Posted on 11/19/2004 3:44:14 AM PST by The Great Yazoo
On Tuesday, the Public Broadcasting Service ran a scathing attack on Wal-Mart, the world's largest retailer, on its "Frontline" series. The title of the program was, "Is Wal-Mart Good for America?" Although never stated explicitly, it is clear from the overwhelmingly negative portrayal of the company that the answer clearly is "no."
I watched this program with special interest. In fact, it was the first PBS program I'd seen in some time. I'd stopped watching shows like "Frontline" long ago because of their heavy liberal bias. But I thought perhaps this one would be different because I had been extensively interviewed for it.
Over several hours at my house, I patiently explained to Hedrick Smith, the chief correspondent and producer of the program, that the main beneficiaries of Wal-Mart's low-price policy are the poor, who could now afford products that would be out of their reach but not for Wal-Mart, improving their lives and raising their standard of living.
I was trying to make the same point that the great economist Joseph Schumpeter made about the Industrial Revolution. In his book, "Capitalism, Socialism and Democracy," he said, "The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort."
I also pointed out to Smith that Wal-Mart, all by itself, was responsible for a significant amount of the productivity miracle we have seen in this country over the last decade. In a 2001 report, the McKinsey Global Institute, a respected think tank, concluded that Wal-Mart's managerial innovations had increased overall productivity by more than all the investments in computers and information technology of recent years.
Wal-Mart's innovations include large-scale (big box) stores, economies of scale in warehouse logistics and purchasing, electronic data interchange and wireless barcode scanning. These gave Wal-Mart a 48 percent productivity advantage over its competitors, forcing them to innovate as well, thus pushing up their productivity. The McKinsey study found that productivity improvements in wholesale and retail trade alone accounted over half of the increase in national productivity between 1995 and 1999.
A new study from the prestigious National Bureau of Economic Research found that Wal-Mart has a substantial effect on reducing the rate of inflation. For example, it typically sells food for 15 percent to 25 percent less than competing supermarkets. Interestingly, this effect is not captured in official government data. Fully accounting for it would reduce the published inflation rate by as much as 0.42 percentage points, or 15 percent per year.
Ignoring these beneficial macroeconomic effects, "Frontline" focused almost exclusively on the loss of jobs allegedly caused by Wal-Mart. Acting as what economists call a monopsony, it supposedly forced countless American manufacturers to close their domestic operations and move to Asia in order to get their costs low enough for Wal-Mart to sell their products. It is also said to have caused innumerable local retailers to go out of business, further adding to the job loss. In fact, academic research by economist Emek Basker of the University of Missouri contradicts this last point, finding that Wal-Mart permanently raises local employment.
Even restricting oneself to the material presented in the "Frontline" episode, it is hard to justify its sweeping indictment of Wal-Mart. For example, it accuses Wal-Mart of buying $15 billion to $20 billion worth of goods from China each year, implying that this is largely responsible for our trade deficit. But since our trade deficit with China is about $150 billion, Wal-Mart can be responsible for at most 13 percent of that.
But even looking at the issue that way is stupid. If Wal-Mart didn't buy from China, its competitors would. And if Wal-Mart had to depend only on high-cost American suppliers, it never would have grown the way it has and its sales would be far less than they are. Yet "Frontline" always implies that somehow Wal-Mart could have done things differently, kept more production and jobs in America, without paying a cost. No alternative scenario was presented.
Finally, "Frontline" relied heavily on biased sources, such as testimony from openly protectionist organizations like the U.S. Business and Industry Council and a union representative who admits to being a disgruntled former employee of Wal-Mart. In other cases, the report relies on hearsay evidence that no responsible newspaper would publish in order to make its case. Supporters of Wal-Mart and free trade were limited to a few short minutes of camera time (I got about 3 seconds), mostly by a totally ineffectual company spokesman.
In short, "Frontline" presented a one-sided hit piece disguised as objective news reporting. Everyone responsible for it should be embarrassed for this grotesquely unfair case of taxpayer-financed liberal propaganda. I will know better the next time they call me for an interview.
Bruce Bartlett is a senior fellow at the National Center for Policy Analysis, a Townhall.com member group.
Im not drunk, Sorry.
I totally agree. Walmart ruins the downtown areas of many small towns by putting everyone out of business.
When you're running a corporation, ethics means operating within the existing legal structure to provide the maximum benefit to your shareholders. That's what Wal-Mart's doing (and rightly so).
I am not of big fan of the way Wal-mart operates but it's difficult to argue that Wal-mart is bad for America. Like many of you have posted, their discount pricing has made it a lot easier for the economically disadvantaged to buy things. Wal-mart still has lay-a-way too.
Now, if they would just stop building huge stores that are abandoned 5 years later for an even bigger one. I have driven through many small towns where i have seen an empty Wal-mart (along with the deserted shopping center) on one end of town and a new one on the other side.
YEs, Is there a conservative argument against wal-mart?
Wal-Marts seems to be playing by the "rules", don't you think?
I agree with you. And Wal-Mart does this in more than one community. Because of that, I do not shop Wal-Mart. I know I'm a very small drop in the bucket, but you know that thing about absolute power corrupts absolutely. I think that is the case with Wal-Mart.
So your solution is to have government determine competitive prices and force Wal-Mart to charge them? To avoid a "central planning approach?"
Who said that, besides TGY?
Rather, it is the role of government to prevent or dismantle market control, whether it be AT&T, Microsoft, or whatever else, in order to allow free enterprise and freer markets. It is very fitting for local governments to decide whether or not to let Wal-Mart in.
I have to spend time on my oblligations, now. Thanks for the discussion.
I just bought 100 rounds of 180 grain remington SW40's for 9.99 anywhere else they are 15 - 25 per 100 so I say I saved.
Wally World DOES carry name brands and at better prices. But there are still small stores around here that have prices close still making a living but they also provide service to what they sell. TV's Stereos and the like so
Wally World only does not in its existance close stores.
Stores close because they mark up things Wally's does not even sell they suck at service.
But like you say Socks T-shirts etc... At least at Wally World you can get OUT of the store. K-Mart has 20 people waiting for 1 checkout. K-Mart SUCKS at Customer service.
Went into one yesterday, took 15 minutes to leave, in K-Mart there was 10 cars in the lot. WAl-Mart is always full even at odd hours.
Did you all know that Mrs. Kerry owns $1 million of Wal-mart stock? That's enough reason for me not to shop there...
Yeh...and I heard that she owns stock in every major drug corporation, beer company & hard spirits distillery, too.
I have a choice of going to Wall-Mart. However, I have no choice when it comes to taking my tax dollars to fund PBS.
that was my point.
The unions destroyed the car industry along with government.
I'd submit it is the role of government to dismantle complanies who are using their monopoly powers to harm consumers. "Freer markets" is not an acceptable rationale for government intervention - particularly given the fact that every market in the world could be "more free".
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