All over America, communities are fighting the blight of the ubiquitous Wal-Mart Super Store. These heroic Wal-Mart fighters are champions of the little guy, protectors of the Mom and Pop business, and defenders of historical integrity...or so they believe. While many of them may mean well, there is nevertheless a great deal of contradiction in the beliefs held by those who oppose Wal-Mart and other "big box retailers". Viewed from a distance, their efforts may seem noble, but close inspection reveals a more insidious line of reasoning.
People love to hate Wal-Mart for a variety of reasons, but there are a few standards that come out nearly every time a Wal-Mart "threatens" a geographical area with its presence. Many decry Wal-Mart's low wages and lack of employee benefits. Others hate that Wal-Mart drives smaller, less competitive businesses out of the market. Some dislike the fact that a Wal-Mart often attracts numerous other businesses to its locations, thereby contributing to "sprawl". On an emotional level these things all certainly seem deplorable, but when considered rationally these arguments all break down. One simple question puts them all into perspective: How many people, in a given geographical area, are harmed when a Wal-Mart opens up, and how many people in that area benefit from it.
The people who may be harmed tend to be obvious. Local businesses who face competition from Wal-Mart may indeed be forced to close their doors as consumers exercise their preference for lower prices and greater convenience by shopping at Wal-Mart. This does, indeed, bring temporary hardship to the owners and employees of those businesses. Some may argue that all the members of a community are harmed when a local business closes, but I fail to see how that could be true. Some may bemoan the loss of a local establishment, and friends and families of the affected business owners may feel some grief, but again this is a temporary condition, and it shouldn't render anyone incapable of ever obtaining another job or finding some other productive means of making a living.
Others who may be "harmed" are those who prefer to (and can afford to) shop at local businesses rather than at big box stores. This is not so much harm as inconvenience, and the fact remains that if there are enough people who refuse to shop at big box stores then boutique shops should have no fear of losing revenue.
The number of people harmed when local businesses close due to competition from Wal-Mart may number in the tens or possibly even 100s. These are the "victims" that Wal-Mart haters claim to be protecting. What is rarely considered, however, are the thousands who benefit when a Wal-Mart comes to their town. Poor families benefit greatly from reduced grocery bills, clothing costs, and household item costs. In addition, Wal-Mart brings valuable jobs to any area in which it's located. But often this fact is turned completely on its head and used as an argument against the store, as outsiders claim that the wages paid and benefits provided are too low. It must be kept in mind, though, that the people who apply for and accept jobs at Wal-Mart don't quit higher-paying jobs with benefits in order to take a lower-paying job with no benefits. They work at Wal-Mart because it offers a better alternative than what they would have otherwise had.
In the end, those who oppose Wal-Mart are simply attempting to impose their own preferences on others, without consideration for the costs of doing so. They attach inflated importance to "historical preservation" or apply some arbitrary standard of what wages and benefits Wal-Mart should offer their employees, with no regard to poor families who must bear the costs for those preferences by being forced to pay higher prices. Competition is the nature of Capitalism. It is what causes quality to constantly improve and prices to continue to fall. It raises the standard of living for everyone, and in absolute terms the poor benefit the most. To stand against it under the pretense of protecting a few people from temporary hardship isn't noble or heroic, but harmful and elitist.
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2 comments:
I agree and some comments. Say I'm a grocer close to a site where a WM will soon open. I can expect to be driven out of competition if I continue to sell the same groceries. What can I do?
I don't know how these things work in the US but here in the UK grocery shops converted to "convenience shops" : because the ASDA (WM's subsidiary over here) is usually far away, people don't want to go there if they suddenly want to have some beer or chocolate or other enjoyable goods for the evening. Or if they suddenly run out of basics like bread and ham. So that sort of thing seems to work - booze, sweets etc. impulse goods on one hand and some little of the basics on the other hand. Here in Oldbury , Birmingham we have three convenience shops within five corners even though the ASDA is only about ten corners away. For most homes in the area it's a lot farther away. And I still go there only about once a week - when I just want fresh bread or ran out of wine or chocolates, I don't want to stand the long queues etc. the convenience store is simply more convenient.
That's one thing. The other thing is - so let's say I have a store there, and I expected to be driven out. However, I can also expect that a lot of people in the vicinity will save a lot of money because of lower prices. I figure they want to spend that money on some other stuff. So what about opening a pub? Sounds like a safe bet. Or an Indian takeaway? Or car parts shop? Or a gym? I think if I can expect the people in the area save a lot of money and therefore willing to spend on something else, I can figure out what else to offer to them.
This is the worst thing about the anti-WM arguments. Anticapitalists seem to think that people should spend most of their wages on groceries in order to protect local businesses. When in reality, it's better if groceries are cheap and people can spend the money on other local businesses such as gyms. Everybody wins.
Thanks for the comments, Miklos.
The conversion of groceries to convenience stores is an excellent example of how businesses can and should adapt to competition. In addition, the money saved and spent on other things beautifully illustrates the concept of "What is Not Seen," a la Bastiat. People see a small grocer driven out of business, but they don't see the other businesses that benefit from the extra cash left in consumers' pockets from spending less on groceries.
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