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 Townhall.com member group.
Canned goods and paper goods are not crap. WalMart has the same brands that Target, Randalls, Safeway, etc. carry for about 30% less.
WalMart is owned by same co. as Sam's Club. I don't need those HUGE packages that Sam's carries, plus there is a Walmart here in town. I would have to drive an hour to Houston to go to a Sam's.
I grew up in the grocery store business. We were put out of business by a store that came into town that was bigger and could sell products for one penny less per can. That store was put out of business by a bigger store, and so on. I would hate to go back to the old tiny stores like ours was. We didn't have a freezer section or a fresh fruit and veg. section. We had a meat department, tiny one, because my dad knew how to butcher. Mostly we had canned goods, paper goods, school supplies, bread, donuts, cigarettes, snuff, soda, and candy. And we had a gum machine. But the store was so tiny. about 30' x 30' with no storage space.
I love going to the big super markets where I can get all kinds of fresh fruits and veggies all year long. I would hate to go back to the "good old days". And our other grocery stores are Randalls, Kroger, etc. all of them are big huge corporations just like WalMart. Plus we have Walgreens and Eckerds - big corporations too. That is the way it is. There are still quaint little shops downtown and we have a mall. Our mall has Dillards, Penneys, Sears, etc. All corporations like WalMart. They CAN all compete with each other on prices IF they want to.
Woah Chief. I didn't mention anything about gov't restrictions. Keep the gov't out whenever possible.
As far as your other point, I am sure that there are many cases similar to the one you mentioned. That's great for your town. It would be nice if happened that way everywhere else. Maybe most of these buildings are owned by third parties who won't cooperate. It still leaves a lot of derelict shopping centers out there.
The town I grew up in would have already died if not for WalMart. That is about all there is there now. The population keeps shrinking. But all the people from the surrounding smaller towns come to shop at WalMart. So it keeps the employment, money, payroll, tax base up.
They have great christmas ornaments and I love their cards. They carry a lot of Christian-oriented Christmas cards at decent prices. I buy all of next year's after Christmas for $1.25 a box. Can't beat that. They have nice cards for $2.00 a box for about 36 cards. I love going there after Christmas.
Wal-Mart has turned the markets upside down. Manufacturers could set their prices. Now, the retailers demand low prices from suppliers or the items won't be carried. THe net result is that manufacturers and suppliers must locate overseas or have ridiculusly low wages in the U.S. Either way, the low Wal-Mart prices are needed because lower labor costs means less income to workers which restricts their buying habits to cheaper merchandise. Wal Marts low prices are a necessity for many communities because customers don't have extra cash left that they can pass on to higher end retailers.
Wal-Mart's low prices are needed by low wage earners. By forcing down wages by dictating loer prices to manufacturers and suppliers, Wal-Mart has created a captive market of low wage earners that can't afford to shop for higher priced goods.
Let's say that I remember the cars GM made back in the '70s.
I haven't seen any dresses I'd get there either, but they have good jeans!
There is no proof to what you are saying.
The company I work for is in manufacturing and Wal Mart basically told us to offer our products to them at below our manufactuing costs in the U.S. SInce we supplied between 40 to 50% of the product type sold by Wal Mart, we had no choice. The net result was 2000 employees laid off, and production shipped to Mexico. When the labor savings from Mexico weren't enough, we laid off Mexicans and closed plants there and shipped production overseas to Asia. The production wages we do have in the U.S. (for less manually intensive tasks) have been dropped from $10/hr to $7/hr and the plants are located in regions where most jobs were union and paid up to $20 per hour. I say were union because most of those plants in those areas have been closed, too. We are now the dominant employer in those areas. Now Wal Mart is the only place our employees can afford to do their shopping.
Please do not say I have no evidence when I am an eye witness to the economic changes Wal Mart has produced. Like other posters have mentioned, is it good for America when the economy becomes service based rather than manufactuing based? Look at WWII when American production was the backbone behind the solid muscle of American military strength. If such a war happened today, are we to barcode scan the enemy to death?
Well then, you explain to me who you propose to tell Wal-Mart what to do other than the government!
You may be right. It's hard enough in some neighborhoods to find a mom-and-pop household, let alone a mom-and-pop business enterprise.
My beef with Wal Mart is they target rural towns, in rural America and yet do not become part of the community.
My town is 20,000 population here in Oregon. An annual event, a big event here is the Fair. Hundreds of children join 4H and FFA (Future Farmers of America) and raise for the fair, pigs, cows, sheep, etc. Fair day is a very vital part of our rural community and "mom and pop" businesses show up for the auctioning of the childrens animals. Of course they pay a little too much but it is such a great learning experience for the young entrepreuners that everyone participates, except Wal Mart!
No where to be seen at thousands of fairs throughout rural America, their target market, is Wal Mart bidding up the childrens animals to participate in the community.
They are hypocrites, so I don't participate with them!
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