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Not surprisingly, we got a lot of email responding to yesterday’s piece commenting on a New York Times op-ed piece that defended Wal-Mart, arguing that Wal-Mart actually has improved national productivity figures and has, through its low prices, made it possible for more people to buy more stuff – which is good for the economy in general.

We think the authors made some legitimate points, but wrote:

”The questions we tend to ask about Wal-Mart aren’t about the levels of productivity that it achieves, nor about its ability to sell more stuff cheaper to more people who otherwise might not be able to afford such purchases.

“We tend to worry more about the homogenization of American retailing, which is something that Wal-Mart contributes to (though it is hardly the only company that can be accused of lowest-common-denominator retailing). We worry about the cultural impact of one company having so much power and potential sway over what gets published and produced. And sure, we worry about the impact that it has on other, smaller retailers around the country – though we hope we consistently make clear that many of these retailers bear more than a little responsibility for their victimization because they, in fact, have acted like victims.

“…It seems to us that there (could be) an inherent economic problem if Wal-Mart pays people just enough money so that they can only afford to shop at Wal-Mart…and then other companies mimic this approach. There’s probably nothing illegal about it, but we can’t help but think that there could be economic implications down the road that spell prosperity for Wal-Mart and its shareholders, but maybe not for everyone else.”

The reactions came from a lot of directions.

One MNB user responded:

It seems the typical characterization of Wal-Mart has something to do with them somehow undermining the viability of other businesses and the economy itself because of how they pay their associates. This is a company born in the 60's. Many of your readers predate its humble beginnings in rural Arkansas and can attest to the fact that low wages existed long before WM came on the scene. In fact, low wages were being perpetuated by many other larger companies long before most people started to hear about the "Bentonville Behemoth" back in the 80's.

If I'm not mistaken, this is a company that pays MORE than the minimum wage, and they also offer / provide health-care to their associates. That being said, why do they seem to be the target of everyone's ire in this area? (Please don't use the excuse that they are the largest company in the world, and that's just the way it is when you're the big man on the block.) There are MANY large and small companies across America that pay LESS than what Wal-Mart does, and MANY don't offer / provide health care coverage on a par with WM. Taken as a whole, we might be shocked at the figures and their economic impact. This isn't a Wal-Mart issue, it's the reality of business in America.

If Wal-Mart arbitrarily decided to increase its wages a couple of dollars an hour for all of its associates - all for the sole purpose of being a good citizen of corporate America and to set an example for other businesses to follow - do we honestly think that these other companies would all jump on the proverbial band-wagon and follow suit if it wasn't required of them? Puhlease! Surely we aren't all that naive.

Wal-Mart is doing what works for them. They are doing MORE than what the government requires. They are doing what keeps them competitive with the majority of retail operators across the country. They are doing the kinds of things that allow them to maintain a pricing structure that (obviously) many Americans appreciate for their budgets. They are providing a positive return for their shareholders, and they aren't doing anything illegal. Until then, maybe the pointed opinions against WM in this debate should be eliminated in favor of a general discussion about what business in general can / should be doing differently.

Another MNB user wrote:

I appreciated your thoughtful response to the arguments made by the authors of the NYTimes article defending Wal-Mart. One thing that doesn't seem to be widely talked about is the context within which "more people buying more stuff" is actually a good thing. While this is good for the economy in the short-term, it is arguably the worst thing we could be doing in the long run.

With limited resources, even despite advances in technology, we need to be thinking about sustainable growth, not growth at any cost. I realize that maybe we avoid this conversation because the challenge is daunting, but we can either choose to take on this challenge proactively, or wait until gas prices hit $5/gal., quality food becomes unaffordable for the majority of people (a scary trend Whole Foods has started), and damage is done irreparably to our environment. This is a bigger issue than Wal-Mart, but they should be part of the discussion, a discussion that people don't seem to be having.

MNB user Ryan Boegh wrote:

The biggest point missing from the NY Times piece and your comments, not to mention most stories about the Wal-Mart, is not what Wal-Mart is doing to the retail environment and our economy from a low price / low wage / employment practices and inflation holding standpoint, but the ultimate impact the practice of pushing lower and lower prices has had in pushing hundred of thousands of manufacturing jobs off shore by companies that are forced into the beat this price to keep your business practice.

We know each community has lost major manufactures of consumable goods, in Tulsa I can name 2-3 in the last few years (Kwick Set Locks, Zebco Fishing Equip….). The common denominator has been that they all had Wal-Mart as a major customer and were forced to move Mfg to China, or other low wage/cost locations to keep their business and profits. If you can not meet the price they set with your US mfg costs, Wal-Mart has a team in Bentonville that will assist you in connecting with overseas firms that will be able to make your goods and “increase your profits” in as little as 60 days. You need to check on this practice and see what the response is. This is fact, not internet hype.

There is no doubt in my mind that the manufacturing job loss issue in the past 4-6 years has not been caused by China, nor our federal governments, but by Wal-Mart who alone is the 6th largest single exporter from that country behind the 5 largest National Economies in the world.

The ultimate irony is that the majority of the jobs lost were $15-$25/hour jobs of people who without doubt shopped each week at their local Wal-Mart Super Center. It’s the classic catch 22, I have to shop at Wal-Mart because I lost my good paying job, but the reason you lost the job was because you shopped at Wal-Mart and supported their practices with your checkbook!

I heard a Harvard Economist speak in Chicago a few years ago and he stated “there is no reason that the US should manufacture any goods, if they can be made by someone overseas cheaper”. This is true only in an economic bubble, where no one loses a good job to be replaced with a $7 Wal-Mart greater position.

The ultimate results will be devastating to our way of life. The “American Dream” has always been to provide a better life and standard of living for our children than we inherited from our parents. Welcome to the end of the dream!

MNB user Randal O’Toole wrote:

When I was growing up in Portland Oregon, we had a choice between a fading corner grocery store, with possibly 1,000 items on its shelves, and one of two or three supermarkets (Safeway, Ceba, and eventually Albertsons), each with a nearly identical set of about 10,000 grocery items on their shelves, plus Fred Meyer, who had both grocery and non-grocery items.

Now we have club warehouses, supercenters, food/drug combos, convenience stores, natural food stores, limited selection, and perhaps a half-dozen other different breeds of grocery stores. And you are worried "about the homogenization of American retailing"? Get a grip! Retailing has never been so diverse, and it is only going to get better for the consumer.

Your worries about "one company having so much power" and "the impact it has on other, smaller retailers" are mere echoes of the same fears expressed by competitors of J.C. Penney, A&P, King Kullen, and every other successful retail innovator. In reality, it is often the fear mongers who want to stifle diversity so that their obsolete retail model can stay dominant for a little longer.

In fact, all your worries are opportunities. Is Wal-Mart the lowest common denominator of retailing? That creates opportunities for stores like Publix to serve higher scale markets. Does Wal-Mart limit the publications it sells (as if no other store did)? That creates opportunities for other stores to sell a different array of publications. Does Wal-Mart pay its employees minimum wage? That creates opportunities for other stores to pay their employees better and thus offer better service to customers with their more-highly skilled workers.

And please skip the insinuation that anyone who defends Wal-Mart "has ever received funding" from it. I've never even received the free item that is promised when Wal-Mart scanners overcharge me. But as an economic historian, it is obvious that Wal-Mart is just the latest of retail innovators like Sears, Piggly Wiggly, and A&P. Just as those companies are faint shadows of their former selves, so Wal-Mart will eventually be displaced. But in the meantime, it sure is exciting to watch!

MNB user Stuart Silverman wrote:

I can't believe that your biggest concern is the homogenization of retail. Consumers should always have a choice - good/better/best. Wal-Mart has indeed provided more choice at a lower price point for many consumers. What is the larger concern are the economic impacts Wal-Mart has made on the many municipalities where they operate. The burden that they place on the general population's tax base is unethical. If I were given a choice to support Wal-Mart that is one thing; but if I am taxed (and have absolutely no say about how my tax dollars are being spent - I am so angry at our deficit spending Congress) to support Wal-Mart and its investors, that is completely different.

MNB user Janine Bauer wrote:

I guess I question as to why Costco can afford to pay their employees so well when Wal-Mart cannot and still keep prices on merchandise relatively low? Costco is also an excellent model for productivity. I also question what drove these professors to write these articles and how much practical business or retail experience they actually have? Most professors know theory but have relatively little practice to back it up. Anyone actually working in the business world would say theory is nice but it doesn't always work perfectly when you apply it to real world scenarios.

I also want to point out that most employers use what is called market pricing on pay strategies. What that means is that similar companies will find out what other companies are paying for similar jobs and set their compensation to that rate. So in their same theory Wal-Mart will also drive wages down for all employees. I guess I'm not sure how that will help the economy?

MNB user Paul Schlossberg wrote:

In any category, no matter how strong the market leader is (even if a few companies are dominant), there is always room for small, nimble innovators to create niches. Those niche opportunities are not big enough for the "big" company (or companies) to chase profitably.

What happens is an example of economic Darwinism. Generally the big fish eat the small fish. Then the small fish adapt and learn how to survive (and even prosper - in economic terms). Wal-Mart was once the small fish if we look back a few years. That is something that we don't hear enough about in the debate.

We might not know yet which companies will be the next evolutionary winners in specific categories. But they are out there learning how to survive in the wake of the big fish.

And finally, MNB user Jesse R. Garcia wrote:

You know what, I am sick of you, and everyone else, bashing Wal-Mart. Look around! Do you even know what percent of American households make less than $50,000 per year. You might want to take a look. America needs Wal-Mart. Families need Wal-Mart.

Every retailer has employees that are on subsidies. Guess what? Wal-Mart is the largest retailer in the World and obviously in the U.S. Stands to reason that they would just happen to have a few more given the number of employees that they have. Tough math there, huh?

Look at any area that puts in a Wal-Mart Supercenter. What happens? Exactly....Home Depot shows up, Bed Bath & Beyond shows up, restaurants show up, then all of the sudden it is an economists dream. But here you are once again, bad Wal-Mart this, bad Wal-Mart that. Please, look at the needs of consumers and look at the results.

As of today, I no longer need your column, it is just the same tired stuff everyday.

We’ll miss you.

We have no problem with being question, challenged or derided.

The only thing we have a problem with is a lack of debate.

We wrote a piece yesterday comparing the changes that the movie industry is going through with those that the food industry needs to embrace.

To which MNB user Philip Herr responded:

Ted Leavitt described the decline of the railroads as caused by marketing myopia. And that is very much the instance for the movie industry. They are in the entertainment business and have far more competitors today than just TV. And that includes, games, Internet and other electronic diversions. Other than the multiplex, stadium seating and super-sized popcorn at extravagant prices, what has this business introduced in the past two decades? Oh yes, I know, they made it illegal to bring your own refreshments!

MNB user Randy Aszman wrote:

From what I understand, there are theaters that offer alcoholic beverages as well as a better variety of food! I think this would add a new dynamic in going out and seeing a movie!

MNB user Bob McMath wrote:

The only problem with a dearth of good movies to play in the theatres is that they translate into a dearth of movies to make into DVDs! That part of the business is falling a bit these days because there aren't movies coming along that a lot of people want to purchase as a DVD for home! Certainly not at the prices they are being launched for in the stores.

We had a story yesterday about a situation in Salem, Massachusetts, where a couple of boys running a lemonade stand near the city’s Common have been put out of business by local police, who were responding to a complaint by a sausage vendor who said the boys were operating without a permit. The vendor, who also sells lemonade, paid $2,200 for his permit. The boys also were guilty of a more grievous offense – they were taking business away from the sausage vendor. Late news reports say that the sausage vendor, under community pressure, has called a truce with the kids and has “merged” with them, allowing them to sell lemonade near his stand.

Our comment: Lemonade stands traditionally have served to teach kids basic lessons in business and economics. Now, these particular kids have learned another business lesson – in 2005, the big guy is always going to try and smack you around. Welcome to reality.

Since this little conflict took place in Salem, Massachusetts, that sausage vendor is probably lucky someone didn’t turn him into a toad. Of course, they didn’t have to turn him into an ass. He did that all by himself by picking on a couple of kids.

Not everyone agreed, though.

One MNB user wrote:

Don't beat up on the sausage vendor because the kids are taking money from his pocket. You are right in acknowledging that the kids have learned a valuable lesson on the costs of doing business. And they have learned a valuable lesson on the economics of market share, competition and partnerships. This looks like it worked out for everyone.

One MNB user wrote:

Wait! Give the guy credit, he stood up and took his lumps. He said he was wrong, he said he was sorry. He took the boys on as associates. He turned the biggest mistake he may have ever made and created a positive. How many CEO's react as quickly? I give him a mulligan. He had a disaster on his hands, admitted defeat retreated and came out a winner!

MNB user Bill Welch wrote:

You missed the point. The real villain here is the Big Government in the Blue state of Massachusetts that charges $2,200 for a license to a small businessman that runs a sausage stand. I can understand your sympathy for the kids but what about this poor guy trying to keep his head above water and he’s got the government pulling him down.

And another member of the MNB community wrote:

Wait a minute here! I have to disagree with your POV on this one. Put yourself in that man's shoes for a minute. You pay $2,200 of your own hard earned money for an operating permit that allows you to sell sausage sandwiches, lemonade, etc... on the city streets so you can make a living. In the meantime, a couple of kids set up shop down the street. They don't have a permit. They haven't paid any money, and they begin to sell a similar product that cuts into your business. So, you rightfully file a complaint to protect your business interests and livelihood, and what does it get you? Now you’re accused of picking on a couple of kids. (Never mind the fact that they may be taking money away from your own kids.) Now you’re the "big guy" who's "smacking people around?" I'm sympathetic to the boys’ situation just like the next person. There's a small town, hometown, Opie Taylor, aw shucks feel to the whole story, but this guy did nothing wrong, and he certainly didn't deserve to be verbally "smacked around" the way he was.

In the acting business, there’s an old truism that says you should never share a stage with kids and dogs. Translated to the retailing business, the same statement goes: Never mess with kids and animals.

It just doesn’t pay.

Yet another MNB user wrote:

Greed can be described as a pair of blinders that totally block vision. Common sense totally goes on the window in the quest of the almighty dollar. Our corporate mentality is full of it.

Last but not least, reacting to a discussion taking place between an MNB user and us about age discrimination (he didn’t take kindly to a joke we made about the AARP), MNB user Karl Heink wrote:
After reading B. MacDonald's comments about AARP and his apparent snobbish attitude about being older than 50, I was compelled to comment. I enjoy reading your MNB each morning, but I weigh everything written and make decisions for myself. Many times, I can agree with your point of view but sometimes I don't. I enjoy your sense of humor and actually laugh harder when others don't get it. It was very apparent to me that he didn't "get it" and I am glad to see your sense of humor and sarcasm continue.

I would expect that a highly educated, wealthier, AARP member, Internet drone (like yourself) would help educate younger and dumber readers (like myself) about what "nosocomial" means.

Thanks for the early morning laughs and commentary.

Well thanks…though we don’t know about the “wealthier” part.

We know we’re not everybody’s cup of tea. We’re just trying to keep the conversation lively.
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