When Discussing Capitalism with people, they bring up walmart as a flaw

[ClayTrainor]

Okay, i hear alot of people talking bad about wal-mart all the time, and somtimes people come to the defense of the corporate giant.

I dont really understand it to be honest.

I was talking to a friend who believes that Taking money from big corporations and giving it to poor people on welfare is indeed a good idea. I was explaining my position on how that big business is good and creates jobs.

My friend then stated that The big business owners keep most of the profits for themselves and leave the little guy in the cold.

I argued that the free market would force the big businesses to stay competitive, and there would be more money for jobs because there'd be no income tax.

He then brought up wal-mart, and why they pay their employees such a ridiculously low wage.

I was then stumped... what is the reason for wal-marts success, with minimal expense?

 

[lodge939]

Walmart offers value for money, that's why theyre so successful. Their economies of scale allow them to undercut smaller businesses

 

[tmosley]

Plus they take advantage of the artificially low value of the renmembi (Chinese currency) to lower their prices below what they could do in a truly free market with truly free trade.

 

[ArrestPoliticians]

explain to them that high prices make them poorer. Wal Mart makes them richer. If the government stepped in a created little mom n pop shop monopolies, people would be VASTLY poorer than they are today.

 

[dannno]

Tack on The Federal Reserve. That's my answer to problems with big corporations. They are only able to grow because they are able to borrow so damn much from their rich buddies who can make money from nothing.

If we had a free market economy, we would still be trading with China, but at a more reasonable level without all the trade deficits.

 

[brandon]

Okay, i hear alot of people talking bad about wal-mart all the time, and somtimes people come to the defense of the corporate giant.

I dont really understand it to be honest.

I was talking to a friend who believes that Taking money from big corporations and giving it to poor people on welfare is indeed a good idea. I was explaining my position on how that big business is good and creates jobs.

My friend then stated that The big business owners keep most of the profits for themselves and leave the little guy in the cold.

I argued that the free market would force the big businesses to stay competitive, and there would be more money for jobs because there'd be no income tax.

He then brought up wal-mart, and why they pay their employees such a ridiculously low wage.

I was then stumped... what is the reason for wal-marts success, with minimal expense?

Walmart is paying their employees what they are worth. If the employees were worth more then they would work somewhere else.

Your friend may respond "Yea but there is no where else to work because walmart put all the other stores out of business!"

Then you respond "Walmart put all those other stores out of business by offering products at lower prices then any of those other stores. If walmart didn't exist, then sure, Joe the Walmart Employee might get a job somewhere else making slightly more money. But then Joe would also be paying more for his food, toilet paper and clothing. All in all, Joe would not be any better off getting payed a higher wage if the price of goods increased as well.

And as an added benefit, Mike the Carpenter also gets to enjoy lower prices even though he doesn't work at walmart. If Joe the Walmart employee wants to earn more money, he should develop skills that are worth more then his current skills."

 

[dannno]

explain to them that high prices make them poorer. Wal Mart makes them richer. If the government stepped in a created little mom n pop shop monopolies, people would be VASTLY poorer than they are today.

Walmart is the essence of what is destroying our country. There is nothing good about Walmart. The "wealth" you speak of is entirely fake because we are moving it over to China instead of to the people who actually live here.. we are taking on more debt as consumers to pay for things like housing we can't afford so we can use our measly incomes to buy cheap things at walmart..

 

[micahnelson]

Walmart imports vast amounts of goods from china. They provide a pisspoor shopping experience, terrible service, and extremely low prices.

For the shopper concerned with nothing but price, they are the best option. Many people don't go to Walmart to shop, they go to buy. They know what they are going to buy and get it off the shelf. Poor people don't have a choice and must do both shopping and buying at walmart. When richer people want to shop, they hit malls and things of that nature.

Try comparison shopping in walmart, I dare you. The birds in the rafters and feral children make it nigh impossible.

As long as the cheapest goods are available in China, discount retailers will always benefit from the trade "deficit", etc. Once the Chinese stop accepting US debt and US Dollars, see how successful walmart will be.

But again, just because someone is big, doesn't mean you can't be as successful. You won't be able to open a walmart sized chain- but you could open your own small retailer and beat them on services and unique products.

 

[theoakman]

Wal-Mart thrives on government intervention. They thrive on the Chinese government robbing their citizens of purchasing power. And they thrive on the US government giving them tax breaks to give them an unfair advantage against other businesses. That's not a free market. Wal-Mart is simply the beneficiary of government meddling.

Okay, i hear alot of people talking bad about wal-mart all the time, and somtimes people come to the defense of the corporate giant.

I dont really understand it to be honest.

I was talking to a friend who believes that Taking money from big corporations and giving it to poor people on welfare is indeed a good idea. I was explaining my position on how that big business is good and creates jobs.

My friend then stated that The big business owners keep most of the profits for themselves and leave the little guy in the cold.

I argued that the free market would force the big businesses to stay competitive, and there would be more money for jobs because there'd be no income tax.

He then brought up wal-mart, and why they pay their employees such a ridiculously low wage.

I was then stumped... what is the reason for wal-marts success, with minimal expense?

 

[Mini-Me]

There are two reasons for this:
First, Wal-Mart is a whore when it comes to corporate welfare, and by being essentially subsidized to a greater or lesser extent in different places around the country (and around the world as well), it's much easier for them to maintain lower prices in a way that their smaller competition cannot, than if they had to rely on economies of scale alone.

Secondly, there is also a valid free market reason for this, though it's difficult to tell how big of a role corporate welfare pays in comparison: The very purpose of a free market is that it serves consumers. It does not serve employees, and it does not serve corporations. Instead, corporations must bring goods and services to consumers in the cheapest and most efficient way possible. High prices are a competitive liability, which means that high wages are a competitive liability (including executive compensation), high supply line prices are a competitive liability, and yes, even high profits are a self-limiting competitive liability. Companies in a free market must deliver more than their competitors for less, and they will pay all of their employees as little as their employees will take. That allows for the most efficient distribution and use of natural resources and labor throughout the economy so that the most possible material wealth can be produced and enjoyed by the population as a whole. Similarly, through their labor, workers must compete with each other to serve consumers (through businesses or in any other way) in the most efficient way possible. Basically, the market wage is determined by what people are voluntarily willing to accept as a condition for working. Workers compete for jobs based on who can best serve the consumer for less, basically. Companies also compete for workers, and companies who require more consistent and better qualified employees will offer higher wages to attract them. Interventionists always focus on the distribution of wealth in the economy, or each person's share of the pie. The problem is that by intervening, they make things much less efficient by requiring more and more capital and labor to be spent on the production or delivery of each good or service, and that reduces the size of the entire pie, sometimes drastically.

This isn't a very strong argument by itself, though. I've given my more complete thoughts in some other posts, so I'll link to a couple. There's a good thread discussing minimum wage here:
http://www.ronpaulforums.com/showthread.php?t=151879
My own post in that thread is here: http://www.ronpaulforums.com/showpost.php?p=1633111&postcount=47
Also, I have a much longer and more detailed post in another thread here:
http://www.ronpaulforums.com/showpost.php?p=1630316&postcount=23

 

[Feenix566]

Wal-mart is able to charge less for everything because they run an extremely efficient operation. Paying their employees low wages is part of that. Wal-mart passes the savings on to you. They're keeping the cost of living low.

The whole thing is a cycle. People don't understand that. A lot of people, like your friend, only see one side of the economy. They think that if Wal-mart paid their employees more, then Wal-mart employees would be richer and everyone would be happier. The real world just doesn't work like that. If Wal-mart paid their employees more, they would have to pass on the cost to the consumer, and that would put their prices above those of other retailers such as Target. That would lead to a decrease in Wal-mart's market share, and a subsequent shrinking of the company, which means layoffs and Wal-mart's employees would be looking for new jobs. How does that help them?

 

[bucfish]

WalMart has always been a huge Lobby in DC. They are a fascist Corporation that has achieved success through that and through paying local government officials to get preferable things. They have risen because of their dirty handed practices.

 

[brandon]

Also, if your friend is bitching about walmart making too much profit, politely explain to him that walmart is a publicly owned company. Tell him that he can buy shares of walmart and enjoy those profits himself! Walmart paid $0.95 dividends on each share last year. The rest of the profits are used to buy back stocks (raises value) or investing in more capital.

Your friend can make these profits, and then e can then donate that money to joe the walmart employee if he wants. Or better yet, Joe the Walmart employee can buy shares himself!

 

[dannno]

Wal-mart is able to charge less for everything because they run an extremely efficient operation. Paying their employees low wages is part of that. Wal-mart passes the savings on to you. They're keeping the cost of living low.

The whole thing is a cycle. People don't understand that. A lot of people, like your friend, only see one side of the economy. They think that if Wal-mart paid their employees more, then Wal-mart employees would be richer and everyone would be happier. The real world just doesn't work like that. If Wal-mart paid their employees more, they would have to pass on the cost to the consumer, and that would put their prices above those of other retailers such as Target. That would lead to a decrease in Wal-mart's market share, and a subsequent shrinking of the company, which means layoffs and Wal-mart's employees would be looking for new jobs. How does that help them?

Will you please read all of the posts around yours and get a friggin clue.

We all understand the benefits of free-markets, but as you can see this is not a free-market issue. You are essentially promoting fascism rather than free-markets. The people who really believe in free-markets know that Walmart is evil, and it's not about paying their employees higher wages, it is about depressing wages in the other sectors of our economy such as manufacturing. Govt. intervention is the reason for this, not free markets.

Oh, and Walmart is not the cause of these problems, they are the result.

 

[brandon]

Will you please read all of the posts around yours and get a friggin clue.

We all understand the benefits of free-markets, but as you can see this is not a free-market issue. You are essentially promoting fascism rather than free-markets. The people who really believe in free-markets know that Walmart is evil, and it's not about paying their employees higher wages, it is about depressing wages in the other sectors of our economy such as manufacturing. Govt. intervention is the reason for this, not free markets.

I don't see how they cause net decreases to wages.

If Ron the Roofer lives near a walmart, he gets to enjoy all the savings of walmart. He now has extra money in his pocket. With this extra money he can expand his business. He can afford to hire more employees. And since roofing is a skilled trade, the roofers he hires will make substantially more then a walmart employee. If walmart didn't exist, he would not have been able to expand his business.

 

[Feenix566]

Will you please read all of the posts around yours and get a friggin clue.

Just because the majority believe something, that doesn't make it true.

We all understand the benefits of free-markets, but as you can see this is not a free-market issue. You are essentially promoting fascism rather than free-markets. The people who really believe in free-markets know that Walmart is evil, and it's not about paying their employees higher wages, it is about depressing wages in the other sectors of our economy such as manufacturing. Govt. intervention is the reason for this, not free markets.

Oh, and Walmart is not the cause of these problems, they are the result.

I see a lot of posts talking about this sort of thing in general terms, but I don't see any specifics at all. Can you please cite one law that was written to give Wal-mart an unfair advantage?

I'm not calling you a liar; I'm just trying to educate myself.

 

[danberkeley]

My friend then stated that The big business owners keep most of the profits for themselves and leave the little guy in the cold.

That's a ridiculous statement. It is not as if they keep their money in a vault in the basement of their house where it never sees the light of day. That money is reinvested in the company, invested in other companies, spent through out the economy, or lent (via banks) to other businesses. Also, WalMart's profit margin is 3.38%. That means they keep 3.38 cents of every dollar in sales. Compare that to Google's profit margin of 24.63%. Why aren't people protesting Google?

He then brought up wal-mart, and why they pay their employees such a ridiculously low wage.

If it's ridiculously low, why do the employees work there? If they are not being paid enough, why dont they go somewhere else?

I was then stumped... what is the reason for wal-marts success, with minimal expense?

Wal-Mart spent $286,000,000,000 on cost of goods sold, another $70,000,000,000 on SGA expenses, and an additional $7,000,000,000 in income taxes last year. How is that a minimal expense?

Walmart imports vast amounts of goods from china. They provide a pisspoor shopping experience, terrible service, and extremely low prices.

Well, then. Start you own "consumer friendly" Wal-Mart paying your workers $20/hour, selling Made in America (by illegal immigrants) goods, and gift wrap every item at the checkout counter. Oh, and don't make a profit becuase then you are a capitalist pig.

Poor people don't have a choice and must do both shopping and buying at walmart.

So you would rather have them buying and shopping at more expensive place?

 

[angelatc]

Walmart .... provide(s) a pisspoor shopping experience, terrible service, and extremely low prices.

I would absolutely argue everything there except the extremely low price aspect.

My husband went to buy a bicycle for me. He went to a Mom and Pop shop. They didn't have one already assembled - he would have needed to wait for a week because they refused to sell him the floor model.

He went to Target. It took him 25 minutes to get somebody to come pull a bike off their upper rack for him to see. A piece fell off of it during the process, and the brakes didn't work.

He went to Wal-Mart. A guy was actually working in the department there, got a bike for him, took a wrench out of his pocket and tightened up a few things, then took it in the back room and topped off the tires.

Wal-Mart makes the return process easier than any other retailer in the country. No receipt? No problem - they'll take it back. Bought it 10 years ago and decided you hate it? No problem - they'll take it back.

Christmas time is the only time I ever have to stand in line at Wal-mart, because they have cashiers at the open lanes.

So you tell me - what other store has better service? And what, exactly, do you look for in a shopping experience?

 

[graddium]

Wal-mart is a flaw of capitalism. All big corporations are flaws of capitalism. To the vast majority of the public, capitalism is what we have today, which is evil. Capitalism as defined by Rothbard and such is not what we have today. When I hear libertarians use the word capitalism, and then defend big corporations as if they are natural products of a free market, I cringe. Capitalism does not equal free markets. Capitalism (in nearly every usage of the word throughout society) is state favored companies sucking the life out of the economy and workers. If you use the term capitalism and mean free-markets, then do so at your own risk. You will have tons of people yelling at you because capitalism created Walmart, and Walmart is evil. Then you get confused on the definition and think Walmart is good because it came out of capitalism, and you start defending the very thing your principles reject. Some people call this vulgar libertarianism.

In a voluntary (free-market) society, Walmarts would not exist (and we'd be much better off economically, and morally, for it).

 

[Mini-Me]

Just because the majority believe something, that doesn't make it true.



I see a lot of posts talking about this sort of thing in general terms, but I don't see any specifics at all. Can you please cite one law that was written to give Wal-mart an unfair advantage?

I'm not calling you a liar; I'm just trying to educate myself.

Just a small example: http://www.progress.org/2005/tcs179.htm. Here's another story, and one of the things it talks about is government abusing eminent domain for Wal-Mart's sake: http://www.reclaimdemocracy.org/independent_business/walmart_eminent_domain.html. Those are the first and third links I found when I Googled "walmart corporate welfare" without the quotes, but you'll find tons of stuff about it. Wal-Mart is well-known for thriving on corporate welfare from governments of all kinds.

In addition,
Dannno was right about how the Federal Reserve System enables unnaturally huge loans to big companies. Also, while this isn't usually considered corporate welfare, every regulation in the economy increases the cost of doing business, and they therefore also increase the cost of market entry. It costs a lot of money to comply with regulations, and it also costs a lot of money to do all the lawyer work and prove to the government you're complying. This is why lots of big companies, like Wal-Mart, love regulations sometimes (you could even say corporations write them half the time ), at least up to the point where those regulations block out smaller competitors. After that point, the regulations just cut into profits, so it's a double-edged sword to them.