There was a great op-ed piece in the Washington Post about WalMart today. Many many people complain about how walmart reduces wages. It isn’t clear how this can be done, but let’s give them the benefit of the doubt and say they’re right (for a rebuttal of this, see this post). The figures the writer of the article state the the yearly loss of wages is between 4 and 5 BILLION dollars a year. That’s a lot of dough, but it isn’t the whole story. It is estimated that people shopping at walmart save 50 billion a year on food alone by shopping there, it could be as much as 5 times that amount when you factor in all of the other stuff they sell. That is what you call helping poor people…
The beauty of this is that it is all done voluntarily, no one is forced to work or shop at a walmart. Walmart’s suppliers are free to sell or not to sell to them, and the people that work for those suppliers have the same freedom. The net result is that there are a lot of people employed (and this shows that what they earn is better than their alternatives) and a lot of people save money. For a synopsis of the article, check out the always informative cafe Hayek. Isaac
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6 replies on “A great piece on Walmart”
All of your posts about this seem to have the attitude that if the situation exists, then it must be fine. That it works just the way it should, or else it wouldn’t work. That doesn’t seem like much of an argument to me, but I’m probably missing something.
You almost have it right. The real point is that if people willingly, freely engage in a transaction, then both parties have benefitted. The fact is that people willingly apply to walmart and willingly accept the pay. The idea that they are somehow being taken advantage of is silly. In addition, all the people that argue that walmart is mistreating their employees seem to be arguing from a standpoint that THEY know what’s best for those poor, ignorant, helpless people. Almost all of my economic posts take for granted that each person is in charge of their decisions, and are free to change things if needed. This is, in my mind the essence of being an adult. People that argue that someone else (AFLCIO, the government) should make those decisions for them do not trust people and only trust their own agenda. So yes, most of the time in this country, things are working just fine, contrary to popular belief. The only time they do not work smoothly is when organizations or government prevent free exchange via price controls (mandatory union hiring, minimum wages, rent control, windfall taxes) or actually prevent people from making exchanges via trade restrictions. Opponents of walmart want to destroy a very successful, beneficial element of our economy, that’s what this post was about.
Isaac
alright. I’m not saying Walmart is the antichrist. BUT one cannot ignore a couple of things: 1) it is nigh impossible to get health care when working for Walmart 2) the implanting of a Walmart in a town can drive other stores out of business which, I realize, is the demands of the marketplace, but will make it impossible to work anywhere else in said town and 3) i don’t think I sound like a condescending liberal when I say “Hey, there are illegals who have been locked in there overnight. That’s not cool.”
But, and I quote Jon Stewart here: “5 bucks for a refrigerator?”
Lol! Yeah, there have been some really weird things done to employees, being locked up is not cool, and you gotta figure that there’s hell to pay when these things come to light. As to your points…
1) Whose fault is it that they can’t afford healthcare? Check out the first link on my post to see how Walmart does not set the prices on their labor. In a free economy, people’s labor earns them what they are worth. If they aren’t getting paid what they are worth, they go somewhere else. Walmart is a very successful company, (unlike GM and Delfi), they do that in many ways, but part of that is paying COMPETITIVE wages.
2) Walmart does not, of course, drive out other businesses. They would like to, but they can’t, they rely on us to do it for them. Because Walmart does not set wage rates, those people would be paid about the same regardless of where they worked assuming that a competitive wage scale was employed (mandatory union hiring is an example of noncompetitive wage setting). The idea that there aren’t any other places to work wherever there is a Walmart seems shaky at best. Surely there are other jobs for low skilled workers like fast food, manual labor, dishwashers, etc.
Isaac
Dissapointed…
Not sure what’s more diappointing… Your defense of WAlmart or the fact that you are listening to Neil Diamond.
Randy
Re: Dissapointed…
I’d appreciate any corrections to what I have written. If you can show how people are worse off because of Walmart I’d love to see it. BTW, there will be no disrespect to Neil on THIS blog!:-)
Isaac