Monday, June 7, 2010

Wal-Mart

For some reason, Wal-Mart has the ability to spark heated discussions. I know that many see it as a threat to the "small business", and others see it as an example of markets and competition. Here are a few interesting resources to use in discussing the issue, whether it's in economics, government, or when discussing community issues. I am personally neutral.  I shop at Wal-Mart and I shop at other stores (large and small), as well.  It depends on the product and/or service and the utility I get from my exchange.

The first resource was in today's edition of The Wall Street Journal (free content at this writing, but if that changes, try putting the headline in your browser). It was also the impetus for this post, as it made me look for a few more items that I had read about or heard. The article reminds me of a quote from Adam Smith,
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
In this case, it may not be a contrivance to raise prices. But it appears to be an aversion to lowering them.

The second resource is a podcast on EconTalk. Host Russ Roberts did an interview with Charles Platt who wrote an interesting piece for The New York Post. It includes links to some other related resources.

This last one is a brief piece on some research done by an economist at the University of Illinois at Chicago. This research was done in the city of Chicago and would seem to support the contention that Wal-Mart has a detrimental effect on small neighborhood businesses. However, I question the data. The timing is largely coincidental with the current recession. Therefore, I would question whether the closings were solely attributable to Wal-Mart.

Feel free to comment.

***UPDATE***
Here is another blogger who has trouble with the UIC research piece.  And he does a much better job of raising objections than I did.

2 comments:

Mike Fladlien said...

I think people hate Walmart* because they see a company that is too big and that scares them. The threat to small businesses is just one of the factors in my opinion. Consumers have to give up some of their choices when shopping at the big box. In short, they have surrendered some of their autonomy.

Ben Harris said...

While I disagree with how they treat their employees, I think Wal-Mart provides the best value to the consumer. And isn't that what its all about?