Wal-Mart Exposes Contradictions on the Left

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 limited incomes.

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?

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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 cars.

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 improvements possible.

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 innovators are.

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 chips, whatever.

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 evolution.

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 spirit."

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 help anyone.


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.