He raises these interesting questions:
Should people be paid according to what they "need" instead of according to what their work is worth?
If their (the employees) work is not worth enough to pay for what they want, is it up to others to make up the difference, rather than up to them to upgrade their skills in order to earn what they want?I tend to agree with his perspective in the article. Wal-Mart seems to be a whipping boy for anyone that wants to take shots at a large coporation. I think most of these types of attacks come as the result of a general distrust of all corporations and without the consideration of the benefits that comapanies like Wal-Mart provide. I'd love to hear your own opinions so leave a comment.
Are they supposed to be subsidized by Wal-Mart's (or any other company's) customers through higher prices or subsidized by Wal-Mart's stockholders through lower earnings?
2 comments:
Besides offering its customers goods at a low price and giving those poor Indonesian children a place to learn to sew, I'd like to hear your thoughts on the benefits of a corporation like Wal-Mart. They're the whipping boy because they move into communities and devastate the local economies, giving nothing back in the ways a mom/pop store depends on local ad designers, suppliers, contractors, etc. Add into that the fact that people who work there can barely afford to buy the goods (even at that low, low price) they stock and scan and schlep.
As for your "subsidy" options--lower share price or higher shelf price--I'd say split the difference and sleep better at night, knowing that you've invested in a company that practices sustainability or shop at a store that allows you to meet the dead eyes of the undocumented worker in the blue smock who is working mandatory overtime--off the clock.
This isn't a general distrust of all corporations. It's a distaste for unscrupulous business practices that puts a smiling face on its efforts to mindlessly crush competition without a thought for the collateral damage they cause. They promise local officials they'll create hundreds of jobs, but these are jobs that don't allow for its employees to return much to the local economy--because they can barely afford their rent. Forget about health care, child care, and retirement.
Yeah, it's an incentive to "upgrade their skills" to be sure, but that's another argument about the feasibility of dropping out of the workforce or scaling back one's involvement in the workforce to go to a community college they can barely afford (in time or dollars).
I like your site, I don't know jack about the stock market or the finer points of managing investments. It shouldn't be a dirty or secret or guilty activity. But just as you say Wal-Mart seems to be the knee-jerk's favorite target, I think there's a similar rush to defend Wal-Mart by those with a similar automatic distrust of any proposed limits on virtual monopolies. Maybe in a truly "free" market this wouldn't be necessary, but this market ain't free. Regulation is necessary to protect the disadvantaged from predators who manipulate local, state, and federal governments into protecting them instead of the individual.
I'd like to respond to your comments. First, thanks for reading the site. It's always good to get a variety of people together with a variety of thoughts, so we can learn about economics, finance, money and really the world from different sources.
I guess I first need to clearly lay out my position. I am a free-trade consumer advocate. Anything that helps consumers (pretty much everyone in the world) is a potentially good thing. That's my take and it will help you understand where I am coming from.
So let's start by addressing your first question: What are the benefits of a company like Wal-mart? I think that Wal-mart embodies a zeitgeist, if you will, of a way of doing things. They want to use technology and their bargaining power to bring the consumer the lowest prices he or she can get. In this case they are creating economic value by being efficient.
Wal-mart is credited by some as single-handedly keeping inflation down in the 90's because they constantly, through innovation in logistics and consumer research, were able to become efficient and keep prices low. In my opinion, low prices are a good thing. Efficiency is a good thing and for me it has value. For most, Wal-mart creates value. What is the significance of the type of value that Wal-mart creates? Well, by providing the same product those "mom and pop" stores provide, at a lesser cost, they allow consumers to use what they would have spent at the "mom and pop" stores and spend it elsewhere. Perhaps the money they save would create demand for a different kind of value. Maybe the money they save could be used on a vacation or doing home improvements. This is a great illustration of opportunity cost.
Let's look at an example. This past year a number of hurricanes hit Florida and caused immense amounts of damage. After it was all over, "experts" on the news said that this would actually be a boon for construction workers in the South. They would have a whole lot of extra work and that would help the economy. The Hurricanes helped the economy. To me, this is a fallacy. To me, the money that is now being used to rebuild Florida, had there not been a hurricane, could have been used elsewhere. People could have bought a boat, or invested it in the stock market, or built a new room on their house. Who knows? Unfortunately, the hurricanes are forcing them to use that money elsewhere.
The mom and pop shops are like the hurricane. They charge too much because of their inefficiency. I'm not saying they're evil or anything, I'm just saying they don't create economic value when compared to Wal-mart.
Now you may have noticed that the value I'm talking about is almost purely monetary. You're right. Often this is a commonly understood definition of "value," but it isn't neccesarily always true. Look at New York City. Specifically Manhattan. Can you see a Wal-mart there doing well? Me either. I think that people in Manhattan define "value" differently. To them "value" might mean quality or exclusivity. In Manhattan, Wal-mart has no value.
In some communities in the U.S., Wal-mart would not do well, because the value they create is not what the consumer wants. To me, this is great. The consumer then drives demand for a particular value. In those places where Wal-mart floursishes, consumers want cheap goods. End of story. In the places where mom and pop stores or specialty shops do well, consumers want quality. They want to know the people they buy from. To them, it is their choice to shop at Wal-mart or the local places. On a side note, this is why Target is doing well right now. There is a consumer base who want cheap-er prices, but don't like the "feeling" of Wal-mart. To them Wal-mart has no value.
I'm a self-described free trade consumer advocate. I also believe that you can't pay people less than what they'll work for. If the employees of Wal-mart were being treated so badly, why not quit? If enough of them did that, Wal-mart would have to pay more, right? Apparently though, people aren't quitting. So, I conclude that they must like it. About as much as someone at McDonald's might like it. Who knows? They're still working there, though.
I might not have addressed everything in your post. I want to end by saying by being a consumer advocate, I dislike monopolies, too. I don't quite think Wal-mart is there yet. As a monopoly, creating value would be their last objective. If Wal-mart ever became that big, I'd be right there at the front saying break it up. You should hear me go on about Amtrak and other monopolies!
Keep coming back to the site, Trevor. If you want to continue with this discussion, I'd love to hear your thoughts on it.
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