TCS Daily

Bonjour Wal-Mart?

By Louis James - June 3, 2004 12:00 AM

"Wal-Mart tells Tesco we're coming after you: US giant lays down the gauntlet," reads a May 25th headline in the Financial Times. With Wal-Mart planning a huge expansion into the European market, and many powerful interest groups taking note, Europe had best brace itself for a flood-tide of anti-Wal-Mart idiocy.

It's not actually surprising that the world's largest retailer should be hated by socialists of various stripes. They hate everything Big (except for Big Government) and Wal-Mart is the epitome of Big Business, that greatest of evils in leftist dogma. Now, any huge multinational organization with tens of thousands of employees is going to have its bad moments, bureaucratic snafus, and fair share of wrong-headedness, but Wal-Mart haters have made a crusade out of their hate.

In his book, How Wal-Mart Is Destroying America (And The World) And What You Can Do About It, writer Bill Quinn lays out a lengthy laundry list of reasons he can't stand Wal-Mart. The list is quite telling, more for what it says about Quinn and people who think like him than for what it says about Wal-Mart. The cover-to-cover flood of economic ignorance in the book is too great to answer, error by error, in a short column. However, there is one chapter entitled, "Nine Ways Wal-Mart Is Downright Bad To The Bone," in which one would expect to find the most compelling evidence of Wal-Mart's most worst offenses. Here are the complaints:

1) Wal-Mart sells stuff made in "sweatshops." This is doubtless true, but what critics fail to understand is that what they call "sweatshops" are actually a very attractive alternative to people whose other choices include lower wages, prostitution, crime, and starvation. There is no magic wand to wave and grant everyone in the world the same wages as the average American UAW worker. It is exceedingly cruel and uncaring to seek to deny hard-working people a chance for betterment because that choice doesn't seem good enough to relatively wealthy poverty activists in the US and Europe. As Kenya's June Arunga said in an interview with John Stossel: "Sweatshops? We need more of them -- they pay twice as much as anyone else!"

2) "Gray market" products (items whose production may involve practices that are illegal in the US) have been found on Wal-Mart shelves "more than once." That this has happened doesn't show that Wal-Mart is particularly culpable. How often does this happen in other retail outlets? Is Wal-mart's record better or worse than average? Everyone knows what "knock-offs" are. This shows that "trademark infringement" and other gray market practices are widespread -- not a Wal-Mart invention. Given Wal-Mart's size, it's no surprise that a few incidents have cropped up. Quinn's anecdotes fail to prove that Wal-Mart's behavior shows a deliberate effort by management to profit as much as possible from gray market products.

3) Wal-Mart engages in "quota busting." Wal-mart is accused of helping China make and sell more than it is "legally" allowed to. Sounds great! Next.

4) Wal-Mart over-charges customers. Quinn admits that price scanner mistakes are common, not limited to Wal-Mart, but nevertheless lists it among Wal-Mart's nine deadliest sins. Enough said.

5) Wal-Mart Executives -- gasp! -- receive tax-deferred income. By this standard, everyone with an MSA, 401K, etc., is a slimy villain. Next.

6) Wal-Mart is a corporate welfare recipient. Here we can even agree with Quinn that pork-barrel spending is bad. However, citing one example and then mentioning that Bill and Hillary Clinton own a lot of Wal-Mart stock, hardly constitutes a case for Wal-Mart being particularly evil. Wal-Mart is a business functioning in an environment where its competitors receive handouts. What else should they do? The blame lies with the politicians, not the businesses who are impelled by the distortions those politicians inflict on the marketplace.

7) Wal-Mart sells guns. Lots of guns. Quinn does document a few cases where a gun bought at Wal-Mart was used for a crime, or the transaction wasn't handled properly, but again makes no case for Wal-Mart being particularly negligent or responsible for those events. If Wal-Mart is responsible for what everyone who ever bought a gun from them does with those firearms, then so is every other sporting goods store and gun retailer in the world. That would include the US government, and others which sell guns a-plenty. The bottom line is that guns are legal to buy, sell, and own where Wal-Mart sells them. Since Wal-Mart is big, of course it sells a lot of them. Quinn apparently just doesn't like guns, and expects his readers to share this view and see Wal-Mart as evil simply because they sell them.

8) Wal-Mart is a "bad neighbor" because ... well, for a variety of unrelated reasons. They let RVs park in their parking lots. They don't want to pay for damages created by faulty work done by contractors. They must be bad neighbors because they say they want to be good neighbors (seriously).

9) Wal-Mart has a "bad record" with women and minorities. Once more, Quinn provides a few examples, without making a case for Wal-Mart's specific culpability. Since America is a country still struggling with racism and sexism, how can one expect it never to crop up among Wal-Mart employees?

The chapter closes with more "horror stories" revolving around the complaint that Wal-Mart fights law suits aggressively, appealing judgment against them all the way. America has become a litigious society, and Wal-Mart, having about the deepest pockets around, is already being sued at a rate of about ten times per day. That rate would soar if word got out that Wal-Mart was an easy target. Can anyone reasonably say it is not necessary for them to defend themselves as vigorously as possible?

Throughout Quinn's book, there is heavy use of insinuation, reporting of rumors, name calling (e.g. "Bentonvillains"), and a heavy use of inflammatory language (e.g. the section on Wal-Mart selling guns was called "Gats For Tots" -- as though any Wal-Mart ever sold a gun to a toddler!) As such, thinking people might simply dismiss it as the work of a crank who doesn't even deserve to be argued with. Unfortunately, his populist approach can't be ignored. People love it!

The heart of the issue, although not mentioned among Wal-Mart's worst offenses, seems to revolve around the issue of what economists call "creative destruction." Wal-Mart is globalization in action. The net result of Wal-Mart's activity is a rising standard of living. In so doing Wal-Mart is putting "Mom and Pop" type operations and other obsolete enterprises out of businesses. As Bastiat would tell us, critics focus on the seen, such as boarded up shops around town squares. They ignore the unseen: the significant, though incremental, improvement in the quality of life of those Wal-Mart is feeding, clothing, amusing, etc. at a lower cost.

If this blindness is highly persuasive to many Americans, who are supposed to be culturally more inclined to approve of capitalism, imagine how well it will play in Europe. Consider what US Wal-Mart haters have achieved with just words, and then consider what people like French labor unionists might do, with their infamous penchant for disrupting the whole French economy. If you think a few smashed McDonald's restaurants are bad news, you ain't seen nuthin' yet.

Louis James is Senior Vice President of The Bureaucrash Foundation, Inc., an activist organization dedicated to educating students and others around the world about the benefits of free markets and freedom in general.


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