Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

30 November 2013

Did You Know that We Need Big Government to Protect Us from Walmart?

Walmart is the biggest retailer in the world, with $443.85 billion in sales in 2012.  It has 2.2 million employees.  It offers low prices to bring in customers for the goods it efficiently supplies.

The U.S. federal government can only tell us how many employees it had in 2011.  It had 4.403 million employees.  The state governments had 3.779 million full-time employees and 1.534 million part-time employees.  The local governments had 10.786 million full-time employees and 3.202 million part-time employees.  Each of these governments inefficiently supply services for which their customers are forced to pay.  They also produce copious mandates that the People are forced to obey. They command forced labor from employers and businesses for the convenience of government.  Federal, state, and local governments all produce mandates that Walmart must obey.  Federal, state, and local governments spent a mere $6.5 trillion out of the national GDP of $15.0 trillion (43.3%) in 2011. 

Now which of these would a rational person fear, Walmart or Government?  I fear Government, but Progressive Elitists fear Walmart!  Yes, they offer Walmart as a primary reason why we must have Big Government.

Why?  Well the story is that Walmart moves into a town or small city and offers goods at such low prices that they drive all other businesses that used to be in the town out of business.  Walmart pays its employees so poorly that they are in danger of starvation and poverty overtakes the town.  A minimum wage increase mandated by government is required to make Walmart pay a "living wage."  In addition, Walmart is killing American jobs because it brings many of its goods in from other countries.  Walmart is a monster, a very unethical killing machine!  Progressive Elitist after Progressive Elitist will use this story to justify Big Government, including MBAs from the Wharton School of the University of Pennsylvania and the Columbia Business School.

OK, let us ask a few questions about this story. 

When Walmart moves into a town, how does it find the manpower to open its store before it has driven all of the other businesses out of business and taken their employees away?  Does it not have to pay prevailing wages to induce those initial employees to work for them?  It is common for new stores to have tens of applicants for each person they can hire.  Yes, according to studies for every 100 jobs created at the Walmart store, in time about 50 retail jobs in other stores are commonly lost.  Yet this is a sizable net creation of jobs.

It is said that Walmart is evil for putting many other retail businesses out of business.  But all Walmart does is to offer products for sale at good prices.  It is up to the people who used to go to the pre-existing retail stores to actually choose to go to Walmart.  They are the ones who do not go to Joe's Grocery Store and Madeline's Clothing Store.  They have the option to choose to pay higher prices in those stores and support those who have long been in their community.  If anyone made unethical choices, would it not be these customers who had no loyalty for the original shop owners of their towns?

Of course, it is not always the case that these smaller stores were even doing their best to provide the lowest prices they could.  A few of them may have taken advantage of having little competition in the town for the kind of goods they sold.  Some of them morally deserved to go out of business in many cases.  No doubt others did work hard to provide the best service they could, but so surely did many a buggy maker, a stabler, a blacksmith, a wagoner, and a saddler when they were mostly put out of business by the advent of cars and trucks.  Logically, the Progressive Elitist claim would be that all car and truck makers and trucking companies were unethical in putting these older companies out of business.

On Black Friday, there were labor union organized protests at many Walmart stores.  They claimed that 825,000 Walmart employees make less than $25,000 a year.  This may be true, but many of them are likely part-time employees.  The majority of Walmart employees are full-time, which is actually unusual for retail stores.  The average full-time associate earns $12.81/hr. and the average employee (full and part-time) earns $11.83 per hour.  Walmart says that 99% of its employees make more than the minimum wage in their areas, which is highly at variance with the usual story told casually by the usual Progressive Elitist.

Walmart, in a McKinsey & Company study that George Will referred to in 2006, found that Walmart contributed 13% of all of the national productivity increase in the late 1990s, which held down inflation greatly and made Bill Clinton look good as President.  It accounted for $200 billion in savings on the cost of goods each year, which is surely a larger savings now that Walmart is even bigger.  George Will pointed out that the average Walmart shopping household makes less than the national average, so these cost savings go to these poorer households, doing them much more good than food stamps and earned income tax credits did for them then.  But as usual, one can count on the Progressive Elitist, who claims to champion the poor, to actually abhor anything that really helps the poor outside of a government dependency program.  They hate Walmart.

But, Walmart's business model depends upon these less affluent customers and those customers respond in droves by going to Walmart for its convenience and low prices.




3 comments:

Andrew Underwood said...

You know, I'd always considered large corporations with near monopolies almost as bad as big government, but I see now that I was wrong. I'd much rather deal with Walmart than the government. That being said, I'm still rather leery of companies like GE who seem to regularly trade favors with the administration. I don't know that I can blame them for doing what's in their best interest, but gaining an advantage over competitors by borrowing power from friends in government seems to be the most distasteful way to get ahead.

Andrew Underwood said...

You know, I'd always considered large corporations with near monopolies almost as bad as big government, but I see now that I was wrong. I'd much rather deal with Walmart than the government. That being said, I'm still rather leery of companies like GE who seem to regularly trade favors with the administration. I don't know that I can blame them for doing what's in their best interest, but gaining an advantage over competitors by borrowing power from friends in government seems to be the most distasteful way to get ahead.

Charles R. Anderson, Ph.D. said...

Thanks for your comment Andrew.

Certainly those companies that use connections with politicians or bureaucrats to use the force of government to gain advantages over competitors and over their customers are nasty beasts. There are too many such companies, though Walmart does not seem to play that game to anything like the degree that GE or Goldman Sachs have.

As I point out frequently, when government becomes big, it becomes too complex for most voters to follow and understand its actions. It becomes a huge threat to businesses, because that is where the money is and government cannot resist extorting businesses.

Businesses then seek ways to defend themselves from the arbitrary power of government. In the process many learn how and are tempted to use that knowledge and the power vacuum that comes with unknowing voters and management-challenged politicians and bureaucrats to become government-manipulating special interests.

In other words, big government makes special interests inevitable and gives them the opportunity to take power and use it to their advantage and the harm of most of us. Then big government becomes even bigger and the death-spiral of self-destruction ensues.