| Subject: Re: i hate wal-mart |
Author:
farsheed
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Date Posted: 13:23:17 12/14/03 Sun
In reply to:
drew
's message, "i hate wal-mart" on 23:38:21 12/08/03 Mon
But what do you do when things are just cheaper at Wal-mart, and you can't afford anything else? Starve?
>Is Wal-Mart Good for America?
>
>
>By STEVE LOHR
>
>The annual celebration of the American consumer
>economy — the holiday shopping season — is just
>underway, and Wal-Mart, the juggernaut of retailing,
>already seems to have claimed its first victim. The
>corporate owner of F.A.O. Schwarz stores said last
>week that it would file for bankruptcy. Bemoaning the
>news, analysts explained that the F.A.O. Schwarz
>formula of selling premium-priced toys in sumptuous
>surroundings could not withstand the steady advance of
>Wal-Mart into the toy business.
>
>"Will Wal-Mart Steal Christmas?" asked a Time magazine
>headline.
>
>The toy war is merely the most recent manifestation of
>what is known as the Wal-Mart effect. To the company's
>critics, Wal-Mart points the way to a grim Darwinian
>world of bankrupt competitors, low wages, meager
>health benefits, jobs lost to imports, and devastated
>downtowns and rural areas across America.
>
>Yet there is a wider, less partisan view of the
>company, which perhaps more visibly than any other
>corporation marches to the mandate of the global
>capitalist economy.
>
>"Wal-Mart is the logical end point and the future of
>the economy in a society whose pre-eminent value is
>getting the best deal," said Robert B. Reich, the
>former labor secretary and a professor of social and
>economic policy at Brandeis University.
>
>To the company's supporters, Wal-Mart is an agent of
>economic virtue, using its market power to force
>suppliers to become more efficient and passing the
>gains on to consumers as lower prices. The enthusiasts
>say Wal-Mart is a big reason for the country's almost
>nonexistent inflation and impressive productivity
>gains.
>
>There is a lot to be said for getting the best deal,
>economists say. Prices, they note, are essentially a
>yardstick of efficiency, translated into consumer
>terms. Prices are concrete and measurable, while other
>values of consumer and social welfare — say, product
>quality or job preservation — are often hard to
>quantify or require costly intervention like
>protectionism or subsidies.
>
>Moreover, some economists note, lower prices for the
>kinds of basic goods on sale at Wal-Mart superstores,
>like food and clothes, are of the greatest benefit to
>the less affluent. Grocery prices, for example, drop
>an average of 10 to 15 percent in markets Wal-Mart has
>entered, analysts say.
>
>"Wal-Mart is the greatest thing that ever happened to
>low-income Americans," said W. Michael Cox, chief
>economist of the Federal Reserve Bank of Dallas. "They
>can stretch their dollars and afford things they
>otherwise couldn't."
>
>Wal-Mart is the largest American corporation in terms
>of sales, $245 billion last year. It is now the
>nation's largest grocer, toy seller and furniture
>retailer. More than 30 percent of the disposable
>diapers purchased in the country are sold in Wal-Mart
>stores, as are 30 percent of hair-care products, 26
>percent of toothpaste and 20 percent of pet food.
>Wal-Mart has nearly 3,000 stores in the United States,
>and plans to add an additional 1,000 over the next
>five years. Increasingly, the company is taking its
>formula abroad; Wal-Mart is now the largest private
>employer in Mexico.
>
>The prospect of Wal-Mart amassing even more market
>power does not worry free-market economists like Mr.
>Cox. Despite the company's gains, the retail industry
>is still not highly concentrated, he said, with
>Wal-Mart accounting for 20 percent of the sales of the
>100 largest retailers. Its success has been built, Mr.
>Cox said, on mastering the use of information
>technology to streamline its operations — much like
>Dell Computer in the personal computer business.
>Inevitably, less efficient rivals will be winnowed, he
>added, and those that remain will compete aggressively
>for consumer dollars.
>
>"With the new technology of the information age," Mr.
>Cox said, "we're moving to a new market structure in a
>lot of industries. And the optimal number of firms has
>gone way down."
>
>Antitrust has traditionally been the tool for insuring
>competition and keeping a watchful eye on powerful
>companies. But the evolution of antitrust policy over
>the last 30 years — to emphasize price, not the number
>of competitors — has actually worked to the advantage
>of businesses like Wal-Mart.
>
>In the past, antitrust policy assumed that more
>companies meant more competition, which was good for
>consumers. The Robinson-Patman Act of 1936 — sometimes
>called the anti-chain store act — was passed partly to
>protect small local retailers from the Great Atlantic
>& Pacific Tea Company, the Wal-Mart of its time. It
>prohibited price discrimination, or discounts, to
>different purchasers when the effect was to lessen
>competition. At the time, the drift of antitrust
>policy was to restrain big business and protect
>mom-and-pop stores.
>
>The populist tinge to antitrust continued for decades.
>In ordering the break-up of the Aluminum Company of
>America in 1945, Judge Learned Hand of the United
>States Court of Appeals for the Second Circuit wrote
>that the purpose of antitrust was to "perpetuate and
>preserve, for its own sake and in spite of possible
>cost, an organization of industry in small units which
>can effectively compete against each other."
>
>In 1966, the Supreme Court sided with the Federal
>Trade Commission in challenging a merger in the Los
>Angeles grocery market, Von's Grocery and Shopping Bag
>Food Stores, which together had only 7.5 percent of
>the local market.
>
>But the intellectual tide shifted by the 1980's,
>especially under the growing influence of the
>so-called Chicago school of economics, which
>emphasized prices as the fundamental gauge of consumer
>welfare. Market concentration and company size meant
>little. If big companies raised prices, they were bad.
>But if, like Wal-Mart, they achieved greater
>efficiency from economies of scale and passed the
>benefits onto consumers as lower prices, they were
>praised.
>
>"Has our thinking on antitrust driven us toward an
>economic world that Wal-Mart represents?" asked Andrew
>I. Gavil, a professor at the Howard University law
>school. "I would say that it has. The harder question
>is whether that is a good or a bad thing."
>
>To keep cutting costs, Wal-Mart is tough on its
>suppliers. Selling to Wal-Mart, by all accounts, is a
>brutal meritocracy. Manufacturers have been forced to
>lay off workers after Wal-Mart canceled orders when
>another vendor cut its price a few cents more. Other
>suppliers have shifted to low-cost operations in China
>and elsewhere when squeezed by Wal-Mart to cut costs
>further.
>
>Yet here again, many analysts regard Wal-Mart's
>practices as simply leading the way in the inevitable
>drive to making the economy more efficient. "Wal-Mart
>is tough, but totally honest and straightforward in
>its dealings with vendors," said Michael J.
>Silverstein, a senior vice president at the Boston
>Consulting Group. "Wal-Mart has forced manufacturers
>to get their act together and forced them to compete
>internationally."
>
>There is some evidence that the company's zeal for
>efficiency has gone too far. Wal-Mart's detractors
>point to a trail of litigation over pinch-penny issues
>like unpaid overtime, and to a federal investigation
>into its use of poorly paid illegal immigrants as
>janitors. Wal-Mart insists that any problems do not
>reflect the culture of the company as a whole. "If
>there is valid criticism that comes from these cases,
>we will own up to it and made improvements," said Ray
>Bracy, vice president of international corporate
>affairs for Wal-Mart.
>
>Wal-Mart's growing power has brought increased
>scrutiny from federal and state regulators. But as
>long as the company keeps delivering lower prices,
>they will most likely be reluctant to act, beyond
>prosecuting employment infractions. The classic
>behavior of a predatory corporation is to cut prices
>to drive out competition in order to raise them later.
>There is no evidence yet that that is the Wal-Mart
>strategy.
>
>"Consumers get huge benefits from Wal-Mart as long as
>it has real competition," Mr. Reich said. "The worry
>is that it becomes so powerful that it can unfairly
>stifle competition."
>
>---------------
>fun fact:
>
>$1.50
>Hourly wage for a new
>Wal-Mart cashier in Mexico
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