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Things I hate about Wal-Mart

Since some people probably think I like them, it's worth expanding on a comment I made in response to Austin Contrarian on this posting. Bear in mind that my poltical/economic bent is that, when operating in a reasonably (lightly) regulated environment where externalities are properly assessed, free enterprise generally provides for a more positive outcome than government intervention would do. That being said:

What did AC get wrong? Wal-Mart are definitely bad guys. They have done very little good, and most of the good they did do was way back in the mists of time when Sam Walton was pretty new to the job. Since being an early (good) competitor in some areas that badly needed a kick in the pants, they've devolved into a lean mean destroying machine - wiping out small town after small town after small town. (On my summer trip up to the UP of Michigan, a shiny new Wal-Mart was in the process of decimating a pretty nice old downtown - yes, they've still got places they haven't killed yet). You can make money and be a bad guy - the market often isn't the perfect frictionless machine that libertarian ideologues believe it is.

They're bad because they build suburban crap even in the middle of urban areas. No, making the store 2 stories with a parking garage isn't urban. Building to the street, not to your parking lot, is what makes a store urban. Unfortunately, many people on the other side of this argument have a similar misunderstanding of the issue. Target gets it, but unfortunately, appear to not have been interested in this location. (Not that I blame them; the added expense of a truly urban store isn't justified by the surrounding low-density residential; they'd never make their money back). Costco is nicer to their workers and sells better quality stuff, but they've never expressed any interest in changing from their own awful suburban store format.

Wal-Mart is bad because they've used their size in an adversarial (monopsonial) relationship with their suppliers that has bankrupted some and seriously hurt many -- companies which were providing at least medium-quality goods have either been destroyed or been forcibly shifted into selling junk because of what Wal-Mart did. (And don't tell me they chose to sell to Wal-Mart; in vast parts of the country that's not a 'choice').

Wal-Mart is bad because they've used their size to eliminate competitors who were providing necessary goods and services, but doing it in a way which required substantially less public investment (an old downtown area doesn't cost the town in question much if anything; but the new one-story strip with huge parking lot on the edge of town costs them a bundle). They're also pretty crappy to their workers, but I don't necessarily buy the workers' welfare arguments in rural areas, since the small-town employers weren't paying for good heath insurance either, but there are certainly parts of the country where they can lead such a race to the bottom. But these poor areas have to pay for a lot of road upgrades, police patrols, and utility costs which would not be necessary if the downtown stores had won out. Wal-Mart doesn't contribute jack-squat to make up for these public costs.

So why am I not afraid of them doing the same in Austin?

Unlike Microsoft, the area in which Wal-Mart enjoys monopoly profits (rural retailing) is merely garden-variety lucrative, not Scrooge-McDuckesque-roll-in-the-money-while-wearing-a-monocle insanely lucrative. There aren't enough excess profits there to provide enough money to destroy Target and Costco (both Significantly Less Evil) in suburban and urban areas. Believe me; if there was, they'd have done it by now.

So here, at least, Wal-Mart must compete on its own merits - not like how Microsoft destroyed OS/2 and Netscape, but more like how Apple ended up as the primary name in MP3 players. They might still successfully win the urban retail market, but they're going to have to do it the right way.

So, it's worthwhile to despise what Wal-Mart does. It's good to point out that they're doing bad things. But don't be afraid that they can do the same thing in an area Austin's size that they've done to little 5,000 person towns, because they won't. Not because they wouldn't if they could, but because they simply don't have the excess money it would take.

All we'll do if we successfully keep Wal-Mart out of this location is forego a bunch of tax dollars for the benefit of a bunch of badly-behaved neighborhoods which have, I think, already been pandered to enough for one lifetime. Nobody better wants to move in, and the neighbors are being disingenuous by claiming now to have gotten the New Urbanist religion. Even if they had, though, this isn't a very good site for urban infill - it's still too far away from the parts of town people want to live close to.

So remember: Wal-Mart is bad. But that doesn't make keeping them out of this empty mall the best thing for Austin.

This entry was posted in the following categories: Austin , Economics , Urban Design , When Neighborhoods Go Bad

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Comments

Good analysis. Keep it up. I thought Austin already had the discussion about urban v. suburban growth and made the decision to go urban. Apparently not, though. First the McMansion ordinance which killed duplex construction (thereby reducing density) and now this idea that the neighborhood associations have veto power over any development that happens in their area. Austin will continue to grow because the job market is so strong here, but it looks more and more like that growth will be suburban, not urban, other than a downtown enclave of half-a-million dollar two bedroom condos for the trust fund babies.

The sad thing is that somehow the city's liberal establishment got tricked into thinking that their opposition to growth will save Austin's soul. Instead, it will just price out all the musicians, writers, freaks, and bohemians that make the city interesting.

I posted a response on my blog.

"The sad thing is that somehow the city's liberal establishment got tricked into thinking that their opposition to growth will save Austin's soul. Instead, it will just price out all the musicians, writers, freaks, and bohemians that make the city interesting."

This is pretty much right on, although I wouldn't use the term "got tricked." I think with many it's more like self-delusion rather than being tricked by anyone else.

"But don't be afraid that they can do the same thing in an area Austin's size that they've done to little 5,000 person towns, because they won't. Not because they wouldn't if they could, but because they simply don't have the excess money it would take."

Is that a joke? Do you know how much money the Wal-Mart fortune is?

http://jcgi.pathfinder.com/fortune/information/Presscenter/0,,11152004_walton,00.html

Doesn't matter how much money the family has; matters how much excess profits the COMPANY has, and fact is they don't have what it would take to drive all other competitors out of a market our size.

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