Good article. Glad to finally know the reason why Ford doubled workers’ wages. Could have gone into more detail as to why Wal-Mart’s efforts are not actually hurting the economy (space reasons, I guess).

Although I agree with the logic on defending Wal-Mart, I feel like the author missed the main point.

It is true that Wal-Mart provides cheap goods to the consumer, and consumers have every right to purchase them. But those educated enough to see the impact of Wal-Mart on the local community know that it does more harm than good. That is why so many groups from all sides are fighting against Wal-Mart, some less eloquently than others. They see that the money in their community is drained out by Wal-Mart, which does not reinvest it into the community like local retailers. In the long run, this hurts the local economy.

As mom and pop stores close due to Wal-Mart, the owners’ incomes disappear, and they cannot support other local merchants, who in turn suffer and eventually fold. Instead of just looking at an individual consumer, you should be looking at communities at large. This way, you will not miss the forest for the trees. Remember, goods don’t make people happy, people do.

Asa Foss makes good points in response to William Anderson’s well written article. For how Walmart really operates, see the Boulder Daily Camera editorial, “More Subsidies, Always”:
http://www.dailycamera.com/bdc/editorials/article/0,1713,BDC_2489_3420026,00.html

Walmart blackmails the government of Lafayette, CO to get back the equivalent of two years taxes (taxes small businesses have to pay), hires illegal immigrants (who are used to living on less than natives of the US), and (unmentioned in the editorial) sells goods made in Red China, where the workers live on less than Americans and where the economy is protected. (China’s economy is predicted to grow some 9% in 2005). WA explains why Henry Ford’s decision on wages made good economic sense, but this does not prove that it was not also good citizenship. What made Ford’s decision economically possible was the fact that the US economy in those days was protected by the Republican tariff policy.

I fail to see much corelation between Walmart and Ford (mind you I grew up in an auto town in Ontario).

“…there’s a BIG sign at the Customer Service desk in my local Walmart that advertises the fact that that particular store has donated more than $65,000 in funds and goods to local charities and various humanitarian causes.”

So in other words: “Give us access to all your community’s money and we’ll distribute it to the causes that we deem appropriate.” Mmmmm. Smell the socialism…

Jonathan C. Eschler, Jr. writes, “Walmart, as a corporation, has acccess to no more money than its customers are willing to give it in exchange for the goods and services it provides.” FACT: The Lafayette CO Wal-mart pays about $1.1 million in taxes. On December 21, 2004 the companies’ representatives told the Lafayette City Council that it wanted $2.3 million in public subsidies or it would move to nearby Erie CO. “That number includes $1.6 million from the city toward the purchase of the superstore’s new site, $625,000 in stormwater improvements, and $97,000 in miscellaneous gifts,” according to the Boulder Daily Camera. Wal-Mart’s revenue in 2003 was $256 billion and its profit = $9 billion. It makes that money putting the squeeze on local government. The news is covered in local papers and the Big Media do not cover it. Nor do Internet sites like Mises and LewRockwell.

It’s sad that Wal-Mart does resort to lobbying for perks from local governments. If the governments didn’t exists, there’d be no one to lobby to, and no one but land owners/sellers from whom to request concessions.

The fact that Wal-Mart can do this however, is proof that the presence of a Wal-Mart is a boost, not a drag on the local economies. If this were not so, municipal governments would ban Wal-Mart from opening stores, not compete for them.

So I say that it is sad that Wal-Mart resorts to lobbying for perks from local governments, but it is far sadder, and far more harmful that the local governments are willing to give Wal-Mart concessions in order to lure them into investing in their communities.

Also, to be fair, one must note that the Lafayette, CO Wal-Mart location pays an AVERAGE of $1.1 million in taxes PER YEAR. Further, as time passes, and that location becomes more valuable and profitable, its yearly tax burden increases, generating more revenue for the municipality in which it is located.

Now, I’m not a Wal-Mart “worshipper”, although the existence of that company has been a benefit to me and my family. But I don’t fault them for using using their clout to their favor. I DO fault, however, the duly elected representatives who allow Wal-Mart to use that clout to the (albeit, temporary) detriment of the citizenry.

For the record – Wal-Mart’s attempts to use Eminent Domain to obtain property is deplorable. Again, in the interest of fairness, one must note that Wal-Mart is, by far, not the only corporation to try this. And again, it would not be possible in the absence of a powerful government.

Even so-called economists often consider only the “cost” associated with what comes out of wallets.

Right, Francisco, and as I added after his post: even so-called economists often consider only the “cost” associated with what comes out of wallets.

Isn’t it funny how we consumers seem eager to ignore opportunity cost whenever we discover that “Hey, this price tag is eight cents lower than that other price tag over there?”

Today’s “wise” corporations lobby for constriction of wealth to state/local governments–not as a noble libertarian protest against property taxes for areas they claim are “condemned,” but rather as a ploy (like I pointed out in an earlier opinion from another thread about Walmart) to entrench their presence and trap consumers into what those corporations would consider “the next best thing to being the only shop in town.” If they can manage their sleight-of-hand, then all the “charity” donations they make evermore will become so much socialism, because they will have become the de-facto local tax collector–a corporate entity acting as feudal lord with fiefdoms all over the map, picking and choosing which other businesses “can live” or “must die.” Their friends in government won’t interfere, either, because by then there will be no meaningful distinction between public and private finance.

I still have yet to figure out why people don’t support competition by digging a little deeper into their pocketbooks to fight the malinvested brainwashing of “convenience.” I figure that anyone who claims “Let others engender competition while I seek out the lowest price tags” is practicing socialism by not comprehending the opportunity cost of supporting corporate behemoths. I also figure that anyone who claims to be “…helping free markets by always paying the lowest price available” is kidding themselves.

Perhaps one day humans will evolve enough to no longer lie to themselves about “Bigger always meaning better because that’s what they claim on TV.”

Yeah, Lisa, I hear where you’re coming from.

I say (short answer) “No,” those people should go to the person who manages to make a halfway-decent product. I would point out, however, that such a scenario might indicate something is wrong in that marketplace–that if no one else seems capable of producing a product approaching the quality of one particular company, something fishy might be going on (e.g. patent-based IP monopoly). Usually at least one other competitor, after a while, will be able to produce something decent–unless they all err by concentrating more on pricing/marketing analyses than on product development (aka “MBA poison”).

Still, people’s tastes are people’s tastes. I once suggested to a friend that–once in a while at least–he might do well to patronize some coffee house other than Starbucks (Vancouver has about as many Starbucks locations as Seattle does), but he insisted that Starbucks is the only place that makes coffee the way he likes it–so fair enough, my friend, go to Starbucks and please remember to support not-number-ones in other sectors of life & economy. As with everything else in life, supporting underdog competition is never a “pure science.”

If a company’s product is both best and cheapest, then they are super-duper winners and we should all support them. Of course, in such a case, many other would-be producers likely would “take the hint of potential profits” and would jump into that market. Then, after a sufficient period of competition, if the first company still offered the best quality for the lowest price, then either they transcended ordinary human potential somehow (which I’ve never seen and never expect to see), or they have some kind of special “arrangement” with someone somewhere (e.g. the patent office) to help them maintain an artificial edge.

Anyway, I’m not exactly one to talk about consumer strength–I still drink Coke and write using MS-Word even though I don’t think either are the best product in their class. I am, however, trying hard to recognize those occasions when I help market leaders without even considering the consequences. I have always considered the greatest microeconomic duty of individual consumers to be “Guaranteeing that no company (or government) captures a substantial portion of any market.” That, as far as I’m can surmise, is what delivers the greatest aggregate utility.

To put things in too-simple terms (which is all I can manage as an amateur):

Economics for Business = “Maximize profits”
Economics for Government = “Maximize votes”
Economics for Individuals = “Make sure the other two never accomplish their economic goals”

Thanks, edoardo, I’d be happy to oblige once I get my ideas off the ground and earn a trip to Europe.

Could not find a suitable section so I written here, how to become a moderator for your forum, that need for this?