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Tilting at Windmills

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September 21, 2006
By: Kevin Drum

WAL-MART: THE GOOD, THE BAD, AND THE UGLY....Ezra Klein comments on Wal-Mart's plan to start selling a wide array of generic prescription drugs for as little as $4 for a 30-day supply:

Some of my right-wing readers may think this'll make my head explode, but Wal-Mart's embarking on a new initiative to use its size and weight to bargain down the prices on generic prescription medications. In other words, the company I always accuse of acting like a monopsony is now going to use their might to act as consumer advocates on health care which will be good for consumers and bad for Pharma. Hooray!

This is actually worth unpacking a bit, because no one ought to be surprised by Ezra's reaction. Roughly speaking, there are three things that keep Wal-Mart's prices low:

  1. A spectacularly efficient supply chain and logistics system that's the envy of the industry.

  2. A willingness in fact, an almost palpable enthusiasm for using their enormous size to beat the lowest possible prices out of their suppliers.

  3. A scorched-earth campaign to prevent unions from organizing at Wal-Mart sites, thus keeping wages and benefits as low as possible.

I'm speaking only for myself here, not Ezra, but I'm pretty sure liberals like us don't have any problem with #1, and not much of a problem with #2 either. Needless to say, we also don't have a problem with Wal-Mart selling stuff as cheaply as possible. That's good for everyone.

It's really only #3 we have a problem with, because Wal-Mart is so big that their low wages have a depressing effect on all service sector wages. If they allowed workers to unionize and genuinely bargain for wages, that's all it would take to keep us liberals happy. (Well, and maybe fixing stuff like this and this too.) Keep in mind that payroll for hourly workers at Wal-Mart amounts to less than 10% of sales, which means that even a significant increase would only force them to raise prices by 2 or 3 cents on the dollar and they'd still have great logistics and enormous leverage with their vendors, which means their prices would still be lower than everyone else's.

So: Efficient operations, no problem. Economies of scale, no problem. Cheap generic drugs, hooray!

But: Poverty-level wages and benefits, big problem. That's the wrong way to keep prices low.

UPDATE: It's a good thing I was only speaking for myself, not Ezra. He thinks there are big problems with #2 as well.

Kevin Drum 8:14 PM Permalink | Trackbacks | Comments (110)

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Comments

What board of directors was Hilary Clinton on before her husband became President?

If anyone wants to know what the DNC has planned for the future of America...look at the ascension of Wal Mart during the '90s.

Helping the poor...by cornering entire markets!

Posted by: The Hague on September 21, 2006 at 8:18 PM | PERMALINK

Bravo, Kevin. Succinct and to the point. It's the illegal and brutal anti-union activity that is the issue. The others two points actually benefit the poor.

Posted by: Ben on September 21, 2006 at 8:20 PM | PERMALINK

And every small-town pharmacy that was managing to hang on on the town square just ordered shutters.

Posted by: Global Citizen on September 21, 2006 at 8:25 PM | PERMALINK

Actually #2 is as bad or worse than #3 because it causes suppliers to have no other choice except to offshore production since no company paying US works (let alone US union workers) can meet Wal Marts price points. So not only are they suppressing the wages of their own workers, they are a huge force is destroying the american manufacturing jobs in general. My guess is if they apply the same price pressures to drugs we'll see drug companies moving R&D operations to India and China soon.

Posted by: Adventuregeek on September 21, 2006 at 8:27 PM | PERMALINK

#2 ain't so hot. It's Wal*Mart using their market power to blackmail companies into devaluing their products and their brand to the point that Wal*Mart can get others, usually offshore, to produce equivalent products.

And by devalue I just don't mean reduce profit margin, I mean produce inferior goods.

So consumers get a less costly good, but it is inferior. Americans lose a manufacturer and get increased unemployment and a more precarious jobs environment. Woohoo!

Google Vlasic Pickles and Wal*Mart....

Posted by: jerry on September 21, 2006 at 8:28 PM | PERMALINK

Let's keep in mind that this is a pilot program in one city (Tampa) and whether it is expanded even if it will continue, will be decided at a later date.

I am all for kicking Big Pharma square in the nuts. I hope this is the begining of a groundswell. Walgreens, CVS, Costco, Target...Maybe they will soon follow suit. Lets hope this is a bellwether moment.

Posted by: Global Citizen on September 21, 2006 at 8:31 PM | PERMALINK

> and not much of a problem
> with #2 either.

Hate to disagree with you Kevin, but policy #2 has devastated what few American manufacturers were left after the 1980s. Wal-Mart drives suppliers to the brink of bankruptcy, then demands more. At which point the suppliers (1) move to China (2) lower quality. Long-term I don't see how this is really good for the US, although the damage has already been done.

Look in the WSJ about a year ago for the article about the name-brand pickle manufacturer that was almost driven out of business because Wal-Mart wanted 2 gal. jars of pickles. The mfgr told Wal-Mart, correctly, that the jars would not sell, but Wal-Mart wanted a big pyramid of 2 gal. jars near every summer bbq display. End of summer, lots of hot dogs sold, millions of 2 gal. jars sent back to mfgr for credit. Instant bankruptcy.

So no, I am not in favor of #2 on the one-sided terms that Wal-Mart brings to bear.

Cranky

Posted by: Cranky Observer on September 21, 2006 at 8:32 PM | PERMALINK

generally speaking, for consumers, at least, wal-mart's addiction to cutting costs and offering low prices is good in the short term. long-term however, i have my doubts.

Posted by: mudwall jackson on September 21, 2006 at 8:32 PM | PERMALINK

It's from Lyndon LaRouche, but read: Wal-Mart `Eats' More U.S. Manufacturers

Posted by: jerry on September 21, 2006 at 8:32 PM | PERMALINK

I heard on NPR that there would be about 250 generic drugs on walmart's discount list. Can anyone find that list of generic drugs? Please post a link.

Posted by: slanted tom on September 21, 2006 at 8:33 PM | PERMALINK

Cranky is pwned! I pwned Cranky! I rock, I rock.


As for inferior goods, one night about two years ago, I landed in Texas after midnight and Southwest lost my luggage. They directed me to Wal*Mart and told me they would pick up the tab.

I purchased a shirt and a pair of jeans and SWA nicely reimbursed me about $45.00.

Within two months the shirt and the jeans had LITERALLY fallen apart. They looked nice on the rack, but they had no longevity at all. Completely inferior in every possible way, except for the initial price. But with built-in obsolescence, I now had to buy more clothes.

Posted by: jerry on September 21, 2006 at 8:36 PM | PERMALINK

Ooooh! $4.00 ED meds. Shaazam!!

Posted by: Keith G on September 21, 2006 at 8:40 PM | PERMALINK

You can bet your ass that whatever cheap drugs Wal-Mart sells, they won't be made by American workers.

Posted by: zeeeej on September 21, 2006 at 8:44 PM | PERMALINK

People overreact to everything here. This is no big deal. The list of drugs include things like ibuprofin and other commonnly available perscriptions, and all are cheap, low markup and low profit drugs. Walmart expects to sell these drugs at a profit, not a loss, and the cost is lower than most people's co-pays.

It's similar to the grocery selling potatos at cost. A nice thing to advertise, but nothing that will have an effect on anyone's bottom line. No on-line or mail order sales at these prices, limited to stores in Florida only- it's just not that big a deal.

Disclosure: I have no connection to Walmart or the drug industry, just a small investor who did his research today.

Tom O

Posted by: Tom O on September 21, 2006 at 8:47 PM | PERMALINK

I have concerns about economy of scale being a good thing. I'm still partial to the Sherman Anti-Trust Act.

Posted by: Carl Nyberg on September 21, 2006 at 8:49 PM | PERMALINK

As long as Wal-Mart refuses to sell Emergency Contraception, I will support them.

Posted by: Thomas1 on September 21, 2006 at 8:53 PM | PERMALINK

Cue *crickets*.

Posted by: . on September 21, 2006 at 8:56 PM | PERMALINK

Neat! Angrybear reader Muckdog was talking about this in my follow-up to Mark Thoma's takedown of Thomas Nugent's spin on the inequality debate. AB readers are hereby directed to Kevin's place for the latest on the Wal Mart saga!

Posted by: pgl on September 21, 2006 at 8:57 PM | PERMALINK

I agree that #2 creates some problems, but tough bargaining between vendors and suppliers is just part of business. As for offshoring, I think that was really inevitable. As big as Wal-Mart is, they couldn't have resisted the tidal wave of vendors moving overseas during the past couple of decades. When it comes to clothes and electronic doodads, there's just no way around the fact that most of this stuff is going to made offshore these days.

Now, Wal-Mart does press its offshore vendors harder than other retailers, and this sometimes creates terrible working conditions. However, it's not really clear whether they're an awful lot worse than folks like Target or Nike in this regard, or even how much of it is their fault. I'm not giving them a complete pass or anything, but this is a problem that's much bigger than just Wal-Mart.

Posted by: Kevin Drum on September 21, 2006 at 8:57 PM | PERMALINK

I'm with Adventuregeek, jerry, and Cranky O. The pressure on suppliers is relentless and unconscionable and it forces them to move production, then design out of the country.

A complacent operation *might* be able to find a 5% reduction for a year or two. It can't keep on finding 5% every year. And especially not when the very conditions of that kind of deal make it impossible to raise capital for equipment that might make continuing reductions possible.

Worse, it screws up everybody else. Woolrich used to produce its stuff here in central PA. Now it's all Chinese-made shod. If I'm going to buy shod anyway, I'll just go for the best price at the discount outlet.

The tipoff with Woolrich, BTW, was a big "tradition" advertising campaign. They have no shame.

And Carl Nyberg is right too. Its dominance is unhealthy.

Posted by: Altoid on September 21, 2006 at 9:03 PM | PERMALINK
Wal-Mart will start offering the new prices at 65 stores in Tampa, Florida, then expand to the rest of the state. In Florida, consumers can search for the least-expensive prescription drugs on a Web site run by the state's attorney general and health-care administration department.

The drugs in the new program account for 20 percent of the prescriptions Wal-Mart sells, Bill Simon, executive vice president of the company's professional services division, said during a news conference in Tampa today.

In the next few years, more generic drugs will become available as patents expire. By 2011, 70 big-selling brand name drugs will lose their patent protection, offering cheaper alternatives to consumers and insurance companies.

from Bloomberg News.

Seriously, I am not sure what to think of this, and I would like to see the list of drugs, but it has thus far proven elusive. I heard on NPR that no statins are on the list.

There are enough drugs that already cost less than ten bucks a month at Costco to make up that list. Wal-Mart can make this public announcement and look really good in the media for a bit, and they can change the retail landscape of this country forever. In cities we may not notice it so much, but small towns will be impacted. The drug store on the square in Priceton, Missouri will close as Wal-Mart in Bethany takes the last of their customers. Princeton is 28 miles from Bethany, and the county seat of the next county over. The Wal Mart went in in Bethany 20 years ago, and the square in Priceton died.

It is win-win for Wal-Mart. They drive out the last of their competitors in rural areas, and they make money on people shopping while they wait for prescriptions.

As to cheap generics, let me give examples. I have had knee surgery nine times total. I take generic Voltaren, which costs $7.63 per month. 90 generic Darvocet per month is $9.26. Lorazepam for the disrupted sleep caused when pain meds are taken long term is $7.14.

The list of drugs that are readily available and cheap is pretty extensive, so there is more to this than face value of the public declaration to lower prices to four dollars per Rx.

I will be watching how this plays out in the long run, not just while it is a hot topic.

Posted by: Global Citizen on September 21, 2006 at 9:06 PM | PERMALINK

There is a difference between an economy of scale and a monopolistic venture, Kevin. Personally I do have a problem with #2 on the list. Just because their tendency to be an enormous bully happens to help people this one time (because they are actually picking on Big Pharma which is about as nauseating a corporate sector as can be imagined) doesn't mean I'm going to abandon the principle. They are doing what our government should have done in the first place, true, but I trust the government to do it a lot more than I trust walmart. Walmart has no accountability to the public. Government accountability may be extremely strained right now but at least it still exists.

Posted by: Tlaloc on September 21, 2006 at 9:08 PM | PERMALINK

This move by WMT had the immediate effect of shaving a big chunk off the market caps of a half dozen drug store chains like CVS and Walgreen. These guys may not be your favorites but when they start squeezing their employees just as the grocery chains had to when WMT came into their space, the pain will be real and widespread. Eventually WMT will have less competition from the drug chains.

This is predatory pricing.

Posted by: wren on September 21, 2006 at 9:10 PM | PERMALINK

I consider points 1, 2, and 3 to be unambiguously good things. Walmart is not in the business of creating jobs. They are not in the business of creating lower prices. They are in the business of returning as much value as possible to their shareholders. They are very good at it. (In the process the create jobs, have created a magnificient supply change, etc. etc.)

If Walmart were to single-handedly devastate every city in America, destroying lives, crushing American manufacture, etc. - it would still be an unambiguously good company if it returned maximum value to shareholders.

Values that fall beyond the purview of Walmart - people able to pursue their dreams, healthcare for the elderly, environmental protection, and so forth - these pertain to government.

The reason that liberals should internalize this is so that they can articulate that government is important, and that it has powerful opportunity to create value for the electorate. We don't pit Walmart against government, because they do very different, uniquely important things.

Saying: Oh, Walmart does this and that's good, and Walmart does this and that's bad - it confuses the role of government and private enterprise, and makes it easier to argue that private 'does better than government' - it's patent bullshit. Private seeks highest returns. Of course they're going to kill their employees if they can. Of course they're going to ruin communities if it makes them rich. Of course if they can make more money not doing these things they'll do that instead. Of course. That's the point. Public seeks highest value. We don't have Walmart arbitrating drug policy, and we don't have government selling band aids. Walmart will do whatever it can to return value, and they're brilliant. It's to government to set wage floors, figure out how best to secure the health needs of the people, set safety standards, and so forth.

Rediculous.

We should stop pretending that corporations are benevolent cooperatives with interesting attributes. The good ones make money. The bad ones go bankrupt.

Posted by: Saam Barrager on September 21, 2006 at 9:10 PM | PERMALINK

Actually, a word against #2 on your list.

What's bothered me most about Wal-Mart was when I read an article where the person in charge of buying for Wal-Mart bragged about how every year she insisted on some further concession from suppliers --- either higher quality or lower prices. Hearing about what this was doing to factory workers in Asia really bothered me.

Posted by: catherineD on September 21, 2006 at 9:11 PM | PERMALINK

Endorsing 2 and complaining about 3 are inconsistent. It would be illogical for Wal Mart to pay more for spatulas than it has to. The same is true of labor. Wal Mart complies with all laws relating to labor; if you disagree, sue them or write your congressman.

If you don't like it, don't shop there. And if those who worked at wal mart could command a higher wage on he free market, they would go do it. Guess what: They can't.

Posted by: American Hawk on September 21, 2006 at 9:12 PM | PERMALINK

Now, Wal-Mart does press its offshore vendors harder than other retailers, and this sometimes creates terrible working conditions.

This sentence works just as well with a small word swap:

Now, Wal-Mart does press its vendors offshore harder than other retailers, and this sometimes creates terrible working conditions.

Posted by: zeeeej on September 21, 2006 at 9:18 PM | PERMALINK

I know how difficult it is to believe but we're teetering on the verge of another great depression. It's a very subtle thing that is hardly ever talked about except by stock analysists, pricing power. With the rare exception of energy hardly anyone else has it, pricing power, the ability to raise prices and maintain sales volumne. Competition is fierce especially in "gadgets."

The term DEPRESSION is short for PRICE depression. Sellers must have some pricing power to compensate for increases in costs that are forever going up. A good example of this is soy bean farmers. At the present price they are losing money because of the increased cost of gas and diesel for their tractors. Many have borrowed just to make the crop. They can't pay the loan so the bank takes the land. The bank can't keep the land so they must, by law sell it at auction. No one wants the land because the price of produce is too low. That's an easier example than a button hook manufacturer but the rules are the same. The producer must be able to increase his price to meet increased costs. Maybe a closer look at GM and Ford will fill in any blanks you might have.

Drug makers are another group that has until now maintained pricing power. Wal-mart may well be signaling the end of that. It doesn't look good for the economy in general. Lookout for a stock market crash, major correction not being one.

I'm an old one and remember the last great depression, just barely, the tail end that ended with WW2. It's like combat, there's no way to explain it. One must live it to understand how absolutely devistating it is.

We're now almost totally in a global economy. Wal-Mart importing cheap prescription drugs is most likely a good thing. Competition is truly a good thing for consumers, what we all are of course. Let's hope this is only a recession and not a depression.

Posted by: BGone on September 21, 2006 at 9:19 PM | PERMALINK

How DARE the private sector help the poor get their medicines? How are we supposed to get more political power from THAT?

Posted by: dnc on September 21, 2006 at 9:20 PM | PERMALINK

so... fuck the Republicans for refusing to allow the US government to bargain with drug companies the way WalMart can. if WalMart can get those deals, there's no fucking way the drug companies are going out of business, and all that asinine moaning about how Americans need to pay out the ass to fund drug companies' R&D is now clearly nothing but bullshit.

once again: fuck the right

Posted by: cleek on September 21, 2006 at 9:22 PM | PERMALINK

Interesting that people who would have no trouble with the government "negotiating" drug prices down for consumers by applying market pressure to drug makers, get all bent out of shape about a corporation doing it.

Posted by: bobwire on September 21, 2006 at 9:23 PM | PERMALINK

Hey, the Republicans have arrived at a compromise on the interrogation legislation. Democratic senators can come out from under their desks now. Oh, wait. They still have to go on record for the vote. Back under.

Posted by: monkeybone on September 21, 2006 at 9:25 PM | PERMALINK

American Hawk, endorsing 2 and complaining about 3 are not necessarily inconsistent unless you assume that human beings are commodities, which apparently, you do.

However, I do have a problem with 2. WalMart is essentially behaving like a monopoly when it forces its suppliers to provide goods at or below cost, which it often does. If you believe in a free market economy, then WalMart should be reined in. If, like American Hawk, you prefer mercantilism or corporate feudalism, then WalMart is wonderful.

Posted by: k on September 21, 2006 at 9:28 PM | PERMALINK

Doesn't Walmart have a documented history of predatory pricing to drive out competition? Drop the price of prescriptions until the local pharmacies are driven out of business, then jack them up. Lather, rinse, repeat.

Posted by: treetop on September 21, 2006 at 9:29 PM | PERMALINK

Why is Wal-Mart driving small pharmacies out of business with low prices any different than government price controls driving small pharmacies out of business? Don't make much difference to Mom and Pop either way.

Posted by: bobwire on September 21, 2006 at 9:31 PM | PERMALINK

American Hawk, endorsing 2 and complaining about 3 are not necessarily inconsistent unless you assume that human beings are commodities, which apparently, you do.

Oh, my mistake. Everybody should get $20 an hour. Let's not even assess how valuable their labor is!!!

However, I do have a problem with 2. WalMart is essentially behaving like a monopoly when it forces its suppliers to provide goods at or below cost, which it often does. If you believe in a free market economy, then WalMart should be reined in. If, like American Hawk, you prefer mercantilism or corporate feudalism, then WalMart is wonderful.

Hardly. Wal Mart started from nothing, and built its way up by being a great company. It's not anywhere near a monopoly; there's sears, k-mart, target, etc., etc., etc. The era of inefficient mom & pop stores is over, as is the horse and buggy.

Posted by: American Hawk on September 21, 2006 at 9:31 PM | PERMALINK

A spectacularly efficient supply chain and logistics system that's the envy of the industry.
...
A willingness in fact, an almost palpable enthusiasm for using their enormous size to beat the lowest possible prices out of their suppliers.

You support reduced employment in the supply chain, and downward pressure on wages in the supply chain.

Why do you part company with yourself on the issue of reduced payments to Walmart workers themselves? It seems to me that they are all the same thing.

Posted by: republicrat on September 21, 2006 at 9:32 PM | PERMALINK

Doesn't Walmart have a documented history of predatory pricing to drive out competition? Drop the price of prescriptions until the local pharmacies are driven out of business, then jack them up. Lather, rinse, repeat.

You say it's 'documented'. Fine, go ahead and link us to this documentation. Like with so many things, it's something lefties say that has nothing to do with reality.

Posted by: American Hawk on September 21, 2006 at 9:32 PM | PERMALINK

It's not like mom and pop stores hire a lot of union guys, or pay huge wages and benefits, either. I'd bet WalMart pays employees a lot more than most mom and pop stores do, and has more benefits.

Posted by: harry on September 21, 2006 at 9:36 PM | PERMALINK

I'm speaking only for myself here, not Ezra, but I'm pretty sure liberals like us don't have any problem with #1, and not much of a problem with #2 either. Needless to say, we also don't have a problem with Wal-Mart selling stuff as cheaply as possible. That's good for everyone.

So, you don't have a problem with antitrust issues, in particular walmart's monopsonist behavior? Doesn't sound like much of a liberal, certainly not a progressive in the TR tradition.

Posted by: marcel on September 21, 2006 at 9:38 PM | PERMALINK

Well, local business serve an important community and social foundation in small towns. I graduated high-school with 17 other kids in a town of 456 in 1981. (Or I was supposed to. I left high-school in December of 1979 and went to university.)

I have seen what happens to a small town when big business moves in, and it has a devastating effect on the social fabric of towns like the one I mentioned earlier. It is a viscious circle.

Posted by: Global Citizen on September 21, 2006 at 9:38 PM | PERMALINK

local business serve an important community and social foundation in small towns

That should read "serve an important community function and act as a social foundation in small towns.

Posted by: Global Citizen on September 21, 2006 at 9:41 PM | PERMALINK

Think this through, people:

a significant increase would only force them to raise prices by 2 or 3 cents on the dollar and they'd still have great logistics and enormous leverage with their vendors, which means their prices would still be lower than everyone else's.

If this were true, why woudn't Wal-Mart just do it? I know, I know, because they are an evil corporation that loves paying people as little as possible. But but by that logic, why wouldn't they raise prices 2 cents on the dollar and keep the profits?

Maybe it's because they have looked into it and found that they can't raise prices at all and still remain the "low price leader".

I trust that they know exactly what prices they can charge, and outside people giving them advice on this is just silly.

Posted by: Withnail on September 21, 2006 at 9:42 PM | PERMALINK

Ezra and marcel, just above, use the right word for WalMart. Monopsony. Not monopoly. Market control by the seller = monopoly. Market control by the buyer = monopsony.

Monopsony is just as much a violation of anti-trust as monopoly, and if we had a president/adminsitration not in the pocket of Big Business, we'd see an anti-trust bust-up of WalMart so fast it would make your head swim.

But with every competitive presidential candidate raising money from Corporate Amerika, I'm not holding my breath.

See why antitrust laws are necessary? Watch as WalMart does what Standard Oil used to do in the Good Old Days.

Posted by: Cal Gal on September 21, 2006 at 9:49 PM | PERMALINK

OK Guys,

I studied Wal-Mart over a 2 year period about 7 years ago and I keep up with everything printed I can find. To put it scientifically, Wal-Mart is basically evil! Half joking, but really WM exemplifies the best and worst of American culture; a kind of American Dream on steroids.

What Kevin says about Wal-Mart is true, but he has missed the essential point that makes WM so special. Other successful retailers past and present have striven to be successful and dominate markets. What makes WM unique is its dedication to completely dominate EVERY geographic and business market it competes in. WM doesn't just want to be the top retailer, its wants to be the ONLY retailer!

WM attacks new markets like the Aliens in Independence Day. It opens a ring of medium sized stores small towns around a central distribution center. Once it has established dominance in the local market (i.e., wiped out the local general merchandiser competition) it then consolidates its new captive customer base into a centrally located Superstore (The Mother Ship).

A classic example of WM at its worst was what it did to the one-horse town of Nowata* (don't you love that name?)OK. WM moved into the small town and offered its extensive product line and famous everyday low prices (EDLP). Within months the thrilled residents of Nowata were only to happy to desert the local merchants who had loyally served them for years. Then, with the predictablility of a Greek drama, within 2 years after WM had decimated virtually every hardware store and general merchandiser in town it announced the closure of the Nowata store, with the nearest WM being a Superstore over 30 miles away!

Anyway, for good or for bad, that's the kind of company WM is!

James

Nowata Facts (From a website: This is true Wal-Mart Territory)

Population (year 2000): 3,971. Estimated population in July 2005: 4,034 (+1.6% change)
Males: 1,884 (47.4%), Females: 2,087 (52.6%)

Nowata County

Zip code: 74048

Median resident age: 40.0 years
Median household income: $23,835 (year 2000)
Median house value: $38,000 (year 2000)

Posted by: James M. on September 21, 2006 at 9:51 PM | PERMALINK

As an aside, a distant in-law-relative was hired as a greeter at a CA Wal-Mart: a Filipino on a tourist visa, a man of dour temperment, and of limited english skills. The relatives were happy to have him out of the house for a few hours.

Posted by: Possum on September 21, 2006 at 9:55 PM | PERMALINK

Did someone just link to LaRouche?

Posted by: gq on September 21, 2006 at 9:56 PM | PERMALINK

Those in this thread complaining about offshoring (issue #2) are attacking the wrong company - Sam Walton banged his head against the wall for several years trying to promote a "buy American" ethos, but even rural patriotic folks would not go for it.
As for Kevin's tired apologia for the dinosaur labor union model, I can only repeat what I've said before when he regurgitates this line. First, Walmart has something like 77 applicants for every position when they open a new store. Second, when people try to visualize labor union officials and don't come up with Tony Soprano's face maybe you'll be getting somewhere. Until then I'd like you to run some salaries, perks and spending priotities of said union bosses past even this blog's readership and I think the reason Walmart employees are not anxious to part with their dues money will become obvious.

Posted by: minion of rove on September 21, 2006 at 9:57 PM | PERMALINK

Then, with the predictablility of a Greek drama, within 2 years after WM had decimated virtually every hardware store and general merchandiser in town it announced the closure of the Nowata store, with the nearest WM being a Superstore over 30 miles away!

So..... in your world, Wal Mart would never close one of its stores? That's a very curious attitude to have. And what's to stop a new merchant from picking up shop in Nowata?

Posted by: American Hawk on September 21, 2006 at 9:57 PM | PERMALINK

American Hawk, nobody, other than you, has suggested that we pay everybody the same wage. So, if you want to argue with yourself, go ahead.

Secondly, all monopolies started out much smaller, so your second point is pretty much nonsensical, also.

As for your third point that it can't be a monopoly because other retailers still exist, you might want to ask yourself, if that is the case, how is WalMart able to get suppliers to give it products at below cost? You might also want to ask yourself, how many of these companies you named are really competing head-to-head with WalMart for the same market niche?

Has it ever occurred to you that you should actually know something about the things you comment on? There are libraries full of books, and websites full of information that you could learn a lot from, if you took the time.

Posted by: k on September 21, 2006 at 9:58 PM | PERMALINK

Well, this is corporate socialism without the "to each according to his needs." It's what socialism was trying to address, precisely. Of course, corporations could be made to meet the needs of their workers if workers refused to accept less. If those who work for Wal-Mart remember to vote for Democrats in November, then maybe they may begin to work on their own terms.

Posted by: NealB on September 21, 2006 at 9:59 PM | PERMALINK

American Hawk, nobody, other than you, has suggested that we pay everybody the same wage. So, if you want to argue with yourself, go ahead.

People are saying that wal mart eployees should be paid more, because people aren't just a commodity. If that's true, then everybody has the same human value, and should be paid the same.

Or, if I'm right, labor should be paid what it's worth. Which is it?

Secondly, all monopolies started out much smaller, so your second point is pretty much nonsensical, also.

Like a drunk tripping over his own vomit, you're completely missing the point. If wal mart can go from small company to king of the hill from nothing, why can't another new company? If somebody can create a better store than wal mart, it will prosper and overtake it.

As for your third point that it can't be a monopoly because other retailers still exist, you might want to ask yourself, if that is the case, how is WalMart able to get suppliers to give it products at below cost? You might also want to ask yourself, how many of these companies you named are really competing head-to-head with WalMart for the same market niche?

Suppliers give wal mart merchandise below cost? I'm sure you have a source for that, right? Right??? And yes, Target and K-Mart have basically the same inventory as Wal Mart. How are they not directly competing?

Has it ever occurred to you that you should actually know something about the things you comment on? There are libraries full of books, and websites full of information that you could learn a lot from, if you took the time.

I've read a lot. I don't hate big corporations reflexively. Which is more than I can say for some.

Posted by: American Hawk on September 21, 2006 at 10:01 PM | PERMALINK

Store closings are part of an overal strategy to eliminate other retailers, even when they represent an insignificant portion of market share, so small as to be insignificant to WM.

Posted by: Global Citizen on September 21, 2006 at 10:02 PM | PERMALINK

It's too late to unionize Walmart and drive up their costs, because their competition is more and more the web. And, the web is more and more international. E.g., I buy a certain drug over the internet from India. I don't know if these sales are supposed to be allowed, but I save a lot of money. Walmart has to compete against Indian drug stores, not to mention a zillion discounters who sell an ever wider variety of products.

The internet revolution will continue to change retailing as we know it.

Posted by: ex-liberal on September 21, 2006 at 10:03 PM | PERMALINK

Poverty-level wages and benefits, big problem. That's the wrong way to keep prices low.

Labor costs are the most expensive costs in almost every product or service. Until Walmart figures out how to replace its workers with industrial robots, low wages and benefits are the only way for them to keep their prices low.

Most people who buy from Walmart are not upper-class wage earners. They are mostly poor and lower middle class. If you raise the wages and benefits of Walmart employees, you reduce the purchasing power of all their poor and non-rich customers. that might be the correct thing to do, but do pay attention who is paying for your ideals and clear conscience.

Posted by: republicrat on September 21, 2006 at 10:05 PM | PERMALINK

Sadly NealB, I think that Lieberman, Biden, et. al. (including Reid), have shown us with the Bankruptcy Bill that there is no way to expect Dems to counter Wal*MART meaningfully.

They may, just may, take on the issue of fair-trade, and that might help some.

At this point, I tend to think that our best bet is in the Revolution of '08 when we overthrow Bush's when he takes his third term and reform the Government by repealing the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad and amending the 14th amendment to specifically exclude corporations.

Posted by: jerry on September 21, 2006 at 10:11 PM | PERMALINK

Cal Gal, good point, but in this case, since WalMart is both a buyer and a seller which uses its market share to stifle competition and blackmail suppliers, they are really two sides of the same coin.

I don't think WalMart should be vilified, though. Like most companies which are amoral, they do whatever they can get away with. It is actually our responsibility as citizens to set the limits. For this reason, I find people like American Hawk who don't believe that any limits should be set, morally reprehensible.

Posted by: k on September 21, 2006 at 10:12 PM | PERMALINK

Anecdotal story: My uncle, in semi-retirement in his late 50s, took a job stocking shelves at the local Wal-Mart. First day on the job, my uncle had just clocked out, when the manager came up to him and said a truck arrived and he needed it to be unloaded right away. My uncle did as he was told and worked for 45 minutes more, off the clock. He wouldn't have thought much of it, until it happened on the second, third and every day thereafter. He quit after six months.

Coercing people to to work off the clock is morally wrong, regardless of your politics.

Posted by: A Cynic's Cynic on September 21, 2006 at 10:18 PM | PERMALINK

It is ont only #3 that causes problems. In this giant drug sale, for example, will Plan B be included? WalMart already censors CDs. What about pharmaceuticals?

Posted by: focus on September 21, 2006 at 10:26 PM | PERMALINK

Global Citizen:

So is this all about living wages and benefits, or is it about social fabric? A small town with no major businesses at all except farming has a pretty strong social fabric, but it's kind of tough to get a good job.

Posted by: harry on September 21, 2006 at 10:30 PM | PERMALINK

Cynic's Cynic,

Your uncle passed up a great opportunity to sue for punitive damages, but of course no trial lawyer would take a case like that.

Posted by: minion of rove on September 21, 2006 at 10:34 PM | PERMALINK

Coercing people to to work off the clock is morally wrong, regardless of your politics.

I know plenty of people who work unpaid overtime regularly. I have done it. Nurses and doctors do it. University faculty, including graduate students, do it. Farmers and builders do it. People in the military do it. Almost everybody does it. Police and firemen do it even when they are unionized. It's basically a way of life for independent entrepreneurs.

Posted by: republicrat on September 21, 2006 at 10:36 PM | PERMALINK

walmart is still a canker sore on the society's penis. Anyone think they might be giving away drugs cause you need to be numb just to work there? If you buy at walmart, someday your kids will be working at walmart.

Posted by: American Idiot on September 21, 2006 at 10:37 PM | PERMALINK

Been to a dollar store lately? They beat WalMart prices by bunches on what they got to sell. Been to a super WalMart? They got it all under one roof and you don't need bother checking what price you actually pay at the register like many big retailers and all mom and pop operations. Got a super WM coming to my neighborhood real soon. Bring it on!

Posted by: BGone on September 21, 2006 at 10:38 PM | PERMALINK

ex-liberal: It's too late to unionize Walmart and drive up their costs, because their competition is more and more the web. And, the web is more and more international.

I am glad that you made that point. I wonder if the people here calling for higher wages at Walmart actually buy more at Walmart than they buy on the web.

Posted by: republicrat on September 21, 2006 at 10:40 PM | PERMALINK
Labor costs are the most expensive costs in almost every product or service. republicrat at 10:05 PM
The following perspective is excerpted from a speech given by Federal Reserve Governor Ben S. Bernanke at the meetings of the American Economic Association in San Diego, CA on January 4, 2004. In it he discusses how unit labor costs affect the costs of production and therefore final prices for consumers:

"Labor costs account for the lion's share, about two-thirds, of the cost of producing goods and services. The labor cost of producing a unit of output depends, first, on the dollar cost per hour (including wages and benefits) of employing a worker and, second, on the quantity of output that each worker produces per hour. When the cost per hour of employing a worker rises more quickly than the worker's hourly productivity--the historically normal situation--then the dollar labor cost of producing each unit of output, the so-called unit labor cost, tends to rise. Recently, however, labor productivity has grown even more quickly than the costs of employing workers, with the result that unit labor costs have declined in each of the past three years. Indeed, in the second and third quarters of 2003, unit labor costs in the nonfarm business sector are currently estimated to have declined by a remarkable 3.2 and 5.8 percent, respectively, at annual rates. Again, because labor costs are such a large part of overall costs, and because capital costs have also been moderate, the business sector has enjoyed a net decline in total production costs."

http://www.federalreserve.gov/boarddocs/speeches/2004/20040104/default.htm

Lower wages = lower production costs = higher profits = bigger bonuses and salaries to management.

Posted by: Mike on September 21, 2006 at 10:41 PM | PERMALINK

harry, i just want all of the facets of the issue considered. social fabric is most definitely important. have you ever seen a boarded up town square? the entire community sinks into poverty and the social structure changes draswtically in a short period of time.

why does it have to be an either/or proposition? why can't we look at the big picture?

Posted by: Global Citizen on September 21, 2006 at 10:50 PM | PERMALINK

Wal Mart is nothing but a huge, easily identifiable example of what is going wrong in 'industry' across the boards. The climate is completely amoral. Let the CEO run off with as much as he (or she) can get away with, undertake any practice that will enable 'profits' and the people issues be damned. This is what the world is becoming, and if that is the kind of world you want to live in, you're well on the way.

As for its products and 'low prices'? Bah.

I'm on a pension, and I can tell you this: I cannot afford to buy from Wal Mart. The goods are so cheaply made, they just do not last. You end up buying a replacement every time you turn around, and before you know it, you've forked out way more than the cost of a 'quality' product for all the repeat purchases of cheap Wal Mart goods.

Only problem is, with US manufacturers drying up at the rate they are, where can you even FIND a 'quality' product any longer? Make things cheap, throw them out a lot more often. That's the way things are going. Frankly, it's disgusting. There's no honor in business any longer. Corporations have no pride in their name being on a product. This is what smaller business brought to the table - honor. Everything today is $$$ and that's it.

Not my kind of a world, kids.

Posted by: Otolaryx on September 21, 2006 at 10:52 PM | PERMALINK

Only the farmers have a degree of insulation from WM's tentacles. Those who live in town lose value on their homes when Main Street dies.

Posted by: Global Citizen on September 21, 2006 at 10:52 PM | PERMALINK

I'm on a pension, and I can tell you this: I cannot afford to buy from Wal Mart.

This is a variation on the lesson in thrift every young Jewish girl learned from her Bubbe: "You can't afford to buy it twice."

Posted by: Global Citizen on September 21, 2006 at 10:56 PM | PERMALINK

I have to go study in a few, so this will be my last comment for a while. I just think that there are sides of this issue that are not apparent to urbanites who have no rural connection. There are social concerns that have far-reaching impact on communities when Wal-Mart moves into a rural marketplace. These effects are not so noticable in the city where options and alternatives manage to survive the onslaught. These issues as they impact rural America should be considered when the issue of Wal-Mart is discussed.

Posted by: Global Citizen on September 21, 2006 at 11:01 PM | PERMALINK

gotta go w/kevin on this one. my wife loves wal-mart, but only inasmuch as there's one close to where we already are going, that is, she won't drive miles out of her way to patronize them.

i like the low prices too, but i wonder just how could wal-mart keep those low prices if they had to actually pay a decent livable wage, plus maybe some benefits so their employees don't have to be on the medicare/medical roles, causing the taxpayers of this country to subsidize wal-mart's profit-making business model?

Posted by: skippy on September 21, 2006 at 11:04 PM | PERMALINK

My uncle did as he was told and worked for 45 minutes more, off the clock. He wouldn't have thought much of it, until it happened on the second, third and every day thereafter. He quit after six months.

What this poor fellow should have done was negotiate in good faith with his manager and arrive at a compromise that solved BOTH of their problems. I did not have the opportunity to work at Wal-Mart, but I can definitely say that I like the way they do business.

Over cocktails, two men can settle a whole host of issues and problems. Not the least of which are bringing a workable solution to the table and then executing the plan nicely. The solution? Both of them become managers. That's step one. Step two is to go find a woman to do the work for half of what a man would get!

And you wonder why my laughter drowns out your cries.

Posted by: Norman Rogers on September 21, 2006 at 11:06 PM | PERMALINK

I hope you still see this, Global Citizen.

Social fabric is definitely a major part of life in a smaller town. My parents moved from the city to a small town for just that, and I was better off for it being raised there. But when I got older, finding a job was not easy. The main business in the town, a food company, moved out, and things were tough. If some other large businesses (not giant corporations, but definitely not mom and pop) hadn't moved in, the town might have died off. So far, no WalMart though.

Most people in my parents' town, including my parents, now drive thirty miles to the city to shop in large stores to get the choices and prices. WalMart or no WalMart, local merchants aren't doing very well anyway, and if there was a WalMart in town, or some other big store, at least the employees would be from the town, and the tax money would be there.

I still think it's a nicer place to live than the middle of the city, and the people are still great, but friendliness doesn't get the bills paid. In another 20 years, it will probably be a bedroom community for the city.

Posted by: harry on September 21, 2006 at 11:14 PM | PERMALINK

Step two is to go find a woman

Well, you really don't have to tell everyone here you failed at that one, Normie. No wonder you are so uptight.

Posted by: Press Corpse on September 21, 2006 at 11:27 PM | PERMALINK

i thought preventing workers from unionizing was, you know, illegal?

Posted by: robert on September 21, 2006 at 11:31 PM | PERMALINK

I wonder what they'll be paying their pharmacy employees compared with the independents and other chains.

Posted by: Linus on September 21, 2006 at 11:53 PM | PERMALINK

My grandparents operated a kosher farm a hundred and twenty miles from Kansas City, long before Eisenhower led that convoy across the US and got so frustrated he dreamed up the Interstate Highway System, making it possible to drive from New York to L.A. and not see a god-damned thing - but i digress...

Communities go through a life cycle, and we don't have the option of running away to M.Night Shamalan's "Village" and pretending there is no outside world. To that end, change is inevitable, and must be planned for. The communities in rural Missouri where I have roots all did a pretty good job of meeting the changes until the Wal-Marts started moving in. But when Wal-Mart moved in, during the "farm crisis" of the mid-80's, the change was exponential, and they couldn't keep up.

The only jobs are Wal Mart and prison guard. Methamphetamine has shredded the social fabric. Wal Mart didn't sell the tweak, but they contributed to the social forces in the community that encouraged it's use.

A girl my younger sister went to high school with was working at the Wal Mart in one town, and she lived 32 miles away. She had an older car and liability insurance and hit a deer on her way home from work one night. She could not replace her car, so she lost her job. In the town with no options, she went to the welfare office and got what assistance she could, and kept her ears open for a job in town. As the cycle continued, she started to drink and ended up in the bar every afternoon. Soon she was doing tweak with the men who bought her drinks. Her life quickly went to shit, out of boredom and hopelessness. Her kids ended up in the system, and she is in prison for allowing them to cook meth in her house. She is 37 years old and looks 57.

No, I am not hysterical and blaming wal-mart for her fucked up life. She made her choices, and she has to live with them. I just wish a sociologist would comment on this. I just know the story, but extrapolating and interpolating social data is not my realm of expertise, so maybe I shouldn't even bring it up?

Anyway, I believe there was a social scientist up thread. Perhaps he or she will comment.

(wow that was wild lightning - I may lose power.)

Posted by: Global Citizen on September 22, 2006 at 12:02 AM | PERMALINK

THe average annual income of Walmart's customers is $35kpa. Kevin wants to institute transfer payments from those people to Walmart's employees.

Kevin is "progressive". He is also stupid. But I repeat myself.

Posted by: am on September 22, 2006 at 12:04 AM | PERMALINK

想要获得翻译公司的翻译服务?还是要进入一家上海翻译公司?英语翻译爱好者的最大希望就是能够进入一家英语翻译公司或者是日语翻译公司,不过能够进入德语翻译公司那就更好了。什么?你说法语翻译公司或者是俄语翻译公司?那是不敢想了。特别是英语同声翻译公司担任同声翻译的工作。虽然在不少翻译论坛上询问了译友,他们也没有太好的学习翻译的建议,但是大家都说不要使用机器在线翻译的功能。

Posted by: 上海翻译公司 on September 22, 2006 at 12:06 AM | PERMALINK

Yes, 上海翻译公司, we realize Wal*MART been velly velly good for you.

Posted by: jerry on September 22, 2006 at 12:22 AM | PERMALINK

Kevin Drum, as usual, is full of hot air. After the WalMart ImmigrationRaid in 2003, Queen Bea, aka NancyPelosi called them "terrorizing raids". And, she said that in Mexico.

In other words, speaking in our cheap labor supplier, she showed her opposition to attempts - no matter how meretricious - to prevent the importation of cheap labor.

The Democrats are basically just corrupt whiners: they want to support something and they also want to complain about it.

Posted by: TLB on September 22, 2006 at 12:24 AM | PERMALINK

For more about what is wrong with issue #2 (monopsony) see this excellent article in Harper's Magazine.

Posted by: Steven Rumbalski on September 22, 2006 at 12:33 AM | PERMALINK

In response to my post:
"Then, with the predictablility of a Greek drama, within 2 years after WM had decimated virtually every hardware store and general merchandiser in town it announced the closure of the Nowata store, with the nearest WM being a Superstore over 30 miles away!"

American Hawk wrote:

"So..... in your world, Wal Mart would never close one of its stores? That's a very curious attitude to have. And what's to stop a new merchant from picking up shop in Nowata?"

Posted by: American Hawk on September 21, 2006 at 9:57 PM | PERMALINK "


OK Hawk, you are in my House on this issue so don't mess with me! Haha. But actually, in a general sense what you say is true. What makes it untrue in this case is the following:

1. The store closing was planned from the start. In its old days Wally World might have been content to own a 4000 person market, but it is now much too big for that. No doubt from the beginning they had planned a larger store that would consolidate the smaller markets. If you think I am making this up check out any of the WM literature.

2. It is somehow immoral: WM knows that one of their stores will radically alter the retail landscape in a small town. Remember, WM does not strive to compete but rather to dominate. Aside from the mini-tragedy of all the mom & pops (thought conservatives used to love them?) being forced out of business, think of the inconvenience to elderly shoppers whos only option is now miles away. I don't know, but to me it seems immoral to 'take over' a town and then abandon it.

3. A general merchandiser selling standard products would be nuts to open a store within one of WM's circles. The 'spill effect' documented by an Iowan Univ Prof shows that WM sucks in retail dollars from all the surrounding market. One of my WM's most charming tactics is to pit desperate local communities against each other to gain all kinds of abatements and tax breaks. People WILL get in their cars and drive 45 minutes to save 50 cents on a hammer.

James

Posted by: James M. on September 22, 2006 at 12:48 AM | PERMALINK

Don't care.

Pharmacies about about the drugs that you need now, or need special to stay or become healthy - not about the few that they can mass produce.

Wal-Mart is using this like they normally do in small towns: Kill the competition by taking away their profits...

...And then the local people cannot get access to the the broad swath of medications that Wal-Mart does not carry via 'moral clauses' or because they only do repackaging.

I bet you never needed a formulization pharmacy before, eh?

Posted by: Crissa on September 22, 2006 at 12:49 AM | PERMALINK

Spot on, Jerry. You nailed it.
Santa Clara Co vs SPRR, and the 14th amendment.

The Free Market is a force of nature. Like any force of nature, if Man does not do something to try to control or mitigate it, as mankind has done since the dawn of civilization when ancient Sumerians built dikes and channels to control floodwaters on the Tigris and Euphrates - if Man does not control it, it will destroy Man. Free Market Fundamentalists are nothing more than Anarchists. With power.

It's too late to unionize Walmart and drive up their costs, because their competition is more and more the web. And, the web is more and more international. E.g., I buy a certain drug over the internet from India. I don't know if these sales are supposed to be allowed,
Posted by: ex-liberal on September 21, 2006 at 10:03 PM | PERMALINK

ex-Liberal, apparently, also ex-intelligent. No, the sales from India are NOT legal, if they were, they'd be half the cost, and Wal Mart would be matching them.

As it stands today, with America's system, Globalization's benefits are avaialable to corporations, who can freely import and export - but not to Consumers, who are legally bound to the market segment that the Lobbyists have designed into the system.

It's Tyranny, and it's NOT Capitalism.

Posted by: osama_been_forgotten on September 22, 2006 at 1:07 AM | PERMALINK

To have a store, you need to sell X items, total.

Now, some products sell more often (staples) and some sell less often (staplers) and a few a very rarely sold, but still needed (staple sharks).

WalMart moves in, sells staples cheaper. Suddenly, the other stores can't match that price. They're selling staplers, and a few sharks, but it hurts.

Wal Mart sells staplers on sale, taking a loss to eat the competition, the other store closes.

Now there's nowhere to buy staple sharks.

This is a silly, but true comparison. Now even worse: Wal-Mart is closing otherwise profitable stores in communities, basically killing the community.

It's very difficult to move in to fill the void - because you have to sell only staplers, and the few staple sharks, 'cause you aren't going to get a portion of the staple market. And how is a small company going to compete with the monopoly, which is able to force suppliers to sell at a higher price to other vendors?

Posted by: Crissa on September 22, 2006 at 1:15 AM | PERMALINK

James M.

Moral, immoral?

Careful. American Hawk's head might explode.

Posted by: notthere on September 22, 2006 at 1:47 AM | PERMALINK

An astounding number of Walmarts have been operating successfully without turning their communities into meth ghettos. If, as you say, the only other jobs available in your area are as prison guards, I can deduce that maybe, just maybe, the problem isn't the WalMart in your community.

Posted by: harry on September 22, 2006 at 1:48 AM | PERMALINK

I no longer live there, but I own land up there. The area had problems before, yes. But they have been exacerbated by the presence of Wal Mart.

Posted by: Global Citizen on September 22, 2006 at 1:59 AM | PERMALINK

Why the fuck do ya think Jobs had to pony up with Disney.

The smack down I can't wait to see is California (Silicon Valley, Internet) vs. WalMart.

Fuck WalMart and their DVD/music sales. Things change, and networked economies are the future of America's greatness. WalMart trying to threaten studios about moving online, etc are anti-growth and basic 19th century marketeeting. (Remember the 88 cent iTunes killer they launched...nice, nuanced reaction, Arkansas mafia).

Thank God that price isn't everything to everybody...yet.

Posted by: The Hague on September 22, 2006 at 5:23 AM | PERMALINK

osama_been_forgotten wrote: No, the sales from India are NOT legal, if they were, they'd be half the cost, and Wal Mart would be matching them.

I don't understand your point. Regardless of legality, more and more Americans are buying prescription drugs from overseas, at a fraction of the cost here. American stores have to compete with these foreign sources, even if they're illegal.

Posted by: ex-liberal on September 22, 2006 at 5:34 AM | PERMALINK

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Posted by: xx on September 22, 2006 at 6:18 AM | PERMALINK

Err, some of the comments above, thinking that this is going to bash Big Pharma in some way. Umm, you do know what generic drugs are? The ones out of patent protection that anyone can make? The ones that are not, in fact, made by Big Pharma?
As to Kevin's desire that prices should rise so that wages should. Well, why not raise all prices in every store? Why stop with one? In fact, why not raise the wholesale prices as well? So that factory and transport workers get more pay? Why be such a piker and insist on only one company doing it?
Why, we could all become rich if everything went up in price!

Posted by: failingeconomist on September 22, 2006 at 9:10 AM | PERMALINK

American Hawk:

If wal mart can go from small company to king of the hill from nothing, why can't another new company?

Exactly! Just as the U.S. went from a few boatloads of people to the world's only super-power. To do it, all we had to do was kill off the existing competitors for the available land and then enslave a large portion of the population. Wal-Mart is following the American Way!

Oh, my mistake. Everybody should get $20 an hour. Let's not even assess how valuable their labor is!!!

Exactly again! Your sarcasm to self-styled moralists is warranted because where would this country be if its settlers had paid the Indians what their land was worth and their slaves $20 an hour?

And just like another company can do what Wal-Mart did, so too can another country do what the U.S. did. They just have to understand that we will kill them if they try!

If they succeed, more power to 'em!

Yours in Christ.

Posted by: moralschmoral on September 22, 2006 at 9:26 AM | PERMALINK

Point #2 and point #3 are the same point.

Workers are suppliers of labor. Wal-Mart uses all its suppliers against each other, whether its for Shampoo or putting that Shampoo on the shelf. It has no desire for it's suppliers to have any increased market power.

For the companies that supply Wal-Mart with goods, that basic strategy means they always have multiple vendors for a particular product type, and they are always willing to drop one until they can't take the pain and cave in; for companies it means they can underpay and burn out their workers because another will come along.

Wal-Mart would still have a lot of power over unionized Wal-Mart workers, but the imbalance would be less.

The other thing with #2 and #3 being the same point is that #2 forces its suppliers to go as cheaply as possible in their manufacturing, heading to China and being as aggressive as Wal-Mart at union busting.

Point #1 actually represents a true increase in efficiency for the economy, and increases the size of the overall pie for all. Point #2 and #3 are all about distribution - not how much money do we all get, but who gets the money that we have.

Posted by: Fides on September 22, 2006 at 9:29 AM | PERMALINK

Why, we could all become rich if everything went up in price!

We could all be richer if the price of the ruling class came down.

Posted by: diduno on September 22, 2006 at 9:45 AM | PERMALINK

ex-liberal:

I don't understand your point.

He made his point in the paragraph following the one you quoted. Did you quit reading before you got to it?

Posted by: somepeople on September 22, 2006 at 9:51 AM | PERMALINK

When Wal-Mart closes a store, they will not allow any competitor of any of their products to either lease or buy the old store. So a town is left with an empty big box and locked parking lot at the edge of town.

Kudos to Beaverton, Oregon for denying permits for a big box W-M at Cedar Hills.

Of course, the small community of Cornelius, further west, caved. Cities with plenty of money and balls resists, smaller, cash strapped ones cave.

Posted by: thethirdPaul on September 22, 2006 at 11:03 AM | PERMALINK

This one really made me laugh: because Wal-Mart is so big that their low wages have a depressing effect on all service sector wages

All? ALL?! So my service sector wage as a lawyer is lower because of Wal-Mart? My wifes wage as a PhD biochemist is lower because of Wal-Mart?

The sloppy language used suggests the sloppy thinking of the author. The author really means to say Wal-Mart is so big it depresses wages for unskilled, largely temporary workers like Wal-Marts hourly work force. But shouldnt that enormous claim be backed up by, oh, a @#$%# empirical data set?!

Simple question, really: Is Wal-Mart really paying less than Joes Inefficient Corner Grocery (and all the other comparable places where such workers work) in the labor markets? I suspect not, but I don't know. Oh, and anyone including unskilled civil servants and unionized workers in their data set should acknowledge that such people are *not* paid market wages--they are protected from the market by their contracts.

Posted by: low IQ on September 22, 2006 at 12:15 PM | PERMALINK

Walmart built a superstore on the edge of the town where I'm from, and the old building sat for about a year before some sort of dollar store and a local community college moved in. So I'm not sure if what you say about not selling the old store to someone who carries the same items is true. The dollar store has lots of things Walmart carries.

Posted by: Starfox5253 on September 22, 2006 at 12:26 PM | PERMALINK

Point #2 and point #3 are not the same point. True, there is a point at which hardball negotiation becomes bullying, and there are knock-on effects to consider (how are they treating those Chinese workers?), but #2 is bargaining hard with companies while #3 is a refusal to bargain with relatively powerless individuals. Ethical yet functional capitalism requires making that distinction.

Posted by: eisenhower democrat on September 22, 2006 at 1:02 PM | PERMALINK

Wow, Kevin, you really thought that most of the Left has no problem with #2? Almost every other complaint I read from liberals criticizing WalMart is a complaint that WalMart's "heavy-handed" way of dealing with suppliers has forced the out-sourcing of production to Chinese labor camps.

And some even have a problem of sorts with #1 since I have often seen writers dismiss WalMart's success/efficiency as due to the subsidization of roads, oil, education etc. by the government, but without paying enough taxes.

And, really, how long do you think it would take, if WalMart became the country's biggest pharmacy due to the lower cost of the drugs it resells, for the critics to start to lament about all of the mom and pop (Walgreens and CVS) pharmacies being put out of business.

Posted by: Yancey Ward on September 22, 2006 at 1:57 PM | PERMALINK

I quit going to Walmart a few years ago. When I was in the Midwest (Columbia, MO) and on a grad student budget, I did some of my shopping there, mostly for things that were available elsewhere in town but more expensive. I mean the *exact same items,* not the lower-quality items typical of Walmart.

The quality, or lack thereof, of almost everything they sell is what made me leave. I'd rather have *less* stuff and not need to replace it all the time. Not to mention that the stores are generally filthy and cluttered, the "help" unhelpful, etc.

But I have the choice, because I live in a major metropolitan area, to go elsewhere. Someone in a small town does not.

I am also seeing a general decline in the quality of goods overall, as if retailers realize that in order to compete with Walmart, they have to adopt Walmart's strategies. An example: women's clothing. WalMart and other low-end retailers started the "trend" of not finishing hems a few years ago, because finishing hems is difficult and expensive. Now I am finding unfinished hems even in items that cost four times what Walmart charges. Sorry, but unfinished hems are schlubby.

(I have also read that Walmart *raises* their prices once they have forced out a lot of the competition. Once they're the only game in town, they're not so nice.)

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