walmart post #4

If Walmart is gonna be the subject of blog posts here every so often, I may as well just start numbering them, eh?

You can count on the LRC/Mises contingent of libertarianism to sing the holy praises of WalMart from time to time. In fact, that practice is perhaps more common coming from there than the time-honored libertarian tradition of critiqing drug prohibition. While many adore these Walmart love sessions, a growing number seem to be growing mighty tired of them.

I'm a libertarian, and I don't like Walmart. This shouldn't come as a surprise to those who stop by here regularly, since I've written three other posts about this particular beast (uno, dos, tres). My primary point is that Walmart is certainly no beneficiary of a free market, and in fact happens to love taking advantages of various laws and other goodies from the State to gain a competitive edge. Despite this, many libertarians champion Walmart while quite often leaving genuine criticism out of focus.

As I've stated before, there is nothing wrong and much that is good about those who wish to refute some of the typical Walmart bashing that is rooted in protectionist and otherwise anti-market thought. What gets on my nerves though is the wholesale glorification of Walmart that ensues as if there is practically nothing wrong with the corporation, other than perhaps having to deal with big crowds or less than helpful employees.

The latest example is this Lawrence Vance article from Mises.org that lists ten reasons not to like Walmart. The problem is that all ten of these reasons are pretty superficial compared to some of the real reasons to dislike Walmart. Again, aside from stuff like this, many libertarians will go right back to explicit pro-Walmart prose, as if Walmart is as wonderful as sex and they often find themselves hard-pressed not to cream their pants whenever they're strolling down WM's spacious aisles. This may be a bit of an exaggeration, and there are times when they'll mention the use of eminent domain, but such instances are most definitely pretty rare. Is it possible for these particular libertarians to justifiably tear apart the bad criticisms without also engaging in Walmart idolatry?

I got a kick out of reading the many comments inspired by this article on the Mises blog. There were some quality, well-reasoned responses, such as the many written by Roderick T. Long. For example:

"Wal-Mart has never caused any firm to go out of business. Wal-Mart can't close down any store but one of its own. It is the customers who no longer do business with a company or shop at a particular store who put that company out of business or closed that store."
Well, yes and no. It's not as though Wal-mart is a pure market firm, operating with no government patronage. For one thing, Wal-mart often gets the land for its stores by eminent domain. Since land obtained by eminent domain is generally land obtained below the market price (i.e., below the price at which the owner would have sold voluntarily -- otherwise eminent domain wouldn't have been needed), Wal-mart's operating costs are lower than they would have been without government help.

So, sure, customers voluntarily choose to shop at Wal-mart because of its lower prices; but those lower prices have been made possible, in part, by theft -- so it's not exactly fair competition. If I got to steal my means of production I could offer lower prices too. (And eminent domain is only one of the many ways in which big corporations are aided by state violence.)

And if Wal-mart first uses government intervention to help it defeat its competitors, and then takes advantage of the absence of such competitors in order to offer employees lower salaries than they could if the competitors hadn't been wiped out, then Wal-mart's low salaries are not exactly a pure market phenomenon either.

To be sure, Wal-mart's success isn't due solely to state patronage; there's been genuine entrepreneurial skill involved too. Still, Wal-mart's success is rather tainted.

A commentor named Beefcake the Mighty inserted some humor into the discussion by calling Vance "the Sean Hannity of libertarianism", implying that he apparently writes things that make libertarianism look bad. I don't endorse that ad-hominem by Beefcake since I'm unfamiliar with much of Vance's work, but it did make me chuckle and it does have some relevance, at least as it pertains to the Walmart article in particular.

Another good and insightful comment came from "JB" who revealed another (and largely unknown, I'd guess) reason to dislike WM:

I would like to add a "good" reason to not shop at WalMart. I do not "hate" WalMart, but I find some of their business practices questionable and virtually unknown to the consumer.

The "reason" I would like to add is DECEPTION.

The example I will use is from a lawnmower manufacturer about 15 miles from me: Simplicity in Port Washington, Wisconsin.

I own a manufacturing facility here. I have 100 employees and do about 10 million a year - been in business since 1986.

We met with Simplicity (some salesmen and a VP) about 5 years ago for a project. After discussing our deal, we began making small talk. One of the things that came up was our feelings about WalMart as a customer to our companies.

I had a bad experience with WalMart prior to the meeting (basically, the buyer took my price and hammered his current vendor to match it - not illegal, but not something that will have new vendors beating down your door if word gets around - it's like a guy in highschool who screws every girl he can as quickly as he can: he gets a "bad rep" pretty quick and no girls will go out with him at all soon enough).

When I brought this up (my bad experience with WalMart, not bad reps from too much sex!), I was surprised to hear that Simplicity had recently turned down a huge deal with WalMart - until I found out why.

According to the VP in our meeting, WalMart was all set to go with a specific model of Simplicity lawnmower. On the day they went to see the buyer in Bentovnille to get the final p.o. and go over a few minor changes to the graphics, the buyer suddenly let the VP (and owner and a few others that flew down)know that in order for the purchase to go through Simplicity would have to "cheapen-up" many of the parts, but not change the name or model number in comparison to what was sold at their "mom and pop"/other dealers.

So, in a nutshell, the buyer wanted to undercut all other vendors (which is understandable) not with volume, but with DECEPTION.

I have heard so many stories like this from so many different manufacturers, that I have a hard time seeing myself using WalMart as a vendor in the future. To me, this IS "the market" working - it won't start with consumers, it will start with vendors such as myself depriving WalMart of selection due to their behavior - if WalMart responds to the concerns, they will stay in business, if they don't, they will be Kmart in 30 years.

I now must question just about any product I buy from WalMart - am I really getting a "better price" or am I just buying lower quality product that has the same name/label as the higher quality product?

With WalMart, it really may be that we are "getting what we paid for".

One of the libertarians who is sick of all the Walmart praise is Stephen Gordon from Hammer of Truth, who recently wrote a great post titled "The Real Reason to Hate Wal-Mart". He starts off by pointing out all of the good arguments made by libertarians who defend Walmart from shoddy but persistent criticisms. He then shows the flaws in certain other comments and brings up the examples of three Walmarts in his home state of Alabama that have exploited bad laws and greedy politicians to gain favors from the State that wind up giving Walmart a competitive advantage over other stores.

A large debate continues in response to this post as well, with the primary point made by those disagreeing with Gordon being essentially that it is the laws and the system that need to be criticized, not those who benefit from it, such as Walmart. I wholeheartedly agree that the system is the root of the problem and should be condemned, but Walmart and other companies that similarly benefit should not be getting off scot-free from exploiting the system for their benefit. There is nothing libertarian about that. Additionally, there is nothing wrong with criticizing both the government and those who use the government to engage in certain dirty deeds. Just because Walmart is a business and not city hall or a large federal bureaucracy doesn't mean that they should be given a free pass to engage in or profit from political coercion without scorn.

When I see people seeking to eliminate any criticism of companies such as Walmart just because they're not the one who wrote the eminent domain laws, I'm reminded of why some libertarians are increasingly engaged in defining and pointing out instances of what Kevin Carson has dubbed "vulgar libertarianism". While glorifying Walmart may not necessarily equate promotion of faux free enterprise, it does (to return to the idea promoted by Beefcake The Mighty) serve to make libertarianism look bad. As a former left-wing statist who wishes to make libertarianism look good to the left, I'm especially sensitive to examples of corporate glorification that is not justified on libertarian grounds.

The one valid point that was made by those who questioned all the Walmart criticism is that Walmart is not the only corporation benefitting from eminent domain and other government goodies. This is certainly true, and all other corporations, such as Target or Costco or whomever, who fall into this category should be criticized as well. Walmart gets all the attention because it's the biggest and is subject to criticism from all sorts of people, but it certainly isn't alone in terms of gaining unjust nourishment from the government teat. Additionally, libertarians shouldn't need to be reminded that the State is ultimately the root of the problem. With that in mind though, this libertarian critter is not going to be compelled to back off from criticizing corporations who benefit from the State just because they may not be the root of the problem.