuted by Austrian economics. The very basis of human action is purposeful behavior; to call human action "mindless" is absurd. Consumers at Wal-Mart and other chain stores are not zombies walking aimlessly through the building with glassy stares. They are human beings with needs and desires who perceive that at least some of those desires can be fulfilled through the use of goods purchased at Wal-Mart.

In a free society, activists would have to try to convince other individuals to change their buying habits via persuasion and voluntary action. Yet, the very history of "progressivist" activism in this country tells us a story of people who use the state to force others to do what they would not do given free choices. Yesterday, Microsoft was in their crosshairs; today, it is Wal-Mart, and tomorrow, some other hapless firm will be declared guilty of providing customers choices that they had not enjoyed before. A great sin, indeed.


TOPICS: Business/Economy; Extended News; News/Current Events
KEYWORDS: 229; economics; fuzzyheadedhaters; no; ofcoursenot; walmart; wmt
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To: .cnI redruM

I have a 25 year old cousin who is mildly retarded. He is unable to drive and lives with his parents.

He works for Walmart. He collects carts from the parking lot and helps move boxes around.

He is making an income. He feels like a useful citizen, which he is. He is not a charity case - he is well liked by his employer for his hard work. He is enthusiastic and looks forward to going to work.

He would be unemployable in a mom and pop shop.


161 posted on 06/02/2004 1:19:26 PM PDT by kidd
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To: Joe Hadenuf

Save it for someone who gives a rats patoot what you think, Joe. You're not goading me into some stupid, useless argument because you seem to hate the rest of the world.

OUT.


162 posted on 06/02/2004 1:21:26 PM PDT by Not A Snowbird (You need tons click "co-ordinating")
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To: SandyInSeattle

I admit it Sandy, the Red Chinese are not my friend.


163 posted on 06/02/2004 1:29:41 PM PDT by Joe Hadenuf (I failed anger management class, they decided to give me a passing grade anyway)
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To: Question_Assumptions
The whole thing? No. But what is factually wrong about the specific examples such as product quality or the suppliers being run out of business (mentioned by someone else in the thread) by Wal-Mart's hardball tactics? Are you saying that these things do not happen or are you claiming that they don't matter?

IF you are a company you have a choice to go after Walmart business. If their pricing isn't to your liking, don't sell to them. Go to other retailers and sell your products. You go to Walmart and try to sell because you want to cash in on their distribution, if the numbers don't add up or your capacity isn't big enough- don't sell to them. No one makes you sell to them.

Wal-Mart using the strong-arm tactics of a semi-monopoly to force suppliers out of business and lowering the quality of goods to meet Wal-Mart's pricing demands are not a good thing, in my opinion. When any business gets government-like control to demand harmful changes from other businesses, I get as concerned about them as I am about the government. Concentration of large amounts of power concern me, whether that power is conentrated in a government, individual, or corporation.

Why would Walmart want to force a supplier out of business? That is just a stupid statement. It seems that reading your concern that they are too big and powerful indicates you MIGHT support some regulation on them, is that correct? You obviously love your right to free speech, but you seem to want to limit other people's right to a free choice.

164 posted on 06/02/2004 1:37:09 PM PDT by bfree (Liberals are EVIL!!!)
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To: Jaded

Wal Mart does more for the elderly as far as giving a purpose, than any other company in America.

And the old folk do what they do best, they care, they listen and they are warm


165 posted on 06/02/2004 1:57:11 PM PDT by Iberian
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To: Joe Hadenuf

but can you admit that WalMart doesn't import any higher percentage of the goods they sell than any of the other mass market retail chains like Target, K-Mart, Sears, Pennys, etc. etc. and that in fact all these companies sell good from largely the same companies and the only real variation is the is the target market of the specific items purchased from these companies and the subsequent price?


166 posted on 06/02/2004 2:00:58 PM PDT by discostu (Brick urgently required, must be thick and well kept)
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To: bfree
Why would Walmart want to force a supplier out of business? That is just a stupid statement.

Because Wal-Mart doesn't care if the supplier goes out of business and will benefit while the supplier dies. You've never heard of a company killing a supplier by playing games with their contracts and payments before?

It seems that reading your concern that they are too big and powerful indicates you MIGHT support some regulation on them, is that correct?

Not particularly, no, because I think Wal-Mart will eventually blow itself out. You'll notice that several Wal-Mart shoppers on this thread have noticed the loss in quality and no longer buy their durable goods there. I think they are failing to recognize the limits to their own mode of operation. I simply think that all the pain that gets caused learning this lesson is stupid. At some point, Wal-Mart is going to recognize that they've sacrificed too much quality to cut prices, which will happen after enough consumers realize this and stop buying durable goods at Wal-Mart. But there will be a lot of pain between now and then.

You obviously love your right to free speech, but you seem to want to limit other people's right to a free choice.

Again, please point out where I've said that Wal-Mart should be regulated. You can't, because I haven't. So instead you simply pretend that I have.

I do, however, realize that liberty is a delicate thing and that it tends to be one of the first things sacrificed during times of social or economic unrest. If the Wal-Mart style of business leads to sufficient economic distress, those people left out won't be voting Republican. Given a sufficient number of them, we'll wind up with a socialist government that will make Old Europe proud.

What I'm suggesting is that people practice their liberty responsibly, with some awareness of the consequences of their actions. Liberty is constantly struggling against security and often loses in the face of insecurity (in fact, civilization itself is a sacrifice of the freedom of a hunter-gatherer existence for the security of farming, a wall, and an army provided by an overlord). If the Wal-Mart style of business creates sufficient insecurity, it won't be me that takes your liberty away from you.

167 posted on 06/02/2004 2:28:16 PM PDT by Question_Assumptions
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To: Huck

Obviously, my point went right over your head.


168 posted on 06/02/2004 2:52:50 PM PDT by SengirV
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To: discostu

You people kill me. A single pair of jeans is not the problem. Thousands and thousands of pairs of jeans are the problem. That's where Walmart and the open mouth breathers who frequent Walmart come in. When you get into the "I have to pay the lowest price possible for everything, even if it falls apart after one wash" mentality then you are being penny wise and pound foolish. Thanks to Walmart, and other like them, and people like you, we are propping up the Chinese economy, and moving American Jobs south or overseas. All so you can buy your pair of inferior jeans for $3 less. What's the problem as long as you get a good deal - and a pink slip in a couple months.


169 posted on 06/02/2004 3:03:54 PM PDT by SengirV
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To: Question_Assumptions
What I'm suggesting is that people practice their liberty responsibly, with some awareness of the consequences of their actions. Liberty is constantly struggling against security and often loses in the face of insecurity (in fact, civilization itself is a sacrifice of the freedom of a hunter-gatherer existence for the security of farming, a wall, and an army provided by an overlord). If the Wal-Mart style of business creates sufficient insecurity, it won't be me that takes your liberty away from you.

What verbose nonsense.

170 posted on 06/02/2004 3:05:05 PM PDT by bfree (Liberals are EVIL!!!)
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To: bfree
What verbose nonsense.

Ignore history at your own peril. Liberty without responsibility rarely turns out well.

171 posted on 06/02/2004 3:14:57 PM PDT by Question_Assumptions
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To: SengirV
That's where Walmart and the open mouth breathers who frequent Walmart come in. When you get into the "I have to pay the lowest price possible for everything, even if it falls apart after one wash" mentality then you are being penny wise and pound foolish. Thanks to Walmart, and other like them, and people like you, we are propping up the Chinese economy, and moving American Jobs south or overseas. All so you can buy your pair of inferior jeans for $3 less. What's the problem as long as you get a good deal - and a pink slip in a couple months.

Good God, are you ever a self important fool. Go to Sears, Bloomingdales, Macy's or any other store a pay more for the same product if you wish, but most people prefer not to waste the money. Walmart didn't bankrupt Levi Strauss, they have been in financial trouble well before they sold any product to Walmart. Blaming Walmart for societal problems is ridiculous. The company creates jobs(if the jobs all sucked, they wouldn't have 1 million employees) they heavily contribute to local charities, they employ the elderly, the handicapped and many first time job holders. I know most Americans must be wrong shopping there according to you, but I don't think anyone is forcing them to shop in their stores. Why don't you compete with them and you just sell Made in America products only, I'm sure people will flock to your store, the only problem will be finding the products to stock your shelves, Walmart didn't create the problem for manufacturers, unions did.

172 posted on 06/02/2004 3:20:42 PM PDT by bfree (Liberals are EVIL!!!)
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To: Question_Assumptions
Ignore history at your own peril. Liberty without responsibility rarely turns out well.

What does that have to do with shopping at Walmart? Do you work and if so, in what field? I'm just curious.

173 posted on 06/02/2004 3:24:03 PM PDT by bfree (Liberals are EVIL!!!)
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To: WKB

Does Walmart destroy communities?


174 posted on 06/02/2004 3:26:26 PM PDT by onyx
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To: SengirV

You people kill me, completely lacking in facts you go straight for the insult, very telling.

People pay for the quality they want. Some people are willing to pay more for quality, some aren't. Some companies cater to the low end of the market, some cater to the high end.

Don't look now but we've had an entire year of job growth in the manufacturing sector.

I buy the value I'm seeking, if no American company can provide the quality I want for the price I'm willing to pay, then no American company deserves my money. I'm not gonna get a pink slip anytime soon, my company makes the best product in our field and have the majority of the market, and I stand by the fact that people should buy our product because it's the best, not because we're an American company.

It's people like YOU that have propped up bad American companies like Ford that make inferior products and charge too much. If you went for value instead of worshipping location maybe Ford would actually have learned to make cars that don't suck, or they'd have gone out of business like they richly deserve.


175 posted on 06/02/2004 3:33:12 PM PDT by discostu (Brick urgently required, must be thick and well kept)
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To: bfree
Go to Sears, Bloomingdales, Macy's or any other store a pay more for the same product if you wish, but most people prefer not to waste the money.

It isn't always the same product, but you seem to want to ingore that point. Levis had to make a new line of clothing to supply pants cheap enough for Wal-Mart and Wal-Mart purchases enough units that manufacturers can run special models or batches just for Wal-Mart with different components. Sometimes, suppliers move their production overseas to make things cheaper. It's not the same. But don't believe me or the other people in this thread who actually like and shop at Wal-Mart who are also saying that quality is dropping. Do whatever you want. I think they are approaching the end of the line on sacrificing quality for cost.

176 posted on 06/02/2004 3:37:39 PM PDT by Question_Assumptions
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To: Question_Assumptions

But Levis considers that new line of clothes they made for Wal-Mart a life saver, they were a dieing company before then. And they had other things to get in line besides price before they could get to Wal-Mart (like reliable delivery, they were a pretty disorganized company and Wal-Mart doesn't like doing business with disorganized companies) which has also helped them improve their bottom line dramatically. Using Levis as an example of the nasty things Wal-Mart does to suppliers doesn't work, they saved Levis.


177 posted on 06/02/2004 3:45:08 PM PDT by discostu (Brick urgently required, must be thick and well kept)
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To: GOPJ
The REAL reasons elite's hate Walmart.

Walmart is non-union.

178 posted on 06/02/2004 3:51:07 PM PDT by cinFLA
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To: bfree

No one is forcing them, that is correct. And nothing I do or say will stop the vast majority from shopping there. It's jsut that I have taken a different approach to life now that I have a home and family. I'm much more keenly aware of how my purchases affect the econmy of my country as well as those of other countries. If you choose to think you live in a vacuum, then go ahead. I simply see that my purchases have an affect, no matter how small, to the nations economy. And I prefer to have my purchases go towards American products if possible. And yes, I do think America would be in much better shape if people shopped the way I do. I get upset with people complaining about jobs going overseas, yet can't fill their cart up fast enough at Walmart.


179 posted on 06/02/2004 3:52:08 PM PDT by SengirV
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To: bfree
What does that have to do with shopping at Walmart?

Nevermind.

Do you work and if so, in what field? I'm just curious.

Yes. Computer programming. No, I'm not worried about my own employment (I've already been laid-off three times) and have nothing to do with working in retail. Frankly, so long as I've got local retail choices (and I do), Wal-Mart has a nearly zero impact on my life.

180 posted on 06/02/2004 4:01:38 PM PDT by Question_Assumptions
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