Kruse Kronicle

Saint Wal-Mart? well, let’s look at the record

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mwkruse
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Vancouver Sun: Saint Wal-Mart? well, let's look at the record

We might also think about the Nobel Peace Prize when we consider the retail giant's contributions to society.

Wal-Mart deserves the 2008 Nobel Peace Prize. And the Vatican may want to beatify the world's largest retailer.

CONSIDER THAT WAL-MART:

– Provides employment to 1.9 million people; the best defence against poverty is a job.

– Creates thousands of job opportunities for people in developing countries like China and India; this keeps hunger at bay in many households.

– Doles out hundreds of millions of dollars each year in dividends that help fund the retirement of millions of people; the company had sales in excess of $348 billion and a net profit of $11.3 billion in 2007.

– Sells food, clothing and other necessities to Canadians, Americans and others at prices that are 15 to 25 per cent below what other supermarkets charge; this helps millions of low-income families stretch their dollars.

– Pushes the inflation rate down and helps keep interest rates low; this comes in handy for millions of families when borrowing to buy a house or household appliances.

– Disburses $415 million in cash and in-kind merchandise annually to 100,000 charitable organizations around the world.

– Pursues environmental sustainability; sells more organic produce than most retailers; works with the Clinton Foundation to lower prices on sustainable technologies such as energy-efficient lighting and building materials; has opened the first in a series of high-efficiency stores that will use 20 per cent less energy than a typical Wal-Mart. And its proposed Vancouver store is more environmentally friendly than any building in the Lower Mainland.

All of this was made possible by Wal-Mart's innovations….

Related: Is Wal-Mart Good for the American Working Class? by Economist Jason Furman in Slate. Furman quoting Economist Ken Rogoff:

[T]ogether with a few sister "big box" stores (Target, Best Buy, and Home Depot), Wal-Mart accounts for roughly 50% of America's much vaunted productivity growth edge over Europe during the last decade. Fifty percent! Similar advances in wholesaling supply chains account for another 25%! The notion that Americans have gotten better at everything while other rich countries have stood still is thus wildly misleading. The US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous.

Comments

7 responses to “Saint Wal-Mart? well, let’s look at the record”

  1. Peter Avatar
    Peter

    I’m deeply sympathetic to the view of Wal-Mart in this post. However, when I put forth this view I get push back about Wal-Marts low wages and the way it shuts out Mom and Pop shops.
    Any thoughts?

    Reply
  2. Michael W. Kruse Avatar
    Michael W. Kruse

    Peter my short answer is that on the balance, Wal-Mart does more good than harm.
    The longer answer is that in any economic scenario there are winners and losers, and there are trade-offs. Furman writes:
    “Maybe you’re ready to grant my point that Wal-Mart’s low prices are great for the 298 million Americans who don’t work there. But what about the 1.3 million Americans who do work for Wal-Mart? Here the evidence is murkier, in part because Wal-Mart refuses to release the data on its wages and benefits that could clear up a number of questions. What we do know is that its wages and benefits are about average for the retail sector—which is to say, not so great. It is harder to quantify other aspects of the job, like the quality of the work, the number of breaks, the prospects for advancement.”
    Wal-Mart destroys some jobs but appears to create about two jobs for every job it eliminates. The wages and benefits are not that starkly different from what one makes at a Mom and Pop shop. And one has to ask what is sacred about Mom and Pop shops. Think back to the introduction Montgomery Wards catalogs 125 years ago that took advantage of new infrastructure technologies. Each retail innovation destroys some jobs but on balance creates and new jobs and reduces prices. In actuality, as the article points out, a great many local businesses actually do thrive upon the arrival of Wal-Mart by specializing in either products or services offered.
    The two ways we get ahead economically are by either making more money or by paying less for goods and services. Wal-Mart excels in the later like few businesses ever have in history. It is predominantly comes from labor unions and anti-corporation activists. Their narrative is that Wal-Mart exploits workers so middle class Americans can get their consumer goods cheap. But Wal-Mart keeps food, clothing, and other basic necessities cheap which are a far larger portion of the poor’s budget than it is for middle and upper class folks. Wal-Mart has a disproportionate benefit for the poor and low-income and it is not generally low-income people that you hear complaining about Wal-Mart.
    Wal-Mart is hardly saintly and has had to address labor violations it has had to address but I don’t think the anti-Wal-Mart folks’ arguments bear up well under scrutiny.

    Reply
  3. Bruce Gerencser Avatar
    Bruce Gerencser

    Well you know what they say about statistics 🙂
    Yes Wal-Mart provides jobs. Low wage jobs that no one can support a family with.
    Wal-mart dumps thousands of people onto the Medicaid rolls because of the wages they pay.States end up having to pay for medical costs.
    The jobs in other countries also are low paying and even have a greater consequence. People from farming backgrounds, where they were able to meet their basic needs through the farm, take factory jobs by which they have to buy everything. They are actually LESS economically secure than before.
    Yes, Wal-mart donates a lot of money. Having a business background myself……..donating makes TAX sense. Let’s see how altruistic Wal-Mart is if there was no tax incentive.
    Wal-Mart hurts small towns and destroys local enconomies.
    They are ruthless in their dealings with those they buy goods from. Always demanding this and that. Always demanding lower wholesale cost. Demanding RFID tags.
    IMO Wal-mart is akin to the Bell System of years ago. They act with impunity and most government leaders roll over whenever Wal-mart commands them to.
    As you can see……….I think we disagree on this one 🙂
    Bruce

    Reply
  4. Michael W. Kruse Avatar
    Michael W. Kruse

    Come on Bruce. Tell us what you really think. 🙂
    I don’t think every job needs to pay a wage a family can live on. Not everyone (teenagers, college students, first time workers, retirees looking for extra income) needs that kind of income. I don’t agree that Wal-Mart dumps thousands on Medicaid. It creates many jobs for low-skilled worker and gets people on the bottom rungs of the economic ladder. Once on that ladder, if people don’t get the wage they want, they take their experience, possibly get some additional education, and seek out a higher paying job elsewhere.
    Again, I’m not saying there are no dislocations or negative consequences, and I’m not saying Wal-Mart is saintly. But the radically lower prices Wal-Mart achieves for millions of low-income people far off-sets whatever wage issues may be at stake. Economic analysis reveals this from economists across the spectrum. (BTW, Furman in the linked article is a strong Democrat. This isn’t a partisan perspective.)
    In the rush to crucify large corporations, I think a lot of justice folks don’t fully examine the consequences.
    “Wal-Mart hurts small towns and destroys local enconomies.”
    A common asertion. I don’t think the evidence supports it. Some businesses go under while others thrive and new ones come into the market.
    As to disagreeing, you aren’t the only reader that disagrees here at Kruse Kronicle. 🙂 Glad you are here.

    Reply
  5. Michael W. Kruse Avatar
    Michael W. Kruse

    BTW, I also meant to add my favorite retort about statistics. It is true that it is easy to lie with statistics. But it is even easier to lie without them. 🙂
    How do we know how many people were dumped of medicaid roles or that the net impact on a local economy was bad without statistics? It cuts both ways.

    Reply
  6. Bruce Gerencser Avatar
    Bruce Gerencser

    Of course it works both ways but my way is always right 🙂
    The Medicaid stats come from the number of employees that are on Medicaid as opposed to being on Wal-Mart’s less than stellar, costly, group plan.
    Of course my observations come from my own experience. Rural community, rural county. Long standing businesses close when a Wal-Mart opens up. Of course the unanswered question is…………did Wal-Mart just speed up the inevitable? Perhaps.
    Sometimes I feel our rural communities are right on the edge, ready to slip over the side. I tend to be a local economy. local business consumer but I do not necessarily hate the mega-corporations.
    I would have less of a beef IF local businesses got the same breaks Wal-Mart does. When a Wal-Mart comes to town they get all kinds of incentives. A level playing field, with government dishing out zero incentives is what I would like to see.
    We shop at Wal-mart. Very little, but we do shop there. Electronics, a few food items. Most of our shopping is done at a regional player, Meijers.
    I am an avid Wendell Berry reader………..perhaps that helps explain my delusions 🙂
    I always appreciate your posts. The world we live in is complex and it helps to have our sincerely held ideas challenged.
    Bruce

    Reply
  7. Michael W. Kruse Avatar
    Michael W. Kruse

    My roommate in Grad school at Kansas State University did his sociology dissertation back in 1984 on the decline of small towns. The title was something like “From Cow Chips to Microchips: The decline of small rural communities.” (The first part of the title I hope to use for a later series.) I think there are dynamics at work bigger than Wal-Mart.
    There is not question that there are big and traumatic changes working there way through society and while I think the lead to some good stuff, bad stuff happens along the way too.
    “I am an avid Wendell Berry reader………..perhaps that helps explain my delusions :)”
    LOL. I don’t agree with some of Berry’s views (a little too negative on technology for my money) but I still like him.
    Thanks for engaging. I enjoy the conversation.

    Reply

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