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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: Huck
"Corporate America is US industry, no?"

No, US Industry is also the machines that make the products, (shipped to communist China) the people that operate the machines (losing their jobs), the towns (shutting down) and families (breaking up) of the workers and the various suppliers (going out of business) that keep thing moving.

Why yall support a communistism system (Communist China) over a capitalist system (USA) is beyond me.

221 posted on 06/04/2004 7:30:33 AM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: jpsb
Why yall support a communistism system (Communist China) over a capitalist system (USA) is beyond me.

I buy shirts.

222 posted on 06/04/2004 7:46:23 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Huck

Check the manufacturer's tag. Does it say People's Liberation Army?


223 posted on 06/04/2004 7:51:59 AM PDT by mac_truck (Aide toi et dieu l’aidera)
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To: mac_truck

I just went to the closet and pulled out a 10 dollar wal mart shirt my wife bought me. The tag says Made in Korea. Should I have checked with the State department first? Which side of Korea made the shirt? Does it matter? Do I care?


224 posted on 06/04/2004 7:59:48 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Huck
Yea, and support a brutal communist system that enslaves it people and has sword to defeat the USA in battle.I don't buy Chicom, but people like you are making it increasing hard not to. I will do without before I'll send one damn dime to communist China.
225 posted on 06/04/2004 8:04:58 AM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: jpsb
Here's something I said elsewhere that applies here:

Seriously, how many tears are you shedding for,say, North Korean peasants? Me? None. Do I wish them luck? Sure, I hope one day the whole world gets with the program, at least to the extent the US is with it. You know, basic freedoms (all though we get ripped here more than I like, it's relatively ok) commerce...life liberty and the pursuit of happiness. I am for that all over the world. But personally, I dont give a crap about individual iraqis. I care to the extent it helps us and helps the world be a better place.

226 posted on 06/04/2004 8:13:25 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Huck
The Chicoms said they would nuke LA, and defeat the USA in battle, that makes them special in my mind. I have also noticed the massive military build up going on in China, the massive space program (space is the high ground) going on in China and I think "hmmm, maybe the Chinese mean it when they claim they will nuke and defeat the USA". Building up China, sending money to China is IMHO treason. Wal-mart is a the top of my list of treasonous American companies.
227 posted on 06/04/2004 8:24:04 AM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: jpsb
The Chicoms said they would nuke LA

Who, what, where, and when?

228 posted on 06/04/2004 8:28:01 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Conspiracy Guy
Walmart went to heck when Sam passed...
True statement. I have never shopped at WMT and never will, but that is a personal decision. WMT's business practices is to bully their way into any community, then when the store turns into a dump, abandon the old building leaving a huge eye-sore. We all know those places.
229 posted on 06/04/2004 8:34:35 AM PDT by devane617
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To: Huck

Conventional wisdom has held that while China may threaten Taiwan or other neighbors, it poses no threat to the United States. That assumption was shattered on January 24, 1996 when the New York Times reported that a Chinese official had told former Ambassador Charles Freeman that China could act militarily against Taiwan without fear of U.S. intervention because American leaders "care more about Los Angeles than they do about Taiwan." This threat to use nuclear missiles against a major American city stands in sharp contrast to the assumptions of the National Intelligence Estimate that China presents no threat to the United States.


230 posted on 06/04/2004 8:51:39 AM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: jpsb
Looks like your stretching it quite a bit there. Actually, that Chinese official was right on the money if you ask me. I think China could act militarily against Taiwan without fear of U.S. intervention. And hopefully it's not just American LEADERS who think so. I assume optimistically most Americans also care more about the security of LA than Taiwan.

By the way, just bought a shirt at Marshall's recently. Checked the label. It's made in China. 100% silk. Perry Ellis brand. I didn't look at any of that when I bought it. Just thought it was a good looking discount shirt for summer.

231 posted on 06/04/2004 9:06:17 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Huck
[ And who works in Wal-Mart? Slobobians? ]

Some do, some are customers. At Wal-Mart I'm dodging Slobobians like at a race track.

232 posted on 06/04/2004 9:10:04 AM PDT by hosepipe (This propaganda has been edited to include some fully orbed hyperbole....)
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To: hosepipe

Well, as Bugs Bunny used to say, "When in Slobobia, do as the other slobs do."


233 posted on 06/04/2004 9:15:07 AM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: devane617; Conspiracy Guy
Walmart went to heck when Sam passed...

True statement. I have never shopped at WMT and never will, but that is a personal decision.

Wal-Mark is going to heck, as many people who do shop there realize. Many of the stores are dirty and disorganized, when years ago it was the opposite. I shop Wal-Mart a lot because of the prices and because of the tremendous advantage of not having to wait for stuff to go on sale. However, Target is far more pleasant and better liked by customers. This really is a serious issue because Wal-Mart is so big that if it goes under, as most discount stores eventually do, it would hurt the economy. They need to get back to a system where the head of the company constantly makes surprise visits to stores and the managers fear what will happen if the place is a mess.

People in rural areas probably have different experiences and my guess is that many of those stores are still good.

234 posted on 06/04/2004 9:24:04 AM PDT by Steve Eisenberg
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To: devane617; Conspiracy Guy
Walmart went to heck when Sam passed...

True statement. I have never shopped at WMT and never will, but that is a personal decision.

Wal-Mark is going to heck, as many people who do shop there realize. Many of the stores are dirty and disorganized, when years ago it was the opposite. I shop Wal-Mart a lot because of the prices and because of the tremendous advantage of not having to wait for stuff to go on sale. However, Target is far more pleasant and better liked by customers. This really is a serious issue because Wal-Mart is so big that if it goes under, as most discount stores eventually do, it would hurt the economy. They need to get back to a system where the head of the company constantly makes surprise visits to stores and the managers fear what will happen if the place is a mess.

People in rural areas probably have different experiences and my guess is that many of those stores are still good.

235 posted on 06/04/2004 9:24:11 AM PDT by Steve Eisenberg
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To: devane617; Conspiracy Guy
Walmart went to heck when Sam passed...

True statement. I have never shopped at WMT and never will, but that is a personal decision.

Wal-Mark is going to heck, as many people who do shop there realize. Many of the stores are dirty and disorganized, when years ago it was the opposite. I shop Wal-Mart a lot because of the prices and because of the tremendous advantage of not having to wait for stuff to go on sale. However, Target is far more pleasant and better liked by customers. This really is a serious issue because Wal-Mart is so big that if it goes under, as most discount stores eventually do, it would hurt the economy. They need to get back to a system where the head of the company constantly makes surprise visits to stores and the managers fear what will happen if the place is a mess.

People in rural areas probably have different experiences and my guess is that many of those stores are still good.

236 posted on 06/04/2004 9:24:16 AM PDT by Steve Eisenberg
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To: devane617; Conspiracy Guy

Sorry about that guys (triple post). The computer didn't respond and I kept clicking on Post.


237 posted on 06/04/2004 9:25:36 AM PDT by Steve Eisenberg
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To: Huck
"Actually, that Chinese official was right on the money if you ask me"

I knew you see it that way, since you support the Chicoms. The official is now the leader of the Chinese communist party, or the leader of China. I also knew you'd have no objection to the Chicoms over throwing the democratic republic of Taiwan and imposing their brutal communist system there just like they are currently doing in Hong Kong. Hell let China rule the Pacific, take over Japan and Korea, Singapore, etc. Who cares as long as you can buy a cheap shirt. Well hope you've stocked up on 5,000,000 whatever sun block.

238 posted on 06/04/2004 9:33:45 AM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: nyconse
why so meanspirited?

Because I find the same peole who fill their Walmart carts with stuff made overseas are the same ones who complain about jobs going overseas. That is why I am so mean. It's also the older folks who seem to think everyone should give them everything for free at this point. They are the ones who purchased American products in the past(granted there was more selection in the past) yet want the absolute cheapest prices now, so they buy foreign. The older folks are the first to complain when there is no money for medicare/cade/SS because the "skilled" jobs are going overseas and are being replaced by minumum wage service jobs.

239 posted on 06/04/2004 9:42:34 AM PDT by SengirV
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To: devane617

They make excellent flea markets.


240 posted on 06/04/2004 10:44:07 AM PDT by Conspiracy Guy (Everything that really matters I learned from a song when I was 3. Jesus Loves Me!)
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