L. Neil Smith's
THE LIBERTARIAN ENTERPRISE
Number 276, June 20, 2004
Leave Wal-Mart Alone
Special to TLE
When it comes to the ludicrousnot to mention insidiouscharges of "slave wages," "gender bias," "unfair labor practices," "purchasing and supplying low-priced products in order to kill American workers' jobs," and "encouraging and fueling the disease known as 'consumerism,'" the loopy Wal-Mart critics just couldn't understand the natural function of the marketplace if their lives depended on it.
As everyone knows by now, Wal-Mart, the giant low-priced retailer, has just introduced a new pay scale plan and declared that it would implement a quota system to promote women and minorities in order to counter the criticism levied at the company by labor unions, employees, and competitors who say they are struggling to meet the company's low costs. Chief Executive Officer Lee Scott addressed more than 15,000 attendees comprised of shareholders and employees at the organization's annual meeting at the University of Alabama, outlining steps aimed at responding to wage-and-hour concerns, including setting up electronic alerts that instruct cashiers to go on break. Standing before the members at the meeting, he said, "Not a single one of those is earth-shattering, but when you put it all together that is major progress."
That's not all though. Scott told the members that he and other executives have agreed to do away with 7.5 percent of their bonuses this year if Wal-Mart does not actively promote women and minorities, as The New York Times put it, "in proportion to the number that apply for management positions." As Scott puts it, "If 50 percent of the people applying for the job of store manager are women, we will work to make sure that 50 percent of the people receiving those jobs are women."
Not surprisingly the retailer's critics took the news with a strong dose of skepticism. "None of it sounds like a huge improvement in the lives of Wal-Mart workers," quipped Ross Eisenbrey, vice president of the Economic Policy Institute, a leftist think tank in Washington. Wait a minute here! Didn't the leftists want this kind of arrangement in the first place? After all, with the company's plans for "equal pay" and "diversity goals," you'd think the liberals would be cheering this all the way to the bank. I suppose not.
He then notes that the plans seemed "wooden" to have what he believes to amount to quotas for women and minorities in the organization, although he was pleased with the company's decision for "acknowledging a shortcoming." "I think what he's really saying is 'I think we're going to make sure that women are given a fair shake.' It's recognizing that they haven't been, and I think that's important," he said. My, my, myhow nice of him to think so!
Amazingly enough that doesn't end there. Wal-Mart bashing seems to be the most popular fad at the moment. It doesn't matter if one comes across a liberal column geared towards slamming the superstore or an online website hounding the enterprise, the charges against Wal-Mart proceeds to flourish. For example, the anti-Wal-Mart site Wal-Mart Watch states on the Consumer Alert section of its website:
But what heinous crimes has the giant retailer committed? Well, they are of the following:
Let's deal with the charges on an individual basis, shall we?
People should have figured out by now that the real motive behind these charges is to control the spending habits of the buying public. These critics can't stand the fact that individuals choose Wal-Mart as their favorite source for quality merchandise in lieu of stores where they would want the buying public to spend their money. They can't stand the choices that consumers make for themselves. (It ought to be noted that liberal and conservative activists on both sides of the aisle often can't resist employing the name of the "people" when their true goal is to both control the "people" by restricting their choices.)
The truth of the matter is that consumers will spend their money the way they want to spend it. No central planner in the history of the world has been quite successful at coercing people to spend the way they would like their money spent. Unfortunately these critics have no clue that coercing people to spend money the way they would like their money spent can never succeed, no matter how pure and good the intentions are. The consumers have a right to invest, spend, or save their money as they like. After all, it's their businessnot the business of the critics.
Sojourners Magazine writer Brian Boltion, in a recent piece, "Always Low Wages," points out that Jesus Christ, if he were alive today, would never cater to Wal-Mart, since the company's employee pay scale is not up to the magazine's standards. Moreover, he charges that Christians are committing a "sin" for patronizing the business because it imports low-priced goods manufactured by people who earn lower wages than company employees. After all, Bolton contends, "Lower prices equal lower wages."
It is correct to say that most of us would go along with higher wages for our services. Obviously there are no exceptions for Wal-Mart. However, that hardly constitutes an illegitimacy of the company's pay scales, contrary to the claims advanced by Bolton and his ilk.
Let's put it this way. If I were working for a reputable company, and my employer who had been paying me a starting wage of $7.00 an hour wanted to double my earnings (that would be terribly doubtful), I would not object to it. However, my other co-workers might see things rather differently. Obviously they would protest, and that would be hardly surprising, regardless of what anyone would say. But, in all fairness, my current salary would be no more illicit than, say, a double in my take-home pay.
Unfortunately Bolton and the other critics seem to miss the point: payments for services are a consensual activity. They involve mutually agreeable exchanges. There is no evidence in the world that Wal-Mart coerces its employees to work there. Point of fact, the people who choose to work there do so because they would prefer employment to unemployment any time, any day of the week.
Bolton is wrong to believe that lower prices "drives down" wages. As a matter of fact, there is no conspiracy to push wages down, no matter what the "evidence" they provide to support their claims. Anyone who is well-versed in Austrian economics should be aware that the argument is false. Murray Rothbard, in Man, Economy, an dState, points out that profits are the result of what is known as temporarily underpriced factors of production. Entrepreneurs realize that, as time goes on, they will have to either refuse to sell their factors at current prices and search for other options, or accept the current price because the opportunity costs of selling to other buyers may be higher than they would like to incur. If they choose the latter, then these particular factors cannot be underpriced. Therefore, the owners are not able or willing to do what it takes to bring in higher prices for their employment.
On top of that, Bolton and individuals like him fail to understand that it's the consumers who pay these employeesnot the company. The more the consumers pay relative to how much they value the product, the more the employees make relative to the amount of productivity, hard work, and quality they put into their jobs. It is that simple.
The bogus charge regarding the greeters (most of whom are diminutive senior citizens) ought to be dismissed, considering their job is to greet consumers who walk into the door. They are also there to prevent the possibility of in-store theft (as many retail stores are often hit hard with the loss of their inventories due to pervasive thieves). If activists are annoyed at and uncomfortable with Wal-Mart not liking certain kinds of people who steal from their shelves, then they are, in reality, advocating theft. With that reason in mind, their arguments should be ignored at all costs.
As for the claim that the company pushes their smaller competitors out of the way, that is further from the truth. The claim is that, as soon as Wal-Mart and any other bigger competitor moves into town, the smaller stores had to close their shops and the owners there had to go to work for the company that shoved out to the streets. It is held up that the former owners have less incomes than ever, proving once and for all that Wal-Mart and the rest of the "big boys" are out to create and prolong poverty.
First of all, none of those owners were forced out of business. They ended their businesses simply because they couldn't afford the expense to keep them open, as their businesses weren't reaping the kind of profits they would have liked to have generated. If the new store attracted their customers at the former owners' expense, it means that their consumers liked Wal-Mart better than their stores because of more choices and lower prices that they enjoyed more than what they getting from the other older businesses.
Second of all, the employees of those businesses will definitely find jobs at the new stores, resulting in higher incomes. While the business owners may suffer loss of incomes, their employees will most likely reap the new benefits they are now earningbenefits that they never had in their possession recently.
The "Wal-Mart creates poverty" argument is baseless and false. It isn't true. That has never been true. In reality, Wal-Mart enhances the quality of large at large and small communities because they furnish a wide variety of choices that consumers had not enjoyed in times past. For example, the Wal-Mart I go to (it's located in Chesterfield Township) offers a variety of low prices all the timestuff that I could pay higher elsewhere than at the store. I recently purchased a copy of the widescreen edition of Lord of the Rings: The Return of the King on DVD for $14.87 (plus sales taxit's six cents on the dollar here in Michigan)a price that I could not get anywhere else. Blockbuster Video charges $25.99 for the movie where I live, and it's not a price that I would pay there, no matter what the incentives Blockbuster might offer to me.
Finally, as for the "mindless" consumerism claimthese activists get this wrong as well. Consumers don't "mindlessly" purchase goods at Wal-Mart. Consumers act on their own self-interests and purposely behave this way when they shop at the store. They are not zombies wandering aimlessly in the aisles with an agenda implanted by the companyto purchase products for the benefit of the company. These people have desires and needs like anyone else. At least they believe that some of those desires can be satisfied and fulfilled through the use of the items purchased there.
As for the pay scales and the diversity goals, the only reason Wal-Mart is introducing these pay scales simply because they were coerced. If these employees were not happy with the kind of salaries and job positions they had, then why were they working there? It is ludicrous to suggest that politics should decide what kind of pay scale system should exist and what groups of people should receive job opportunities through a quota system. Quotas aren't part of the solutionthey are part of the problem, and they should be abandoned in favor of a voluntary, pro-free market method of remuneration for their employees. It's time for Wal-Mart executives to establish a system of qualifications that define the experience and criteria for new applicants within and outside of the company.
If Wal-Mart wants to have a private system of quotas for their employees, so be it. But keep the government out of this matter. It's time to let the free market solve this problemnot the government.
It's time for the labor unions, government investigators, and the critics to leave Wal-Mart alone. It's time to let the free market solve these problems. If anything, the marketplace can solve them better than the government and its cronies ever will.
While they're at it, leave the consumers alone. Let them spend their money however they want, whenever they want, and wherever they wantwithout the permission of the State, the critics, and their allies.
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