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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: dvan

Can't you just see it... and elderly greeter shuffling down the aisles behind you to make sure you don't shop lift. Then they wave their canes at you to intimidate you.

That's too funny. My step mother is a greeter. Figured it was more exciting than watching TV after she retired.


21 posted on 06/02/2004 7:51:15 AM PDT by Jaded
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To: .cnI redruM

The better question would be..."Do Politicians Destroy Countries?


22 posted on 06/02/2004 7:51:36 AM PDT by Osage Orange (Sick Slick's heart is darker than the devil's riding boots.............)
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To: .cnI redruM
It's easy, people love freedom for themselves, and hate it for anyone else.

The "new Americans" who buy into this crap, suck.

23 posted on 06/02/2004 7:51:58 AM PDT by Protagoras (Control is the objective , freedom is the obstacle.)
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To: No Blue States

Buy your cheap Chinese goods. What you save on the purchase you lose on attrition. I knew Sam Walton and the WalMart of today was not his vision, it is his nightmare.

I'm not whining so go spend your money how you like. I miss Small Town America but WalMart didn't kill it alone. I'll spend more for a superior product every time. If you own an American Flag where was it made?


24 posted on 06/02/2004 7:52:02 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: .cnI redruM

If liberals aren't griping about the lack of jobs, they're campaigning against a new Wal-Mart store. I personally avoid the big chains and try to patronize the 'mom and pop' businesses, but Wal-Marts employ people who may not otherwise be employed and provide inexpensive, cheap, if you like, consumer goods.

BTW-it's not hard to understand why rich snobs like Kerry, et ux., look down their prominent noses at mass consumer goods retailers. I doubt Kerry's ever bought anything 'off the rack', but someone should tell the good Senator that we're not all millionaires with summer estates at Cape Cod.


25 posted on 06/02/2004 7:53:05 AM PDT by Spok
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To: .cnI redruM

I prfer Target to Walmart. I can always find bargains in Target. I head there specifically looking for shoes, slippers and summer clogs. The prices are reasonable and the items are sturdy and well-made. If you compare the prices to stores in the mall, it's way down. I have to watch my income since I'm retired, and I appreciate stores like Target.


26 posted on 06/02/2004 7:53:32 AM PDT by Ciexyz ("FR, best viewed with a budgie on hand")
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To: .cnI redruM

The REAL reasons elite's hate Walmart.
1. Elite's don't get special treatment. No Walmart clerk will kiss the butt of local rich elitists. All customers are treated the same. Small Mom and Pop places gush over the TaRaySa Heinz's, but she's not "more equal" at Walmart
2. Walmart doesn't advertise in small liberal newspapers. Walmarts prices speak for themselves, so the media doesn't get ad money. "Mom and Pops" advertise more.
3. Mom and Pop places hire mainly "Mom and Pop". Walmart hires non-elitist.
4. Walmart gives more money to Republicans than to Democrats.


27 posted on 06/02/2004 7:54:39 AM PDT by GOPJ (NFL Owners: Grown men don't watch hollywood peep shows with wives and children.)
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To: LadyShallott

Shopping Malls are bad for communities and Mom & Pop stores? Everyone agree? Boycott J.C. Penney, Sears, Mervyns, Target, Millers Outpost, Costco and Sam's Club.

Eating at Fast food restuarants are bad for Mom & Pop Cafes also. Let's boycott MacDonalds, Churches Chicken, KFC, Jack in the Box, Wendy's, Carrows,Dennys IHOP and all of the rest. How stupid. These businesses meet a need that obviously Mom & Pop establishments did (can)not meet.


28 posted on 06/02/2004 7:56:29 AM PDT by dvan
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To: TXBSAFH

Exactly.


29 posted on 06/02/2004 7:56:51 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: Huck

You can't buy any baby equipment there which isn't COSCO (China Ocean Shipping COmpany) stuff.

This bothers me.


30 posted on 06/02/2004 7:58:47 AM PDT by bannie (Liberal Media: The Most Dangerous Enemies to America and Freedom)
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To: ruiner
"Jesus shops at mom and pop stores" sounds equally ridiculous to me.

Of course he did; but then again, there were no Wal-Marts in his day and age. And he had nothing against emporia per se except that he didn't want the Temple turned into one.

31 posted on 06/02/2004 7:58:57 AM PDT by Agnes Heep (Solus cum sola non cogitabuntur orare pater noster)
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To: .cnI redruM

When I was a kid in the 1950's, there were several mom-and-pop grocery stores in the neighborhood. By about 1965, they were all gone, replaced by larger chain-store "supermarkets" like Safeway. I don't know how much money the owners and employees of the mom-and-pops earned, but I doubt it was more than what the employees of the supermarkets earned. What were the trade-offs for the community? On the negative side, a loss of individual proprietorship and sense of ownership; on the plus, a wider variety of merchandise at lower prices. All in all, it is not clear to me that the trade-offs were so evil as to violate scripture, as Sojourners would claim.


32 posted on 06/02/2004 8:00:33 AM PDT by Steve_Seattle
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To: TXBSAFH

As a matter of fact when Sam was healthy 95% of his merchandise was made in the USA.

Sam set out to compete with the K-Marts, Sears, etc. His kids set out to sell you poop.


33 posted on 06/02/2004 8:04:19 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: Spok

At Christmas, my liberal sister made a show of buying gifts from mom-and-pop type businesses. She paid more for those gifts than if she had gotten comparable gifts at chain stores, but then she's well-off and can afford to pay more. So there's an elitism involved in the critique of Walmart, I think; like K-Mart, it's viewed as a place for the great unwashed masses. People who can afford to shop at upscale stores like to ridicule the chain stores.


34 posted on 06/02/2004 8:05:01 AM PDT by Steve_Seattle
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To: LadyShallott

No flaming here. We do the same thing. We help the local businesses when we can but sometimes they are just overpriced.


35 posted on 06/02/2004 8:07:40 AM PDT by pfflier
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To: CSM

I would bet that virtually all of the conservatives (and liberals) bashing Walmart are using computers and other electronics that were made in China and other low-wage countries. If those electronic products were made by people earning American wages, a lot of people wouldn't be able to afford them and the economy would tank.


36 posted on 06/02/2004 8:08:16 AM PDT by Steve_Seattle
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To: .cnI redruM

blessed are those who care for the poor. does anyone doubt that for the first twenty years walmart was only in small towns and that they cared more about working class people and became blessed by their systems? people that forget history are doomed to relive it.


37 posted on 06/02/2004 8:09:10 AM PDT by q_an_a
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To: Jaded

But he didn't dwell on our huge trade imbalance ($120B) with China and the marvellous help US shoppers are giving to the Chicom Army Inc. and the lovely ICBMs they have thoughtfully aimed at us. This matter gets no attention for some mysterious reason. As we sit here all happy with our W-M and KM junk, the Chinese leadership is in crisis, trying to decide whether ot not to use the missiles now or wait until later. They may soon practice on Taiwan and then what do we do? (Just an idle thought...)


38 posted on 06/02/2004 8:10:01 AM PDT by Paulus Invictus
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To: q_an_a
I love Walmart but seldom go, because the parking lot is always packed and it gets annoying to fight the crowd. Mom and Pop need to get creative and come up with a product to sell at Walmart, but alas they are too lazy to change.
39 posted on 06/02/2004 8:17:44 AM PDT by Sybeck1 (Kerry: how can we trust him with our money, if Teresa won't trust him with hers!)
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To: Conspiracy Guy
"Buy your cheap Chinese goods....I'm not whining so go spend your money how you like.....If you own an American Flag where was it made?"

Walmart has American goods also. Some of very high quality, imagine that.

And I need not your permission to spend my money as I like. But you knew already that.

I do not believe in the VWC (vast walmart conspiracy), and buy no flag that wasnt made in the USA.

Walmart bashers have communist tendencies.

40 posted on 06/02/2004 8:18:08 AM PDT by No Blue States
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