Wal-Mart: The Big Friendly Giant
BY PIOTR BRZEZINSKI
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ITS MONOLITHIC TICKY-TACKY BOXES LITTER THE
countryside, destroying all that is good: the local butcher,
greengrocer, and neighborhood bakery. By oppressing
workers and squeezing suppliers dry, Wal-Mart
drives out small, friendly shops, undermining livable
communities and living wages.
Or that’s what the activists would have you
believe.
Around the country, the anti-Wal-Mart movement
continues to gather steam, making its way into new
legislation and Democratic congressional campaigns.
Community crusaders, union activists, and liberal politicians
have joined together to oppose the latest corporation
to “oppress” us. Through a flurry of zoning
restrictions and targeted laws, the Lilliputians hope to
tie the giant down, or at least hamstring him.
Wal-Mart has become a lightning rod for Americans’
latent suspicions about capitalism. For a country of
capitalists, we have always had an ambivalent relationship
with the progeny of laissez-faire, from Standard
Oil to Microsoft. Simply by offering people what
they want — low prices, wide selection, and decent
products — the Beast from Bentonville has become this
generation’s corporate bête noire.
So activists pamphlet, picket, and legislate against
Wal-Mart. Meanwhile, Wal-Mart shoppers are voting
with their feet. Despite having the aesthetic appeal of
a disorderly warehouse, Wal-Mart offers impoverished
(and not-so-impoverished) people a way to lift their
standard of living.
The average American family saves $2,300 a year by
shopping at Wal-Mart. In fact, because of its relentless
drive to lower costs, Wal-Mart may be America’s single
greatest anti-poverty program. In terms of groceries alone,
a study by MIT economist Jerry Hausman found that
Wal-Mart’s low prices increase poor families’ effective household
income by 6.5 percent. Other studies have found that when a
Wal-Mart opens, its mere presence drives down prices in
an area by 10-15 percent. Wal-Mart saves U.S. consumers
more than $200 billion a year; compare that to the federal
government’s $33 billion food-stamp program.
DOES WAL-MART HURT ITS EMPLOYEES?
The behemoth’s workers benefit as much as consumers
do — even apart from the fact that many of its workers
shop where they work, and can therefore buy vastly
more for their wages than if Wal-Mart didn’t exist.
Although Wal-Mart workers, like all of us, would
surely prefer higher wages and better benefits, they too,
have voted with their feet, by choosing to work at Wal-
Mart. It’s hard to claim that a corporation oppresses its
employees when 11,000 people apply for 300 positions
there, as happened when a Wal-Mart recently opened
near Chicago. If Wal-Mart were truly undervaluing
employees’ labor, people wouldn’t line up for the jobs
it offers.
Is it fair that many people are so poor that they
flock to the chance to work, or shop, at Wal-Mart? No.
But legislating against Wal-Mart doesn’t do anything to
alleviate the unfairness of poverty. Quite the opposite:
it deprives the poor of access to jobs and low prices.
Poverty is endemic, but Wal-Mart actually helps address
this unfairness by making its customers and workers
richer than they would otherwise be.
On the other hand, excluding Wal-Mart exacerbates
inequality by forcing everyone, including the
poor, to pay for the luxury of local shops. The thoughtless
“Wake Up Wal-Mart” campaign accuses the retailer
both of “hurting other businesses when it comes to
town” — through its low prices — and of harming the
poor through low wages (which seem to be higher than
those offered by the existing stores). Somehow the
contradiction between protecting expensive local shops
and helping the poor escapes these activists.
With similar obliviousness, many activists sympathize
with Wal-Mart’s suppliers, who are allegedly
coerced into selling their products to Wal-Mart at too-low
prices. In what other context would leftists protest
lower prices — the equivalent of higher wages — in
order to help “corporations” preserve their profits?
Curiously enough, these community guardians don’t
trust their fellow citizens to recognize the merits of
the local grocery store. Every time Wal-Mart opens a
Supercenter, it has to win over every single customer who
passes through its doors. A Wal-Mart can lure people
away from where they used to shop only if it gives them
something better — or cheaper. So Wal-Mart opponents
try to replace the quasi-democracy of the market – where
customers or workers can “vote” Wal-Mart out of business
by refusing to shop or work there – with zoning
restrictions imposed by planning councils or town referenda.
As the Wal-Mart Watch “battleplan” proclaims,
“the whole fight comes down to winning a majority vote
on the planning board of the city council.”
THE WRONG KIND OF DEMOCRACY
Unfortunately, political interventionism empowers economically
illiterate voters, and equally ignorant politicians.
The same consumers and workers who benefit
from Wal-Mart when they shop or work there don’t
necessarily understand how capitalism functions. Most
people have only a limited knowledge of economics,
and overlook the indirect consequences of meddling
with the market. In this case, voters are tempted to
simply order the retailer to pay its employees more,
ignoring the effect of artificially high wages on employment
and prices.
Moreover, political restrictions on Wal-Mart necessarily
imposse a winner-takes-all outcome on poor and
rich alike. In a referendum, 51 percent of the electorate
can inflict its fears on everyone else. Markets, in contrast,
satisfy a wide range of desires. If most people prefer
intimate local stores, then they can shop there — if
they’re willing to pay higher prices. The minority gets
to shop at Wal-Mart — if they’re willing to tolerate the
flourescent lighting.
But let’s not paint a utopian picture of Wal-Mart. It
confers its immense benefits on consumers and employees
by out-competing other retailers, which hurts those
stores’ owners and employees (at least if the employees
are earning more than they would at Wal-Mart, which
usually isn’t the case). Although many smaller retailers
thrive in Wal-Mart’s shadow by offering something
that Wal-Mart doesn’t, like higher-quality products or a
friendly atmosphere, most retailers can’t compete with
Wal-Mart on price.
Nor could horse-drawn buggies compete with cars,
or plasterers with drywall. Such is the nature of capitalism:
“more, better, and faster” renders “less, worse, and
slower” obsolete, because “more, better, and faster”
helps more consumers and employees. As cold-hearted
as it sounds, capitalism’s “creative destruction” harms
the people who are suddenly unemployed only by benefitting
everyone else. We can transport ourselves faster
with cars, build better houses with drywall, and buy
cheaper goods at Wal-Mart.
Alternatively, anti-Wal-Mart activists might argue
that the whole ethos of materialist progress is spiritually
vacuous or emotionally unfulfilling. Perhaps materialism
is just a hedonistic treadmill; maybe a simpler,
slower, poorer life would make us happier.
That critique of Wal-Mart, however, demands the
rejection of the whole modern world, not just the
world of big-box retailers. The problem — if it is a
problem — is neither Wal-Mart, nor capitalism, but our
own materialistic desires. And the solution is not political.
It is withdrawal from the economic maelstrom — an
option open to anyone who doesn’t care about material
comforts.
Few anti-Wal-Mart activists hold such radical convictions.
They aren’t living out at Walden Pond. They
partake of the same consumerist world as the rest of us,
and rail against “corporations” like Wal-Mart not on the
grounds that corporations cater too well to unhealthy
appetites — but on the grounds that they don’t cater
to them well enough. Thus, they charge Wal-Mart,
and implicitly capitalism, with inhibiting our quest for
material goods (by underpaying workers, etc.).
This charge flies in the face of all experience of
capitalism, ever since it unleashed on the world the
luxuries most of us now take for granted. As Adam
Smith noted, the butcher and baker do a very good job
of giving customers what they want, and by doing so,
the butcher and baker (and the Wal-Mart “associate”)
improve their wages.
Although anti-Wal-Mart crusaders think they are
defending the poor against low-paying jobs, they miss
the fact that low-paying jobs are better than the alternative:
no jobs or even worse-paying ones. Forcing
Wal-Mart to raise its wages or offer more expensive
health-care benefits means forcing up its prices. That,
in turn, hurts poor consumers, diminishes Wal-Mart’s
competitive advantage, and thus depresses its ability
to employ more people. It does the poor little good to
mandate high wages and benefits if it means that fewer
jobs will be available, and that the prices paid by those
with jobs will be higher.
If they remain unconvinced, Wal-Mart’s opponents
should relax. What the market gives, the market will
eventually take away; sooner or later, the giant will
stumble, and a superior competitor will emerge, offering
even lower prices or better service. Until then,
however, Wal-Mart will continue to succeed only if it
gives consumers and workers the goods and the jobs
that, in the real world of scarcity and unemployment,
they want.
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Piotr Brzezinski is a senior at Harvard and the Editor in Chief of The Dissident .
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