Politics & Policy

“Every Day Low Prices”

Facts about the revolution.

There’s something about Wal-Mart. So say shoppers and so say Richard Vedder and Wendell Cox in their new book from AEI Press, The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy. Richard Vedder discusses the revolution with NRO Editor Kathryn Lopez.

Kathryn Jean Lopez: What is “The Wal-Mart Revolution?”

Richard Vedder: Wal-Mart has radically changed the way people buy goods and services in America. In doing so, it has lowered the costs of goods to shoppers, particularly low-and middle-income Americans. By being efficient, it has cut the cost of getting goods from manufacturers to the people. Wal-Mart has done more to help poor people than probably any bloated government bureaucracy or any other private institution.

Lopez: You and Wendell Cox write that the Wal-Mart Revolution is a worldwide phenomenon. How extensive? Will Wal-Marts all over Europe make them hate Americans all the more?

Vedder: About one-fourth of Wal-Mart sales now are in other countries, and that is growing. I doubt, however, Wal-Mart will take over the world. They have had to back out of some markets (e.g. Korea), probably because of their lack of in-depth knowledge of local customs and regulations. But I can’t see how “every day low prices” and greater consumer choice will resonate badly with European consumers, although it might cause problems for labor unions and other special interest groups that are politically influential.

Lopez: Does Wal-Mart pay badly?

Vedder: No. A typical U.S. Wal-Mart worker makes a bit over $10 an hour, which obviously is not big bucks but is pretty typical for relatively unskilled, inexperienced persons in retail trade. Many workers have stock in the company and other subsidized benefits that compare favorably with other firms in retail trade.

Lopez: Isn’t being union-free a recipe for unhappy workers, social injustice — and the lawsuits Wal-Mart is seeing?

Vedder: No. About 91 percent of the American private sector workforce is “union-free” and as a group are not particularly unhappy. Indeed, the fact that on average Wal-Mart workers are pretty happy is probably a big reason why workers have resisted unionization. If workers are so unhappy, why don’t they unionize, and why doesn’t Wal-Mart have a hard time getting workers?

Lopez: But does Wal-Mart hate women?

Vedder: Companies are made up of people, and there are no doubt a few Wal-Mart managers out of the thousands that work there who don’t like women. But Wal-Mart as a company seems focused on making money, and if women can do the job best, they hire and promote them. Wal-Mart has had women in high level positions. I have no reason to believe that company policy has been deliberately anti-women.

Lopez: On the subject of women and Wal-Mart: Is there any merit to this latest court case?

Vedder: I really have no inside information, so I cannot say anything definitively. But I would be surprised if Wal-Mart has systematically discriminated against women. To be clear, it is not necessarily discrimination if it is demonstrated that females make less than males collectively at Wal-Mart, since there can be gender differences with respect to skills, education and experience. However, I have seen no data relating to gender differences with respect to working conditions.

Lopez: If I were John Edwards, I’d shop there by night but demonize it by day. Why do Dems pick on Wal-Mart?

Vedder: Actually, Edwards does shop there at night, or the equivalent, as he tried to negotiate the purchase of an electronic game in short supply at Christmas. In my opinion, the only rational reason for Democratic candidates to demonize Wal-Mart is that those candidates want the dollars and endorsement of the unions leading the anti-Wal Mart protests.

Lopez: Do you have any sense of how big an issue Wal-Mart might be in the upcoming (or already ongoing) presidential election?

Vedder: My guess is that a few candidates will push it in the primaries, find that it is not winning them a lot of votes, and abandon the strategy. The winning candidate will stay away from Wal-Mart bashing in the general election if she or he is smart, since most Americans like Wal-Mart, especially the Democratic Party base of low and low-middle income persons.

Lopez: Among big-box stores, why does Wal-Mart stand out?

Vedder: Simple –it is huge, bigger than the next four U.S. competitors combined. Historically, the left has always attacked big corporations –Standard Oil (Exxon), Philip Morris, big pharmaceutical firms. Big is evil in some people’s eyes, except when it comes to government.

Lopez: What are these big-box stores doing to small businesses? Isn’t it a good instinct for people to want to protect them?

Vedder: Wal-Mart’s coming to town has put some smaller stores out of business, although the same thing could be said about Sears and Montgomery Ward mail order catalogues around 1900, chain grocery stores in the 1930s, mall developments of the 1960s, and maybe even Amazon.com today. Schumpeterian “creative destruction” is at the heart of economic change. In the aggregate, Wal-Mart has increased employment and incomes for Americans.

Lopez: You say that “the criticisms directed against Wal-Mart are generally weak and/or erroneous.” But is that too broad-brush? Is there anything Wal-Mart could be doing better?

Vedder: Note the word “generally” in the above quote. Wal-Mart is not perfect, even though on the whole it has been a positive force in American society. The company’s performance under Lee Scott has been pretty mediocre by some measures—look at its stock price. The move into upscale fashions was a flop. Getting in bed with liberals over the minimum wage and health care is both a political and economic mistake, and probably has Sam Walton rolling over in his grave.

Lopez: Is the latest health-care team-up with unions a sign of a lessening of the attack and more people (and liberals) getting with the Wal-Mart Revolution?

Vedder: I think Wal-Mart is making a mistake in trying to sleep with their enemies. They probably think this will get the unions off their back — and Wendell Cox and I think they are wrong, They may also think a national health care system would take this cost item off their back, not realizing that the inefficiencies of such a system will have to be paid for by someone, and Wal-Mart will no doubt pay more than a proportionate share. National health care is a prescription for lower economic growth, and that would hurt Wal-Mart a good deal.

<em>The Wal-Mart Revolution</em>, by Richard Vedder and Wendell Cox



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