Three for one, Wal-Mart, economy and being positive

This article as the title suggests is about the current state of the world economy and how it relates to Wal-Mart and being positive. The real reason, I chose the topic is because I have many thoughts and wanted to write all three at the same time but did not want to publish them separately As of December 2003, Wal-Mart was the most important department store, but the most dominant player in economics everywhere both directly and indirectly.

I will show how the world economy now must imitate the Wal-Mart model in order to survive. There are several articles with a negative tone about job prospects, divorce rates, crime and destruction, that I felt necessary to write a positive opinion. I noticed that several people assume I am bitter in debates and feel sad first about me and them about themselves after I have won the debate or it ended in a stalemate. This article will use generalizations to keep it short and simple, please note, it is based on available information as of December 2003.

According to The Economics of Wal-Mart, Wal-Mart uses public funds in the form of generous tax breaks to move into new territories with promises of permanent jobs and an attractive brand name. This is all true, most new businesses need tax breaks to succeed. The permanent jobs are however very unconventional and need to be subsidized by taxpayers. These workers will not be able to afford to shop anywhere but Wal-Mart.

The Economics of Wal-Mart also show that Wal-Mart does not compete to generate new sales, but engages in cannibalizing sales of existing local stores. The local stores are forced to cut employees and their wages in order to compete and most close. However when Wal-Mart decides to close, there are no opportunities because prior businesses closed and the town suffers twice.

How Wal-Mart is remaking our world article shows the working conditions of Chinese workers are lowered in wages, benefits and voluntary overtime. This sounds similar to the previous paragraph, where Wal-Mart moves from town to town in western countries and sets up shop in china.

Wal-Mart is not all to blame. Most people love the low prices and do not care where the goods are made, or about the slave-labour conditions in which they were made. These people do not understand that by working at Wal-Mart or getting paid Wal-Mart wages, you will not be able to buy a house or car or help the local economy. A good employee should not need to have two to three part time jobs and government assistance just to be able to pay shelter and buy subsistence.

The reason good paying full time jobs are rare is because of the Wal-Mart effect. The demand for low quality goods and ever cheaper prices means that technology has lost its advantages of creating new good paying jobs and good quality goods. Even when shopping at a large Wal-Mart competitor such as K-mart, Bay or Sears; chances are very high that the products are manufactured by Wal-Mart suppliers in china. The brand names may stay the same, but their origins change from your local town to china. Along with loses of local stores that paid decent wages, manufacturing jobs also disappear forever.

The situation in China is not well. At first, the Wal-Mart economy helped china advance in terms on manufacturing technology, but when the price pressures appeared, the same negative patterns emerged. Competition was stifled; wages were lowered to fit with the low prices demanded by Wal-Mart and their clones. The overall benefit to china is that the country peaked and will remain poor if it continues to follow the Wal-Mart model. The solution is simple, local economy of scale which includes local manufacturing and local sales.

From the VNN reader mail for December 8, 2003, the following from anonymous about Joe Smith. Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA).

After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB. At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can’t find a good paying job in…..AMERICA…..

The last part of this article concerns the perceived negative tone of my debates. I fancy myself as a researcher; I seek knowledge and present my observations. The truth is very difficult for some people to fathom, so they resort to name-calling to feel better after losing. However for the rest of this article, I will provide good news.

The Wal-Mart economies of scale are an example of a company listening to its customers and providing their needs and wants. The needs are everyday goods and services and the wants are lowest prices. Since Wal-Mart started in a capitalist country, it is not fair to attack them for being very successful. Many of their previous competitors were very complacent and did not change as Wal-Mart used new technology to their advantages. The remaining competitors of Wal-Mart employed some of the same tactics such as importing goods from other countries.

Price is not the number one determinant of where a consumer will buy a good or service. Ferrari makes expensive cars and is very profitable, while a company such as Lada which made very cheap cars no longer has a significant presence in Canada. There are also examples of small local stores that withstood the onslaught of big-box stores and department stores like Wal-Mart and actually do very well, charging a premium for their goods and services. The Wal-Marts, McDonalds and Microsofts of the world must provide general goods and services because they cater to the average consumer; there are still many opportunities for speciality stores.

I will use myself as an example. My boots, my belts are all locally made. I know that when I buy my organic food, pick up my local community paper, that I am helping my local economy. I am helping by providing a decent wage for the employees. I know that most of the employees are actually the owners and their smiles are genuine. I am not bashing Chinese made goods; I am just creating a balance, once in a while, buy a product made overseas to help their standard of living improve. Remember that Wal-Mart, Ford, IBM and Wendy’s started local and would not have become a success without help of its locals.

If you are having trouble landing that dream job, it may actually be a blessing. There are many countries where you will be appreciated and paid accordingly. Why not travel, there are many African countries waiting to take the next step to economic independence. Even in you local area, you will find many ideas, it is not hard to start a new business, do not try to compete with a monopoly like Wal-Mart with low prices, why not introduce an idea where you are a niche, such as consultant, repair and maybe a new field.


The Economics of Wal-Mart

How Wal-Mart is Remaking our World

This entry was posted on Monday, August 25th, 2003 at 10:27 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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