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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: Steve Eisenberg; devane617

Where were yall when I was getting flamed as a commie for not shopping at WalMart?


241 posted on 06/04/2004 10:45:16 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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To: Steve Eisenberg

It was worth saying more than once.


242 posted on 06/04/2004 10:45:50 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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To: jpsb
It's not even a matter of having an objection. I don't know the first thing about Taiwan. As I said, I'd like all the world to get with the program, but exactly what I should authorize our gubmint to do about it, and what I should do about it, are not questions I have ready made answers for.

Walmart is the #1 retailer. There is no boycott. Nothing any individual does on his own in that regard amounts to spit. Maybe if there were some kind of movement to pressure China to be more free or something, but in the meantime, I haven't got a clue what impact my shirt buying has. How do I know it's not opening up channels with the east? How do I know it's not helping? Beats the hell out of me. I am happy enough to find something in my size that I can wear. The shirt on right now is from Bangladesh. I have no idea, none at all, about the political implications. I just know it's my trusty red flannel I got at wal mart.

243 posted on 06/04/2004 12:43:47 PM PDT by Huck (The corporation I work for spends big bucks each year on taglines.)
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To: Huck
Ok, that I can understand. I urge you to educate yourself a little on China, most intelligent people think that China represents the greatest threat to US security that the US has ever faced.

There are two competing theories on how to deal with China, one theory is to deal with China in the same manner we dealt with the USSR. The other theory, the one currently in use, is to use "constructive engagement" (trade) in an attempt to bring reform and civil liberties to China. The problem with constructive engagement is that China, PLA grows stronger everyday, and reforms (real reforms) are not happening. If constructive engagement fails, we will have created a monster that may very well destroy us, just like they that they would if we oppose there stated goal of over throwing the republic of Taiwan, which we have an hard commitment to protect.

244 posted on 06/04/2004 1:10:55 PM PDT by jpsb (Nominated 1994 "Worst writer on the net")
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To: Steve Eisenberg
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.

Wal-Mart is not going under, in our lifetimes.

Has Sears gone under? Except for appliances and tools, Sears is the nastiest chain of stores in America, yet they're still around.

I don't think Wal-Mart is "going to heck" at all. They've just put in self-check at all of the Wal-Marts in my neighborhood, and that's the icing on the cake, for me.

245 posted on 06/04/2004 1:18:39 PM PDT by sinkspur (Adopt a dog or a cat from an animal shelter! It will save one life, and may save two.)
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To: Captain Rabbit

Eminent domain is an issue both of government gone amok and of certain commercial entities who take the bait. They are often offered land for virtually nothing, in exchange for their future tax revenues. I fault both the government and the businesses, one for offering the eminent domain, the other for taking the bait.


246 posted on 06/04/2004 10:06:42 PM PDT by pbmaltzman
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To: SengirV

The problem with American jobs vs global economy has nothing to do with Walmart. Clothing makers began leaving this country years ago. Walmart did in fact buy American when they first opened, but the pool of American products was shrinking. Also, American made often meant in recent years -sweatshops employing illegal aliens in big cities like New York. Georgia lost it's entire garment industry before Walmart became popular. I have concerns about the "global economy". However, I will say this. I have never seen such a sustained economic growth before. You want to see real economic problems; go back to the 1970's and early 1980's. The stockmarket was down for ten years, gas prices were about $1.50 per gallon at the height of the energy crisis (people made a fracton of what they make today),inflation caused fear that today's young people can not understand, interest rates were 21% in 1980. People considered unemployment rates of 7 and 8 % full employment 20 and 30 years ago. Most people bought their first homes in their 30's. Today, many 20 somethings own their own homes. I don't like to see American companies sending jobs overseas, but what should we do? Should we pass laws that force companies to do business in a certain way? I am a conservative. I can not believe regulation is the answer. Believe me "freezing wages" in the 70's and price controls did not work.

As for older people being "selfish". Quit complaining and whining about how tough you have it and expecting people to make it easy on you. You have it much easier than plenty of these "selfish" older people did. Get on with you life and make the most of it. Believe me when I say; life passes too quickly. Look at the pictures of a young Ronald Reagan, George Bush or Bob Hope. They were young just like you...time passes. Get busy and and make a life for yourself.


247 posted on 06/08/2004 2:34:27 PM PDT by nyconse
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