The incomparable Dale Ahlquist recently posted a superb article on the evils of Wal-Mart on the Distributist Review website. Here it is:
The Monster
Economics – Posted by Dale Ahlquist on May 1, 2011 10:00 AM
For any critic of modern America, Wal-Mart is an easy target. (There is a pun there somewhere.)
Begun by Sam Walton in 1962 in Bentonville, Arkansas, Wal-Mart has grown to such proportions that there are now 4,700 stores all over the world, with over 1.3 million employees. It has such economic dominance in America that it owns 30% of the consumer staples market and almost 20% of all music and video sales. Even big companies like Clorox, Del Monte and Dial make a quarter of their yearly sales through Wal-Mart.
This conglomerate has closely followed John D. Rockefeller’s dictum, “Competition is a sin.” All across America, small, locally-owned shops in quaint downtowns have been boarded up, swallowed by the Whale-Mart that surfaced from a sea of blacktop just beyond the city limits. City councils try to find ways to stop Wal-Mart from marching into their communities, but (new metaphor) an elephant tends to sit wherever it wants. Now the medium-sized retailers are also being crushed.
Most of us are probably familiar with the litany of accusations against Wal-Mart. This includes not just bad publicity and snobbish complaints, but charges of serious corruption and villainy. A class action suit was filed in early November 2003 against Wal-Mart after a Federal 21-state raid arrested 250 illegal immigrants working as janitors in 60 stores. In Southern California, over seventy thousand striking grocery workers blame Wal-Mart’s predatory ways for forcing the three other major supermarket chains to cut their health benefits. Also, there are notorious accounts of Wal-Mart’s efforts to stop or hinder unionizing activities among its workers.
Defenders of the biggest of the big box retailers say this is simply the free market in action. But it isn’t. It is the Servile State in action. It is the unholy marriage of Big Business and Big Government. What the defenders of the “free” market either don’t know or don’t mention is that Wal-Mart costs taxpayers a lot of money because of its rock bottom wage levels. According to one congressional report, taxpayers pay around $420,000 a year for each Wal-Mart store employing 200 people. The costs include money for Section 8 housing assistance, free lunch programs, tax credits for low-income families, education funds and subsidies for energy assistance.
Capitalism creates holes; Socialism fills them. It’s a fascinating equation. You stretch that dollar to buy as much Chinese-made merchandise as possible and your taxes will take care of the clerk. The prices are cheap, the products are cheap, the workers are cheap, and Sam Walton’s widow and four children have a combined net worth of $100 billion. Is this a great country or what?
The plodding assault of a giant retailer is not exactly a new phenomenon. G.K. Chesterton eloquently expressed his scorn for the big shops in Utopia of Usurers:
The big commercial concerns of today are quite exceptionally incompetent. They will be even more incompetent when they are omnipotent. Indeed, that is, and always has been, the whole point of a monopoly; the old and sound argument against a monopoly. It is only because it is incompetent that it has to be omnipotent.
So, can anything be done about this?
Two things would help: The Leftist elite could stop calling on the Government to bust up Wal-Mart. And the Rightist elite could stop excusing everything that Wal-Mart does. But since neither of those things is going to happen, it is up to us common folk to clean up the mess that we have created.
Yes, we created it. You see, Wal-Mart does not get all the blame, even if it gets all the money. We are the ones who keep giving it all that money. In our lust for the lowest price, we have (third and last metaphor) created a monster. We have fed the monster. And now the monster is eating our villages.
If you know anything about monsters, you know that they usually have to be destroyed by torch-carrying citizens from the town, that is, by people who suddenly wake up and realize that have to regain control of their lives. Self-government means self-control. It applies to commerce as much as it does to politics.
We have to limit what we buy and we have to be more selective about where we buy it. Whenever possible, we have to support the smaller, locally-owned business. Whenever possible, we have to be the smaller, locally-owned business. We have to hold local government accountable. We have to be local government. We have to explain this to other people. We have to wake them up and give them a torch and tell them to join us. Tell them people about the common-sense vision of Distributism. Mention Gilbert Magazine perhaps.
It is not the government that is going to fix this problem. Or a market adjustment. It is you. And you. And you.
A thoughtful and persuasive critique: and that’s coming from someone who, if not actively defending Wal-Mart, has tended to find them annoying but generally inoffensive.
I simply find it sad that the business has become such a monster: its original business model of a shop to provide consumer goods to rural markets without comparable retailers wasn’t objectionable and was itself quite profitable. The way it steamrolls grocers (and is able to dictate policies to manufacturers) today is disheartening.
I’m a big Chesterton fan. I also find the distributist arguments emotionally appealing, if not always rationally convincing.
On that latter point, I have to take issue with one point in this very interesting article.
There may be an “unholy relationship” between Wal-Mart and Big Government, but this doesn’t support that argument: “there are notorious accounts of Wal-Mart’s efforts to stop or hinder unionizing activities among its workers.”
Big Government is fed by Big Union. Has Mr. Alquist missed the near riots in Wisconsin, legislators walking out of Indiana, and massive protests in New Jersey over those State governments attempting to reign in public sector union power?
I’ll agree that there is an unholy relationship between Big Business and State and Federal governments. But whipping out the union card doesn’t support that argument. The TAXATION Card, however, presents a very different story. I’m sickened by politicians who lure Big Business into their districts with tax breaks and gov’t contracts, which only means the working folks are going to have to pick up the tab when it comes time to pay for all the social services political activists (usually always Leftists) demand.
Where I usually come down on this issue is the same place that Mr. Ahlquist arrives at at the end of this interesting piece: If you don’t like Wal-Mart, then don’t shop there, and encourage your neighbors not to shop there. Wal-Mart became “Wal-Mart” because a lot of people abandoned the local shops for the “Big Box” lure. If you’re able to convince enough people that Wal-Mart is “evil,” and if you allow the market to work, i.e., don’t allow Big Government bail outs (or special tax breaks, property seizures, etc., on behalf of Big Business) , the company will go out of business.
I second Mr. Crandall. (And duck, waiting for the tomatoes to fly! 😉
There’s one reason Dale Ahlquist writes so well: he reads well. He reads the really great writers. Like Chesterton. This article – in both sentiment and style – is worthy of Chesterton.
“The costs include money for Section 8 housing assistance, free lunch programs, tax credits for low-income families, education funds and subsidies for energy assistance.
Capitalism creates holes; Socialism fills them. ”
Not sure if that relationship is correct. You suggest that Wal-mart created these social programs so they can pay their employees less. I would think that socialism created these programs which allows Wal-mart to hire employees who are willing to work for less because their incomes are being subsidized by wealth redistribution. The energy subsidies result in a lower priced product of the ability to pay wal-mart employees more. If they just rolled that money into profits then it would be that much easier for a competitor, who is willing to take a lower profit, to displace them. I know it is popular to rail against the high profits of companies like Wal-mart and Exxon but those profits are the result of high volume not high margins. High margins opens the door to competition (if the government does not stifle it)
I know Distributists and socialists like to rail against evil capitalism in the US but we do not have true free market capitalism. Rather we have a form of corporatism which enables big business to more readily stay in business by lobbying for regulations that stifle competition. The stories of robber barrons of the past are not true. True that people became wealth but no one company took hold of a (free) market and held onto it for long. Rich people become poor and poor people become rich, that is if you don’t have gov regulations stifling innovation. Even with the corporatist taint to our market there will still be companies that will displace wal-mart (perhaps amazon) just as wal-mart displaced Safeway, Safeway displaced A&P, and A&P displaced the general store.
What is ironic is that you would more closely realize your Distributist dream of small local businesses, because folks with new ideas of how to create more value (i.e. wealth) out of the same raw materials will arise to displace larger companies who have become slow to react to market need. It is less government that we need, not fewer businesses with innovative ideas (e.g. wal-mart’s just in time supply chain) which bring greater value to the market for a lower price. If you force the market (the socialist path) to fit into a Distributist box then you will end up with a very inefficient system where people will once again be paying half their salary for food rather than the ~15% they pay today.
“The big commercial concerns of today are quite exceptionally incompetent. ”
How so? I thought you just wrote an article about how Wal-mart has taken over their market???
“It is not the government that is going to fix this problem. Or a market adjustment. It is you. And you. And you.”
In your mind what is a market adjustment? Most economists believe to be capital (people’s money) leaving a market or a particular business because it no longer provides value. It is the consumer that makes the market adjustment; that is in a free market.