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As good a time as any
Kathy G writes:
I thought it was as good a time as any to begin a project I've been contemplating for a while now: an occasional series of posts about why Wal-Mart is the single institution that, above and beyond all others, represents the despotism, moral depravity, and sheer viciousness of American life in the 21st century. As surely as the motto of this humble blog is "Écrasez l'infâme!," there is no better synecdoche for the modern infâme than Wal-Mart.
Here is post one in the series. Here is the next paragraph:
Why Wal-Mart? For one thing, Wal-Mart is huge. It is America's, and the world's, biggest company (in terms of revenues), and also America's, and the world's, largest private sector employer. Using the figure listed here on Walmart's 2007 revenues, and the figures for the U.S. GDP in 2007 listed here and here (which all give slightly different estimates for the GDP), I calculate that Wal-Mart's revenues are equal to approximately 2.7% of the gross domestic product of the United States.
It is argued that Wal-Mart has a negative net effect on U.S. wages. I would sooner stress that Wal-Mart has boosted Chinese wages and lowered inflation rates (and thus raised living standards) for many poorer Americans. On the negative side it might be argued that "jobs selling toys" pay less than "jobs making toys." Even if that is true, perhaps America would not have kept the jobs making toys anyway, thus making Wal-Mart a net increase in the demand for labor. Alternatively, you might argue that Wal-Mart's competitive prowess induces other firms to work harder to cut labor costs. Again, this story works only if you start with a net increase in the demand for labor from the side of Wal-Mart. Can the induced "get rid of the x-inefficiency of overpaid workers in other firms" effect be so large? I am still inclined to side with Wal-Mart as providing a net increase in the demand for labor. Kathy G, it seems, sees the matter differently.
Read the whole thing.
Posted by Tyler Cowen on August 12, 2008 at 05:36 AM in Economics | Permalink
Comments
Kathy G seems to believe that fighting unions is something unique to WalMart. Corporate leaders, who represent the interest of the firm's owners, have a legal obligation to hold the line on all costs, including labor.
What's truly amazing about folks such as Kathy G is that they would use the force of government to deny consumers and workers their freedom.
Walmart does not enslave its workers. Every new Walmart is flooded with job applications weeks before opening day. The company offers an opportunity to job seekers who are eager to take advantage.
Walmart does not rob its customers of their money at gunpoint. Every new Walmart struggles to serve the throngs of customers on opening day. The compay simply offers products at low prices which its customers snap up with glee.
Who is Kathy G that she believes she can deny Walmart workers and Walmart customers their freedom?
Posted by: John Dewey at Aug 12, 2008 6:04:10 AM
How about Target? They're #2 in the big box space, if I recall correctly. Aren't they evil too? Don't those sorts of stores indicate that at some level, people like what they have? I'm not a big fan of "the walmart experience" myself, but am dubious about singling them out for a beating. I see at as more important to focus on things like getting basic health care for everyone, and a good education for anyone who wants it, than targeting one particular company, in terms of "progressive" goals.
Posted by: David N. Welton at Aug 12, 2008 6:25:38 AM
Newsflash, corporation doesn't like unions!
Given their rural growth stragegy and that they grew out of Arkansas and The Heartland,
http://projects.flowingdata.com/walmart/
is it really that astonishing that in a country of 80% white, where there are more whites distributed in the heartland and rural areas that Wal-Mart might have 90% whites in middle management?
Of course Wal-Mart might get it's underwear in a knot over a quasi-socialist running the country. We just got done with an experiment called the 20th century where we found a good proportion of the world's people will do stupid and brutal things following charismatic ideologues.
These people are so annoying, so simple, and yet so dangerous. I really wish they'd just come out and say they hate capitalism and want a kinder gentler socialism.
Posted by: Andrew at Aug 12, 2008 6:50:13 AM
I wonder how many of your average Wal-Mart critics have ever been in a store and looked around? I have, and I've made a few observations:
1) Wal-Mart primarily serves the poor. Judging by the cars parked outside of Wal-Mart stores, most of its customers seem to be lower-class. Many are minorities.
2) Wal-Mart's employees are some of the most unhelpful, unskilled, rude, and simply unemployable people I've ever encountered. Call me an elitist if you'd like, but I think its great that an organization has been able to use those sorts of people and make them productive. I can't imagine who else would hire them.
David, I'd imagine Target doesn't get as much flak because it primarily serves wealthier customers. This means its prices are higher, so it doesn't undercut anyone. It also doesn't seem to employ as low-skilled (thus low-priced) of labor as Wal-Mart. For these reasons, some people refer to it as "Targé" where I live.
Posted by: Grant at Aug 12, 2008 7:02:56 AM
I don't know how my elderly mother would survive without Walmart. Her social security check goes so much farther since Walmart opened up in the town where she lives.
Walmart has become the "Main Street" in her community. It is one of the places where she sees her friends in a warm, safe environment (her town is one of the coldest places in the U.S.).
When a recent crisis affected the municipal water supply it was Walmart that trucked in multiple trailer loads of bottled water within a few hours and sold it at a price that was certainly less than cost.
Before Walmart came to town, there were things you just couldn't buy. There was no store that sold computers and many other electronic items. Buying such things involved a four hour round trip over a steep mountain pass.
I'm on the other end of the spectrum. I live in a major city and can afford to shop anywhere. We do around 30-40% of our retail purchasing at Walmart. It is an amazing cultural experience as we get to shop alongside a veritable United Nations of customers at a store that is situated right in the middle of a sea of multi-million dollar "McMansions". Their sushi is every bit as good as what we've had from Whole Foods right down the street.
So just a bit of anecdotal evidence- Walmart makes my mother very happy in a rural town and makes me very happy in a big wealthy suburb. How can that be evil?
Posted by: Tom Kelly at Aug 12, 2008 7:14:08 AM
[Wal-Mart] represents the despotism, moral depravity, and sheer viciousness of American life in the 21st century.
Yawn....
If you've never been to a Wal-Mart, you really should go just to see the "sheer viciousness" in the place. It's JUST LIKE wrestling and ultimate fighting!
What's truly amazing about folks such as Kathy G is that they would use the force of government to deny consumers and workers their freedom.
No longer amazing. She has your, and my, best interests at heart. Which is what makes her so dangerous....
"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."
-- C. S. Lewis
Wal-Mart's employees are some of the most unhelpful, unskilled, rude, and simply unemployable people I've ever encountered.
Oh, I don't know. I find the employees at Target increasingly fit that description.
And for those concerned about health care costs, check out Wal-Mart's prescription prices. And for diabetics (no jokes here about the size of Wal-Mart customers, please), Wal-Mart has the best prices, by almost half, of supplies that diabetics use. Now that is just "sheer viciousness". Not to mention morally depraved....
Posted by: chug at Aug 12, 2008 7:39:12 AM
"the despotism, moral depravity, and sheer viciousness of American life"
If that's a fair summary, you have much bigger problems than the structure of the retail sector. Also, I don't know what Kathy's desired policy response would be, but if it can be reasonably summarised as "more regulation" then that regulation will need to yield some pretty miraculous results, to drag American society out of its vicious depraved depths.
(I say that as a supporter of some more regulation, here and there).
Posted by: Luis Enrique at Aug 12, 2008 7:45:35 AM
huh, I thought this debate was pretty much over, with Walmart as the victors.
Posted by: thehova at Aug 12, 2008 7:54:41 AM
Oh come on you lot. The point about Walmart is that it employs people full-time who cannot live anything other than the most basic existence on the wages they pay. I'd argue it's not Walmart's fault but it is massively counter-intuitive to most people that someone can have a job in the richest country in the world and still have so few options.
It all comes down to what you think is fair and there's no real way to argue either way. Personally, I disagree with the author that American life is despotic or morally depraved. It is somewhat vicious though.
Posted by: Finnsense at Aug 12, 2008 8:33:45 AM
The point about Walmart is that it employs people full-time who cannot live anything other than the most basic existence on the wages they pay.
Who are these people? Do they have alternatives? Why or why not? I'm asking because I don't know.
What surprised me in the comments to Kathy G's post were several comments expressing hostility to secret ballots in union matters.
Ai yi yi yi yi! The last time I was a union member, in Denver in the mid-70s, a workmate and I attended a "business meeting" of our union (maybe United Food and Comml Workers?). Where we raised a few questions about a few issues. And were told during a break by 2 very large menacing-looking guys to STFU.
My guess is that many unions have become much more civil and respectful of their members since then....
Posted by: chug at Aug 12, 2008 8:57:54 AM
Finnsense-
What would you have Walmart do then? Pay these people more than they're worth, to the detriment of Walmart shareholders who Walmart executives are ultimately responsible to?
The fact that an almost unemployable human being can even carve out the most basic existence is the only justification of Walmart that anyone should need. If not for Walmart, what would these people do? The ugly reality is they'd die of starvation for lack of any income. The income they make from Walmart, which we may consider meager, is the height of their earning potential and if you actually speak to a Walmart employee, many of them are quite thankful for the opportunity that Walmart provides them.
You'll rarely find the poor taking up arms in these battles against Walmart's business or employment practices, because they realize that Walmart is helping them.
Posted by: David at Aug 12, 2008 9:01:36 AM
chug-
The view of most right minded economists is that these people do not have other options. Walmart hires the unskilled and uneducated. And what's more, the only way for these people to learn a skill is through low level employment. After a small time at this level however, many of them learn the skills which make them promotable, which is why a huge percentage of supervisors and managers at Walmart are hired from within the company. They teach their lowest level associates the skills necessary to become upwardly mobile and carve out a less modest niche/lifestyle.
Posted by: David at Aug 12, 2008 9:05:14 AM
when did America make toys? I grew up in the '70's and all the toys I remember were made in Taiwan or Japan (with most of the profits going to Hollywood intellectual property monopolists). Now my kids get their toys from China (with most of the profits going to American and British (thomas the train) intellectual property monopolists).
Posted by: DK at Aug 12, 2008 9:10:32 AM
Wal-Mart's latest marketing push is to be the leading conduit for money laundering to Mexico, including giving prizes in pesos to the recipients.
And according to correspondence I received from the home office, the highly trained staff will guarantee that only legally earned and taxed money is transferred.
Oh well, someone has to do it.
Posted by: save_the_rustbelt at Aug 12, 2008 9:15:05 AM
Wal-Mart is the single institution that, above and beyond all others, represents the despotism, moral depravity, and sheer viciousness of American life in the 21st century.
Sheesh, this is going to be one amazingly ideological rant (no matter how much she pretends to dress up her "ideas" in scholarly language).
Posted by: John Doe at Aug 12, 2008 9:18:18 AM
I find it amusing that someone living in Chicago would Target Wal-Mart as a source of enmity.
Posted by: cfpete at Aug 12, 2008 9:27:13 AM
David, your "just be grateful you are not dying of starvation, you miserable wretches!" justification, isn't doing 'right-minded economists' any favours. Thankfully, no right minded economists would come out with it.
Posted by: Luis Enrique at Aug 12, 2008 9:34:05 AM
"It's JUST LIKE wrestling and ultimate fighting!"
Haha! It is a lot like wrestling.
"I thought this debate was pretty much over"
You misunderestimate the ability for people to maintain and exaggerate positions they've become psychologically wedded to.
Why do unions really want Wal-Mart? Because without a monolithic demon and a singular source of membership to focus on, what else would they do?
If the leftists who mouthpiece for the self-serving unions could open their eyes, they'd see what they always claimed they wanted is happening right under their nose, despite their efforts to the contrary.
Posted by: Andrew at Aug 12, 2008 9:56:51 AM
luis,
another way to express david's argument is that working for wal-mart is their best option, as opposed to their only option. we all want to pursue our best options. of course they have other options. they could, as you allude, starve, find another job with either less hours or less pay (wal-mart does pay higher than the min wage), sit and live on the g-ment dime, or resort to theft. all of those, i would argue, are less-good options.
we've all heard of the people lining up weeks in advance to get jobs when i new wal-mart opens. these aren't people who have already lost their jobs b/c of wal-mart competition. these are people who feel that a job with wal-mart is better than what they're currently doing.
on another note, as for target, does anyone know if it is unionized? i would assume so since kathy g doesn't mention it, but i don't know.
Posted by: hutch at Aug 12, 2008 10:03:04 AM
Luis Enrique-
Am I wrong? Do unskilled laborers have other, more profitable work options? Will you answer my question to Finnsense then? What would you have Walmart do?
Posted by: David at Aug 12, 2008 10:03:44 AM
well, this rules out my best guess about the blogger who's too-obnoxious-to-read
Posted by: thetillerman at Aug 12, 2008 10:04:03 AM
it is massively counter-intuitive to most people that someone can have a job in the richest country in the world and still have so few options.
We can put a man on the moon, but we can't....
So few options? Options to do or not do or be what? Why or why not?
Seriously, I'm obtuse, and I'm asking because I'd like to know why "someone can have a job in the richest country in the world {do you mean Wal-Mart employees?} and still have so few options."
Posted by: chug at Aug 12, 2008 10:11:18 AM
Grant: "Wal-Mart primarily serves the poor. Judging by the cars parked outside of Wal-Mart stores, most of its customers seem to be lower-class."
That was once true, but Walmart has moved beyond serving only the poor and the blue-collar of America. Here's two links showing that Walmart is now offering such amenities as a huge selection of quality wines, sushi bars, and performance bicycle centers in stores in affluent neighborhoods:
Wal-Mart turns attention to upscale shoppers
Highland Village Walmart Supercenter
WalMart saves 125 year old pecan tree
In the parking lots of these North Texas Walmarts one can find as many Mercedes, Lexus, and Escalade vehicles as Chevy's and Kia's.
Walmart is still the low price retailer, but that doesn't keep many of us more affluent folks from saving money there.
Posted by: John Dewey at Aug 12, 2008 10:12:22 AM
Isn't the upshot here that Kathy G is ignorant. She says that "an academic she knows" who does work in the area "misses the point." I suppose that is true, but given that most academics spend a great deal of time keeping up with the relevant literature, I doubt everyone has "missed the point." The logical conclusion is that her academic friend disagrees with Kathy G's position for sound reasons that Kathy G is ignorant of.
One of the joys of the internet, I suppose, is that for every polymath like Tyler, Robin Hanson and Bryan Caplan who can share interesting thoughts, there will be a thousand dullards like Kathy G who can share uninteresting ones. What I find odd is that she thinks what she has to say is new and interesting and deserving of a "series of posts." We get it. You don't like Wal-Mart and you don't know enough about economics to offer a convincing explanation why. Two sentences is more than sufficient.
Posted by: John Jenkins at Aug 12, 2008 10:19:18 AM
The point about Walmart is that it employs people full-time who cannot live anything other than the most basic existence on the wages they pay. I'd argue it's not Walmart's fault but it is massively counter-intuitive to most people that someone can have a job in the richest country in the world and still have so few options.
But at least they can buy things at Wal*Mart. It's not like wages at Wal*Mart are any lower than Target, Borders, etc. in places where they compete. One big difference is that Wal*Mart locates stores in rural areas, small towns, and (attempts to locate in, when not blocked) inner cities that Target et al. won't touch because they're not wealthy enough. This explains most of the particular anger towards Wal*Mart:
1) Because Wal*Mart locates stores in a wider variety of areas, it's bigger. *Much* bigger than Target. That's not so obvious if you only live in a suburb and don't visit small towns. To a certain type of person, the bigness itself is suspect.
2) Because Wal*Mart locates in small towns and rural areas, there's a lot more opportunity for stories about all the change to those areas and business put out of business. (Small businesses that buy supplies at Wal*Mart rarely feature in such stories.) It's a lot harder to make a "Target and Borders and Best Buy are preventing small boutique shops that never existing from opening up in that new suburb!" argument.
3) Because Wal*Mart opens shops in poorer areas with lower cost of living than competitors where there are few competitors, its overall wages are lower, even though they're similar in areas where there's competition. (But inner cities' experiences with grocery stores have shown that chasing out Wal*Mart is no way to guarantee that competitors will arise.)
4) Several others have mentioned that most Wal*Mart critics don't shop there, and what's more, make more income than the average Wal*Mart shopper.
In short, to me the decisive point is that Wal*Mart pays similar wages to its competitors in similar areas, but sells goods to a poorer clientele. If big box retail is really driving down wages or not paying enough to live on, then certainly it's better that Wal*Mart drives down prices on what they buy rather than lowering wages for the poor in order to provide better deals for the middle class, like Borders or Target.
Posted by: John Thacker at Aug 12, 2008 10:21:03 AM
