em7el

walmart is our friend?

Here's the latest from the libertarian blog-miasma:

http://cafehayek.typepad.com/hayek/2005/11/progressive_wal.html

Everybody is jumping on the bandwagon and saying, "see, you goddam bleeding hearts were wrong! WalMart is Good!!!"

This is just more libertarian intellectual laziness. Here's a story about how the free market is succeeding. No need to think hard about it, because it must be true! The free market always succeeds!!

The assumption here is that if walmart were not addressing the needs of its consumers, it would not be the behemoth that it is, because people would simply shop elsewhere. You need some heavy-duty blinders on to believe this.

What are the flawed assumptions made here?

1. That WalMart is not and cannot be a monopoly. This is flawed, because despite the existence of other big box retailers, some communities may have no retailer in driving distance other than WalMart. WalMart may (and I strongly suspect, does) have a local monopoly in many places.
   
2. That lower prices necessarily are better. This is obviously flawed to any one who would bother to spend 5 minutes thinking about it. We know that WalMart has lower prices than other retailers, and lower prices than the smaller business that it displaced. But, we don't what products WalMart doesn't carry that were available before, and we don't know what products it does carry that weren't available before. In other words, prices may be lower, but how do we know how the value available to consumers has changed? It may have decreased.
3. That higher value (assuming that WalMart's lower prices do reflect higher value to the consumer, and not just slightly worse crap for slightly less money) is by itself good for low income people. The original article says that WalMart has lowered prices by 200 billion dollars in aggregate, while suppressing wages to the tune of a mere 4.7 billions dollars. So, the argument goes, consumers had 4.7 dollars taken out of their paycheck, and 200 dollars handed back to them at the cash register. So what's to complain about? Shitty statistical inferences, that's what! We don't know (or, at least, the article isn't telling us) how the price savings or the wage suppression is distributed across the population. All we know is that the economy is probably growing, which is no surprise.
   

And what about social justice concerns? WalMart has defended some of its pharmacists' refusal to sell various forms of birth control. In many areas there are no other pharmacies, and so the effect is that we have a large corporation effectively controlling the private lives of the poorer individuals in some communities. Is this illegal? No, probably not. Is this troubling? I think so. Should people complain loudly when they see this happening? Absolutely, and they shouldn't be labeled hypocritical socialists for doing so.

And what about concern for the American landscape? WalMart is a dreadful, sickening place, and it is just the sort of thing you get when you worship at the altar of Mammon. If any libertarians come across this post, they'll say: "see, you blew your cover: You're just another walmart hating socialist." Ok, fine, I hate WalMart. I don't believe the false faith that the invisible hand will always improve everything. I believe it will only make things cheaper - in every sense of the word.

posted by Mark @ 8:34 AM