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Back to Wal-Mart

Posted by Chance on February 9, 2006

I want to talk more about Wal-Mart. Personally, I am not crazy about visiting Wal-Mart, because it is always so busy. I hate grocery shopping there especially, because it is even harder to move around the maze of people with a shopping cart, so I go somewhere else even if it means spending a little more.

Now, the reason Wal-Mart is so busy means they must be doing something right, they give the customers what they want, and, really, what that is, is low prices. The service is terrible (no offense Josh, but its a lack of people, not the people themselves, as you probably know), and the quality is not always the best. I do not go to Wal-Mart to buy cookware or my wife’s wedding ring, but for groceries and electronic media, Wal-Mart’s product quality is sufficient for me personally.

The primary criticisms against Wal-Mart are 1)the way they treat their employees, 2)they do not recognize union employees, and 3) they put other stores out of business, specifically, smaller mom and pop stores.

Now, let me address these arguments, which are all reasonable arguments. Let me start off with #2, and this will focus on the philosophical. I believe in a free economy, which I believe most people do, to some extent. Now, I adopt the libertarian position on unions that anyone has the right to form a union, but, at the same time, a company has the right to recognize or not recognize a union. I also believe no one should be forced to join a union in order to hold a job. Now, the whole union issue is something that extends beyond Wal-Mart.

Now, #1 and #3 will be somewhat of a philosophical/utilitarian argument.

I believe two certain things.

1) I personally believe, at least in this instance, that it is very difficult, maybe impossible, to argue the morality of numbers. That is, how do we decide what a just price is? How do we decide when a business is too big? I do not believe that we have the ability to assert what a just price or wage is.

People can make calculations based upon what a standard of living is, I suppose. For instance, one may be able to calculate the average cost of living for an area, and argue that a living wage must be 105% of this. There are ways to do it, but when you control numbers based on this, it will affect other things as well. For example, if Wal-Mart is forced to raise wages for their workers, they will also raise their prices as well, adjusting the cost of living amount from which the wages were calculated in the first place.

The value of anything is what someone is willing to pay for it, and I think it is best if it remains that way.

2) Everything is a trade-off when it comes to business. For instance, Wal-Mart can raise their wages, but it will also raise the prices of their goods. The previous blog post on Wal-Mart linked to articles stating how much money the poor can save by consuming goods. Now, we have a dilemma. Do we want to A) raise wages for the people working there (who are mostly young people, retired people, family provides at the lower end of the economic ladder), thereby improving their quality of life, or do want to B) lower prices of goods that those same people buy. Either way, there is a trade-off. How do we decide where this balance is? I would argue that the free market should decide upon these things. How can we determine which option is morally better? I don’t think we honestly can, or that we should. Either way, its a tradeoff. Now, there is a third option, C) which is, lower the prices of the CEO’s and higher up managers. This is possible, and this is what most on the left end of the spectrum would argue. However, these high-paid executives are paid money to figure out how to make Wal-Mart more successful, and in order for Wal-Mart to be successful, they have to provide what the customer wants. We already decided that Wal-Mart makes its money by essentially being cheap. Those CEO’s are working around the clock to basically determine how they can save money, thereby saving the customer’s money and/or improving their profit. Now, the profit margin is often looked upon as a bad, selfish thing by many. However, high level people are not the only ones making money. The great thing about capitalism is that anyone can buy stock in the company. The average Joe or Jane can put in a little bit of money in Wal-Mart in hopes of making some.

Concerning the issue of Wal-Mart putting smaller stores out of business, again, we are faced with tradeoffs. Which is better: A) allowing smaller stores to survive, making it better for middle-class people, or B) providing jobs for a larger number of lower class people, and providing cheaper products to these same lower class, or even middle class people. Again, we have to make a choice on the superior option, and again, I believe the free market should sort it out.

The reason Wal-Mart beats out the smaller stores is because it provides something the people want. Which is more unfair, A) the customers choose which store they want to go to and choose Wal-Mart because they like to save money, or B) the small stores use politics and legislation to prevent Wal-Mart from showing up, not allowing the customer to make the choice in the first place.

I know this sounds heartless, I do not want any mom and pop stores to go under, but I don’t want to force poor people to pay more for their products either. They need Wal-Mart the most. If Mom and Pop stores cannot compete on the basis of price, then they need to find some other way to compete.

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One Response to “Back to Wal-Mart”

  1. The Prophet said

    As a former employee of Wal-Mart, I have a bone to pick with the company… the labor thing… eh, take it or leave it. I’m in Texas remember (what is Union Labor?). And as far as driving Mom & Pop Stores out of business, Capitalism has its pros & cons as you’ve pointed out.

    http://www.forbes.com/lists/results.jhtml?passListId=54&passYear=2004&passListType=Person&searchParameter1=unset&searchParameter2=unset&resultsStart=1&resultsHowMany=25&resultsSortProperties=%2Bnumberfield1%2C%2Bstringfield1&resultsSortCategoryName=Rank&fromColumnClick=true&passKeyword=&category1=category&category2=category

    Above is the link to the Forbes 400 wealthies people in the country (sorry it’s such a long link). 8 on the list are from Wal-Mart, 5 tied at #4 worth 18 Billion. I don’t have a problem with either of these things… people are entitled to their own earnings. What I do have a problem with is the fact that most of their employees can’t afford to purchase their insurance or become a part of their “stock program”. I know this for a fact, because both of my brothers work for the company.

    But bad business kills itself. If Wal-Mart continues to not provide for its employees (my opinion only), then it will eventually kill itself.

    Good post Chance. Keep up the good work. And keep out INFINITE BROCCOLI.

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