Wal-Mart, Bush ruining economy

[Omaha Steve]

Full story: http://www.fortwayne.com/mld/journalgazette/news/editorial/15163101.htm



Posted on Mon, Jul. 31, 2006
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Wal-Mart, Bush ruining economy
By Etson Hougland

In his column, “Pundits mired in contradiction on prices” (July 25), T. Norman Van Cott, professor of economics at Ball State University, concludes that low prices at Wal-Mart have no different economic result than do high prices for oil and gasoline. He further flogs the public for “the fact that the contradiction has gone unnoted in the public discussion is a sad commentary on our insightfulness.”

I beg to differ. Indeed, we need increased insight to understand how Wal-Mart’s business model is damaging every American.

During the past 20-plus years, Wal-Mart has been allowed to expand its operations throughout America and many other nations by using a business model designed to drive down prices at all levels in the business chain. In the July issue of Harper’s magazine, Barry C. Lynn calls for the breakup of Wal-Mart based on the illegal use of its market power, a condition called “monopsony.”

Monopsony arises when a firm captures the ability to dictate price to its suppliers, because the suppliers have no real choice other than to deal with that buyer. Translation: Wal-Mart now has such economic power that few businesses can afford not to succumb to their price demands.

Wal-Mart not only dictates the price, it also dictates the terms, conditions, source and in some cases the material used in the products it purchases. It has been the leading exponent of forcing American firms to move production of products to a Communist “slave labor” state – China. It is using its economic power to orchestrate the destruction of American industry. Its economic power is used to destroy local independent merchants in virtually every community in which it operates.

In conjunction with this power, Wal-Mart provides substandard pay, medical and retirement benefits to its hundreds of thousands of employees while denying them the option of obtaining union representation. The Bush administration has taken countless legal steps designed to weaken the power of labor and destroy any vestige of legal representation for the working people of this nation. This policy combined with a suicidal unfair trade policy has allowed multinational corporations to exploit slave labor in order to undermine our nation’s entire economic and benefits system.

[unblock]

1. yes! i thought i was the only one who'd heard of the word 'monopsony'

nice to see this in print.

[phattyt]

2. Very interesting points...

as a business major and a soon-to-be MBA student I can definitely see the strong negative correlation between Walmart and the economy. But, really, what's the next step to take; what can realistically be done to palliate such a dominate company's affect?

[CK_John]

3. Ring-a-ling.... Does the breakup of maBell provide a model? n/t

[unlawflcombatnt]

4. Government Intervention Necessary & Justified

This is the kind of market control and manipulation that justifies government intervention. Even libertarians, such as Adam Smith, would have advocated that the government intervene to break up Wal-Mart and end its complete market-control. Government intervention, according to the true Libertarian position, is justified when necessary to maintain competition.

"Free markets" do not exist when one, or a few entities control the entire market. This isn't free enterprise capitalism. It's monopolistic Corporatism, which is exactly the kind of situation the Founding Fathers believed should be prevented when they gave the government the responsibility of regulating commerce.

Wal-Mart is bad for workers, bad for free markets, and bad for capitalism itself.

unlawflcombatnt

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