Business

@ rewt66 and hedgefundguy,

I am snarky when I see ridiculous illogic being spouted as gospel. You both are reciting, chapter and verse, the myth that Walmart drives small mom-and-pop businesses out of business and harms the community. I have patiently attempted to explain using basic economics why this is not true, and why the mom-and-pop stores are REALLY dying off. However, it is painfully clear that you are on some sort of misguided crusade against big-box stores, somehow believing that if they simply went away the mom-and-pop stores would be thriving and local communities would be better off. To be blunt, Walmart could disappear tomorrow, and none of the mom-and-pop retailers would magically spring back to life, because the reasons they ultimately went out of business have nothing to do with Walmart.

Some people are clearly so driven by their mythological worldview that they are incapable of recognizing basic economic facts.

LexHumana:

Well, you know, if your replies had been addressing what our actual points were, we might be more inclined to listen. And by the way, data usually works better than snark to show people the error of their position.

hedgefundguy:

Now you're doing what LexHumana did to you - you're reacting to something other than martin horn's point. He questioned whether WalMart actually paid worse than mom-and-pop businesses (and therefore that mom-and-pops were more morally righteous). You say that WalMart should pay more so that *it* would be more morally righteous. But that's completely unrelated to martin horn's point.

And yet when one points out we all benefit from cheaper labor provided by immigrants, people object.

@ rewt66

You say that my "snark" didn't address hedgefundguy's position, namely that "hedgefundguy challenged R.A.'s position, arguing that replacing mom-and-pop businesses with WalMart had some significant negative effects on the community."

If you re-read the posts, you will see that I directly challenged this premise at its root level -- Walmart did not displace mom-and-pop stores to begin with. Mom-and-pop stores are dying off for reasons that have nothing to do with whether Walmart is around or not. You and hedgefundguy are creating a false correlation, assuming that Walmart causes the death of mom-and-pops, when in reality there are underlying social, economic, political, and demographic changes that enable stores like Walmart to flourish and mom-and-pops to die. When hedgefundguy raised his polemic against Walmart and for mom-and-pop stores, the underlying premise was "Walmart bad, small retailers good", implying that the job opportunities Walmart brings are not worth it... thus my statement that he is implying that the unemployed are better staying unemployed.

Walmart, just like every other major retailer, is merely taking advantage of changes in our demographics. Mom-and-pop retailers are dying because of those same changes. Neither is directly correlated with each other; instead, they are both correlated to common, underlying causes. The villagers need to put away their torches and pitchforks, because there is no Frankenstein's big-box monster lurking about murdering small local retailers.

jomiku wrote: Mar 2nd 2011 5:19 GMT
"And yet when one points out we all benefit from cheaper labor provided by immigrants, people object."

Excellent point. I have previously noted that from the beginning of the first colonies, our country was built on the back of either free (slaves) or cheap (immigrants) labor, and that our appetite for the cheapest labor possible has never disappeared. The immigration debate has a lot of fury in it, but the illegal immigrant population in the U.S. exists because we as a nation deliberately turned a blind eye to immigration enforcement for decades, all because we wanted those immigrants as a source of ultra-cheap labor.

rewt,

I responded to horn's use of a loaded phrase.

He just wants to compare wages.
Not the benefits, nor the taxes paid.

Anybody could specify 1 area to go pro/con.
My original post was a wide-ranging look at Wally vs. local.

People have been brainwashed that Wally has low prices.
On some items, sure. Not on groceries, at least in my area.

My local appliance store gave me a better price on a TV than BustBuy.
The people I talked to knew what they were selling and knew more about the industry and its future than the BustBuy people.

I guess that happens when a business hires full-time employees.

Regards

rewt,

I pretty much agree with your critique of Lex's points, except for one thing: "snark" is supposed to be funny. Sarcasm is another thing.

I'm not sure that the an economy suffering from masses of people being unemployed - which is as inefficient as is possible - needs more efficiency. In the short-term at least, some element of inefficiency would boost employment and demand.

LexHumana:

I start with the assumption that the existence of WalMart does not, in and of itself, increase consumption. Therefore all those customers going to a WalMart are going there instead of going somewhere else. Therefore *of course* WalMart takes customers from local businesses.

But it sounds like what you're saying is that this is bigger than WalMart. The big box stores at the mall take business from the smaller storefronts downtown, and that's been going on a lot longer than WalMart. Home Depot is killing most of the smaller hardware stores. So if it wasn't WalMart, it would be someone else. But to say that WalMart doesn't take business from the mom-and-pop stores seems so disconnected from reality that I have to ask you for either hard data or a rational explanation of how all of WalMart's business is new demand.

Wal-mart costs communities by purposefully maximizing negative externalities; thus it is totally rational for any taxpayer to avoid shopping there.

They have classified workers as part-time to force tax payers to pay for their health care through Medicaid. They have worked very hard to crush any hints of unionization that might protect workers from the variety of complaints that have made their way to court. They fire working mothers and have faced multiple discrimination lawsuits.

The two people I know who worked their were abjectly miserable: unpaid overtime, limited breaks and a sense of quiet desperation as they failed to make a living wage. There are none of the opportunities for advancement some such jobs, like McDonald's, offer. None of the benefits the more white-color retail jobs provide. Nothing but hard work for the absolute minimum payment the corporation can get away with, while the corporation rakes in profits.

I believe it is absolutely rational to refuse to support that.

Sometimes it's not just low prices and selection. I live near Sadsbury Township, PA, Walmart was welcomed with open arms because of the jobs and opportunity. They gave Walmart the requisite tax incentives only to have their police department run to the point of exhaustion (physically and momentarily). http://www.google.com/m/url?ei=GulzTcDqG8vslAef9O3YAw&q=http://www.cityofbelfast.org/WALMART'S%2520IMPACT%2520ON%2520LOCAL%2520POLICE%2520COSTS.pdf&ved=0CBwQFjAD&usg=AFQjCNHaMgMMzDi6PFx-jix9xUdz273DDA

Sorry - should be monetarily (damn auto correct). Another consideration is that because of the high amount of attrition within its ranks, a significantly high percentage of the employees do not live in the community. So those dollars earned are not spent where it matters most.

I definitely appreciate this article, being that I work in another city that is currently fighting Wal-Mart; New York City. I, for one, highly enjoy watching community access television, and it seems that every other show on these days is a City Council hearing accepting testimonies from disgruntled former employees of Wal-Mart speaking on different violations of workers rights; including the prevention of unionization and gender discrimination. Local businesspeople and supermarket owners also are heavily anti-Wal-Mart, and don't hesitate to join in in the protests. One topic they constantly point out is that Wal-Mart, especially at the associate level, almost exclusively hires part-time so as to not provide benefits or overtime pay to employees.

Whereas I couldn't support a company that exploits and mal-treats its workers, I always say to myself "there must be a reason why they're the world's biggest," and in addition, I am of the "its better to have a low paying part time job than no job" school. In the Wal-Mart case, it would seem that many are taking an ironic "anti-anti-competition" stance in that they don't want Wal-Mart to come in and potentially take over the market, which prevents the normal, laissez-faire competition they say they want to enjoy. One thing I fail to understand, though, is the absence of any Wal-Mart representation whatsoever at these hearings. Unfortunately for them, this can be interpreted as 2 negative things; either they are afraid to face their critics and stand up for their policies, or that they simply see themselves as "too big" to have to explain themselves to concerned local parties.

If You doubt the negative effects of Wal-Mart moving into a region, I would suggest that you read a book called "The Wal-Mart Effect". In it, the author describes two major problems.

The first is problemsupply-side. Wal-Mart dictates that suppliers bow to their whims to lower prices at all cost. This drives profit margins so slim, the first thing to suffer is R&D. The second is quality. Competing retailers fall victim to Wal-Mart's quest for ever-lower prices.

The second side is that of the employees. There are very few full-time employees - that way the are no benefits to be paid. Low wage, low-value jobs create a huge class of families living below the poverty line. And the only place they can AFFORD to shop is Wal-Mart ! It's a cycle that is nearly impossible to break.

hedgefundguy wrote:

"Mr horn,

You want small businesses to pay wages that are 40%-80% higher that Walmart? Shouldn't it be the other way around?"

My point is that if those small businesses are giving the same wages to their employees as Wal-Mart, I don't get why there's so much weeping every time a small store closes and a Wal-Mart takes over.

Wal-Mart delivers low prices which boosts income for everyone in the area. That's a benefit. Now, if you argue that the wages Wal-Mart are the same as those at mom-and-pop stores, you're basically saying that I should hate Wal-Mart not because they pay their employees less (because they don't), but rather because *only* the owners of Mom-and-Pop stores get hurt.

In other words, I'm supposed to endorse a system of small stores that are less efficient because they lack of economies of scale not because they pay their workers better (again, they don't according to you), but rather because it allows the owners of the inefficient business to earn money?

Well gee. Instead of buying your groceries from a supermarket, buy your groceries from me at a 20% markup. Sure, I don't pay my workers better than your local supermarket, but by buying from me at a higher price, you're making me richer. And you apparently think that's enough to make a moral case for me being good and supermarkets being bad.