The Wal-Mart You Don't Know II

In response to Fast Company's December feature about Wal-Mart, Dave Pollard diagrams what he terms the "Wal-Mart Dilemma." So doing, he considers the role of regulation as an intervention that can help slow the race to the bottom."

The answer is not to blame the Wal-Mart shopper for buying imported goods there, because in the vicious red cycle it's all they can afford -- they're paradoxically forced to perpetuate the cycle and sustain their own and others' poverty. And the answer is not to blame Wal-Mart either: They're doing what their corporate charter dictates, using their immense buying power (they sell a quarter trillion dollars worth of goods each year) to increase earnings per share, and in the process they have introduced some unarguably beneficial innovations into their, and their suppliers', business processes.

The answer is to recognize that 'free' trade laws need to be limited to goods and services that cannot be reasonably produced domestically, and pressure politicians to reimpose duties and other regulations on those goods and services that can.

What do you think? Is regulation the answer?

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6 Comments

  • Anonymous Coward

    Disillusioned Shopper-

    Are you really trying to say that increasing the cost of goods (raising the labor prices for Wal-Mart/paying Wal-Mart employees more) will somehow makes our society richer? As prices rise, quantity demanded decreases. Decreasing the cost of labor is just another name for increasing productivity.

  • Disillusioned Shopper

    We all need to wake up! Wal-Mart is this year's most admired company by Fortune. 2001's winner...ENRON. What does that say? Company's which succeed in the short run in markets which are only valued or judged based on profit are dangerous. Companies like Wal-Mart have no loyalty to shoppers, communities, or taxpayers. As long as their stocks are up, and execs are making millionsm they will continue to pay workers less than 13,000 yearly. What about the rest of us? How can the economy prosper when a growing number of workers, due to the race to the bottom, will earn less than a new cars costs? What happens? Total deflation, collapse of housing values, unemployment. Are you still smiling now????

  • Anonymous Coward

    Lower prices, simply, are good. If a company cannot make sufficient profits supplying goods at Wal-Mart prices, the blame can neither be laid at consumers nor Wal-Mart's feet. No firm is guaranteed a particular rate of profit and if a firm dislikes the rate it currently gets in a business, it should get out of that business. Trade barriers created to "keep American jobs/industry" make Americans poorer and are nothing other than unusually costly corporate welfare.

  • Tom

    Perhaps, but not really that we need more regulation, but maybe some improvements and refinement of current regulation. After all, it is regulation (environmental, health, etc.) that has handicapped American companies in competing with foreign companies. Maybe we impose heavy tarriffs on foriegn companies that don't adhere to these laws, or we allow US companies some relief FROM these laws in areas they are suffering. Make the playing field level, however you want to do it.

    Your Wal-Mart article has definitely opened my eyes. That's not to say I will never shop there, but I won't ever again sit quietly while some 'I buy American' union type tells me how much they love shopping at the local Wal-Mart. That is hypocrisy at it's worst.

  • Rob

    I don't think we are in a "race to the bottom." WalMart only drives down prices on goods that WalMart patrons normally purchase. Plenty of other retail chains are profitable and doing well. WalMart may sell a lot of DVD players, but not everyone wants the $59 model. Lots of people won't go to WalMart period, because it is crowded and has poor service. People are beginning to equate "value" with the overall experience, not just a low price.

    I agree with Tom, regulation is usually a bad thing. Unless there is some serious negative externality not being addressed by the market, the government should stay out.

  • Tom Robinson

    More regulation-- great idea. We'll turn over the job of defining what is "reasonable" to a bunch of bureaucrats. They know what's best for the rest of us, don't they? I won't mind paying $30 for a pair of undershorts.