Comments on Mutualist Blog: Free Market Anti-Capitalism: Kirklin Follow-up to Wal-Mart Piece

Your blog seems to be very interesting. Personally...

2008-07-05T01:20:00.000-07:00

Your blog seems to be very interesting. Personally I like Walmart. I may find everything I need there. Much about Walmart one can find on www.pissedconsumer.com. Especially consumer reports on the quality of goods and services. The store is wonderful but the customer service is awful. And the problem can not be fixed in any way. No one listens to the voice of the consumers.

Just some thoughts on what's been said here. I'm n...

2006-08-17T01:03:00.000-07:00

Just some thoughts on what's been said here. I'm no economist but I follow the logic here. I agree with Sheldon that it's very hard to gauge what a completely free market would look like. The state interferes in the economy in so many ways that an accurate accounting of benefits/losses to certain economic actors can be hard. It does strike me as sensible that the expanded competition big box retailers might face from smaller ones not under the weight of taxation or regulation could contribute to a downsize. Without hindering state intervention, many new local businesses might profilerate. If big box retailers did still exist in a free market, than their business model might be tilted towards the smaller end. Guess it's hard to tell for sure though.

I guess I would have to agree. Who knows what typ...

2006-08-05T12:33:00.000-07:00

I guess I would have to agree. Who knows what types of competition has been prevented from coming into existence by government interference. There are too many unknowns, but I think in general everyone would be richer, and the way to increase your position in business would be to increase productivity. This is Wal-Mart's stock in trade, so I would guess that it would do very well under economic freedom. However, back to the original point, I do believe that Wal-Mart executives would prefer economic freedom, or at least they should. They would stand to benefit tremendously if they could continue to compete under such circumstances. If you can compete (and Wal-Mart certainly can,) fair play for much bigger potential rewards is better than a more secure share of a poorer industry plagued by government intervention.

Paul Kirklin

Anonymous, I really think it is impossible to say ...

2006-08-05T05:21:00.000-07:00

Anonymous, I really think it is impossible to say what the marketplace would look like without all the subsidies and burdens. I don't think we can even know how things net out today.

Kevin,Glad my sending you that study on Wal-Mart s...

2006-08-04T17:11:00.000-07:00

Kevin,
Glad my sending you that study on Wal-Mart sparked a debate worth a good blog post. I've only skimmed the arguments right now but I'd like to consider them more deeply so I can jump into the debate.

quasibill,I agree with you that Wal-Mart is not cu...

2006-08-04T11:18:00.000-07:00

quasibill,

I agree with you that Wal-Mart is not culpable, in the case of the Interstate, for simply taking advantage of what exists. Again, it simply exploits more efficiently the same niche occupied by the other big boxes. To the extent that W-M is a major lobbyist for highway pork (it certainly is where I live), mileage may vary. And I think we're agreed that the model of the centralized national retailr would exist, if at all, on a much smaller scale in a free market.

Sheldon,

But small local retailers are at least capable of existing as outlets for local or regional goods. And they predated a large-scale national transportation system. Retail chains like Wal-Mart, which run their own national wholesale operations in-house, depend on a high-volume and predictable transportation network. The progression (as Chandler recounts it in The Visible Hand) was from a high-volume national transportation system, to the first national wholesalers, to national retail chains and large manufacturers producing for the national wholesale markets.

Another point worth mentioning is that Wal-Mart an...

2006-08-04T08:31:00.000-07:00

Another point worth mentioning is that Wal-Mart and other businesses that have built production facilities in China have in fact caused obvious improvement in the standard of living of people throughout China.

China has experienced rapid economic progress in recent years. It is on track to become an economic powerhouse in the not too distant future. A major reason this has happened is because the Chinese government is increasingly allowing free wage rates and foreign investment.

So, you can criticize Wal-Mart for benefiting from the terror of the Chinese government, but the reality is, Wal-Mart is helping the Chinese people pick up the pieces. It is a perfect example of the harmony of self-interest.

Sheldon, glad to see you involved in the debate. (I sent my Wal-Mart paper to Sheldon when I was trying to get it published.) I'm curious if you agree that Wal-Mart would likely have a similar size share of a much wealthier retail market under economic freedom as I speculated.

Kevin, point of information: You write, "Still, su...

2006-08-04T06:38:00.000-07:00

Kevin, point of information: You write, "Still, subsidies to long-distance transportation collectively benefit national retail chains at the expense of small local retailers."

Small local retailers also depend on goods traveling long distances over government highways. Where's the advantage to Wal-Mart in this regard? Aren't the real victims the smal local and regional manufacturers?

Here's my take (since I know you're both dying for...

2006-08-04T04:04:00.000-07:00

Here's my take (since I know you're both dying for it):

You're both right, as you are approaching it from different POV. And since "morality", which is in fact what you're arguing about, is a value judgment and therefore subjective. All libertarian philosophy is positive on is what actions justify the use of force. I don't see anyone here arguing that WalMart is a valid target of coercion. Kevin seems to be focusing on the "unseen" - the effects that the situation has on worldwide labor markets - China's actions, in conjunction with WalMart's, drive down global labor prices, and it is true that this process is intimately related to China's repressive policies. Paul focuses on the marginal benefits received by Chinese workers, which seem to be undeniable at this point.

I tend to see it more from Paul's POV, but I can understand Kevin's. It's a subjective call, just like some people condemn drug dealers, prostitutes, or pornographers, even though they don't advocate prohibition.

On the other hand, I can't agree with Paul's opinion that WalMart would be just as big absent the centralized state(s) and the interventions that result. I agree with Hayek and Mises that such centralization never occurs absent centralized political power. Even setting aside the subsidies to centralized business inherent in the interstate system, WalMart and other big retailers use the profit margins generated by dealing with repressed labor to offset the costs incurred by long distance transport. In a world with no such repressed labor pool, labor costs would tend to equilibrate (not actually flat line, but hover in an equilibrium zone) and local producers and retailers would become much more competitive, with their superior knowledge of their local market and lower transportation overhead.

I attempted, at least, to acknowledge in my post y...

2006-08-03T23:27:00.000-07:00

I attempted, at least, to acknowledge in my post your point in the first three paragraphs. Wal-Mart is simply the best at exploiting a niche created for all big box stores by state intervention; but that still means their general business model wouldn't exist with a cost-based transportation system (among other things).

I'm afraid Wal-Mart trying to stop government oppression in the countries where its sweatshops are located would be a little like Brer Rabbit begging not to be thrown in the briar patch.

Perhaps a better illustration than funeral homes for what's going on is that undertaker in High Plains Drifter.

The subsidies that Wal-Mart receives are not uniqu...

2006-08-03T16:04:00.000-07:00

The subsidies that Wal-Mart receives are not unique to Wal-Mart. Many businesses obtain subsidies. Many large retailers obtain subsidies. Probably, since Wal-Mart is so hated, it has a harder time obtaining subsidies than other large retailers. This would mean that it has a competitive disadvantage in that regard. The subsidies you mention such as long distance transportation benefit other large retailers too. Even if they don't use their own trucking systems, it lowers their costs of delivery, costs of inventory, supplies, etc.

Even if Wal-Mart has been somewhat more successful in obtaining subsidies, this certainly isn't significant enough to explain its success. The major, obvious reason Wal-Mart has had an advantage is because of its radical increases in productivity. Just consider its long history of unmatched innovations in the retail industry to understand this fact.

You are correct that in a free market Wal-Mart would have stiffer competition since lower taxation would make other businesses stronger, but Wal-Mart would be stronger too. The probable result of economic freedom in the US for Wal-Mart is that it would have a similar size share of a much wealthier retail business.

As I explained, sweatshops are beneficial for both Wal-Mart and for sweatshop workers because it bids up wages higher than if it wasn't there. If governments keep wages down by their actions, then they should stop. Wal-Mart can't make them.

Your metaphor comparing Wal-Mart to a bagman in a holdup is inaccurate. Wal-Mart benefits from the terror of foreign governments just as funeral homes benefit from the terror of private murderers. But it is not these beneficiaries fault in either case, and they work to actively improve the lives of those devastated by such terror.

Paul Kirklin