Anti-WalMart Campaign?

[Vagos]

I've been reading some things about all this Anti-Wal-Mart business lately, and how some Democrats are raising it as a big political issue. Can someone please give me a crash course on either...
A) Why Wal-Mart is so bad and there's a need for Anti-Wal-Mart campaigns and protests?
or
B) Why it's all just hogwash from the left and why Wal-Mart is not so bad

I'm interested to see hear both sides. I know a little about Wal-Mart, but I'm certainly not an expert on the whole saga, so I'm interested to hear all angles of this thing.

[Vagos]

To get going, I just finished reading this article. It is clearly a "pro-Wal-Mart" article(silly that there should even be such a thing), but I guess this is where I stand too. Can someone with another point of view tell me why the Democrats are so pissed off about Wal-Mart? It seems overall to be more helpful on a lot of lower middle class people's wallets and checkbooks.

[Riddick]

Should Wal-Mart Be Broken Up?
by Di-Lo

Wal-Mart-hating interventionists are running out of reasons to hate Wal-Mart. Incapable of making any kind of coherent argument that America's biggest retailer is harmful to consumers or workers, they are now rewriting American business history — including the history of antitrust regulation — to vent their hatred of an institution that has done more to help the poor than all the government welfare programs devised in Washington .

A case in point is the cover of the July 2006 issue of Harper's magazine that demands: "Break Up Wal-Mart!" Inside is a jumble of inaccuracies, fabrications, and economic mythology in the form of an article by one Barry C. Lynn entitled "Breaking the Chain: The Antitrust Case Against Wal-Mart." Lynn is a "fellow of the New America Foundation," which claims to espouse "new ideas" for public policy. In this case, Lynn espouses the "new idea" of applying nineteenth-century antitrust law to twenty-first century commerce.

The article begins with a straw-man caricature of market exchange. Ask yourself this: The last time you went to the store to buy a carton of milk, did you engage in a death "struggle" against other customers, as well as the merchant? Did you "grasp and elbow" your way to the milk aisle and then back to the checkout? Did you "shout and shove" your way through the store, amidst hundreds of others doing the same? Or did you simply pay for the milk, receive a "thank you" from the checkout clerk, after which you returned the pleasantry?

If you answered "yes" to the first three questions then you agree with Lynn about the essential nature of market exchange, or "laissez faire," as he labels it. You would also be speaking absurdities.

After grossly mischaracterizing free-market exchange, Lynn doesn't even wait until the second paragraph to present an incorrect rendition of business history. "From Adam Smith onward," he declares, "almost all the great preachers of laissez faire … accepted the need to use the power of the state" to battle monopoly so as not to "throw off basic balances," whatever that may mean.

In reality, as opposed to Lynn's theory, from Adams Smith on (and before that), monopoly was always understood as being created by government. Indeed, The Wealth of Nations was a critique of mercantilism, the system of state-sponsored monopolies, protectionism, and monetary superstition that plagued European economies at the time (1776).

Lynn gets Adam Smith completely backwards. For example, in the famous passage in The Wealth of Nations where Smith remarks that businessmen "seldom meet, even in merriment," where the conversation does not turn into some sort of rhetorical conspiracy against the public, in the very next sentence he says that any laws to prevent such meetings would be inconsistent with liberty and justice. He was not a trust buster, as Lynn would have us believe.

Moving on to paragraph two, Lynn complains that the Reagan administration "eviscerated America's century-long tradition of antitrust enforcement…" Tell that to Bill Gates and other victims of the federal government's nonstop persecutions of successful businesses under the guise of antitrust. Lynn seems oblivious to the easily discovered fact that the budget of the US Federal Trade Commission is more than triple what it was in the last year of the Reagan administration; that there are still thousands of private antitrust lawsuits filed every year, and that growing armies of government bureaucrats, always seeking to justify their existence and expand their budgets, are employed not only by the FTC but also by the Antitrust Division of the US Department of Justice and by state attorneys general, who also regulate "monopoly."

Lynn, whose resume identifies him as a business consultant, blames General Motors's current economic woes on "intense competition" while ignoring the role of labor unions and massive government regulation in destroying one of America's great corporations. He is in a panic over the fact that there is "consolidation" in the iron ore and glass container industries, and the fact that Nike and Adidas "split a 60 percent share of the global market" for sneakers. In doing so he ignores the past half century of research — and experience — on and with corporate mergers.

Beginning in the 1960s economists began to discover the old learning that "industrial consolidation" is typically caused by the fact that in many industries there are simply one or a few firms that are just better than the others at serving the consumers. This was widely understood at the time the first federal antitrust law, the Sherman Antitrust Act of 1890, was passed, and is why virtually the entire economics profession was against it (see Thomas J. DiLorenzo and Jack High, "Antitrust and Competition, Historically Considered," Economic Inquiry, July 1988).

By the early 1980s literally hundreds of peer-reviewed journal articles and books on the subject could be cited by Yale Brozen in his landmark book, Concentration, Mergers, and Public Policy. Lynn seems oblivious to all of this research. His only comment on it is to mock a statement by a former University of Chicago law professor who referred to the research as "science."

Lynn also fails to understand that in a market economy it is the consumer who is in charge, ultimately. In the absence of government mandates, no business can become "powerful" (a word that he uses repeatedly) or profitable unless it can persuade consumers to buy its product, period. Failing to understand this freshman-level economic lesson leads Lynn to make dozens of silly statements about companies like Wal-Mart that "fence off entire marketplaces" and "issue decrees" to their suppliers (like "supply us with products that our customers will like").

Wal-Mart has undeniably been a glorious economic blessing for its mostly low- and middle-income customers; has created hundreds of thousands of new jobs; has enriched thousands of small business owners who supply its products; has invented many new and superior management techniques; and has been a driving force of a large segment of the entire US economy. In addition to all these benefits, and more, Wal-Mart has also compensated for the government's assault on competition. This assault has taken the form of anti-corporate takeover legislation and regulation.

During the late 1980s and 1990s dozens of states passed laws that made it more difficult for corporate takeovers to occur. They were the result of lobbying efforts by corporate executives who wanted legal protection from competition for their own jobs. The essence of the "market for corporate control" is that if a team of corporate executives is mismanaging a company, being lax in their work ethic, and generally causing the company to be "undervalued" and therefore less profitable than it could be, groups of investors can challenge that management through proxy battles and other means of acquiring ownership.

If successful, a takeover will throw out the incompetent managers and replace them with a better team. It doesn't always work out that way, since no one is omniscient, but the market for corporate control is nevertheless an important free-market institution that serves to greatly benefit customers, employees, and shareholders by encouraging efficiency in business operations.

All of those laws and regulations that handicapped the market for corporate control weakened this important element of the competitive process, rendering many American corporations less efficient and less competitive on international markets than they could be.

Enter Wal-Mart. One thing Wal-Mart is known for is demanding that its suppliers follow a similar business model to its own, which involves a no-stone-left-unturned approach to cost cutting. If you want to sell a zillion items in Wal-Mart stores, Wal-Mart executives will say to their suppliers, then you'll have to come up with the best price for consumers. There's always room for improvement in that regard through human initiative and imagination. This, in effect, replaces the competitive pressures on many American corporations that were taken away or watered down through the government's anti-takeover legislation.

But to the economically misinformed like Barry C. Lynn, such "pressure" is an unequivocally bad thing. He sheds crocodile tears for the poor, poor, Coca-Cola Company which was "forced" to "meet Wal-Mart's decree" regarding the quality of its products sold in Wal-Mart stores. Kraft was supposedly forced to "swallow" costs and "tear itself to pieces." Well, not exactly. Costs can be reduced in order to increase profit margins. Ask the incredibly successful Japanese automobile manufacturers.

Any kind of competition is a bad thing, according to Barry C. Lynn, who attempts to portray himself as a champion of competition. When Wal-Mart came up with its own brands of products that competed with Proctor and Gamble products, poor, poor Proctor and Gamble was "beat … into submission." And what did Procter and Gamble "submit" to? Offering consumers better and cheaper products, that's what. That's a no-no according to Lynn.

Lynn is frustrated that, at least statutorily and rhetorically, the antitrust laws are supposed "to protect only the consumer." He wants the laws to "protect" people like some of his business consulting clients who have a hard time competing in the market place with their high-priced and inferior products.

It is certainly true that antitrust regulation has in the past been used as a protectionist device by punishing firms for being too good at pleasing consumers, thereby taking business away from economically inferior but politically connected competitors.

Indeed, from the very beginning antitrust has been a protectionist racket (see Thomas J. DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics, June 1985; Dominick Armentano, Antitrust and Monopoly: Anatomy of a Policy Failure; and Fred McChesney and William Shughart, The Causes and Consequences of Antitrust: A Public-Choice Perspective).

It has been a tool of mercantilism, the very system that Adam Smith railed against in The Wealth of Nations. The thoroughly confused Mr. Lynn, however, thinks that Smith actually advocated this very system!

Lynn points to the worst examples of governmental tyranny exercised through antitrust regulation to argue, effectively, that we need more such tyranny. Not only does he speak wistfully of the "good old days" when antitrust laws would be used to punish business firms from cutting their costs and prices and improving their products so as to "protect" price-gouging merchants with inferior products from competition; he also praises the heavy-handed destruction of property rights by the state in other ways.

"The Justice Department routinely used antitrust suits to force high-tech firms to share the technologies they had developed" with their competitors, he declares. He makes no mention of the injustice of forcing someone to "share" his private property with others, nor does he seem aware of the fact that such "sharing" will destroy incentives to invest in such technology in the first place.

It is Lynn who advocates heavy-handed, fascist-style regulation and regimentation of industry by the state, including the "break up" of Wal-Mart and other successful corporations, yet in fine Orwellian fashion he refers to these free-market success stories as resembling "the Soviet Union in 1950" with "a certain Stalinist flair." He makes such stupid remarks because of his fundamental misunderstanding that Wal-Mart — or any other private business — has no "power" at all to coerce anyone to do anything. They can only hope to succeed by persuasion; it is the state that has a legal monopoly of coercion that it every so often uses in Stalinesque ways, including many of the ways that are recommended by Lynn.


--------------------------------------------------------------------------------

Thomas DiLorenzo is professor of economics at Loyola College; a member of the senior faculty of the Mises Institute; and the author of How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present (Crown Forum/Random House, 2005).

[Riddick]

This one far too long to post, but its labeled "The Ultimate pro-WalMart article"

The Ultimate pro-Walmart Article
by Paul Kirklin

[ QUOTE ]
Wal-Mart is one of the great shining examples of what a market economy can achieve. If I were to give a tour of the United States to visitors from a socialist country, who are used to experiencing chronic shortages of almost everything, Wal-Mart would be one of the first places I would take them. It is a perfect symbol of one of the most remarkable things that we have — an enormous variety of high quality, low cost products that are available to virtually everyone throughout the United States.

[/ QUOTE ]

[Borodog]

Vagos,

Leftists, unions, and democrats hate WalMart because they keep consumer prices low by refusing to use union labor. That's pretty much the source of their vitriolic hatred for WalMart and the reason for the propaganda campaign against them.

WalMart has done some despicable things, like using local governments to seize private property to build stores on. But the democrats don't give a [censored] about that. In fact they're all for it.

[hmkpoker]

Why Wal-Mart is evil

Wal Mart has been subsidized by a couple billion taxpayer dollars during its boom. That may sound like a lot (in fact, it is), but it's not much considering their $250 billion/year revenues. It does, nevertheless, give WalMart an edge, and it's not fair competition.

That, however, is not the reason why the left hates WalMart. The left hates success and capitalism, because its supporters are poor people who can't comprehend basic economics. WalMart has given American consumers affordable goods for decades now at extremely competitive prices. It shuts down "mom and pop" (a buzz phrase that people like to use to suggest that WalMart is impoverishing your parents, all it means is "crappy") stores because, well, those stores aren't very good. People would rather go to WalMart. It is the largest employer in the United States, it has upped the quality of life for millions here (because when goods are cheaper, we are richer), and it is a major factor driving China's booming market. Some people think this is bad because the money isn't staying in America, but honestly, no one wants American goods.

[Borodog]

It's a good thing the money doesn't stay here. Buying cheap goods overseas allows us to export a significant fraction of our inflation.

[hmkpoker]

I'd like to post this to anyone who believes WalMart should be broken up:

Despite WalMart's phenomenal success, it has not destroyed competition. If you live near a WalMart, chances are almost any good you purchase there can also be purchased at a nearby store of some other kind, and that that store is making money.

The logic behind anti-trust legislation is that a big business will eventually destroy all competitors and price gouge, but does that really seem like any kind of legitimate threat? To price gouge, wouldn't WalMart have to drive out all STORES? If it did gouge, do you think it would take long for some other wealthy person to open another store that DIDN'T aim to piss everyone off?

What is the Walton family waiting for? Do you really think they are sitting around making a measly hundreds of billions in annual revenue waiting as they have been for years, just waiting for that one fateful day when they pull the plug and GOUGE ALL THE PRICES MUHUWAHAHAHAAHA!!!!!

If they aren't going to gouge prices, then why break them up?

[natedogg]

They are anti-union! They won't accept any unionization efforts by their employees. Evil I tell you.

natedogg

[bobman0330]

A few reasons:
-As everyone has said, Walmart is ferociously anti-union. Unions dislike this.
-Walmart is extremely aggressive in its dealings with suppliers and workers. I've read a lot of credible accounts of various illegal labor practices at Walmart. Their harshness to suppliers is legendary. These factors allow them to deliver their low prices, but they also generate bad PR.
-Walmart really does drive a lot of uncompetitive businesses to extinction. The newly extinct don't like that too much.

Of course, balanced against this, Walmart has done an extraordinary amount of good for the poor and lower-middle class. But the harms are concentrated, while the benefits are dispersed. A union organizer who has been soundly rebuffed is likely to go out and protest or write a letter to his Congressman. Are you going to do the same in support of Walmart because you saved ten cents on a pound of cheese?