Saturday, October 29, 2005

Wal-Mart = anti-free market

It comes as no surprise to me that Wal-Mart supports a minimum wage hike. I'm sure that news of this surprised the hell out of people with a "progressive" mindset. In fact, I've heard such people claim that corporations like Wal-Mart would love to hire people for far less than the minimum wage in order to boost the bottom line even more.

Well, Wal-Mart's CEO has come out and stated that he disagrees with that notion. If you want to get an idea of why a minimum wage hike would actually be in Wal-Mart's interests, check out Lew Rockwell's commentary on the subject. An excerpt:
Before looking at the evidence, let's do some a priori theorizing based on the history of US corporate regulation. Historians such as Robert Higgs, Butler Shaffer, Dominick Armentano, and Gabriel Kolko have chronicled how the rise of business regulation, including intervention in market wages, was pushed by large companies for one main reason: to impose higher costs on smaller competitors.

This is how child labor legislation, mandated pensions, labor union impositions, health and safety regulations, and the entire panoply of business regimentation came about. It was pushed by big businesses that had already absorbed the costs of these practices into their profit margins so as to burden smaller businesses that did not have these practices. Regulation is thus a violent method of competition.

Think of it this way. Let's say you run a retail coffee shop that sells only "fair trade" coffee, which is expensive to acquire, but for which consumers are willing to pay a high price. All is going swimmingly until a competitor shows up and sells unfair coffee that tastes just as good for half the price.

Let's say consumers begin to change their minds about the merit of your "fair trade" coffee and your profits fall. You must make a change to survive. You can compete by offering a wider range of choice. Or you can lobby the local government in the name of "social responsibility" (oh, such high ideals!) to require that all coffee sold in your town be "fair trade."

Who does that benefit? Your company. Who does it hurt? Their company.
Read the whole column to see how he applies all this to Wal-Mart's situation. This specific form of violent competition also reveals something else that your typical "progressive" might be shocked to realize. Says Rockwell:
Now here is the great irony. The left has long been in a total frenzy about how Wal-Mart saunters into small towns and outcompetes long-established local retailers. Wal-Mart's opponents have whipped themselves into a frenzy about the company's success, claiming that it always comes at a huge social cost.
Near the end of the column, Rockwell touches upon something that puzzles me and places me at odds with some people who nornally seem to promote the free market more consistently than your typical vulgar libertarian:
Free-market advocates who have long defended Wal-Mart can only be disgusted at this shift in the company's methods from competing on market grounds to calling for the state to crush its competition. Even more disgusting is how the company can count on the economic ignorance of its critics to help do it.
As a free market advocate, I have never defended Wal-Mart. I don't understand how someone committed to free market principles and is consistent about it could do so. As this article by Jonathan Tasini written back in April for clearly shows, Wal-Mart has been at odds with free market thinking in numerous ways aside from just this recent example. As Tasini states, "Truth is, Wal-Mart could not survive in a real free market". If you ask me, it must be a knee-jerk reaction for some of these otherwise consistent free market types to defend anything criticized by certain leftists.

In order for free market support to become more appealing to "progressives" and other leftists, constant support for state capitalist institutions like Wal-Mart needs to come to an end. These corporate beasts need to be exposed as the enemies to genuine free enterprise that they really are.


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