I’m a liberal. Liberals hate Wal-Mart (generally speaking). Do I?
Yes and No.
I love Wal-Mart because it, or something like it, makes a lot of sense. Having one super-store to shop at instead of dozens of small “Mom and Pop” stores is a way more efficient system, and costs way less. A large store that takes the place of ten small ones will necessarily be more labor efficient. Think about it: Ten different stores absolutely must have ten cashiers. However, if there were some crazy hypothetical way to combine the cashiering work of all ten stores, you could probably get all of that work done with only (say) six people. After all, no cashier works their entire day, they all have idle time. And if the labor was “pooled” each cashier would spend more of their time working, and so less people would be needed to get the job done. My own experience confirms as much: I’ve noticed that working at a small store we are always either way too busy or left with nothing to do, whereas at a larger store the work pace tends to be more even, and hence more cost-efficient.
Since every company has to charge enough to (at least) cover the amount they pay their employees, better labor management means we pay less for the products we buy. If we pay less for the products we buy, consumers all over the economy are richer, since they’ve got more money to spend on other things. This is why a large general store (like Wal-Mart) is a great idea.
But some people, especially those on the far left, disagree. They hate Wal-Mart because they say it kills jobs. Wal-Mart rolls into town and suddenly all those Mom and Pop stores of old are gone, leaving many out of work. What they fail to see is that this temporary destruction of jobs is more than a fair trade: Sure, we’re killing off some jobs, but we’re making everyone else in the economy wealthier. And you know what? More wealth means more to spend, which in the long run means more jobs will be created. Yes, closing your store or having to downsize your business hurts. But that temporary economic discomfort for a few (most of whom will eventually get another job anyway) is worth it if we can make the economy wealthier. And if you disagree, consider this: If you’d rather have to pay more to support an inefficient economy, where do you draw the line? Should we attempt to create a maximally-inefficient economy to guarantee that everyone has jobs? This is a conclusive reductio ad absurdum against the liberal argument.
Imagine, if you will, a perfect economy: an economy where everyone works as much as we ask them too, and all goods and services are distributed evenly. This would never happen in the real world, but entertain this thought experiment just for a minute. Let’s say that this economy starts out with about half of the work force dedicated to producing food. Then, a genius comes on the scene and invents farming techniques that are so good that now only one-tenth of the labor force has to farm, and they still produce just as much food. What happens to all those people who lose their farming job in this perfect economy? Simple: A general labor manager comes along and puts these people to work producing cars, electronics, or anything that the people want more of. Then the whole nation can have more of whatever they want.
Believe it or not, the very imperfect real world economy mirrors the imaginary perfect one: When people get laid off because we’ve found a more efficient way to run a business, the cost of the product goes down. If the cost of product goes down, every person who buys that product saves money they would not have had otherwise. When that happens, all of those people have more to spend. When people have more to spend, best believe some other industry will gain new customers. New customers means business expansion, which means new jobs (And they lay-offs are at work again!). Of course, all of this does not happen instantaneously in the real world. It may take months or even years for this series of events to unfold, and that in-between time can be a cost to laid-off workers. So what? Who decided short-term discomfort for a few outweighs long-term prosperity for many?
Wal-Mart’s general business scheme is efficient, cost-saving, and wonderful. That said, Wal-Mart does have a dark-side, a dark side that doesn’t have to co-exist with its general prosperity-creation. Wal-Mart pulls in billions of dollars every year in profit, but they pay their employees shit for wages (even encouraging their employees to go on welfare and foodstamps), offer no benefits worth mentioning to non-management (a store discount, no health care), deliberately and aggressively stamp out union efforts (which would give their employees a little bit of power and say-so in the workplace), obtain unneeded tax breaks and subsidies from our government, and the higher level offices have a general pattern of corruption (Strong-arming employees to work overtime for free, for instance).
Wal-Mart could do better for their employees, and there is plenty of evidence to support this:
(a) Costco, a company occupying a similar niche in the market place, pays its workers far more than Wal-Mart does, and Costco is a profitable company which is growing. (See this video with supporting details here).
(b) Given the amount of money Wal-Mart makes ($15.7 billion in profit annually, and that was last year, when profits were down!) and the number of employees they have (about 1.4 million in the US, if Wal-Mart’s own estimates are to be trusted). Think about what would happen if 5.7 billion dollars of that profit were divided among the American employees: they’d all make over 4000 dollars more per year, and Wal-Mart would still make ten billion a year.
(c) According to the documentary Walmart: The High Cost of Low Living, Wal-Mart workers in Germany receive 36 vacation days per year, and the book What Went Wrong reveals that in Germany Wal-Mart was forced to pay its workers twice as much as in America. The German benefits may be too extreme (which is probably at least partly responsible for Wal-Mart’s failure in Germany, Wal-Mart banks on low prices and that is difficult to do in a country with strong labor unions) but Wal-Mart could still aim for something better in America. Instead of the Germans’ $16 per hour and 36 vacation days per year, how about $11-$12 dollars per hour and 10-15 vacation days per year?
Although I am currently a Wal-Mart shopper, all of this makes me strongly believe that I ought to shop somewhere else (i.e. Costco) in spite of the longer drive to and from I’d have to make (Wal-Mart is about ten minutes from my house whereas Costco is about forty-five). Speak your mind on Wal-Mart in the comments section.
