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There's more to it than that.  Many of these small towns are crippled by economies that are not diversified.  The Carolinas are a perfect example.  My father, who used to be an accountant for a retail and real estate company in Miami and Columbus (he now owns his own small business), liquidated a few bankrupt textile companies -- Pillowtex the largest among them; that story was all over the news -- a few years back for his old boss.  (The equipment was bought by two companies -- one from South Korea, the other from Germany.)  It, literally, took over half the jobs out, and one of the towns, Rocky Mount, was left with little more than a McDonald's.

You see the same thing in Michigan's old auto towns, like Flint (home of Michael Moore and the subject of his movie, Roger & Me, which I highly recommend).  Flint was once a perfect example of middle-class, suburban, blue-collar America.  Today, it has one of the highest murder rates in the country, and its fall began when GM pulled its Buick plant out in the late-1980s.  The city had no other economic activity.

The problem is deeper than Wal-Mart.  Wal-Mart is simply a chain of stores that sells cheap shit.  What's happening in small-town America goes well beyond any damage Wal-Mart might cause.  Mom & Pop businesses die when Wal-Mart comes to town because consumers choose low prices and brand names.  Now we can say this is monopolistic, in practice.  But it's really not, when you consider the outcome.  Wal-Mart is simply able to beat the other companies' prices, which is what is supposed to happen.  If Wal-Mart attempted to set prices too high, the low barriers to entry, coupled with innovation, would allow other firms to move in (as they will).

It's one thing to call everything out as being the fault of Wal-Mart.  I don't even shop at that store, because it's impossible to walk through the aisles due to the high concentration of overweight hicks and their obnoxious children who have a tendency to run shopping carts into the back in my ankle.  (It also doesn't carry my beer of choice, and the meat selection is just pathetic compared with Publix.)  But I don't blame Wal-Mart for these issues.  Wal-Mart is a company, and companies are best viewed as machines rather than living beings (in other words, stick to the positive over the normative -- it is what it is).  The real question to ask is, What are we going to do about it?  Are we going to regulate the shit out of Wal-Mart?  I think that would be a mistake.  You'll only end up raising prices on poor people, and, frankly, they need lower prices whenever possible.

No, what we need to do is build on the educational base, and expand it (that includes adult education and training).  We also need to rebuild infrastructure, because, at least in America, infrastructure spending has been woefully inadequate for thirty years, and counting.  It's time to stop playing short-run games with long-run issues.  Instead of criticizing a system that generally works well, we should be seeking to build and improve upon it.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jan 25th, 2006 at 12:10:49 PM EST
[ Parent ]
Great post. We have
  1. a refutation of Division of Labour and Comparative Advantage because specialization due to trade leads to loss of resilience of local economies
    Many of these small towns are crippled by economies that are not diversified.
    And
  2. a call for government spending in education and infrastructures
    No, what we need to do is build on the educational base, and expand it (that includes adult education and training).  We also need to rebuild infrastructure, because, at least in America, infrastructure spending has been woefully inadequate for thirty years, and counting.
    Maybe we need to rethink the free movement of capital, goods, services and workers, given that (as Adam Smith said: always back to the good old guru of liberalism) labour is the least easily transported of all factors of production.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Wed Jan 25th, 2006 at 12:30:04 PM EST
[ Parent ]
Labor also thinks for itself, unlike capital.  Capital is a planned input, one-way.  Labor requires negotiation and conscious decision making on the part of the input.

Services, as a practical matter, are also not moved very easily, in many cases.  An Indian operator may be able to take over the job of Dell's customer service, but he can't put your money in the cash register at Wal-Mart, or sell you a phone at Nextel, or fix your iPod at the Apple store, or whatever else you may need.  You can't, for example, outsource the work of a locksmith.

I don't see what you mean by a refutation of the Division of Labor and Comparative Advantage.  Both are largely true, in my opinion.  In many cases, the economic losses in these small towns are the result of the citizens having elected a state or local government made up of total fools.  Rural states have skewed their policies, usually in favor of agriculture, and, today, they wonder why all they can produce is heavily-subsidized agriculture.  (Gosh, that's just shocking, "in'nit"?)  Hence why I've made it a habit to attack rural, Red-Staters as being the true "welfare queens" (to use Ronald Reagan's words), because they're completely dependent upon the tax dollars of urban, coastal cities (the Blue States, or the Blue areas of Red States).

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jan 25th, 2006 at 01:38:34 PM EST
[ Parent ]
I mean, division of labour and comparative advantage lead to specialization which leads to loss of resilience. Since Labour is the least mobile of the factors of production it is also the one that bears the brunt of the consequences of lack of resilience when the conditions change. Labour is people which means it is the one factor of production where ethical considerations are most important. You can't have resilient local economies and, at the same time, global pressures towards specialization.

I could try to write a diary about this, but it would be exclusionary.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Carrie (migeru at eurotrib dot com) on Wed Jan 25th, 2006 at 01:51:05 PM EST
[ Parent ]
There's more to it than that....  The problem is deeper than Wal-mart

I never said the whole thing was Wal-mart's fault.  Still if a mugger robs a poor guy of his rent money and the guy ends up homeless, do we give the mugger a pass because he's not responsible for the guy being in trouble in the first place?

You describe a lot of valid problems with small towns and the economy.  No one's saying Wal-mart caused them nor that getting rid of Wal-mart would fix them.

Still, as I said before, they're capitalizing on the problem and making it worse.  I called it economic strip-mining, DeAnander called it predation -- whatever you want to call it, it's a bad thing and they deserve as much criticism as we can dish out.  They are part of the problem.  They're making things worse and a pretty big scale.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 02:22:44 PM EST
[ Parent ]
But let me ask a question: What happens if Wal-Mart pulls out of these small towns?  Suddenly, a situation of having low-paying jobs is replaced by a situation of having no jobs -- turning a depressed economy into a collapsing one.  Wal-Mart is, in no way, analogous to the mugger robbing the poor guy.  The mugger is breaking the law by stealing.  Wal-Mart is moving into a market where it believes it can turn a profit by selling goods and services at lower prices than its competition.  Consumers buy the cheaper products, and Wal-Mart turns that profit.  I don't follow the reasoning behind Wal-Mart being part of the problem.  The problem is that small-town economies have historically been dependent on a given industry -- cars, textiles, agriculture, and so on.  Now that businesses are able to produce the same goods, at lower prices, overseas, those small-town economies are left with nothing.  Wal-Mart is not strip-mining these small towns.  It's taking advantage of a labor surplus.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jan 25th, 2006 at 02:51:25 PM EST
[ Parent ]
I'd still make the same argument about specialized economies and resilience. The path of least resistance leads to specialization and loss of resilience, and then when the path of least resistance leads to the coal mine, Ford or Walmart to pack up and leave you have a huge problem.

So clearly just because the market is good at picking out the path of least resistance doesn't mean the market is best, or even good.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Carrie (migeru at eurotrib dot com) on Wed Jan 25th, 2006 at 02:57:28 PM EST
[ Parent ]
Don't let the minor detail of what's legal stand in the way of seeing the truth.  30 years ago, most of Wal-mart's current business practices would have been illegal.  

The only difference between them and the mugger is that they had the clout to get the laws changed to allow them to mug people.  In that way, they're worse than the mugger -- he has no clout that would let him get his actions written into law.

Wal-mart can and does pull out of these small towns all the time -- it is strip-mining because they're capitalizing on the collapse.  They hasten it by causing the surrounding businesses to close and taking whatever public funds they can get with them when they leave.

These things aren't just an unfortunate situation that Wal-mart finds itself in -- they count on the desperation as part of their business model.  

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 03:09:45 PM EST
[ Parent ]
30 years ago, most of Walmart's current business practices would have been illegal.

What are the business practises that were illegal, that were changed and Walmart now benefits from?  

Honest question, no spin. :-)

by wchurchill on Wed Jan 25th, 2006 at 07:15:17 PM EST
[ Parent ]
OMG -- where do I even start?  If you look at the landscape, the protections for labor were very different 30 years ago than they are now.  That's not because of workers -- it's because of business fighting, challenging, and gutting the regulations.  It's been a tidal wave of court battles -- some big, some small.

In general, full time workers received healthcare, pension, and other benefits, as well as certain protections regarding hiring and firing, and things like sick leave, maternity leave, and vacation time (remember that?).  

There were regulations so businesses couldn't subvert the law by, say, hiring all their employees for 39 hours a week.  There were also rules about who, why, and for how long someone could be hired as a temp or a sub-contractor.  Remember when temps were actually, y'know, temporary workers?  filling in for someone on vacation?  And this doesn't even touch on outsourcing, etc.

Now it's just a free-for-all -- at least down here with the hoi polloi.  It's not just Wal-mart, they're just one of the big guns.  But it's basically been a class war, although if you point it out, people accuse you of instigating a class war.  That's why it's taken so long to notice it if you aren't on the front lines.

If you seriously want to know about this, you have a lot of reading to do.  I suggest you start with the congressional pdf report linked on this page.  Here's a summary (bold is mine):

The report also provides a comprehensive review of Wal-Mart's numerous anti-worker practices, including union-busting activities, discrimination against women and disabled workers, violation of child and undocumented labor laws, unpaid overtime, and unsafe workplace policies, like locking workers into stores overnight. Wal-Mart has been the subject of thousands of lawsuits and critical media scrutiny on all of these issues. The Washington Post just reported on labor abuses in China at the hands of Wal-Mart.


Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 07:56:38 PM EST
[ Parent ]
I was specifically trying to understand this point in your comments: 30 years ago, most of Walmart's current business practices would have been illegal.  Because my impression is that the legal changes have generally benefited, and not inappropriately, workers.
In general, full time workers received healthcare, pension, and other benefits, as well as certain protections regarding hiring and firing, and things like sick leave, maternity leave, and vacation time (remember that?).
If I might challenge your first two points on healthcare and pensions, there have not been changes in our laws that have disadvantaged workers on these two points.  There was no requirement 30 years ago, legally, for companies to provide healthcare or pensions.  Many did of course, because they were competing for employees in the marketplace, trying to offer competitive pay/benefit packages.  But I personally worked a number of jobs in the '60's and '70's that did not provide healthcare or pensions.

Regarding sick time and maternity leave, I think these issues have been more state by state, but the laws have improved these benefits for employees.  And on vacation time, there have been no laws taking away vacation time from the '70's, compared to now--and believe me, I do remember that.

You also mention a report that links to a "congressional report", which I reviewed.  the congressional report is actually not a congressional report, it is a report by a particular democratic congressman that is replete with inaccuracies, and obviously pro-union to the point of distorting the facts.  This article should be compared to the Walmart website to at least get both sides of the story.

by wchurchill on Wed Jan 25th, 2006 at 09:12:56 PM EST
[ Parent ]
Illegal, in a general sense, does not necessarily mean criminalized.  I'm using it in the sense that the rules and the enforcement of the rules were much different 30 years ago.  So even though steps may have been taken "legally" to change the climate for labor, it does not change the fact that what is allowed now was not allowed then.  Obviously, you know quite well how things have changed over 30 years.  If you want to insist it's not harmful, fine.  You and I simply disagree.

I'm sorry if I used the term "congressional report" to describe a report from a congressman.  Honestly, wchurchill, when you get in an argument, you make SWEEPING generalizations, false assertions, and then demand absolute proof and accuracy from everyone else.

I'm glad things are fine in your world.  You're among the elite.  If you have a genuine interest in finding out what the state of things is for the majority in this country -- do your own fucking research.  The fact that Wal-mart workers get shitty treatment isn't really in dispute by anyone but assholes.  I'm not going to argue about it.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 09:26:01 PM EST
[ Parent ]
This article should be compared to the Walmart website to at least get both sides of the story.

This is ridiculous.  Look at the four pages of fucking sources at the end of the report.  

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 09:35:50 PM EST
[ Parent ]
You're among the elite.  If you have a genuine interest in finding out what the state of things is for the majority in this country -- do your own fucking research.  The fact that Wal-mart workers get shitty treatment isn't really in dispute by anyone but assholes.  I'm not going to argue about it. .....This is ridiculous.  Look at the four pages of fucking sources at the end of the report.
I think this falls into the category of Dodo rules on when one does not need to reply,,,I'm so tempted to respond to these points (it's just so hard to not say that I worked in retail in the '60's and '70's--shut my mouth--I should do my own research, like I don't know Walmart and have friends that work and shop there, being the elite that I am),,,,but I'll let my initial comments stand.
by wchurchill on Wed Jan 25th, 2006 at 09:54:37 PM EST
[ Parent ]
Fine.  Take the high-road you bastard... grrrr.

You're right.  I apologize.  My remarks were over the top.  But for some reason I find you particularly infuriating.  That's not an excuse, just an explanation.  And it's probably because you don't seem like a bad sort otherwise.  If you really were just an asshole, I could ignore you quite easily.

That said, you should read some of the links in the sources of the pdf.  To state that you don't think Wal-mart workers are unhappy when over half of them live below the poverty line, or to question whether their practices now would have been allowed 30 years ago seems... disingenuous at best.

Anyway, there's good reading in the sources.  I'm browsing through the PBS one now.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 10:02:23 PM EST
[ Parent ]
it's just so hard to not say that I worked in retail in the '60's and '70's--shut my mouth--I should do my own research, like I don't know Walmart and have friends that work and shop there, being the elite that I am

Oh, but you did mention it!  And it has nothing whatsoever to do with whether or not you're among the elite.  From what you've said on this site, you've attended the whositz school of economics, you've travelled, you've been in charge of companies and hiring and firing people, you live in the Bay area, and you invest in the stock market.

None of these says anything about you as a person, but you're certainly in a privileged position, by your own telling of it.  Still, it's your lack of understanding of how the lower half live that betrays you... <ducks and runs>

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Wed Jan 25th, 2006 at 10:13:17 PM EST
[ Parent ]
ah, Izzy, you really are great,,,clever, funny,,,bright,,,on and on.  I literally smile and laugh out loud at some of your comments.  And I also sense you are kind and generous.  Sometimes emotional and quick to anger, (not bad traits, and I am the same).  But I imagine you have a group of very bright friends that consider themselves lucky to be your friend.

I often don't know where to start responding to some of your comments, because I have so many comments, but can't write all night, or take up all this space on ET.

First regarding your comments on me, and I don't want to say to much here, but you're basically right accept for the "lack of understanding of how the lower half live that betrays you".  At least I pray that is true--the lack of understanding part.  I guess over the course of writing on these blogs one might reveal more about oneself that intended.  But you have recounted a part, and it is true.  I've waited tables, worked retail (liquor stores), worked heavy factory work (great and needed money at the time--a teamster, btw), and many more jobs like that.  Saved the money to go to school, undergrad and grad,,,worked my way up through business,,,jobs in Europe that were eyeopening (culturally and in business), and have finally,,,ended up, I guess, "elite" in a financial sense.  But don't feel elite, because my friends, in addition to successful business friends, are friends like i've always had.  I was pretty happy when I waited tables,,and i'm pretty happy now.  For me, life is life--I take some pride in success,,but at the same time know others are more successful,,,and still others far better than I have achieved less financial success--often more core, spiritual success.  

I only say that in response to your comments.  I do know the lower end of the financial scale--the retail and the physical work.  And actually it always helped me in business, because I admire people at all levels, truly.  People seemed to see that, and share things with me, regardless of my position.  (which is a huge advantage in senior positions in business--understanding the view from the production line, to the sales force to the customer).  My friends I worked with on the production line were real people, just like my friends in offices later in life.  

I say that to acknowledge that the comments you made, my retail life to my in charge of companies life to my life today, are in fact accurate.  

I have a view as to why you and I, and many others like us, have such contrary views on Walmart.  Walmart is a retail store, it competes in a retail market,,,,it should not be expected to pay a lot more than the average retail salaries and benefits.  Their jobs should not be compared to jobs in other industries.  They don't compete for employees with Intel, General Motors, Merck, etc..  They compete with a lot of Ma and Pa's, Target, Walgreens,. etc.  And, in retail, lots of people want the part time jobs, the odd hours, etc. because it fits with the rest of their life--raising kids, a second job, going to school, or whatever.  So I think if these studies that are made by the Congressman were made to Walmart's market for employees,, to its competitors, they would be the same or favorable.  It's just a fact that retail jobs at the lowest levels (stocking, cash register) pay below the "American" poverty line.  that's true now, and it was true 30 years ago.  I would really like to see some employee satisfaction data from Walmart employees--my sense based on admittedly very small sample size, and some feedback from people who know people who work at Walmart, is those employees feel fairly treated.  

Regarding Walmart's other competitive practises, I don't think I can add much more to what Drew has said above.

Do you personally know any Walmart employees, or know people that shop at Walmart?  My limited experience on both fronts (granted, very limited) is they have happy customers, as well as employees who feel well treated.  I guess the fact that they are the nation's largest retailer would substantiate the customer side.  And where I live on the West Coast, the lines to get hired at a new Walmart near me would seem to attest to the employee side.

Anyway, apologies for the length of my comments,,,and maybe for infuriating you (but maybe not--this dialogue may be good for both of us).  Thanks for making me laugh at your humour, and think about your comments.

by wchurchill on Wed Jan 25th, 2006 at 11:51:18 PM EST
[ Parent ]

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