Does Wal-Mart Destroy Communities?

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:

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.

Word from the new VPs at Wal-Mart is that they think they've expanded horizontally about as much as they can and the next wave is to expand their margin on the market already captured. Which, oddly enough, would solve all these companies whines.

It's certainly likely that the situation will correct itself, which is why I haven't mentioned any sort of formal intervention. But that does not change the fact that several Wal-Mart shoppers in this thread are reluctant to buy durable goods at Wal-Mart because of quality issues. And the question is whether all of those laid-off Levis workers will blame Levis management and their unions for their unemployment and vote Republican or will blame Wal-Mart and free trade and vote Democrat. Their votes matter, whether they are right or wrong.

But the fact that several people are unwilling to buy durable goods from Wal-Mart means absolutely nothing. And also has absolutely nothing to do with laid off Levis workers. They were out of a job one way or the other, anybody that blames the President of the United States for losing their job is a bleeding moron and what they think about anything will never have any relationship to facts. People that understand facts understand that the POTUS wasn't on the board when the got laid off, wasn't in the team that decided who was out of a job, and doesn't have a damn thing to do with their employment status. I got laid off during this term, has nothing to do with the pres, has to do with running out of investment capital, I got a new job in a few months, that also has nothing to do with the pres, life goes on.

I got laid off during this term, has nothing to do with the pres, has to do with running out of investment capital, I got a new job in a few months, that also has nothing to do with the pres, life goes on.

Both my wife and I got laid off during this term. I also got laid of twice during Bush 41's term (my wife was laid off once back then). In fact, I lost one of those jobs (a state government job) as the direct result of budget cuts by Republicans that I helped elect. Sure I found new jobs and didn't blame the Republicans for losing my job (in fact, I helped elect them to lower taxes and cut state government and wasn't all that annoyed that I wound up being a cut). I'm not worried about how you vote, I vote, or host most Freepers vote. Most Freepers do seem to realize that, yes, life goes on. I'm worried about people voting the way they did in 1992. The parallels are there, though the War on Terror and Kerry's more overt liberalism will likely save the day and the economic news is certainly looking better earlier in the election cycle than it did for Bush 41.

One of the lessons of history that you are missing is that most people are unprepared to handle things like contracts, competition, debt, and unemployment.

So, you're arguing that we must protect people from their own stupidity?

Kindly take your silly-a$$ argument over to DemocratUnderground.

I'm not claiming that socialism and/or authoritarian control of business is the answer.

As you demand same...

I am reaching the unhappy conclusion that your intellect is not worth the effort to educate you, but one last try,

Corporate America, largely following Wal-marts lead, is engaged in a massive build up of Communist Chinas industrial might, mostly at the expensive of US industry. The motive is of course profit, exchange cheap Chicom labor for expensive US labor. But the Chicoms drive a hard bargain, they insist upon being full partners in the ownership and operation of industries that move to China, they also insist that the "parent" company "share" it's technology with the communists. Now maybe you think this is a good thing to make the Chicoms as powerful, or more powerful then the USA. Personally I think giving the Chicom our technology, and our industrial base so you can buy cheap crap at Wal-mart a bad idea.

But hey, you are the smart one, I'm just a moron that believes the Chicoms when they say they will nuke LA. Do you live in LA? I hope you do.

So, you're arguing that we must protect people from their own stupidity?

I'm arguing that people need to take stupid people into consideration. They don't magically disappear and in sufficient numbers, they actually cause quite a bit of trouble. If you let stupid people wreck themselves in large numbers, they will become your problem whether you like it or not. Again, five thousand years of human history shows this. And a elements of human psychology help explain it. You may (or may not) find this article, this article, and this article interesting.

Kindly take your silly-a$$ argument over to DemocratUnderground.

I'm sorry, am I speaking to Jim Robinson?

As you demand same...

I'm also not saying that we should choose socialism over a free market. I'm saying that if there are a sufficient number of people who feel trapped and insecure, we won't have a choice. They will impose it. I'll ask again. Why do you think socialism got so far under FDR?

Corporate America, largely following Wal-marts lead, is engaged in a massive build up of Communist Chinas industrial might, mostly at the expensive of US industry.

What do you mean by "US industry"? Corporate America is US industry, no? US companies are seeking the cheapest labor they can find. Nothing new there.

Where? I suggested that people should choose to act in ways that take the plight of others into account rather than acting wholly out of self-interest. I'm sorry if the idea of voluntary consideration offends you so much. I'm also not saying that we should choose socialism over a free market. I'm saying that if there are a sufficient number of people who feel trapped and insecure, we won't have a choice. They will impose it. I'll ask again. Why do you think socialism got so far under FDR?

No offense, but this is the typical leftist simplistic argument. It reminds me of Hillary saying "it's for the children" as a legit reason for her "ideas for America". FDR created jobs for public works, taking a 25% unemployment rate and putting people to work to build and expand the USA. The benefits to the country are still in use, highways, dams and the expansion of cities. Walmart allows people to expand their purchasing power to benefit the quality of life for their families. There are very few people in this country living on the streets starving to death with the security net the system provides here. Yes, way too much of your tax dollars are wasted with a bloated bureaucracy at the federal, state and local levels with far too many government employees, but to blame Walmart for destroying America is just plain ludicrous.

Mom and Pop stores were on the decline since the big department stores started up-Sears, Penneys etc. Also, the malls have ruined it for the Mom and Pop stores. We don't make buggy whips anymore. Imagine how many people this sent to the unemployment line! Times change and business changes. Walmart did buy American in the beginning, but the trend of sending garment manufacturing overseas has been in high gear for years. Walmart didn't cause this.

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