December 22, 2004

Wal-Mart wants you poor

Posted by shonk at 12:27 AM in Economics | TrackBack

Once upon a time, reading The Chronicle’s rip on Wal-Mart would have made my blood boil, but now the only reaction it seems to cause is a slow, sad shaking of the head at its spurious reasoning. The article’s author, Liza Featherstone, wants to portray Wal-Mart, yet again, as the bad guy, causer of poverty and wrecker of lives.1 Now, it goes without saying that the argument is light on facts and heavy on anecdotes; as it happens, the only hard demographics in the whole article are the following:

Only 6 percent of Wal-Mart shoppers have annual family incomes of more than $100,000. A 2003 study found that 23 percent of Wal-Mart Supercenter customers live on incomes of less than $25,000 a year. More than 20 percent of Wal-Mart shoppers have no bank account, long considered a sign of dire poverty. And while almost half of Wal-Mart Supercenter customers are blue-collar workers and their families, 20 percent are unemployed or elderly.

Based on these facts, Featherstone jumps in line to agree with former UFCW vice president Al Zack that “[t]he only problem with [Wal-Mart’s] business model is that it really needs to create more poverty to grow” and then goes on to suggest that it is doing exactly that. Now, would it be nice if Wal-Mart paid their workers better? Sure. But the above demographics hardly prove that Wal-Mart has a vested interest in keeping people poor.

So 23% of Wal-Mart customers have incomes lower than $25,000? Well, 28% of households and 20% of families have incomes in that range;2 if anything, the poor are slightly underrepresented among Wal-Mart customers. 20% of Wal-Mart customers are unemployed or elderly? Well, 19% of the populace is over age 62 (16% over 65) and 7.6% is unemployed. Like the poor, then, the elderly and unemployed are slightly underrepresented among Wal-Mart customers. Now, 14% of households have incomes over $100,000, so the rich are (as one might expect) also underrepresented. So what does that leave? The middle class. As should surprise nobody except sociologists with an axe to grind, the middle class are Wal-Mart’s biggest customer base, both in terms of sheer numbers and in terms of relative percentages. If anything, Wal-Mart has an incentive to make sure everybody is middle-class (which is impossible, of course, but that hasn’t stopped socialist fruitcakes from trumpeting that is the ideal since, oh, the 18th century).

After a rambling harangue against Wal-Mart’s alleged gender discrimination (even after re-reading the article, I have no feel for whether Wal-Mart is really “systematically discriminating against women”, Featherstone goes on to argue that Wal-Mart needs to be stopped but that, get this, “Boycotts Don’t Work”. Why? Because customers save 20-25% by shopping at Wal-Mart over competitors and “poor women need those savings more than anyone.” Well, aside from the fact that we’ve already dispensed with the notion that the poor constitute the core of Wal-Mart’s customer base, what’s so different about this than any other boycott situation? Boycotting a store or service-provider always incurs costs among the boycotters; if it didn’t, they wouldn’t be “boycotting”, they’d simply be “shopping somewhere else”, sorta like how I don’t buy my groceries at Trader Joe’s because their prices are outrageous and they don’t sell frozen orange juice.

So why doesn’t boycotting work? Well, according to Featherstone, because everybody has a “consumer mentality” these days:

In addition to replacing the “worker,” the “consumer” has also effectively displaced the citizen. That’s why, when most Americans hear about the Wal-Mart’s worker-rights abuses, their first reaction is to feel guilty about shopping at the store. A tiny minority will respond by shopping elsewhere—and only a handful will take any further action. A worker might call her union and organize a picket. A citizen might write to her congressman or local newspaper, or galvanize her church and knitting circle to visit local management. A consumer makes an isolated, politically slight decision: to shop or not to shop. Most of the time, Wal-Mart has her exactly where it wants her, because the intelligent choice for anyone thinking as a consumer is not to make a political statement but to seek the best bargain and the greatest convenience.

Featherstone claims that “[t]o effectively battle corporate criminals like Wal-Mart, the public must be engaged as citizens, not merely as shoppers.” Aside from the “corporate criminal” crack (Wal-Mart may be a criminal organization, but not because they only pay their workers $8/hour), my response is: no shit. Obviously, any sort of principle-based social change requires people to take responsibility for the consequences of their actions.

Of course, that’s not really what Featherstone wants. Her proposed solutions boil down to “stronger labor laws” and “forcing employers to pay a living wage”. Typical. The entire legislative thrust of the last century has been to create state-funded institutions which insulate people from the consequences of their actions (which has the necessary consequence of forcing the prudent to subsidize the imprudent).

Featherstone blames the Wal-Marts of the world for the “consumerization” of the citizenry, and there may be something to that. But far more important, in my view, are the effects of increasing wealth and increasing nanny-statism.

The former is almost absurdly obvious. In large part, people identify themselves as “workers” less and less because work is no longer something that dominates one’s life. People in the U.S. spend more time, on average, at leisure than at work. As such, it should be no surprise that leisure activities define us more and more. The 19th century farm worker that spent 16 hours a day at backbreaking manual labor had no choice but to identify himself as a “worker” because the only other activities he had time for were eating and sleeping. And, to address Featherstone’s numerous references to the “big girls” that work and shop at Wal-Mart, nobody, and I mean nobody, that is morbidly obese can be considered, in the context of the broader human experience, “poor”. Most people around the world and throughout history have trouble getting enough food to survive, let alone to require plus-size clothing.

The effects of nanny-statism on the “consumerization” of culture may be a bit less obvious, so let’s try to define exactly what we mean by “consumerization”. So far as I can tell, Featherstone seems to mean by this term an increasing materialism and an increasing lack of regard for the consequences of one’s actions, especially buying goods and services. As for materialism, what could be more crassly materialistic than the incessant harangues about how if only Social Security/Medicare/Medicaid/welfare/the schools/the environment got more money from the government, then all social problems would be resolved? Aside from the fact that it simply isn’t true (do a bit of research on the Newark school system if you don’t believe me), this sort of nonsense simply entrenches the notion that money solves all problems.

Okay, so what about refusing to take responsibility for one’s actions? As I said above, this is precisely what 95% of legislation in the last century has been driving towards. Rather than parents taking responsibility for their children’s education, we have public “education” that assuages the guilt without actually educating much of anybody. Rather than people taking responsibility for their own health, we have smoking bans everywhere, 15 year drug approval processes in the FDA, the Drug War and, if Noam Chomsky gets his way, crappy but “free” universal health care. The list goes on and on. Featherstone’s solutions, not surprisingly, are simply more of the same. Rather than advocating that people take responsibility for whatever bad consequences (if any) result from shopping at Wal-Mart, she wants government to force Wal-Mart to do “the right thing”.

And let’s not forget who is hurt most by “living wage” laws. That’s right, the poor.

  1. It should be pointed out that I have no particular love for Wal-Mart. Hell, I don’t even shop there (though mostly because I can’t afford a car and Wal-Mart is way the hell too far away to walk). Anyway, if they really are discriminating against women, that’s pretty uncool. If they really are encouraging workers to go on welfare while employed as the article suggests, that’s despicable (though, to be honest, the fault lies more with the government agencies who are colluding to subsidize Wal-Mart in this way). I know they benefit from the little condemn-land-via-eminent-domain-and-sell-it-to-a-big-sales-tax-source-for-pennies-on-the-dollar scam that local governments enjoy perpetrating on the citizenry, but, again, this sort of thing is impossible without government collusion. My point is, I’m not trying to defend Wal-Mart as some sort of corporate good samaritan.
  2. All demographic data in this paragraph is drawn from U.S. Census Bureau data.

I don't care if Wal-Mart discriminates against women., it's their money. If they are (and if it's a mistake) then it's nothng but an opportunity for other businesses.

I love the part about how it's impossible to boycott Wal-Mart because they save you too much money...

Posted by: John T. Kennedy at December 23, 2004 01:55 PM

The questions raised by both your comments and those of Ms. Featherstone touch on an important question. How far should do-gooders be allowed to stick their noses into the affairs of private businesses? She knows what is good for the “masses.” They need “satisfying work and egalitarianism.” Instead corporations, by selling stuff cheaply, have cleverly substituted consumerism, thus seducing the foolish workers to work for a pittance in a hierarchical racist, sexist, capitalist tyranny. The left never asks if there are trade- offs or unpleasant secondary effects of their utopian plans. Why don’t they ever point out any historical models showing how well their dream world works?
I have recently traveled to Europe where some of Featherstone’s theories have been put into practice. In Germany “where unions are strong enough to make Walmart play by their rules” stores are require by the government to keep certain hours, so as to control competition, sales and price cutting are illegal. In Europe a 15% sales tax (VAT) covers most products. Big tariffs inhibit the purchase of foreign made goods even if they are not made in the country. High income taxes erode purchasing power. Huge amounts of tax money subsidize farmers and society’s deadbeats and inexpensive foreign produce is kept out. Unemployment is high and the economy is chronically stagnant. They have all the problems we have despite mega- government worse than the one we have. Plus they are all personally and nationally impoverished relative to us on account of their excessive restrictions on economic activity. And, sad to say, they are proud of it. I and the other redneck libertarians who shop at Walmart really don’t want this and they say to all the boutique shopping elitists such as Ms. Featherstone “Screw you!”

Posted by: Dave at December 26, 2004 10:30 PM

I think Wal-Mart really wants us to all have mullets and Dale Earnhardt jackets (irony-free, of course). That's their core market.

Posted by: Curt at January 5, 2005 10:17 AM