The Old Gray Lady Sticks Up for Wal-Mart

August 4, 2005 at 7:36pm By: Mr. Wilson Posted in 625 Elm Street

I never would have expected it, but the New York Times published an op-ed yesterday defending Wal-Mart. Their conclusion?

First, Wal-Mart hasn’t just sliced up the economic pie in a way that favors one group over another. Rather, it has made the total pie bigger. …

Second, most of the value created by the company is actually pocketed by its customers in the form of lower prices.…

Without the much-maligned Wal-Mart, the rural poor, in particular, would pay several percentage points more for the food and other merchandise that after housing is their largest household expense.

Important points to consider the next time the periodic “keep out Wal-Mart!” drives fire up.

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The Comments

Steve August 5, 2005 at 8:03am

I dunno, Wilson.  Where I come from, ultra-rural Nebraska (my HS graduating class had 18 in it), things have only gotten worse since the Wal-Marts and Super Wal-Marts have opened.  Everytime I go home to visit my parents everything is more dilapidated.

The small towns I drive through on my way to my parents’ house used to have grocery stores, meat lockers and hardware stores.  They don’t anymore.  Jobs are lost.  Sure people can get a job at the Wal-Mart but they also need to drive 30+ miles each day to do that for about the same wages.

The NYT authors didn’t address the issue of health care either.  In many states Wal-Mart has proven to be a drain on the local economy because instead of having health insurance benefits they tell their workers to try Medicaid.

Also, a lot of Wal-Mart products are manufactured under cheaper standards than identical competing products.  While they’re cheaper, they’re also shoddy.  There’s a built-in cost to any consumer who shops at Wal-Mart.

That stuff isn’t as visible in Lincoln as it is out in the sticks but it’s there.  I’d love it if a Costco opened in Lincoln but that’s probably 10 years off, at least.

Mr. Wilson August 5, 2005 at 3:29pm

I would like to agree with you, Steve, I really would. But I can’t, for a couple reasons. First, you are falling prey to the common mistake of conflating correlation with causation. Nebraska’s rural communities are on unstable ground, but to lay the blame at Wal-Mart’s doorstep is unfair. Nebraska’s rural communities are suffering because its population is leaving for more urban areas, the population that stays behind is dying, anachronistic agricultural policies (at the state and federal level) are the norm, and dozens of other reasons. Wal-Mart is way down the list, if it’s on the list at all.

Second, though it may be uncomfortable to acknowledge it, plenty of research (PDF) suggests that Wal-Mart often has a net positive impact on employment and wages, among other things.

Even ignoring all that, there is one thing that can’t be disputed: Wal-Mart is successful. And Wal-Mart does not drive its own success. The market drives Wal-Mart’s success. If Wal-Mart were such a bad employer, area residents wouldn’t apply for jobs there. If it sold inferior products, customers wouldn’t buy them. If residents didn’t want Wal-Mart in the area, they wouldn’t shop there.

But Wal-Mart has plenty of employees, it sells plenty of products, and it has plenty of customers.

Wal-Mart is not a villain. Wal-Mart is considered a villain because it is easier that way. It is easier to criticize a bad guy for his successes than to acknowledge one’s own failures and shortcomings. (See also: Microsoft.) We want the little guy to succeed even when that desire is based on outdated ideals. We want to support the little guy so badly that occasionally our support becomes patently irrational, and even dangerous. (I am thinking in particular of a certain small local grocery store that sells products at ridiculously high prices, has frightening health code problems, and is managed so poorly it is hemorrhaging cash. But Lincolnites continue to shop there, their health and wallets be damned, because it’s run by a little guy.)

I sympathize with dying rural towns. I wish reality were less cruel. But blaming Wal-Mart for rural America’s problems is like blaming the fire department for the fire. (“But they’re getting everything wet!”) They aren’t perfect from most any perspective. But they aren’t trying to satisfy your notion of perfect, or mine. They merely want to satisfy the market’s demand for a variety of products at cheap prices. At that they are as close to perfect as any business has ever been in world history.

Steve August 5, 2005 at 9:11pm

I agree that rural NE has plenty of problems unrelated to Wal-Mart.  I should have made that clear.  There are however plenty of studies that disagree with you (btw, the link to the study you cite doesn’t work) and show a negative effect on employment and wages and an increased burden on local, state and federal taxpayers.

Wal-Mart may not be objectively evil but its business practices have consequences.  The immense pressure on store managers to lower labor costs led to the infamous practice of locking employees in stores and forcing them to work off the clock.    Sam Walton’s “Buy American” philosophy that drove so many Americans to Wal-Mart in the early 90’s is now a thing of the past.  It’s determination to cut costs has also led to a disturbing practice of not telling injured employees they can file a compensation claim to cover medical bills and lost wages.

I’d be willing to wager that most of the people around here who work at Wal-Mart aren’t doing it as a sole means of support but as part-time work.  Wal-Mart, by virtue of being so big, is going to attract job applicants because it’s there.  It’s the same reason almost everyone I know worked at McDonalds or Valentinos at some point in their lives.  Ask them how long they worked at one of those places.  There’s a reason Wal-Mart makes less profit per employee even with higher profit margins than competitors.  Turnover.

Personally, I’m willing to pay a little more for less shoddy products like meat that isn’t injected with so much solution.  It takes some people longer to learn the you get what you pay for lesson. 

I’m not a small-business fanatic.  I don’t shop at a certain small grocery because it closes at 6 pm and because it’s too expensive.  I don’t go to the locally-owned bookstore, either.  I’d rather there be more variety, though.  I’d like to see K-Mart back in town, for instance.

Mr. Wilson August 5, 2005 at 9:52pm

Sorry about the link. I fixed it above, and here it is again. I also ran across another article that makes similar conclusions. I’m sure we could trade conflicting studies back and forth all day. I’ll just leave this part of the discussion by saying that I’ve read a lot of literature on the topic of Wal-Mart being or not being evil. I was once a Wal-Mart hater, but I found that the evidence eventually compelled me to change my mind. Take that for whatever it’s worth.

You note that “Wal-Mart, by virtue of being so big, is going to attract job applicants because it

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