Response to “How Welfare Hurts Walmart” by Bryan Caplan

It seems that big business loving mainstream libertarians are never ceasing in responding to the call to defend Walmart, from any and all criticisms, including the legitimate ones.  Today’s case in point is from Bryan Caplan and can be found here.

In the article Caplan argues that unemployment benefits and other forms of welfare reduce the need to work, and there by hurt Walmart by cutting into its supply of would be low wage workers.  While, I agree with Caplan that having unemployment benefits does, reduce the need to work, I question his assertion that they are a net harm to the company.

My understanding is that even with unemployment benefits, the reserve labor pool of would be Walmart employees is still quite full and not going to decrease anytime soon. At least one commenter on Caplans piece made the claim that when a new Walmart opens up in an urban area it is generally, swarmed with would be job applicants. It seems probable to me there is some truth to this.  Additionally, I know that  a lot of people using the welfare system would rather work, or would rather supplement their welfare by working part time when they can.

The company almost certainly benefits from these people not starving and from them not feeling so much strain that they start looting or engaging in revolts or uprisings.  Of course, their is also the huge amount of welfare money spent by Walmart customers, which to his credit Caplan acknowledges. As one commenter argued, welfare programs tend to redistribute money from people who don’t shop at Walmart to people who do. This again seems quite plausible to me.  With all that said, even acknowledging  Caplan’s main point, I do not think he makes a strong case that Walmart is not a net welfare beneficiary.

This is not to neglect to reiterate, the point I have already made in quite a few previous post that Walmart’s business model is largely made possible by government funded infrastructure and as such the firm’s success is hardly a product of a free market, in any since of the word.


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