Some Problems with Walmart

I find that in many libertarian and conservative circles Walmart is an object of reverence, a clear example of the efficiency of the free market, that should not be questioned.  I find all the underlying assumptions here to be false.  Their entire business model made possible by government funded infrastructure, some of which was created at the company’s request through eminent domain.

The company relies entirely on the tax-payer funded highway system to make their strategy of wide spread distribution possible. This is of course available to all business, but when government subsidizes an input (in this case transportation infrastructure) it makes firms that make heavy use of that input artificially more competitive. This is not to mention that when government uses eminent domain to procure land makes, it makes all alternative uses of that land impossible.

Essentially the entire big box chain business model is a product of government intervention in the market. But Walmart is a pretty big example. They have used individual subsidies ranging from $1 million to about $12 million, in the form of free or reduced-priced land, job training funds, sales tax rebates, tax credits and infrastructure assistance to go from the a regional store to one of the biggest firms in the economy.   To quote Charles Johnson:

“Just about every time Wal-Mart decides to build a new store, or especially a new distribution center, they turn to local governments to demand that they grab some money out of working folks’ pockets and put it towards building up “business park” infrastructure and highway interchanges, or widening or extending some existing stretch of road to service Wal-Mart’s trucking needs, or simply to build a new spur out to service nothing but the distribution center.

As such I have to doubt weather Walmart would be the Goliath it is on a fair and free market.

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3 Responses to Some Problems with Walmart

  1. Henshaw says:

    I find that in many libertarian and conservative circles Walmart is an object of reverence, a clear example of the efficiency of the free market, that should not be questioned.

    Actually, isn’t this the other way around? I find the Walmart derangement in some liberal circles comical because generally speaking if an IKEA or Apple store was built just around the corner no one would care.

    Walmart isn’t the only big box store in the United States. When I was younger I worked a few years in retail. I made stops at Lowes, Home Depot, and Circuit City. Most of the people I worked with weren’t lifers. It was just a stop while they were going to school. Some worked part time to supplement retirement income. I worked with some people who were simply too drunk, lazy, or dependable to keep a steady job.

    No one really felt like they were being exploited. I have a friend who I have lost touch with over the years, but she work in a pharmacy at Walmart when we were in college. She went to school and is a head pharmacist at Walmart in Arizona. I imagine she make a pretty good living working there.

    I wouldn’t cite Walmart as a champion of the free market because there’s not a free market to begin with. We have crony-capitalist system that rewards big companies because of their connections to an ever growing and more powerful government.

    Walmart is able to get tax breaks and the new store has to pay a corporate income tax higher than any developed economy in the world. That’s neither fair or free, but that’s not Walmart’s fault. That’s our fault for electing a government that would impose different rules on different businesses.

  2. Mr. Wilson says:

    I tend to agree. I think there is a sort of feedback loop where the fact liberals hate or dislike Walmart causes conservatives and mainstream libertarians to like it more, We have this stupid political tribalism, where we teach ourselves to dislike whatever the other team likes and vice versa. It strikes as the same phenomenon that causes liberals to pay extra for a product that advertises itself as environmentally safe, and conservatives to pay extra for one that is not (this is a real thing I promise).

    I also agree of the advantages a firm like Walmart has are not it’s fault (it is just simply good at taking advantage of a niche created by our particular mixed economy), but they do taint the company;s free market credibility,

  3. Pingback: Response to “The Calling: Why I defend Walmart” by Steve Horwitz | The Wilson Report

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