Wal-Mart – Destroyer of Community
Posted in Political on 12/19/2005 05:08 pm by adminSince I’m getting comments about Wal-Mart posted to other topics, I feel pressed to actually create a post about Wal-Mart. Note the provocative title of this post. :)
Back in November I went to the Mount Vernon, Iowa showing of the anti-Wal-Mart movie .
Wal-Mart: The Movie
Wal-Mart: The High Cost of Low Price – such a cool title.
The movie was shown thanks to the efforts of local Mount Vernon resident John Feeney, PhD, who is organizing an effort called The Small Town Project. The Project is attempting to raise the consciousness of local residents to inevitable population and demographic changes that threaten the pleasant small-town lifestyles in mid-Western towns such as Mount Vernon and Lisbon, IA. The movie was crowded, and a great success in terms of attracting lots of viewers.
The movie has a lot of work and research behind it in terms of presenting facts. But many of the facts presented could have used a little context. For example, when the claim that the combined area of concrete of Wal-mart’s parking lots is the area of a small state (Connecticut, was it?), it would have been helpful to have something to compare this against. For all I know, half of the country is paved in concrete at this point. The same for many of the statistics presented – no context. Numbers and information were presented in primarily a shock-presentation format, making it obvious the way that the film makers want you to feel upon seeing the information.
I agree with the general point that Wal-Mart and other big box stores arrive in an area as part of urban-sprawl, that they are both products of and promoters of globalization, and that they thrive on American consumerism.
All of which I do my best to avoid. As such, I don’t really want box stores near me – yes, Not In My Backyard. Though, it certainly is convenient to drive 20 minutes down the road and go to a box store. But who really wants one of those big, nasty, crowded stores in their neighborhood? Not me.
And In the Times
From “New World Economy – the age of high-wage jobs is over – and Wal-Mart isn’t to blame” by Matt Bai, in The New York Times Magazine, issue December 18, 2005 has leftist words that speak much better than can I:
“While G.M. rusts away like some relic from the last century, Wal-Mart beckons us toward our shrink-wrapped and discounted future. Wal-Mart’s founding family is said to be wealthier than Bill Gates and Warrent Buffet combined, and yet more than half of the company’s employees don’t receive health care, and its enduring quest to bring us lower prices drives down wages everywhere. Here we have the model for globalization as Republicans envision it – a world in which rugged entrepreneurialism is overly romanticized and the unskilled expendable, and where shareholder profits are the only measure of success.”
The article cites that Wal-Mart is the largest employer in the United States with 1.6 million employees as of 2004. (Fortune magazine April 18, 2005)
Mentioned in the Times article was a report by Jason Furman (available as pdf) that states:
There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector. Plausible estimates of the magnitude of the savings from Wal-Mart are enormous – a total of $263 billion in 2004, or $2,329 per household. Even if you grant that Wal-Mart hurts workers in the retail sector – and the evidence for this is far from clear – the magnitude of any potential harm is small in comparison. One study, for example, found that the “Wal-Mart effect” lowered retail wages by $4.7 billion in 2000.
According to Furman’s report, Wal-Mart relies on governmental programs to provide health care and other resources to its under-paid employees so that it does not have to pay such costs, while ironically Wal-Mart and the Walton family have worked politically against such government entitlement programs.
So while fiscal conservatives like John Stossel feel compelled to present and defend the right of Wal-Mart to ‘create wealth’ via the simplistic arguments of basic capitalism such as explaining why the poor work at Wal-Mart:
“None of them was drafted. None of them was forced to work at Wal-Mart,” said Brink Lindsey, a senior scholar at the Cato Institute. “That means that if they’re working there, presumably, that was the best job they could get.”
and
That’s a myth. Businesses create wealth.
Take the simplest example. I buy a quart of milk. I hand the storekeeper money; she gives me the milk. We both benefit, because she wanted the money more than the milk, and I wanted the milk more than the money. This is why often both of us say “thank you.” Because it’s voluntary, business is win/win. A transaction won’t happen unless both parties benefit. Each party ends up better off than he was before. And when you have millions of successful transactions, you end up very well off — like the owners of Wal-Mart.
Politics In Song and Verse
If you would like to hear the leftist side of the issue in song, David Rovics recently recorded and posted an mp3 entitled ‘Wal-Mart’.
What the People Say
If you are interested in what public opinion has to say on the topic, you can take a look at some National Survey Results on Attitudes on Wal-Mart by The Pew Research Center. One finding:
Overall, 69% of those familiar with Wal-Mart have a favorable opinion of the company. Still, 31% have an unfavorable view, which is a considerably higher negative rating than is accorded to many other major corporations.
In 2003, NPR did a series of stories on Wal-Mart., including a segment on how a small-town’s downtown area has learned to survive in the wake of the arrival of a Wal-Mart. Hear the audio clip Main Street USA, Surviving the Wal-Mart Challenge on the NPR page.
A complex issue with lots of passions on both sides, I’m sure.
(This post is a work in progress….)
12/22/2005 at 1:11 am
Gare,
I agree with your comments on the movie. And the whole question of Wal-Mart is indeed a complex issue. My own aim in showing the film was to say to people,
“Hey, if you don’t already have an opinion, watch this and then think about whether you want Wal-Mart to come here. If you don’t, then consider that maybe the best way to prevent it is to say “no” to the typical unrelenting push to grow that characterizes most towns, including this one. Though there are Wal-Marts not far from here, we increase the risk that they’ll want to locate right here as we add to our population.”
I hope people think about that. The loss of the classic small town main street isn’t necessarily “wrong,” I suppose, when viewed from a free market standpoint. But it’s a sad loss of history and heritage IMO. Though I’m far from an expert on this, it also seems to signify a shift toward ever more corporatization and a loss of opportunity for small business owners. (It seems similar to the corporate farm/family farm issue in that way.)
I think Wal-Mart must owe a great deal of its success to the growth industry which dominates most towns and cities in this country. Something I haven’t even googled, but which would be interesting to see, it what sort of town or area population size gets Wal-Mart interested in an area. I suppose it would involve some initial threshold, and then a ratio of the number of Wal-Marts in an area to the population of the area… something like that. And I wonder where we fall in that regard.
12/30/2005 at 8:36 am
Thanks for writing, John.
While not directly answering your question, here are some interesting findings from the Pew study cited above:
“Wal-Mart’s most faithful shoppers are found among those with annual incomes below $30,000, more than half of whom (53%) say they shop there regularly. But about a third (33%) of those with incomes above $50,000 are also frequent buyers at the stores and nearly another half (48%) are sometime customers.
Regionally, the South holds a strong lead in Wal-Mart patronage, with 57% of its residents saying they shop there regularly. Fewer Midwesterners (41%), and Westerners (34%), and a mere 24% of those in the Northeast are regular Wal-Mart shoppers. Despite strong criticism of the retail giant by labor unions, there is no significant difference between union and non-union members in their propensity to shop at Wal-Mart.”
Here is the source chart:
07/28/2006 at 2:12 pm
Wal-Mart’s German reality check
Retailer’s move to quit Germany suggests focus on bottom line
By MarketWatch
Last Update: 4:14 PM ET Jul 28, 2006
SAN FRANCISCO (MarketWatch) – Wal-Mart Stores Inc.’s decision to quit the German market, and incur a $1 billion loss was the second time this year that the retailing giant has given up on a foreign market.
While the departure and the hefty loss is a stinging public relations embarrassment, the move is a sign that the retailer, which has been hit by weak sales growth, reversals at the hands of state and local governments and criticism of its compensation policies, is focusing on profitability and return on investment even if that means sacrificing growth.
Analysts said the move should boost Wal-Mart’s earnings going forward because Germany was an unprofitable business in a market that posed tough challenges for Wal-Mart. Germany’s difficult regulatory environment made it hard for the Bentonville, Arkansas-based retailer to open large stores and its low prices did not stand out in a market filled with cut-price stores.
“Germany has been a retailer’s nightmare due to restrictive regulations. Wal-Mart and other major retailers have entered Germany and failed,” Oppenheimer analyst Bernard Sosnick wrote in a note to clients.
The decision caps a tough week for the fast-growing retailer. On Friday, the Federal Deposit Insurance Corporation placed a six-month hold on applications for ownership changes for industrial loan companies, dealing a setback to Wal-Mart’s plans to open up one of these banks to process its millions of debit, credit-card and electronic check payments.
And earlier this week, in a decision likely to stall Wal-Mart’s expansion in Chicago, the city’s aldermen voted to require big-box retailers including Wal-Mart to pay workers substantially higher wages and benefits than the national or state minimum. Earlier this year, Maryland legislators passed a law, aimed specifically at Wal-Mart, forcing large employers to provide healthcare coverage for employees. The legislation was struck down by a federal judge earlier this month.
Goodbye Germany and Korea
Wal-Mart said Friday it would sell its 85 German stores, which generated about $2.5 billion in sales in 2005, to Metro AG, a leading retailer in Europe’s largest economy. Wal-Mart said it would take a $1 billion before-tax charge in its second quarter to rid itself of the operations which news reports said produced losses of as much as $250 million a year. See full story.
In late May, Wal-Mart sold its 18 money-losing stores in South Korea after failing to make headway in that market. Korea’s Shinsegae Co. Ltd bought the stores for $882 million. The decisions on the international front were made by Mike Duke, head of the international division, in the year since swapping jobs with John Menzer, who now oversees the U.S. operations. Analysts said Duke appeared to be determined to make investments pay off, or cut his losses.
“Wal-Mart’s international division is withdrawing from countries where the company cannot become a big, profitable player and where its investment of capital and management time exceeds likely returns,” Sosnick said in his note.
Adrianne Shapira, an analyst with Goldman Sachs, said the sale of the German stores would allow Wal-Mart to channel its resources into better opportunities.
“The exit of the German market will allow Wal-Mart to be more focused on increasing returns and expansion in markets like China and South and Central America,” she said in a note to clients.
“Wal-Mart’s detachment from the German market and focus on more opportunistic markets should drive profitability, return, and ultimately the multiple, in our view,” she said. End of Story
source: http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B12CDFBFF-1059-468B-8435-2443F66C76C4%7D&keyword=&print=true&dist=printTop