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The Pros and Cons of Having Wal-Mart Stores and New Wal-Mart Stores

There are good and bad characteristics of virtually anything, including Wal-Mart. The alleged reasons that Wal-Mart and other big box superstores have succeeded in destroying hundreds of billions of dollars of competitors' businesses, land values, and community tax bases are:

1. Failure of many of the persons in an affected community to understand as much of the problem as they need to know to vote or act intelligently on the issue
2. Failure of individuals seeking to pay less for their purchases to know about the higher related costs which inevitably result from their "bargain" purchases, including reduced wages, reduced community support, reduced business opportunity, reduced land values, reduced tax base, and lower standard and quality of living for most members of the community
3. Shortsightedness of employees and other community members when dealing with the Wal-Mart problem [a problem related to the shortsightedness of the financial markets insisting that public companies create immediate as distinguished from long-run profits and values
4. Accepting Wal-Mart as a religion of sorts that can do nothing wrong in spite of every indication to the contrary
5. Resignation and related willingness to take whatever is offered as better than nothing
6. Failure by lawyers, politicians, local elected officials and citizens to understand the legal issues involved and to try to rely instead on professionals in fields other than law and litigation (who themselves may not understand the entire problem) to try to solve the problem
7. The desire of persons existing at the lower levels of our economy to believe in the good tooth fairy, because from their standpoint it can hardly get any worse
8. More trusting nature of persons who are brought up in a community in which most persons are known to each other
9. Non-use and distrust of lawyers, the judicial system, elected officials and government agencies to resolve problems
10. Additional business and profits for those few businesses not competing directly with Wal-Mart
11. Resignation of townspeople to the inevitability of having a Wal-Mart in the vicinity, which would do more damage to their town in their opinion if the Wal-Mart were located in a nearby town rather than in their own town

The foregoing reasons are not all-inclusive and themselves can lead to disharmony among persons trying to oppose Wal-Mart, but they need to be articulated. Leaders of the movement to stop Wal-Mart have obviously failed, for the most part, and the time has come to take a different and more appropriate approach.

But, before talking about this approach, let's look at a list (also incomplete) of the major arguments favoring the exclusion of Wal-Mart from any further expansion, and the major arguments favoring further Wal-Mart expansion. Because the arguments in favor of Wal-Mart are much fewer and therefore easier to list, I'll start with these Arguments Favoring Wal-Mart and Its Further Expansion:

The Arguments in Favor of Wal-Mart and Further Wal-Mart Expansion

1. Wal-Mart will provide a new and substantial source of tax revenue for the local community
2. Wal-Mart will provide a significant number of jobs for the residents in the area
3. Wal-Mart will provide a larger selection of goods and services under one roof than is available in the business section of any nearby small town
4. Wal-Mart will provide a lower price for all (or substantially all) of its goods and services than the existing local merchants in any nearby small town
5. Wal-Mart will provide convenience to its customers through immediate, nearby, no-cost, no-meter-feeding, no-tow parking space
6. Construction of the Wal-Mart facility will provide some temporary construction jobs to local persons;
7. Wal-Mart will attract additional business to the community consisting of persons who will patronize Wal-Mart from other communities within a certain number of miles (or radius) from the Wal-Mart store
8. Wal-Mart will cause the adopted town to grow, together with the values of some of the real estate surrounding the Wal-Mart facility
9. Wal-Mart will provide opportunity for some local residents to start at the ground level and work up in the Wal-Mart organization
10. Wal-Mart will provide training for its employees
11. Wal-Mart will provide profit-sharing, incentives, health care and other benefits to its employees
12. Wal-Mart will feature and promote American products and services through its "Buy American" or "Bring It Home to America" programs
13. Wal-Mart will treat its employees as partners in the Wal-Mart enterprise
14. Wal-Mart will respect and treat its employees well as valued members of the Wal-Mart family
15. Wal-Mart will compensate its employees fairly and bring prosperity to its employees and the communities in which it operates
16. Wal-Mart will become a contributor to the local community

The above list of arguments favoring Wal-Mart and its expansion into every community or group of adjacent communities in the United States is pretty slick, very misleading, and has easily been sold to many Americans.

Before looking at the list of arguments against Wal-Mart set forth below, look again at the above list of arguments favoring Wal-Mart and see if you can spot how each of the foregoing arguments is false and/or misleading.

The Arguments Against Wal-Mart and Any Further Wal-Mart Expansion

Here is a list of the major arguments (all allegations) which could or should be made in opposing Wal-Mart and any expansion by Wal-Mart into new communities (domestic or foreign). The arguments are not set in any particular order, and undoubtedly some major arguments have been inadvertently omitted (or are considered to be part of another listed argument).

1. Wal-Mart is allegedly in wilful violation of the federal Robinson-Patman Act and any similar state law (which prohibits price discrimination) as to most of its purchases of inventory, which drives many lawful and law-abiding local businesses out of business, which enables Wal-Mart to lower its costs and sell at lower prices (at the expense of its local competitors and the persons from whom Wal-Mart purchases its goods)
2. Wal-Mart is allegedly in violation of the federal and state wage and labor laws requiring Wal-Mart to pay overtime to its employees (called "Associates" by Wal-Mart) which enables Wal-Mart to lower its costs and sell at lower prices (at the expense of its local employees and their families)
3. Wal-Mart often receives subsidies from the state and local governments in the form of reduced interest on construction loans, guarantee by the local government, retention (by Wal-Mart) of sales tax revenues for a specified number of years, condemnation of private business and other property by the community for use by Wal-Mart, government action and priorities favoring Wal-Mart, contribution by government to infrastructure costs, all of which subsidies are paid in part by Wal-Mart's lawful business competitors, who are then placed in further competitive disadvantage by such lowering of Wal-Mart's costs of doing business in the local area
4. Wal-Mart allegedly uses unlawful tactics to prevent its employees from forming unions in violation of the federal Taft-Hartley Labor Relations Act and various state statutes
5. Wal-Mart attracts customers by alleged false advertising that many of its offered goods are made in America (through its "Buy America" and "Bring It Home to the USA" campaigns), which advertising is in alleged violation of various federal and state laws prohibiting false advertising and solicitation of business - such alleged activities enable Wal-Mart to obtain customers and sales at a lower cost, at the expense of competitors and Wal-Mart's customers
6. Wal-Mart allegedly has lower wage and labor standards for its employees than the local communities realize, resulting in poverty for Wal-Mart's employees, their family and their community
7. Wal-Mart allegedly makes use of part-time and temporary employees from the community which deprives the employees of profit sharing, pay increases, health benefits, vacation and vacation pay, and other benefits
8. Wal-Mart's purchasing practices requires most suppliers to manufacture goods in third-world countries and to even lower the foreign workers' already-impoverished standard of living by competing with other suppliers to become the lowest-paying employer of all, with employees having the lowest standard of living and highest employer abuse, in the worst sanitary, social, working and educational conditions, to win and retain Wal-Mart's approval and contracts
9. Wal-Mart's purchasing practice supports dictators and undemocratic practices in third-world countries by requiring strong-arm methods to keep the enslaved third-world employees in line and prevent union or individual complaints about the ever-lowering working conditions and pay -- all to prevent loss of Wal-Mart and other superstore contracts from going to a third-world country with even worse (but lower-cost) working conditions
10. Wal-Mart's business practices allegedly ignore ethical and moral considerations which are important to the community and its members
11. Wal-Mart's pay scales and other labor practices allegedly results in a lower standard of living for Wal-Mart's employees with the alleged result that about 90% of Wal-Mart's full-time and part-time employees and contract employees are living in poverty as defined by various standards
12. Wal-Mart allegedly does not purchase any significant amount of goods or (non-employment) services from local manufacturers or suppliers, so that the customary accelerator of 5 times sales (i.e., that $1 of sales by Wal-Mart expands into $5 in total sales for the community as a whole) is substantially lower than 5 times, and instead much of Wal-Mart's income is spent elsewhere or distributed as interest or dividends to lenders or shareholders of Wal-Mart many of whom are located at or near Bentonville, Arkansas
13. Wal-Mart's presence allegedly reduces the value of competing businesses, other businesses, most land values, and the community tax base
14. Wal-Mart's presence allegedy increases the welfare costs and other costs of the community far more than Wal-Mart pays in taxes to the community
15. Wal-Mart makes no reliable promises to stay; it has hundreds of abandoned Wal-Mart stores throughout the United States, moving from one location to another in search of maximum profits, without regard to the effect upon the communities it invades or flees
16. Wal-Mart managers are not tied in to any town for long; they are moved from one place to another periodically, sometimes in a matter of a few months
17. Wal-Mart lowers the aesthetic quality of the working place with its windowless concrete boxes and adjacent asphalt carpet for parking, for the carrying out of its business
18. Many of these points and other arguments are contained in Professor Edward B. Shils' study and survey on Wal-Mart which can be read in its entirety at The Shils Report, a 250-Page Report and Survey Proving that Big Box / Superstores Are Injuring Towns and Small Businesses in America through Price Discrimination and Other Predatory Practices. This report deals with Wal-Mart and how it seriously injures the local economy, businesses and tax base for the areas in which it does business. The report is based on a projectible survey which might be admissible as evidence in a lawsuit attempting to seek recovery of damages or injunctive relief against a superstore chain for violation of the Robinson-Patman Act
19. One should not overlook the 1995 study conducted by Prof. Kenneth E. Stone, of Iowa University, entitled "Competing with the Discount Mass Merchandisers", which is widely heralded as a devastating study against Wal-Mart and its effect upon the small towns, villages and communities it invades; Prof. Stone's address is 2208 Van Buren Ave., Ames, IA 50010, tel. no. 515-232-7766 [or 460 Heady Hall, Iowa State University, Ames, IA 50010, tel no. 515-294-6269]; the study is not available at any website, but there are about 100 articles referring to his study; Prof. Stone's impressive c.v. can be found at Prof. Kenneth Stone's c.v.

The foregoing list of alleged arguments against Wal-Mart is not all-inclusive, but it does not have to be complete. There is enough set forth in the first five points (if properly presented to the court) to halt further expansion of Wal-Mart for many U.S. communities.

The specific nature of the lawsuit which allegedly should be brought to stop expansion of Wal-Mart or other big box, category killer superstore in a community is discussed immediately below.

A Closer Look at the Arguments Purportedly Favoring Wal-Mart

Now, let's take a look more closely at the arguments purportedly favoring Wal-Mart, to see if there really is a valid argument favoring Wal-Mart. Each of the items listed above in the Pro Wal-Mart section is set forth below, followed in each instance by allegations of why the item is not accurate or not a good argument:

Pro Wal-Mart Arguments Followed by Critical Comment Allegations

1. Wal-Mart will provide a new and substantial source of tax revenue for the local community; HOWEVER, these amounts are small in comparison to the dollar amount of destruction to local business, reduction in land values, reduction in tax base, and tax abatements and benefits provided by the local government to Wal-Mart
2. Wal-Mart will provide a significant number of jobs for the residents in the area; HOWEVER, many of the new employees will come from other towns because Wal-Mart pays so little that most employees cannot afford to live in a town which can support a new Wal-Mart; many of the Wal-Mart employees will be required to hold at least two jobs, and will be living below the poverty line no matter what they do
3. Wal-Mart will provide a larger selection of goods and services under one roof than is available in the business section of any nearby small town; HOWEVER, this causes a loss of the business providing different types of goods and creates an unwanted homogenization of goods being offered throughout the country, without significant regard to local preferences or local manufacturers and suppliers
4. Wal-Mart will provide a lower price for all (or substantially all) of its goods and services than the existing local merchants in any nearby small town; HOWEVER, this is not true when all the costs are taken into account, including the higher social costs for the underpaid employees; the loss of businesses and their value and the destruction of families dependent on such businesses, and the inevitable price increases which will be imposed by Wal-Mart when competitors are pushed out of business and when manufacturers raise their own prices to Wal-Mart to offset the loss of their vastly more profitable small business customers as they are put out of business by Wal-Mart; the immediate attraction of what seems to be a lower price has severe consequences to be paid by most members of the community; lower prices are an illusion caused by the failure to take all costs into account
5. Wal-Mart will provide convenience to its customers through immediate, nearby, no-cost, no-meter-feeding, no-tow parking space; HOWEVER, this is paid for by the illegally-low prices at which the superstores buy their goods and would not be available if Wal-Mart and the other superstores paid for their goods at the same price per unit as their smaller competitors are required to pay when buying from the same manufacturers; Wal-Mart has not found a better way of doing lawful business; it has found a way to buy goods at unlawfully low prices and drive its law-abiding competitors out of business, at which time it can and will raise its prices to much higher levels
6. Construction of the Wal-Mart facility will provide some temporary construction jobs to local persons; HOWEVER, these are fewer than one would think because Wal-Mart is always building new facilities and undoubtedly uses the same lawyers, engineers, architects, plumbers, interior designers (if any) and others from one job to the next as the state is filled out with new Wal-Mart stores; hopefully a few shovelers will be hired from the local area to pitch in for a few weeks during construction
7. Wal-Mart will attract additional business to the community consisting of persons who will patronize Wal-Mart from other communities within a certain number of miles (or radius) from the Wal-Mart store; HOWEVER, this is a disaster for the surrounding towns because more than 75% of WAl-Mart's business comes from these surrounding towns, according to Prof. Kenneth Stone's study
8. Wal-Mart will cause the town to grow, together with the values of some of the real estate surrounding the Wal-Mart facility; HOWEVER, any such growth will be more than offset by the destruction of business, property, tax-base and other values
9. Wal-Mart will provide opportunity for some local residents to start at the ground level and work up in the Wal-Mart organization; HOWEVER, Wal-Mart's personnel turnover is so high, due to low wages and poor working conditions, that the likelihood of any one employee moving into real management appears to be less than 1 out of 100
10. Wal-Mart will provide training for its employees; HOWEVER, this type of training is for a job paying slightly above mininum wage, and below the poverty level for anyone trying to support a family with one or more children on the wages received for full-time employment with Wal-Mart
11. Wal-Mart will provide profit-sharing, incentives, health care and other benefits to its employees; HOWEVER, these benefits are not given to part-time employees, or to temporary personnel, or to full-time employees who have not yet served one or two years; and when the benefits are given, they do not change the employee's financial condition to any significant extent
12. Wal-Mart will feature and promote American products and services through its "Buy American" or "Bring It Home to America" programs; HOWEVER, Wal-Mart now appears to be importing close to 90% of its goods from other countries, directly or through suppliers, so that Sam Walton's sales pitch of "Buying American" has been changed to "Selling Out America and Americans"
13. Wal-Mart will treat its employees as partners in the Wal-Mart enterprise; HOWEVER, this is pure fantasy, designed to make the overworked and underpaid Wal-Mart employee forget his/her impoverished and virtually enslaved situation, especially while the real money is turned back to Bentonville, Arkansas and to Wal-Mart's officers, shareholders and other investors
14. Wal-Mart will respect and treat its employees well as valued members of the Wal-Mart family; HOWEVER, this is just more hype with little factual support; most Wal-Mart employees are destitute and forced to accept whatever Wal-Mart hands out to them, for fear of losing the next paycheck needed by them to survive; see Barbara Ehrenreich's book NICKEL AND DIMED for her own story as a Wal-Mart employee, earning about $6.00 per hour or $210 per week (before taxes)
15. Wal-Mart will compensate its employees fairly and bring prosperity to its employees and the communities in which it operates; HOWEVER, this is contradicted by the facts
16. Wal-Mart will become a contributor to the local community; HOWEVER, this amounts to ever so little, and often does not even offset the amount of continuing governmental subsidies (such as tax abatement and receipt of all sales tax moneys) which Wal-Mart receives when it sets up a new store in an area.