Saturday, January 07, 2006

What's Wrong with Wal-Mart?

I became enganged in a conversation with a friend today and it centered around the ever illusive and explosive topic of the great American corporation--WalMart. Either someone at our lunch table remarked about missing WalMart or maybe I did, I simply do not remember. The conversation was centered around being anti-redneck and the person sitting next to me commented that she was "anti-redneck" so she doesn't support WalMart because they "destroy all the community shops" in fact she "despises WalMart" because it "supports China" and that [WalMart] enables them [China] to rival the United States or something like that, but China did come up.

to boil it down to its basics: WalMart is evil because it pays "low" wages, runs 'mom & pop' stores out of business "destroying" communities, and now, it is evil because it is supporting China, just like our oil habit is supporting the Middles Eastern countries and in turn supporting terrorism.

i won't get into the oil, so, that (above) is the classic liberal case against WalMart.

however, I love WalMart. yes, i know that i am not going to get great quality on certain items there but i can get competitive items and very competitive prices. another criticism of liberals is that WalMart has it down to a science and they "know" that the average customer who buys a TV will spend about $34 in other stuff, even though the TV is about 10% cheaper than elsewhere. but again, that argument makes it sound as if we are all pulled by the great gravity of WalMart and we cannot escape it--as soon as we get within a mile or so the gravity sucks us in and doesn't let us go until we purchase something and support the "evil corporation."

oh come on!! gimmie a break. what utter lunacy! WalMart is a great example of capitalism because Sam Walton realized that people appreciated good goods at reasonable and cheap prices and he made it happen. it seems to me that it is good for everyone, even Proctor and Gamble who just provides goods at whatever WalMart states, yet, since WalMart is sooo huge and the giant "evil corporation" then i would think, logically, that P&G would want to be providing their products to get a huge peice of that market-share, because if P&G products aren't there, well the zombie consumers shopping WalMart will simply buy something else.

as far as the average wage being "lower than other places" or the make it more catchy--they don't pay enough. well. looking at this from an economic 101 class it seems that WalMart is doing alright. since the avg wage is about $9, that is certainly more than you would make in other places doing other things. but, according to econ 101 there are supply and demand curves, if we plot a demand curve with "cost" on the x-axis and "demand" on the y-axis, we'll see that as cost goes up the demand goes down. there is also a supply curve. if we take that same supply curve and on the same axies make "supply" on the y- and "price" on the x-axis we see that as the supply goes up, more people want to supply that service. by putting these two curves together, there is an equillibrum point where all is well and in harmony.

taking this principle and applying it to wages and workers, regardless of what the gov't establishes the equillibrum point for the most part will always be more than what the gov'ts minimum wage is because this is the point where the economy, the supply and demand for labor, is most efficient and economical for both those providing work and those seeking work. WalMart would be well within their right to pay everyone in the company minimum wage because that is the federal law, yet, even though they pay way above that, they get called greedy. WalMart simply has cost-effectivness down to almost a science and there is nothing against the law for that. there is obviously a great demand by WalMart for workers and there certainly are plenty of people to fulfill it. until the supply diminishes at current wage levels, the liberals have no argument that WalMart doesn't pay enough.

as far as ruining mom and pop stores, yes, WalMart has probably done plenty of that. the liberal argument is that they are destroying "community" but yet they are simply shifting the definition of community and unfortunatly shutting out those who cannot compete. that is capitalism in a free-market economy. read Adam Smith. however, there is a rise of the mom and pop stores of a different variety because what the liberals are getting at is that there is not the great store where people can go and congregate--yet we see the huge rise in Starbucks and Caribou Coffee where people gather to study or work and even have business meetings. instead of community being centered around Gramp's General Store it is now the local franchised Starbucks, which i hear no complaints from the liberals about that.

however, the WalMart phenomenom is nothing new because it has been happening for years. Sears and Roebuck, grocery stores or chain stores all attempted to corner the market of a certain area and eventually they all combined to take over Gramps' General Store because Gramp's couldn't sell milk for what Kroger could or fabric for what Sears could or a power-saw for what Home Depot could or Woolworths.

all the criticism against WalMart, i think, is sad, unfair, unfortunate and unfounded. WalMart sadly is just the liberal "target" of the day. tomorrow it will be something else.

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