Low Prices at High Costs: On Wal-Mart's Destruction of the American Economy

 

It was only thirty or so years ago that one could drive through virtually any of America's small towns and find in them thriving, closely knit business districts. On a single street, there might have been a barber's shop, appliance store, hardware depot, luncheonette, and, of course, a five-and-dime. The sidewalks would be teeming with life as shoppers, most of whom were also neighbors, went from storefront to storefront in search of the best bargains of the day. Fast forward to the second decade of the twenty-first century, however, and a very different scenario is playing out; perhaps as much as seventy percent of all the businesses which had been alive with such vigor are now closed. Very few walk the streets, and those who do are either en route to another neighborhood or up to no good.

 

There is still commerce being conducted in town, to be sure, but as far as retailing is concerned, virtually all is centered inside a massive rectangular structure built on what was once a gorgeous meadow just outside of the former business district. Here, the doors never close and jobs are to be found without shortage. People roam its aisles with the intention of snagging great deals on anything and everything imaginable; from potted plants to cat chow. It all seems so wonderful, so convenient! With everything in one location, who could possibly need to venture elsewhere to shop? This place is just fantastic; the answer to every time and/or cash pressed consumer's dream! Is this not simply wonderful? The entire world in a single big-box super-center. Honestly, does it get any better than this?

 

Welcome to Wal-Mart, and the environment which it creates. Since the mid-1990s, when the children of Sam Walton began bringing their late father's chain of megastores into isolated communities with an unrelenting passion, thousands of small businesses, mostly sole proprietorships and generational enterprises, closed shop as they simply could not attempt to keep up with the new competition. Their employees then sought new jobs at, you guessed it, Wal-Mart, and as it was the only economic power in the region, spent their paychecks there as well. Today, this is the reality faced by millions in our nation. Creating a plantation-like atmosphere reminiscent of the old South, Wal-Mart has a labor force from which it not only derives a handsome profit, but has fenced into its shadeless fields for, more than likely, life. The saddest thing of all, though, is that many of the individuals from which it enjoys modern indentured servitude do not even realize the futility of their respective situations. No, all they see are good prices, moderate pay, and unbelievable convenience. What lies beneath this facade is inconsequential or, more frighteningly, irrelevant.

 

Lest any of us believe, as I wrote in my new book, The American Thinker: Realistic Solutions That We Need Now to Revitalize the American Dream, Wal-Mart takes a serious toll on the wallets of even those of us who do not work for it. What? How? As a recent study conducted by the City University of New York revealed, the chain "...depresses area wages and labor benefits....pushes out more retail jobs than it creates, and results in more retail vacancies..." but not before imposing a burden on taxpayers as it forces many of its workers to apply for government assistance because they are given no medical benefits. Essentially, what Wal-Mart does is destroy previously healthy capitalistic environments, replace them with monopolies, and foster an entirely new generation of welfare recipients by leaving them without healthcare. Perhaps all that can be done to stem the tide of this insidious corporate dictatorship, besides the implementation of tariffs against China, from where Wal-Mart purchases most of its undervalued merchandise, therefore allowing it to charge artificially low prices, is to patronize as many locally owned establishments as possible; whether they be made of bricks and mortar or existing solely on the Web. If we do not, then all of us will continue footing the bill for Wal-Mart, and it will only grow steeper as time wares on.

 

 

Originally published in Blogcritics Magazine.

 

 

Meta: 

Comments

Wal-mart: "shoppers are running out of money"

To show the never ending race to the bottom on wage repression versus retail sales, we have this declaration because Walmart's quarterly profits are down.

This basic tenement, if you wish to have a large personal consumption expenditures boost US GDP, there is something called wages required.

Walmart article where this was proclaimed.

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Questions about wages and economic policy

Robert Oak: "[To boost] US GDP ... something called wages [is] required."

Wages require employment (including independent operators, self-employed) ... something that used to be called full-employment policy.

Question: Can we have a full employment policy without protectionism of any kind?

Similar questions: Can we have a full employment policy without an immigration policy tied to that policy? Can we have a full employment policy without control of out-sourcing? Can we have a full employment policy and keep our H1B system as is?

Another question: Is free enterprise compatible with full employment? I think it is. I think that free enterprise is the only way to reach full employment without stagnation and the fall of democratic civil liberties. That brings us to the question of whether ad hoc subsidies are really compatible with free enterprise.

Has Trump come out strong in support of Obama's call to eliminate subsidies for oil companies? No, I don't think so. Are the news media playing elimination of those subsidies emphasizing the desirability of eliminating subsidies as a free-trade principle ... or are they using the scare tactic that "you will be paying more at the pump"?

The problem with tariffs is that, when they are targeted, they degrade into essentially political decisions. That is, targeted tariffs - like targeted subsidies - distort markets in favor of politically-connected special interests. Corruption is rewarded at the expense of the maintaining a healthy environment for competition.

What is needed is a way to protect our national economy and national interest against the erosive effects of tax dodges, monopolistic practices, corruption of the U.S. political structure, and other abuses that have become institutionalized within the WTO system as it exists.

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Walmart and China

Walmart - Arkansas - Clinton - Democratic Leadership Council (DLC) - $$$ - NAFTA - more fast track - China trade 'deal' - U.S. decline

The next links in the chain of causation may well be like this:

U.S. decline - populist reaction - protectionism

The real question is what kind of protectionism?

There are three approaches : tariffs, subsidies and currency exchange.

I suggest there should be less blah-blah about protectionism is bad, 'free' trade is good ... and more about what kind of protectionism do we propose?

Going farther, I suggest there WILL be more discussion about what kind of protectionism does the U.S. want and how will it be implemented.

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something to that effect has been called for left & right

There are all sorts of demands to confront China's currency manipulation, from the far left to the far right.

So, I don't know about anyone else, but I saw Trump's speech and just laugh, say "right on".

But that's basically a good idea, some version of that.

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I Know I Agreed With It

But of course I have no training in economics.

Funny how many people who view "free trade" like a religion. Even more than a religion, really. Frankly over the past few years I've seen economists and other people apologize more often for deviating from free trade principles than I've seen people apologize for disagreeimg with their religion's teachings.

Too bad Trump didn't talk a bit more about stuff like this. He's never was a real, viable candidate and now all his birther stuff and cursing has probably sunk him and his ideas, as few and mostly ignored by the public as they were.

Even big mouthed jerks can articulate helpful ideas. Looks like he did.

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Mass news media and religion of anti-protectionism

JoblessInJersey writes: "over the past few years I've seen economists and other people apologize more often for deviating from free trade principles than I've seen people apologize for disagreeimg with their religion's teachings."

There's another economic populist -- "Economic Populist Forum" -- which cannot fairly be compared to this EP site. It's wholly the creation of an M.D. in Southern California who has become interested in economics (and related politics) our of frustration with the current system and with the fantasy systems that permeate U.S. media and related non-thinking of the U.S. public. The other EP Forum presents good research and isn't just a political blah-blah thing, but it gets active only a few times a year -- presumably when the practicing physician can afford the time to do economic research and related commentary. Although this source is limited in scope, I have followed it on and off for a few years now, and I think it is impossible not to have some respect for the man behind it. The moniker of the blogger is 'unlawflcombatnt'.

Excepted for review purposes from 'unlawflcombatnt' writing (Aprl 18, 2011) on Trump and criticism of Trump by TV pundit, Lawrence O'Donnell -

Super-jack-ass Lawrence O'Donnell of MSNBC again proved his globalist plutocrat credentials tonight by his criticism of Donald Trump's proposal of a 25% Tariff on Chinese imports. O'Donnell also boldly re-stated his own advocacy of free trade, and how "everybody knows that free trade creates jobs."

There are certainly things to dislike about Trump. But his trade position is not one of them. ... And Trump sounds absolutely committed to reducing our trade deficit with China ...

O'Donnell actually had a Club-For-Growth member on his show to criticize Trump's economic policies - and Trump's trade position in particular. Needless to say, the the Club-For-Growth (i.e., Club-For-Upward-Restribution-of-Wealth) opposed Trump's populist stand on trade. And in unison both O'Donnell & his CFG buddy barfed up the "everybody-knows-free-trade-is-good" garbage.

O'Donnell is the prototypical rich liberal elitist snot-rag. Whether American workers live or die is no concern of his. ... On economic issues he's as anti-populist, pro-Corporatist, and pro-Globalist as any Republican.

Well,  'unlawflcombatnt' usually writes much more along the lines of what we see here from Robert Oak, but occasionally, as in this case, 'unlawflcombatnt'  does get somewhat heated. Since I don't watch any TV news or commentary, I wouldn't have even heard of this O'Donnell guy except for the unfavorable review by 'unlawflcombatnt'.

If the point is to expose a political prejudice accepted like a religious belief, not to be subject to rational criticism, then the point is well taken.
 

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Here's one other worthy video

2011 White House Correspondents Dinner

I too stay away from the propaganda machine.This is remarkable 18:54 of video.  I'm not a fan of Obama's.  However, the personal attacks on him have been simply outrageous. They put him at danger from the lunatics who actually believe the nonsense. This clip shows Obama totally demolish that fake stories and Trump in particular. This is the comedic equivalent of the moments that Joseph Welch put an end to Sen Joseph McCarthy's career. And it's extremely funny.

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Is Trump the only protectionist?

IS TRUMP THE ONLY PROTECTIONIST?

JoblessInJersey writes, "Why didn't any other well known public figure suggest this years ago?"

Public figures who advocate protectionism don't get a whole lot of press. Which is strange, because ...

Every realist knows that protectionism has never died in practice and remains enormously popular among working people, with good reason. So, the question really shouldn't be "protectionism vs. non-protectionism", it should be "which protectionism do we advocate?"

Specifically, there are three approaches: tariffs, subsidies and currency exchange. According to the theorists of 'free' trade, all three of these are evil.

(How else can I discuss those theorists who have promised that war would end, national borders would dissolve, poverty would vanish, jobs would increase, consumer prices would fall, justice would prevail, and, autocratic one-party bosses would embrace civil liberties for all? You really have to go to the terminology that economists hate to get into, namely, Good vs. Evil. "Protectionism is evil whereas all 'free' trade agreements are good.")

Of the three approaches, it is only currency exchange manipulation that isn't 'outlawed' and subject to WTO quasi-litigation. So, everybody pretends that the whole issue is currency exchange manipulation. And that leads us where? Duh. Hat in hand, to the gate with "Central Bankers" inscribed in gold over the ornate arch!

IMO, America is filled with protectionists, as is the world. What else can be expected, considering what can only be considered the failure of virtually all the pie-in-the-sky promises of so-called 'free trade' advocates or WTO apologists? (Putting it another way, the collapse under an experiential critique of what is sometimes called the 'Austrian School' of economics -- for example, the lately great Greenspan.)

The truth is this: After a decade of experimentation with the WTO 'free' trade system, the working people not only of America, but of the world, are demanding protectionism. Protectionism is popular, and all but paid professional apologists respect that reality.

I recall a column by William Pfaff (Herald Tribune, writing from Paris since the days when there was a New York Herald Tribune), way back in the 1990s. Pfaff was puzzled by apparent enthusiasm in the U.S. for the globalist 'free' trade agenda, since (he stated firmly) there was no substantial popular support for that agenda in Europe any more. Indeed, there was wide-spread dissatisfaction growing throughout Europe with the EU system.

It's really been a case that could accurately be named "THE MONEY vs. THE PEOPLE" for some time now. The problem for advocates of THE PEOPLE is that one party (THE MONEY) has standing whereas the other party (THE PEOPLE) is left pleading for standing, without the issues ever being reached.

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How real is Trump's populist appeal to protectionist sentiment?

Of course, Trump isn't criticizing the global mercantilist system generally. He isn't at any level advocating even a modification of our current system of targeted tariffs and subsidies, he's advocating an ad hoc policy targeting China only. That wouldn't work, because China's mercantilist system would easily find ways around it. Evasion of tariffs would be as easy as tax evasion by way of shifting profits to a low-tax or no-tax jurisdiction. The "Made in China" label would be replaced by "Made in Vietnam" or "Made in Pakistan" or "Made in Phillipines" - in all of which China has enormous resources that can be used in a mercantilist scheme.

Aside from that Trump's suggestion is unworkable, Trump doesn't really advocate it at all -- he advocates it as a kind of cowboy machismo approach that he knows will be attractive to many people who vote in Republican primaries. His idea really is to appeal to TV viewers ( = non-thinkers) with a ready-made pipe dream of China surrendering to the U.S..

I do credit Trump for admitting that he is among the many rich Republicans (and others!) in the U.S. who have essentially taken bail-out and tax-cut dollars from the U.S. economy and put them into China and other "emerging markets."

China is the prime example of the problem, NOT the problem.

The real solutions are here in the U.S.A., controlling our own lives our own borders and trade policies in our own best interests.

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Consequences of Walmart and Other Stupidity?

I clicked on one of the site's EPI links and the analysis of present trends is appalling:

"GDP Picture: First quarter growth dips, suggesting higher unemployment"

..."The last six months have seen an average growth rate of just over 2.4%, a rate indicating that the economy’s growth isn’t strong enough to put any downward pressure on the overall unemployment rate. In short, unless the economy starts growing appreciably faster, the problem of high unemployment will be quite persistent."

. . . . .
"All of the signs in this report [from the Bureau of Economic Analysis], point to an economy that remains below potential because it lacks sufficient spending. Another clear sign that the economy is running below potential is the continuing slow growth of core prices—prices minus food and energy products—whose changes are both volatile and driven largely by supply-side influences in the short-run. The “market-based” deflator for core personal consumption expenditures (a closely watched indicator of inflationary pressures building up in the economy) rose by less than 1% between the first quarters of 2010 and 2011. Given this data on slow spending growth and decelerating wage pressures, it is odd indeed that boosting economic growth is not a higher priority among Washington policymakers."

http://www.epi.org/publications/entry/gdp_picture_first_quarter_growth_d...

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Priorities and programs

JoblessInJersey quotes EPI: "Given this data on slow spending growth and decelerating wage pressures, it is odd indeed that boosting economic growth is not a higher priority among Washington policymakers."

Of course, the priorities of Washington policymakers are determined partly by realties and partly by politics. It has been said that "politics is the science or art of what is possible." Lately, politics seems to be the science or art of staying in power, which leads to thinking only about limitations, not possibilities. So, if we could begin to think realistically about possibilities ... for solutions ...

Here's what could be steps toward real solutions:

POSITIVE PROGRAM FOR FREE ENTERPRISE

The best protectionism begins with political reform, as prerequisite to any economic or financial reform.

Having said that, I look at the three protectionist options of currency exchange manipulation, subsidies and tariffs. For the currency exchange approach, I advocate a monetary policy like that prescribed by AMI or economist Michael Hudson.

For the subsidies approach, I advocate elimination of all subsidies and of the entire trade 'preference' system, which is, after all, a system opposed to free enterprise (and therefore to real free trade) and a manifestation of the current system of corporatist mercantilism. Aside from other problems of the 'trade preference' system, it can function only on the assumption of U.S. global hegemony. Whether U.S. hegemony was at one time inevitable and necessary, or not, such hegemony can no longer be assumed. To base national policies on unrealistic assumptions is the depth of folly, and such policies undermine U.S. national interests to the advantage of competing global powers.

Finally, for the tariff approach, I advocate imposition of an across-the-board tariff applied RIGOROUSLY AND EQUITABLY to all imports from any source whatsoever, unless outlawed by embargo deemed essential to our national interests or the interests of humanity. (If we have objections on principle, the proper action is an embargo, not a refusal to give a 'preference'.) Without some kind of across-the-board tariff on all trading partners, (a) we will never eliminate subsidies, and, (b) we will be unable to prevent profit-shifting income tax evasion. As long as tariffs are targeted by type and by source, tariffs like subsidies remain a guarantee that free enterprise will be forever held hostage to corrupt politics.

Apologists for the current WTO system say that tariffs are categorically against all economic policy across the board. With a little modification, I would agree. I would say an across-the-board tariff would be against all mercantilist economic policy. And I would say "THAT'S THE WHOLE POINT." We need to put systemic limits on the growth of global neo-mercantilism.

 

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OUTSOURCE

LETS CALL IT EVEN LET'S OUTSOURCE CONGRESS JOBS, FROM INDIA AND CHINA... WE CAN SAVE WHOLE A LOT OF MONEY

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Outsource the SCOTUS

From a distance, like from India maybe, the justices could be more objective, if not impartial! And tremendous savings for the taxpayers!

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