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Is Wal-Mart good for America? (Response to PBS hit piece) ^ | November 19, 2004 | Bruce Bartlett

Posted on 11/19/2004 3:44:14 AM PST by The Great Yazoo

On Tuesday, the Public Broadcasting Service ran a scathing attack on Wal-Mart, the world's largest retailer, on its "Frontline" series. The title of the program was, "Is Wal-Mart Good for America?" Although never stated explicitly, it is clear from the overwhelmingly negative portrayal of the company that the answer clearly is "no."

I watched this program with special interest. In fact, it was the first PBS program I'd seen in some time. I'd stopped watching shows like "Frontline" long ago because of their heavy liberal bias. But I thought perhaps this one would be different because I had been extensively interviewed for it.

Over several hours at my house, I patiently explained to Hedrick Smith, the chief correspondent and producer of the program, that the main beneficiaries of Wal-Mart's low-price policy are the poor, who could now afford products that would be out of their reach but not for Wal-Mart, improving their lives and raising their standard of living.

I was trying to make the same point that the great economist Joseph Schumpeter made about the Industrial Revolution. In his book, "Capitalism, Socialism and Democracy," he said, "The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort."

I also pointed out to Smith that Wal-Mart, all by itself, was responsible for a significant amount of the productivity miracle we have seen in this country over the last decade. In a 2001 report, the McKinsey Global Institute, a respected think tank, concluded that Wal-Mart's managerial innovations had increased overall productivity by more than all the investments in computers and information technology of recent years.

Wal-Mart's innovations include large-scale (big box) stores, economies of scale in warehouse logistics and purchasing, electronic data interchange and wireless barcode scanning. These gave Wal-Mart a 48 percent productivity advantage over its competitors, forcing them to innovate as well, thus pushing up their productivity. The McKinsey study found that productivity improvements in wholesale and retail trade alone accounted over half of the increase in national productivity between 1995 and 1999.

A new study from the prestigious National Bureau of Economic Research found that Wal-Mart has a substantial effect on reducing the rate of inflation. For example, it typically sells food for 15 percent to 25 percent less than competing supermarkets. Interestingly, this effect is not captured in official government data. Fully accounting for it would reduce the published inflation rate by as much as 0.42 percentage points, or 15 percent per year.

Ignoring these beneficial macroeconomic effects, "Frontline" focused almost exclusively on the loss of jobs allegedly caused by Wal-Mart. Acting as what economists call a monopsony, it supposedly forced countless American manufacturers to close their domestic operations and move to Asia in order to get their costs low enough for Wal-Mart to sell their products. It is also said to have caused innumerable local retailers to go out of business, further adding to the job loss. In fact, academic research by economist Emek Basker of the University of Missouri contradicts this last point, finding that Wal-Mart permanently raises local employment.

Even restricting oneself to the material presented in the "Frontline" episode, it is hard to justify its sweeping indictment of Wal-Mart. For example, it accuses Wal-Mart of buying $15 billion to $20 billion worth of goods from China each year, implying that this is largely responsible for our trade deficit. But since our trade deficit with China is about $150 billion, Wal-Mart can be responsible for at most 13 percent of that.

But even looking at the issue that way is stupid. If Wal-Mart didn't buy from China, its competitors would. And if Wal-Mart had to depend only on high-cost American suppliers, it never would have grown the way it has and its sales would be far less than they are. Yet "Frontline" always implies that somehow Wal-Mart could have done things differently, kept more production and jobs in America, without paying a cost. No alternative scenario was presented.

Finally, "Frontline" relied heavily on biased sources, such as testimony from openly protectionist organizations like the U.S. Business and Industry Council and a union representative who admits to being a disgruntled former employee of Wal-Mart. In other cases, the report relies on hearsay evidence that no responsible newspaper would publish in order to make its case. Supporters of Wal-Mart and free trade were limited to a few short minutes of camera time (I got about 3 seconds), mostly by a totally ineffectual company spokesman.

In short, "Frontline" presented a one-sided hit piece disguised as objective news reporting. Everyone responsible for it should be embarrassed for this grotesquely unfair case of taxpayer-financed liberal propaganda. I will know better the next time they call me for an interview.

Bruce Bartlett is a senior fellow at the National Center for Policy Analysis, a member group.

TOPICS: Business/Economy; News/Current Events
KEYWORDS: brucebartlett; freetrade; labor; trade; walmart
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Wal-Mart, without intending to operate a charity, has done far more for the poor than all of America's self-satisfied, effete, liberal do-gooders combined. By offering consistently good products at low prices, Wal-Mart does well by doing good.

To Wal-Mart's critics, however, it is intentions, not results, that matter. So Wal-Mart continues to be trashed, not for what it actually accomplishes, but for its intention of making a profit.

Free enterprise and capitalism are what is under attack here.
1 posted on 11/19/2004 3:44:14 AM PST by The Great Yazoo
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To: The Great Yazoo

I agree, wallmart being a success of capitalism now has more enemys than the czar of russia.

2 posted on 11/19/2004 3:45:49 AM PST by Haro_546 (Christian Zionist)
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To: The Great Yazoo
Lots of mom-and-pop stores were closed because of Walmart.

However, that's capitalism. Adapt or perish.
3 posted on 11/19/2004 3:53:30 AM PST by Fishing-guy
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To: The Great Yazoo
Wal-Mart may do all of the things that you say they do, but I believe it ultimately is bad for America. Not because of the way they treat their employees. Don't like the working conditions? Leave! Don't like what they do as a customer? Don't shop there!

Believe me, I'm no bleeding heart in those areas. But Wal-Mart strikes at the very heart of our freedom, which is the right to own property. Neal Boortz puts forth the argument better than I. Here's an excerpt from Neil's Nuze, dated August 21, 2003:


Freedom means little without property rights. What good is your freedom to use your talents and your willingness to work hard to acquire wealth if your rights to that wealth can be denied at the whim of a few politicians?

After the fall of Soviet Union much was made of their attempt to create economic liberty for the victims of communism. All attempts to create a free, market-based economy in Russia met with only limited success, however, until laws were instituted to insure the property rights of ordinary citizens.

Our law recognizes that that there are times when government must use its police power to seize the property of private citizens. Although the right to eminent domain is not specifically recognized in the U.S. Constitution. In 1879 the Supreme Court, in the case of Boom Co. v. Patterson, (98 U.S. 403) said that eminent domain "appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty." The Fifth Amendment contains the words "'nor shall private property be taken for public use, without just compensation." This is a recognition of the government's right to take private property, and a stipulation that it must be taken for "public use."

OK .. sorry for the legal lesson, now let me tell you what is going on in Alabaster, Alabama. I've been talking about this for two days on my show. Many of you, however, don't hear my show ... so I've decided to donate a good part of today's Nealz Nuze to this situation. What you read should horrify you. You just need to know that this sort of government assault on property rights is not confined to Alabaster, Alabama. It is going on virtually everywhere in this country.

Alabaster is a community of about 24,000 people. Interstate 65 runs through Alabaster. A private developer named Colonial Properties Trust wants to build a shopping center anchored by a Wal-Mart on one of the corners of the I-65 intersection. The trouble is that Colonial doesn't own all of the land they need. A few private land owners have refused to sell their property to Colonial. That, my friends, should be the end of the story. If one private individual wants to own a certain piece of property, but the legal owner of that piece of property doesn't want to sell it, the private property rights of the owner of the real estate should be recognized, and the person trying to buy the property should back off.

Well, that's not the way it's working in Alabaster. Colonial, you see, has some friends in powerful places ... politicians on the Alabaster city council. Colonial has decided to use that one unique government asset, the right to use force, to accomplish something that it cannot accomplish on its own. Colonial is asking the City of Alabaster to use force to seize the property under eminent domain and then sell that property to them, to Colonial, so that plans for the shopping center can proceed.

The politicians of Alabaster, Alabama are only too eager to cooperate.

Next week the City of Alabaster will file the condemnation proceedings in the Shelby County, Alabama courts. The City of Alabaster will try to seize the land under the principle of eminent domain. But wait! Aren't governments supposed to use eminent domain to seize private property only when that property is needed for a public use? How can these politicians take that property away from its owners and then sell it to a private company to build a privately owned shopping center?

Here's what the Alabaster politicians are saying. They claim that they simply cannot collect enough property taxes in their town of 24,000 to pay for all of the government they believe the citizens of Alabaster need. They need some sales taxes. Trouble is, there aren't enough businesses around town to generate the amount of sales taxes these politicians want. The answer? Hey! Let's get a shopping center in town. A shopping center will generate thousands of dollars in sales taxes, and we'll have all that money to spend! What a concept!

So, Alabaster's "public use" excuse is that the current owners of the land simply don't pay enough taxes. The land needs to be seized and turned over to someone who will generate some more tax payments. Those additional taxes can then be spent on the public. There's your "public use."

You do realize, don't you, that this very same excuse can be used by any government entity anywhere in the United States that wants to increase its tax revenues? Let's say that you're sitting fat and happy in a home that has been in your family for generations. You're sitting on about five acres in a prime location near a major city. A local developer wants your property to build a subdivision of cluster-mansions. You don't want to sell. The developer goes to the county commission and tells them that if he had that property he could build at least 15 homes there worth about $600,000 each. The developer correctly points out to the politician that the county could collect thousands of dollars in additional property taxes if he could just get his hands on that land and build those homes. A few weeks passes and one day you get a letter from the county attorney telling you that your property is going to be seized by the county. Their only excuse is that they can get more tax dollars if your five acres had 15 homes than they can with your 60 year-old farmhouse. The "public use?" More tax revenues.

If governments can abuse the concept of eminent domain in this manner then your private property rights are virtually non-existent. You own your home only so long as the local politicians tolerate that ownership. Let some developer come along with a better idea, and you can kiss your dirt goodbye.

What are the citizens of Alabaster saying about the rights of the property owners? Let's check in with Councilman Tommy Ryals. Ryals, who works in the environmental compliance department of Alabama Power, thinks that these property owners are just being greedy. He says "Sometimes the good of the many has to outweigh the greed of the few." Sound familiar? Wasn't it Hillary Clinton who said "We must stop thinking of the individual and start thinking about what is best for society." Private property rights? The rights of the individual? Hey, these are all to be set aside for the good of the collective. I wonder if Tommy Ryals and Hillary Clinton have ever met. I wonder if Mr. Ryals would tell us that the individual has the obligation to make sacrifices for the community, for his fellow man. If so, he wouldn't be the first person to express that belief. Adolf Hitler said the same thing back in 1933.

Yes, I'm invoking some pretty ugly names here in the defense of the property rights of these Alabaster landowners. That's because I'm passionate about the right to property and to the idea that one of the prime directives to government is to protect those property rights, not to destroy them for the economic gain of another. Property rights are the absolute foundation of economic liberty, and property rights are under assault by Colonial and the politicians of Alabaster, Alabama.
4 posted on 11/19/2004 3:54:43 AM PST by Uncle Vlad
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To: Fishing-guy
this is not true, The saving of a wallmart consumer allow him to purchase more expensive good in other mom ^ pop stores which sell higher-end products.
5 posted on 11/19/2004 3:57:42 AM PST by Haro_546 (Christian Zionist)
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To: The Great Yazoo

Wal-Mart, in addition to providing wonderful things for our economy, is a huge icon for what economic freedom and enterpreneurship can do for society. Sam Walton began as a small businessman with an idea. If the oppressive left had been in total control, Sam Walton's dream would never have materialized. All of us who have a Wal-Mart superstore around get the benefit. People have cut their grocery bill by as much as 25% at Wal-Mart, not to mention the cost of everything else. My husband often says that Wal-Mart has everything he needs. I understand, though, that Wal-Mart stores are not allowed into many of the blue state areas in the country..Imagine that! I could not live where the local shop keepers nixed a Wal-Mart store. PBS hates freedom..It means they cannot rule. Go figure why anyone listens to their distorted view of life.

6 posted on 11/19/2004 3:58:35 AM PST by jazzlite (esat)
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To: Uncle Vlad
It's about balance. Simple condmenation without compensation would, of course, be wrong.

But, most of these landowners come out pretty nicely in terms of market value.

7 posted on 11/19/2004 3:59:14 AM PST by sinkspur ("It is a great day to be alive. I appreciate your gratitude." God Himself.)
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To: Haro_546

PBS has not yet understood that a majority of non-elitists are disgusted with their leftist trash and its time to stop subsidizing the tax payers.

8 posted on 11/19/2004 3:59:38 AM PST by Lightnin
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To: Lightnin


9 posted on 11/19/2004 4:00:47 AM PST by Haro_546 (Christian Zionist)
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To: Fishing-guy
Lots of mom-and-pop stores were closed because of Walmart.

I really don't understand the "mom-and-pop" sentimentality. We've got two Wal-Marts in our area, but if the mom-and-pops weren't driven out by Woolworths and Woolcos in the '60s, K-mart in the '70s, and Boscovs in the '80s, they sure as hell weren't going to be driven out by Wal-Mart in the '90s. It's my opinion that there aren't any mom-and-pop shops, and haven't been for quite some time.

10 posted on 11/19/2004 4:02:38 AM PST by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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"consistently good products at low prices"

uh...more like crap at low prices

11 posted on 11/19/2004 4:03:44 AM PST by KneelBeforeZod (Deus Lo Volt!)
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To: sinkspur
That's not the point. When one private citizen can use government for force another private citizen to sell his property against his will, we're striking at the cornerstone of our freedom regardless of the settlement price. I think our Founding Fathers would back me up on this one.
12 posted on 11/19/2004 4:05:33 AM PST by Uncle Vlad
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To: The Great Yazoo
In short, "Frontline" presented a one-sided hit piece disguised as objective
No way you can use "Frontline" and "objective" in the same sentence.
13 posted on 11/19/2004 4:07:56 AM PST by oh8eleven
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To: The Great Yazoo

When Bill Clinton allowed the Chinese unregulated trade, he promised grreat export opportunities for American companies. This never happened, but billions of dollars each month are transferred from here to China, via Wal-mart. The long term outcome remains to be seen.

14 posted on 11/19/2004 4:09:40 AM PST by mgpilot
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To: KneelBeforeZod
I don't think that's a fair characterization. In my last WalMart Purchase I bought 4 Easton Aluminum Arrows for bowhunting season. They cost me 30% less than anywhere else including the Web and Ebay. If you want a rolex watch, you're shopping in the wrong place, but for the kind of purchases that run our daily lives, WalMart carries consistently high quality at low prices. If you're uncomfortable with the quality of some of their manufacturers, stick to the name brands which are the same there as anywhere else, they are just sold at a lower markup.Walmart (by definition) is successful because they give people exactly what they want.
15 posted on 11/19/2004 4:11:56 AM PST by tcostell
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To: The Great Yazoo
Wal-Mart is successfully dominating retailing but nobody can argue a single monster retailer, without realistic competition, is good for America.

The announcement K-Mart and Sears are combining to go head to head with Wal-Mart is good news.

No monopoly is good for America. That has been proven over and over again.

The argument Wal-Mart is helping the poor misses the point that Wal-Mart is also responsible for making more American people poor by only buying products made in the poorest of poor countries instead of made by American workers.

American consumers must have jobs and income to shop at Wal-Mart.

Another threat is selection. If Wal-Mart becomes the only choice in America, consumers are inherently limited as to choice of products. Wal-Mart can never have large enough stores to offer every choice to consumers.

16 posted on 11/19/2004 4:12:14 AM PST by NoControllingLegalAuthority
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To: The Great Yazoo

I get the impression that Frontline shied away from directly focusing on China. China by government policy is deliberately undercutting American production, a policy that it probably won't be able to keep up forever, but currently is pretty successful in keeping its workers' wages from rising in response to demand. Yet economists gush over the fruits of China. Go figure.

17 posted on 11/19/2004 4:12:43 AM PST by HiTech RedNeck
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To: NoControllingLegalAuthority

"The argument Wal-Mart is helping the poor misses the point that Wal-Mart is also responsible for making more American people poor by only buying products made in the poorest of poor countries instead of made by American workers." There is no proof that american are becoming poorer. Please provide some.

18 posted on 11/19/2004 4:13:30 AM PST by Haro_546 (Christian Zionist)
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To: The Great Yazoo
The liberal policy of globalist free trade is alive and well at free republic. Sad.

In the 60's, GM was the nations largest employer. Today, besides the government, WalMart is the nations biggest employer.

If you think exchanging factory jobs for clerk jobs is good for America then you're part of the problem.

19 posted on 11/19/2004 4:16:07 AM PST by Nephi (AIDS: The disease originally known as GRIDS (Gay Related Immune Deficiency Syndrome)
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To: Uncle Vlad
Adam Smith wrote (in spirit, not in so many words) that businessmen are vile and disreputable and you can't allow them to even attend a party without hatching some kind of conspiracy against the public. But out of that reprobate state comes public good. For it is not out of charitable intentions that we eat our evening meals, but out of thousands of individual actions of the butcher, the baker, and the brewer, each looking out for his own best interests.

Adam Smith is the intellectual basis for free enterprise and capitalism. That is what is under attack.

Back to Alabaster, Alabama: Public taking of private property is not what free enterprise is all about. If anything, takings are inimical to it.

Wal-Mart should not be criticized for taking advantage of a bad law. Government is to be blamed for bad law. The city fathers and mothers of Alabaster should be held accountable for their actions and the Alabama legislators are responsible for the bad law. And the courts are to be blamed for erosion of private property rights in the first place.

Let's keep our eye on the ball. Government is the problem.
20 posted on 11/19/2004 4:19:48 AM PST by The Great Yazoo (Why do penumbras not emanate from the Tenth Amendment as promiscuously as they do from the First?)
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