The Wal-Mart Effect

I just read a news article this morning about the small town of Hercules using eminent domain to keep Wal-Mart out of town. Now I'll be the first to say I hate Wal-Mart. I wish they'd pay their employees better and work harder for the social good of the world, but I can also give them credit where credit is due: They're damn good at what they do which is providing low prices on everyday items. Wal-Mart has always been about making profit, and that's not a bad thing. Every non-profit company is out to make a profit--that's hardly unusual. They're just so darned good at it, but that's capitalism for you. If you think that's bad, try supporting a company like Enron instead--they didn't do so much for their employees either. All things considered, those working at Wal-Mart were probably better off in the long run. Wal-Mart didn't take anyone's life savings and flush it down the marble toilet.

But I find the use of eminent domain very disturbing. In fact, I find any law, ordinance, or protest that hits directly at Wal-Mart disturbing. People want to kick Wal-Mart because they're the biggest competitor out there. They want to kick Wal-Mart because it's popular to kick Wal-Mart. And that's just plain stupid.

Let's focus on the real issues here. Such as low-paying jobs. How do we fix that? We can't demand that Wal-Mart pay better than minimum wage. No other companies are required to pay better than that, so if Wal-Mart were expected to do that, it would put them at a competitive disadvantage. They couldn't provide everyday low prices, customers stop coming, they go out of business, and--well, since when is it good in capitalism to allow the poorly run companies to survive while the best run ones to wither and die?

And, Wal-Mart's not really the problem in this case. Almost every store you walk into starts paying their employees minimum wage. Such jobs require no specialized knowledge or training that a high school dropout could master. Not to pick on high school dropouts, but they aren't exactly known for getting good paying jobs to being with. Walk into a McDonalds, Barnes and Nobel, Pizza Hut, Gap, or even most of those local stores everyone goes on about that gives a town 'character'--they're all paying out minimum wage as well. But when Wal-Mart does it, it should be criminalized. That's just unfair. If minimum wage isn't enough to live on, our government should step in and force a minimum wage increase.

Force Wal-Mart and every other company in the United States to pay a livable rate. The reason Wal-Mart can pay such low wages is because our elected officials LET them. And Wal-Mart has to pay low rates to compete against other companies that pay minimum wage rates. Yes, it's not Wal-Mart at fault here, the fault lies square in the face of our elected officials.

A while back, Maryland passed a law that requires any employer with over 10,000 employees to provide health insurance for their employees. Not surprisingly, the only employer this effects is Wal-Mart. It was a sad day for capitalism. I heard Wal-Mart was looking to open a new distribution center in Maryland at the time. If I were running that company, I'd start looking for a new distribution center just outside of the state line. I'd immediately look into closing any underperforming stores. And I'd shorten hours until I got the employee count under 10,000. I have no inside information on Wal-Mart, but when you pass a law that targets one, individual company to its detriment, it makes strong business sense to skirt that law.

The biggest irony, of course, is that it's the smaller mom-and-pop stores that actually have a higher percentage of employees who are still on welfare--not the Wal-Mart employees.

Massachusetts recently passed a law requiring all residents to have health insurance. The poorest of the poor will get it for free from the state coffers, but this makes a lot more sense. It insures all people will get health insurance, not just those folks who work at Wal-Mart. The reason Wal-Mart has been able to get away with having employees that are still on welfare or have no health insurance is because, once again, our elected officials allow it. Requiring all companies to provide health insurance makes a whole heck of a lot more sense than just requiring Wal-Mart to provide it. That's just stupid.

And now, eminent domain is being used to bully Wal-Mart. If I were Wal-Mart, I'd fight that tooth and tail because it sets a bad precedent. What happens if you decide you want to open your own donut shop in your town, but the city council decides that donuts have too many calories and wants to run your little business out of town for the health of its citizens? What if you want to open a bookstore but the city decides that selling books with things like wizards and magic (i.e. Harry Potter) is un-Christian and decide bookstores should be banned? Extreme? Absolutely! And it's no less extreme to use eminent domain to keep Wal-Mart out of town.

I understand that many town want to keep the 'character' of their town by keeping big box stores out. In fact, my home town of San Luis Obispo managed to keep Costco out for decades by passing all sorts of ordinances, but they finally managed to get their foot in last year. (And frankly, if it's the choice been a Wal-Mart or a Costco coming into town, I'd pick Costco any day of the week.) But it's a bad precedent to pass laws meant to target an individual company. Pass laws for what you really want.

I've never been to Hercules, California--at least I never remember being there--but why didn't they pass some sort of law about what type of businesses they want in town. Perhaps something with less than 10,000 feet of selling space. If Wal-Mart wants to open such a small store, they should have that right. Banning any business that's owned by Wal-Mart from entering the market--that's just un-American.

Other option--this is my favorite idea and I wish more cities would consider it--perhaps close their main street so it's for pedestrian traffic only--which would certainly discourage big box stores because you know nobody is going to be riding around on a bicycle with a huge 32-roll block of toilet paper from Costco. It could give their town more 'character' than ever with countless small, interesting store to show for the effort, but no, instead, Hercules uses eminent domain to keep out Wal-Mart--a sad day for capitalism, indeed.

Wal-Mart is an extremely well run company that has succeeded wildly, and it should be criminal to punish them for that. We should want well-run companies to proliferate. We can raise minimum wage, we can require health insurance for all employees, we can require small stores that fit with the character of a small town, and Wal-Mart would still do well. Don't blame Wal-Mart for their success, blame the politicians who don't have the backbone to stand up for poor people. Kicking down Wal-Mart won't solve any problems, but raising minimum wage and establishing minimum health insurance standards will.