Those on the left are deeply exercised about Wal-Mart, but
they have a problem: While they fulminate over the business practices that make
low retail prices possible, as well as the economic dislocations that Wal-Mart
is accused of engineering, the left does not deny that paying lower prices for
merchandise is better than paying higher prices — especially for those with
In other words, they want it both ways. This results in
contradictions and even incoherence: If Wal-Mart is a "bad corporate actor,"
should shoppers boycott the retailer and pay more for goods? Should Wal-Mart
employees (who make well above minimum wage and receive substantial fringe
benefits) all quit and go on welfare? The Wal-Mart haters never quite say, so
what are we to make of their hostility?
The Wal-Mart retailing phenomenon is the result of
technological, transportation and geopolitical innovations. New information and
communication technologies allow more efficient purchasing and distribution
pipelines. Containerized shipping and transportation networks allow merchandise
to quickly and inexpensively move thousands of miles from factory to store
shelf. Lowered trade barriers widen markets and make it possible to realize the
benefits of these innovations on a large scale. The result is Wal-Mart and the
broader trend dubbed "globalization."
Innovation-driven changes in economic patterns benefit
everyone, but they can also have dislocating effects on a few. Some who were
doing very well yesterday lose out when what they do has no value tomorrow. The
classic example is the blacksmith whose career ended when everybody began buying
You can’t, however, enjoy the higher standard of living
that innovation allows while prohibiting the dislocating economic changes it
often generates. It’s not possible to have both low retail prices and
automobiles, and at the same time insulate less efficient local merchants and
blacksmiths from the effects of the dynamic economy that makes these
Another factor is the left’s egalitarian preoccupation with
"disparate economic power relationships." If one views the world through this
often-distorted lens, it’s easy to mistakenly discern something sinister and
premeditated in the dislocations arising from innovation. Since there’s nothing
to be gained in
the court of public opinion by blaming consumers’ preferences for
horsepower over horses, or cheap merchandise over expensive, the censure falls
on big, impersonal companies like Wal-Mart.
Therefore, if a new "supercenter" innovates — and prices —
the local grocery store’s unionized baggers out of a job, Wal-Mart’s enemies see
this as a scheme to diminish the wage-earning power of the retailer’s own
employees. If an American plastics company can’t match the price on storage
containers made in East Asia and as a result closes plants here, it’s taken as
evidence that Wal-Mart is hoarding wealth at the expense of other businesses as
well. If the former workers at those closed plastics plants "have no choice" but
to take lower-paying jobs at Wal-Mart, then, in the eyes of the left, the
conspiracy has come full circle.
However, there is no zero-sum game in which Wal-Mart wins
only when someone else loses. The retailer (and its customers) benefit because
it (and its suppliers) can sell for less and still make a profit.
Additionally, there is an inescapable reality of life in a
dynamic economy: Innovation and any resulting dislocation are like forces of
nature. Seeking to assign "blame" for them is absurd, even if we know who the
The standard against which Wal-Mart is judged by many on
the left is the mythical security and rootedness of a static economy represented
by "the village." They either don’t realize or won’t admit that this utopian
vision of the same factories, farms and workers making the same products sold by
the same retailers for the same prices, generation after generation, comes with
lower standards of living and reduced opportunities for personal advancement,
self-expression and fulfillment that few would accept. Nevertheless, the desire
to have the benefits of innovation and the security of the static
economy’s "village" results in the incoherence cited at the outset here, and
demonization of the icons of dynamism, including Wal-Mart.
Another contributor to these flawed perceptions is one of
those "the seen and the unseen" issues. We can see the displaced $25 factory
worker "forced" to take a $10 Wal-Mart job. Unseen are the billions of little
additions to "power" that accrue to every consumer, rich or poor, who now pays
$100 for a TV instead of $200, or $1.19 for paper towels instead of $1.49. These
consumers gain power because they can have things they couldn’t before – a
bigger retirement fund, more for a child’s college, an extra six-pack and bag of
These little accruals aren’t included in the "disparate power" equations of the
left, but they are just as real as the dislocations Wal-Mart is blamed for, and
in the aggregate, they are vastly more significant. A typical family saves more
than $800 annually on groceries by shopping at Wal-Mart, according to a paper by Jason Furman, a visiting scholar at New York University’s Wagner Graduate School
of Public Service.
Over the last two centuries, such innovation-generated gains have done more to
redress inequality and "disparate power balances" than all the Marxist
redistribution schemes and Naderite trade restrictions ever conceived. Wal-Mart
and globalization are just the latest chapter in this ongoing societal
With regard to the individuals who find their lives disrupted by
innovation-driven economic change, here’s a fact that may not be "fair," but is
true: The responsibility to create a new life and livelihood is entirely the
displaced worker’s — not for any cold-hearted "economic efficiency" reason, but
because he is the only one who truly can assume it. Others can have sympathy,
and assistance can be offered, but it’s up to the affected individual to turn
that help to lasting and productive purposes.
One corollary of this fact is that the ability of government to play a
constructive role in providing such assistance may be very limited, because the
solution for each dislocated individual is unique and can’t be delivered en
masse via welfare or "job training" programs or restrictive tariffs or any
of the blunt instruments of the state. All too often, these only create moral
hazards by allowing the displaced worker to evade the responsibility that is
ultimately his own, however "unfairly."
Even President Franklin Roosevelt himself, the godfather of the modern welfare
state in this country, acknowledged this: "To dole out
relief in this way is to administer a narcotic, a subtle destroyer of the human
The left claims to speak for those whose lives are disrupted by economic change.
If they are serious about wanting to "help," they must recognize that what
"society" can do may be limited. History shows that only by acting through the
voluntary institutions of civil society, rather than the coercive ones of
government, can we avoid creating new social and economic dysfunctions.
Responses that ignore these lessons may ease the misplaced guilt of their
sponsors, but they are unrealistic "feel-good" measures that ultimately fail to
Jack McHugh is a legislative analyst for the Mackinac Center for Public Policy,
a research and educational institute headquartered in Midland, Mich. Permission
to reprint in whole or in part is hereby granted, provided that the author and
the Center are properly cited.