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Source link: http://archive.mises.org/7659/class-war-and-wal-mart/

Class War and Wal-Mart

January 16, 2008 by

The general bias against Wal-Mart extends far deeper than any generic bias against capitalism or against Wal-Mart’s success. The people who hate Wal-Mart seem to have few scruples about shopping at Bed, Bath & Beyond or Target. Even if Target enjoyed a market share similar to that of Wal-Mart, it’s difficult to imagine the same culturally based disdain being directed with nearly as much passion at Target as has been the case for Wal-Mart.

Wal-Mart has long served its low-income customers well, and it has improved the lives of many by making food, toys, tools, and clothing more affordable for millions. Being hated by the wealthy and powerful is perhaps the high cost of serving those with low incomes, and Wal-Mart will no doubt continue to encounter resistance from those who don’t need its services for some time to come. FULL ARTICLE

{ 69 comments }

Sherman January 19, 2008 at 12:35 pm

Ever notice that places that aren’t dominated by the corporate are very colorfull? Colorfull buildings, colorfull clothing, perfection doesn’t seem to be a priority.
Whereas in our corporate society, we seem to be retreating into a world of shades of grey & brown. Straight lines, no “shockingly bright colors”. Monotones in a society that worships $$$$$

fundamentalist January 19, 2008 at 3:54 pm

Patrick: “If you bothered to look at Table B-47, you would have seen that it shows the exact same figures as the table I linked to.”

You didn’t bother to look close enough at the table. There are three sets of data: weekly hours, hourly pay, and weekly pay. The table you linked to earlier had the weekly pay, also, so yes they agree. However, the middle column in my link shows hourly wages and they don’t agree. So why would hourly wages be up dramatically but weekly pay be down? The weekly hours column shows that hours per week are down.

Patrick: “Mercantilism by its very nature endorses strict government control. I don’t.”

The philosophy has to come first. People don’t advocate gov intervention for no reason. Mercantilism is the economic philosophy that trade surpluses increase the wealth of a nation while trade deficits drain wealth. You’re just a mercantilist without the courage to do anything about it.

Patrick: “With the decline in our manufacturing sector in number of jobs, those opportunities have evaporated, which has led to the decline in average real wages.”

The decline in manufacturing jobs has been very small and the BLS has examined the reasons for it and determined that productivity increases have been the major cause, not trade. And average wages are higher than ever. Just look at the data. The rise of the service sector has employed the low skilled at better wages and working conditions. Most of the manufacturing jobs that have gone overseas paid minimum wage because the work was labor intensive, such as clothing manufacturing, and difficult to automate.

Patrick: “I dare say that the present solutions of setting up shop in third-world countries (thus finding their comparative advantages for them), the importation of more poor illegals to increase the labor supply and thus lowering wages, or expanding the menial service sector which may or may not have any upward mobility benefits, is not even a short-term solution to this problem much less than a long-term one.”

If that’s true, then why is unemployment so low and average wages increasing, even in the service sector. The data is all there to see if you’re not too lazy to search for it on the BLS web site.

Patrick: “In decades and centuries past, countries have been forced to find their OWN comparative advantages.”

That’s simply not true. From the beginning of international trade, businesses have relocated to places where they would have the greatest chance of succeeding. The only difference between today and a century ago is that it happens faster.

fundamentalist January 19, 2008 at 3:54 pm

Patrick: “If you bothered to look at Table B-47, you would have seen that it shows the exact same figures as the table I linked to.”

You didn’t bother to look close enough at the table. There are three sets of data: weekly hours, hourly pay, and weekly pay. The table you linked to earlier had the weekly pay, also, so yes they agree. However, the middle column in my link shows hourly wages and they don’t agree. So why would hourly wages be up dramatically but weekly pay be down? The weekly hours column shows that hours per week are down.

Patrick: “Mercantilism by its very nature endorses strict government control. I don’t.”

The philosophy has to come first. People don’t advocate gov intervention for no reason. Mercantilism is the economic philosophy that trade surpluses increase the wealth of a nation while trade deficits drain wealth. You’re just a mercantilist without the courage to do anything about it.

Patrick: “With the decline in our manufacturing sector in number of jobs, those opportunities have evaporated, which has led to the decline in average real wages.”

The decline in manufacturing jobs has been very small and the BLS has examined the reasons for it and determined that productivity increases have been the major cause, not trade. And average wages are higher than ever. Just look at the data. The rise of the service sector has employed the low skilled at better wages and working conditions. Most of the manufacturing jobs that have gone overseas paid minimum wage because the work was labor intensive, such as clothing manufacturing, and difficult to automate.

Patrick: “I dare say that the present solutions of setting up shop in third-world countries (thus finding their comparative advantages for them), the importation of more poor illegals to increase the labor supply and thus lowering wages, or expanding the menial service sector which may or may not have any upward mobility benefits, is not even a short-term solution to this problem much less than a long-term one.”

If that’s true, then why is unemployment so low and average wages increasing, even in the service sector. The data is all there to see if you’re not too lazy to search for it on the BLS web site.

Patrick: “In decades and centuries past, countries have been forced to find their OWN comparative advantages.”

That’s simply not true. From the beginning of international trade, businesses have relocated to places where they would have the greatest chance of succeeding. The only difference between today and a century ago is that it happens faster.

Webitski January 19, 2008 at 11:54 pm

Why do upper middle class and rich people hate Wal-Mart? It provides goods and services at prices that working people can afford. It is like the upper classes want the working people of this country to “Stay in their place” and live the austere life style that makes them feel good voting for liberal causes. I shop at Wal-Mart and it saves me a couple of hundred dollars a month. When the quality is not up to my satisfaction I shop somewhere else. Here is a shock, sometimes Wal-Mart is too expensive and shop elsewhere, I won’t say where lest the liberals go after them.
As to a Wal-Mart as an employer in the rural area where I live they are considered a good employer. There are better jobs and a lot worse.

newson January 20, 2008 at 12:46 am

patrick says:

“In decades and centuries past, countries have been forced to find their OWN comparative advantages.”

nb: the us was a recipient of massive inward investment flows from europe (particulary britain), and was a debtor nation from its colonial beginning until ww1, when the tables turned and it became a creditor nation. like the china of today, it was both feared and reviled in europe for its extremely competitive agricultural exports.

the difference between then and now is the erstwhile monetary system gave reliable pricing signals. the fiat system does not. the rapid change is valuation of currencies is like nothing we ever saw a century ago. currencies can remain over/undervalued for extremely long periods (think argentine peso prior to 2000, or the thai baht pre-asian crisis).

i don’t think this is a benign development, and i think fundamentalist’s argument (which otherwise i agree with) misses this crucial point.

Deevs January 20, 2008 at 1:10 pm

There’s far more to Wally World than dollars and cents, but as for dollars and cents, let me tell you this. I was a former employee, O/N Stocker, GM side. When I was hired, despite policy against sharing of pay information, on pain of “coaching,” write-up, all of which bear nasty consequences, and indeed possible termination, nearly everyone did it. It’s hard to recall, but I believe O/N Stocker is a level three position. There were two other people hired that I met during orientation who were also hired as O/N Stock, one door greeter, a cart pusher, one O/N maintainence, and one second shift stocker. I found out through discourse with these folks that I was getting the least amount of hourly compensation out of the whole lot, and I believe cart pusher and door greeter are both level one. For the latter two, the difference was ten cents, for my fellow O/N stockers, the difference was 35c.

Within four months, I made full-time well before I should have, before any of the others, and if I recall, though they were there longer than I, neither of my fellow O/N stockers ever made full time. Why? Because I busted my ass, volunteered to do whatever they needed to get done, even assisting in frozen foods, which I abhored, and I learned quickly. I also didn’t complain constantly, chat on a cell phone, or slack off with fellow employees, etc. Working hardware, Automotive, Sporting Goods, Pets, Toys, you name it, they’d give me a time to be finished, and I always beat it. I was fast. The unloaders would pull three pallets to Hardware, and I could have it done in an hour and forty five, when given an estimated stocking time of, say, two hours and thirty. I could do hardware, automotive, and sporting goods, and would still have enough time to go throw a couple pallets of water, or as was most often the case, chemical goods. And I was new, no prior experience throwing freight, and not a very athletic individual when I started.

I get my 90-day review, and despite their pleasure with, and much praise of, my efforts, all points except one, which involved assistance to customers, which was ranked “exceeds requirements,” ranked only as “meets requirements.” Instead of the 60c raise that I, by all rights, should have received, I got the mid-range 40c raise. Huh? On top of that, they required I attain non-stocking related skills, such as key making, fabric cutting, and certification on the forklift, but never allowed me the time or opportunity to work on it, and refused to let me do it off the clock, or clock in early to get it done, nor stay late to get it done-no overtime, son. Always had something needing done, and never could spare me. That impacted negatively my next evaluation, which again was riddled with “meets requirements.” Both times, when inquiring as to why, I got sunshine, double talk, and half-comprehensible nonsense in response.

Sunshine don’t pay the car note, or rent, nor can it be fed to you in small pieces. I’d surely have gorged myself to the 300lb mark and would surely be living in some palacial estate in the Hamptons if it did, for there was much of it. Don’t you dare think to ask for a raise, either.

Then they attempted to move me permanently to Dairy without consulting me, starting putting me there, seeing how I’d cope with that department, then finally told me after doing it for two weeks under the assumptions I was just filling in, they wanted me there permanently, 40c raise. I hated dairy, mostly the tedium of stock rotation, and so refused. I learned that, at the same time, they were trying to move another O/N Stocker into Dairy as a replacement for someone who it turns out was leaving the store, but they offered him 60c by one O/N manager, and he was a slacker, was paid a higher hourly rate then me, and in addition, hadn’t but a month ago been issued a D-day (Decision day: get yourself together, or be terminated) from the other overnight manager.

The “open door” was shut in my face when I made the attempt. Dropped my associate card on the manager’s desk and split.

Don’t you dare fail to get up, pump your fist, and hoot and hollar for the blessing of working for W-Mart at the meetings, either.

On top of all this, I’ve got to pay taxes, and into social security, too?

On the plus side, however, were the tasteless, dry burgers on stale buns and the most vile-tasting, cheapest, store-brand pizza you’ll ever eat, given as reward for consecutive customer and associate accident-free days. The occasional, stale leftover donuts really made up for the inequity, too.

That’s

Deevs January 20, 2008 at 1:30 pm

Drat. Pardon the misclick-

That’s part of it, when it comes to you’re getting your low prices. TANSTAAFL. You’ve got to be a special kind o’ bovid to work for W-mart, and I reserve my commentary for those who support the corporation.

Much better deal. Here’s a good setup. Tax-free subcontracting work in remodeling, occasional hire as a labor for $12/hr tax free, supplemental income from home-brewing of beer and a particularly tasty mead, which happens to be a hobby I’ve become very fond of, too fond to be honest, what with the necessity of sampling, often, and freelance web design. I have other income as well, but that’s not for speaking of openly.

Suppose I should thank W-mart for one thing, as it did lead me from lay anarchism, to ancap, to the pursuit of agorism, frought with trouble as it may be, but at least I have equity, and have ceased to “talk” about “freedom” and live it, for it is a path, and not a destination, nor a gift, nor an achievement.

Good luck with the Ron Paul thing, by the way. Ain’t goin’ to profit you anything, making your attempts at your “achievement”, or at least what you assume is a step in the right direction, by working with mechanisms provided to you by that which you oppose, but good luck just the same.

Cheers.

Patrick January 20, 2008 at 2:09 pm

You didn’t bother to look close enough at the table. There are three sets of data: weekly hours, hourly pay, and weekly pay. The table you linked to earlier had the weekly pay, also, so yes they agree. However, the middle column in my link shows hourly wages and they don’t agree. So why would hourly wages be up dramatically but weekly pay be down? The weekly hours column shows that hours per week are down.

Checkmate.

You’re just a mercantilist without the courage to do anything about it.

You’re hopeless.

The decline in manufacturing jobs has been very small and the BLS has examined the reasons for it and determined that productivity increases have been the major cause, not trade. And average wages are higher than ever. Just look at the data. The rise of the service sector has employed the low skilled at better wages and working conditions. Most of the manufacturing jobs that have gone overseas paid minimum wage because the work was labor intensive, such as clothing manufacturing, and difficult to automate.

Thank you for that overwhelming and convincing anecdotal evidence.

If the service sector wages are so much better, why are so many of those positions being filled by illegal aliens? Perhaps the wages are better compared to what THEY would earn in their place of origin, but many Americans apparently feel otherwise, or else they would be doing that work.

If that’s true, then why is unemployment so low and average wages increasing, even in the service sector. The data is all there to see if you’re not too lazy to search for it on the BLS web site.

The unemployment rate is irrelevant – people need to work to survive, so most will take what they can get. That doesn’t mean, as the BLS figures show, that they are financially better off (in real terms) than their ancestors.

Your economic prescription basically is to maintain the status quo or keep doing what we’re doing but only faster. You’re welcome to enjoy the economic benefits that you and yours reaps from that….and all the increasingly expensive social problems that accompany it.

That’s simply not true. From the beginning of international trade, businesses have relocated to places where they would have the greatest chance of succeeding. The only difference between today and a century ago is that it happens faster.

A century ago and beyond, most countries practiced mercantilism (remember, that economic policy you abhor?). Businesses had few reasons to go elsewhere (except perhaps to the colonies of their mother country where cheaper labor was found) because things like tariffs and import quotas protected them from competition from the imports of both poor nations and the economic powerhouses. So, of course, countries developed their own industries and found their own comparative advantages.

China currently practices a version of mercantilism and has become a major economic force in a fraction of the time Western countries were able to when they practiced the same policy. Are we to believe the Chinese are really that much smarter, or did they receive a little help on their way to finding their comparative advantages by importing some of our technology, equipment, factories, and jobs?

newson January 20, 2008 at 9:33 pm

to patrick:

“Britain practised *unilateral* free trade from 1846 to 1931. Virtually all her trading partners imposed tariffs on her exports. These partners included the ‘white’ colonies: Canada & Australasia. Britain’s free trade period was precisely the period in which she *dominated the world economic order.”

this is a snippet from sudha shenoy, an australian economist and regular at misesworld. comparative advantage calculations only break down in the impossibility of reliable forex pricing regimes. the fiat system is the critical difference between now and one century ago. protectionism occurred then, now, and will do so in the future. this still doesn’t make the argument for free trade any less potent, just a harder sell politically. hong kong has enjoyed very good rises in per-capita income with almost no trade impediments. it will be interesting to see whether democracy (only in place in hk since 1997) impinges on this long-standing anti-protectionist stance.

newson January 20, 2008 at 11:06 pm

to patrick:
the “infant industry” argument, along with sundry other protectionist strategies, gets a good workout in this blog:http://blog.mises.org/archives/002908.asp

the shenoy quote was lifted from the above blog.

Miklos Hollender January 21, 2008 at 4:06 pm

I can see one problem with Wal-Mart. On one hand it helps the working class a lot, yes, on the other hand it makes it’s owners incredibly lich, however, on the third hand, what does it do to the middle class? The middle class does not care much about the few dollars saved by shopping there, however, the owners of the “mom and pop stores” WM puts out of business are of the middle class.

And this is only a sample of a more general problem we are seeing: basically, the economies of scale make large scale production, distribution etc. much more effective than the smaller ones that it makes small business owners out of business. In the meantime, the automatization of white collar work – this is what I do, I’m an ERP consultant, I develop software to automate manual “beancounting” processes – reduces the need for a large number of white collar, middle class employees. Basically it means that the middle class might disappear – and this might be one of the reasons WM enrages many people.

OTOH of course, this also means that the masses are more or less elevated into a lower middle class status, by having quality goods cheaply available, so we could look at it the other way around: the middle class does not disappear, but rather more or less everybody gets elevated into it.

But that’s can also be a reason of the rage. See, being middle class is not only about being able to afford quality stuff. It’s also status. WM eliminates the difference between the middle and the working class – and that might enrage a lot of people.

P.M.Lawrence January 21, 2008 at 8:34 pm

Miklos Hollender, there’s some argument that the “more general problem we are seeing: basically, the economies of scale make large scale production, distribution etc. much more effective than the smaller ones that it makes small business owners out of business” isn’t simply a matter of economies of scale but of bigger businesses working the system to get effective subsidies for themselves that makes optimum business size artificially high. Kevin Carson argues that Wal-Mart has been doing this in Arkansas (where he lives and is in a position to observe it).

Also, a repost of something that somehow got lost:-

Newson, you are right about the capital flow from Europe to the USA in the 19th century making the USA a massive debtor nation (it’s been estimated that this exceeded Marshall Aid, even without allowing for interest), but you left something out. The USA didn’t pay it off, it welched. That was why the USA had a bad reputation for that throughout the 19th century (see Trollope’s “North America”).

It wasn’t anything as subtle as repudiation at the federal level, although a number of states and municipalities did that. It was sovereign risk and populism coming together. The debtor status of the nation was often holding equity and property, including land, at the individual level. Laws were changed to slough off these commitments, making foreign owned land operations fail in the face of small under-capitalised farmers (putting them in hock to the banks, but that’s another story); see the back story of Billy the Kid and what happened to his former employer. Railroad reorganisations “compensated” shareholders with 999 year “income bonds” that didn’t have to pay in “bad” years, defined according to how the accounts were kept. Companies were put into specialised forms of receivership when they could have operated normally, with what would have been profits being diverted into trusts as preferred creditors, leaving the capital suppliers with no returns (see Bertram Russell’s observations from when he was there in the late 19th century). All this and more.

newson January 22, 2008 at 12:24 am

to pm lawrence:

i’ve ploughed through the carson papers on his site, and find myself in broad agreement: enterprise size is informed by indirect subsidies like transport and infrastructure, as well as the more visible direct transfers.
recognising these distortions is essential, but what to do? here in western australia, the state government banned weekend trading for the two dominant national retailers, and sold this policy as levelling the pitch for the small player. without the pricing pressure over the weekend that the dominant two provide during the week, the competition has enjoyed a nice fillup in their earnings, the bill is picked up by the shopping public.

in so far as the us trade deficit goes, i meant to illustrate the dangers of falling into the mercantilistic trap of blindly demonizing trade deficits per se.

i haven’t read the authors’ pieces you cited, but caveat emptor applies in any case. bad payers attract premium yields, that would have applied then, and should apply now. (though looking at the yield on us t-bonds today makes you wonder).

sooner or later even gross monetary distortions get wrung out of the system. italian retail purchasers of argentine government bonds in the 1990′s learned a very bitter lesson about how mispricing in the capital markets (thanks to interventionist policies) can last for years, and yet be reversed in record time. not quite as bad as tsarist bonds, but hold the wallpapering just in case!

P.M.Lawrence January 22, 2008 at 6:33 am

The problem with re-levelling the playing field that way is that the damage was already done. The boost to competitors’ profits doesn’t go to keep in the ones already shaken out. Over time, it will sort itself out, with new entrants – but right now, in itself it’s like throwing water over a burnt out fire. Now if they just kept things steady with low barriers to entry…

The problem with “caveat emptor applies in any case. bad payers attract premium yields, that would have applied then, and should apply now” for 19th century investors in the USA was that it was like the way malarial parasites keep changing their appearance to the immune system. After the early to mid 19th century repudiations, cautious investors switched to land and populist changes made small farmers artificially competitive (on the back of debt to local banks, which outsiders had limited access to investing in, and which used paper tricks to back fiat money with land too – I’m sure Senator Morrill knew what he was doing). Later, investments in companies led to that pseudo-insolvency trick, often taking advantage of necessary restructuring of railroads (the infrastructure of the defeated south effectively passed into northern ownership, at least for a while, but of course recovery never restored outside capital that had been there before along with US capital).

Some people like the canny Scots money manager Robert Fleming did OK in the USA, largely by knowing the terrain as it were, getting past home ground advantage (anyone thinking of investing in China should be very aware of that, incidentally). But UK war needs cut back what remained, largely because the USA made itself a preferential creditor in a chain with Britain guaranteeing Czarist Russian war debt; they refused to accept any share of the burden of Soviet repudiation after 1918, repudiating the repudiation (so much for “they hired the money, didn’t they?”).

The fallacy of the idea that “sooner or later even gross monetary distortions get wrung out of the system” comes from this fact that it isn’t something that comes to an equilibrium; new stuff keeps coming in, with cumulative consequences. It isn’t even necessary that another one be born every minute; remember Lincoln’s famous remark that you can’t fool all of the people all of the time? The crafty bugger was probably engaged in misdirection, drawing attention to something true but unimportant, when what matters is fooling enough of the people enough of the time.

Here’s another interesting trick: country A prints fiat currency to pay for imports from country B. Some people in country A wonder why they keep taking it. But the people in country B are using a lot of it to buy raw materials from country C, which they use not only to make what they export to country A but also to build up country B’s capital stock, infrastructure and so on. The buck, so to speak, actually stops in country C which has no leverage and little insight into what is driving it all at the head of the chain. That’s not cynical, it has happened before with the Spanish silver inflation of the 16th and 17th centuries. The repercussions from how that worked through are still felt today.

Nathaniel Durham March 17, 2008 at 4:55 pm

I have sold to Wal-Mart for almost 10 years, I saw our work force go from 250 people to less than 50 in 3 years. Although WM was at the core of leading us to make more goods in china, it was equally pushed by the other retailers in my industry. They all wanted WM pricing of the goods that they bought from us, but they did not run their companies as well as WM did. I will not let WM off the hook completely, they are doing things that should not be allowed by a free market, but we do not have a free market economy. Our government is also complicit in letting WM become so dominant. I feel that the biggest problem is our government and our politicians. They talk about creating jobs instead of focusing on creating business’ and new business owners! Our retail environment should be better not worse, as it is now. Our government should focus on helping enlarge our business community rather than expanding our government. Our government does more to help large corporations than the local business owner. Bear-Stearns is the latest example of this. Who do you think is going to pay for their bail-out. Us, the tax payer, first in printing more money to de-value the dollar, two in raising our taxes. It is unbelievable that the poor or middle class thinks that taxing the rich is something to stand up and shout about in approval. If their taxes go up, the first thing they will do is find ways to protect their capital, which will take cash out of the system, and this combined with the higher interest rates that are coming, they will be almost no cash for the small and local business owner to start or expand their business’. We need to quit demonizing companies like Wal-Mart and fight to make our markets more free.

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