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Wal-Mart Controversy

By Chris | November 26, 2007

I’ve been working on an essay about corporate social responsibility recently. It reminded me of a local debate a couple years back about whether Wal-Mart should be allowed to open a supercenter in my college town. Proponents of “smart growth” fervently argued that Wal-Mart lowers wages for workers and hurts small towns. Below is my response to this view I submitted as an editorial to the school newspaper:

“I would like to respond to Peggy Jenkins (“Wal-Mart editorial was misguided”) and the small group of vocal residents who share her anti-Wal-Mart sentiment. Jenkins contends that supercenters have a depressing effect on small-town economies. She references a group of studies compiled by “The Institute for Local Self-Reliance” and sponsored by groups such as the AFL-CIO, local business councils and municipal committees. These studies were prepared by individuals with no economics background. It’s not surprising that few economists are willing to associate themselves with a movement that embraces isolationism.

Jenkins’ fear that Wal-Mart will suck money out of the local economy isn’t unique. Mercantilists made similar arguments for protectionism, and Adam Smith proved them wrong more than two centuries ago. The hoarding of gold, or dollars, doesn’t make an economy prosper. Innovation, spurred by competition, does.

A Wal-Mart Supercenter would put competitive pressure on local grocers, such as WinCo, Rosauers and Safeway. Obviously, labor unions and existing businesses are going to be opposed to new market entrants. Why should the local government comply by granting existing businesses an oligopoly at the public’s expense?
Crusaders against Wal-Mart like to portray themselves as advocates for the poor. Nothing could be further from the truth. Low-income workers and zero-income college students would benefit most from the downward price pressure that would follow a new supercenter.

Jenkins paints the Wal-Mart controversy as a struggle over the quality of life in Moscow. In one respect she is correct. Fighting a supercenter maintains the quality of life for the few while restricting the freedom of the many. There is nothing virtuous about using the government to prevent people from purchasing groceries from whom they please. Although, when the masses stick around for less than five years, it’s a very politically attainable goal. “

Topics: Economics | No Comments »