Product Description

Wal-Mart is under attack--from labor unions, urban planners, globalization critics, and community activists. The company's detractors argue that Wal-Mart reduces living standards, hurts retail trade, causes unemployment, and relegates Third World workers to poverty. In the Wal-Mart Revolution, Richard Vedder and Wendell Cox examine Wal-Mart's true role in the economy. The authors look briefly at the history of retailing in America and the contributions made by James Penney and Frank Woolworth. Looking specifically at Wal-Mart, they review conditions before and after Wal-Mart entered a local market and look more broadly at Wal-Mart's impact on wages, productivity growth and inflation. Vedder and Cox show that the retailer has been a force for good.

Product Details

• Amazon Sales Rank: #230061 in Books
• Published on: 2007-01-25
• Original language: English
• Number of items: 1
• Binding: Paperback
• 175 pages

Customer Reviews

A fascinating discussion of the actual history of Wal-Mart, the retail trade, and Wal-Mart's critics
One of the worst aspects of politics is that the issues politicians use are too often used to commit people one way or the other based on emotions rather than reason or a set of facts. In recent years, with the advent of very accurate polling, politicians and those dependent on them for government largesse have found it convenient to pick out a "bad guy" (the "bad guy" only has to be someone they can smear, not someone who is actually guilty of bad behavior) and then blame a popular set of ills on them that the politician will claim to "fix".

For example, the Clintons went after the "profiteering vaccine makers", as noted in many newspapers in 1993. (The calculating nature of this attack is discussed in Bob Woodward's "The Agenda".) The result? They all but killed off the domestic vaccine industry. Good job! But it got them something to rant about, divert attention from their early political blunders once in office and the ability to garner some votes in the next election. No matter that they made people worse off. The GOP tends to pull out the flag-burning amendment whenever they need to divert attention from some unpleasant political reality they stepped into, although that is getting a bit worn.

Wal-Mart has been taking any number of hits from unionists, mostly Democrat politicians, community activists, and anti-globalization folks. This book is a very helpful way to get some clarifying information about what is actually going on in the retail industry and Wal-Mart's place in it. The authors also consider the validity of criticisms leveled against the world's largest retailer.

In the preface the authors head off the criticism that will inevitably be made of anyone who fails to go along with the criticisms made against Wal-Mart, that the writer is a company stooge. The authors note that while Wal-Mart has made a modest contribution to the AEI, they knew nothing at all about it until after the book was completed and had little contact with Wal-Mart while writing the book. The introduction sets the stage for the book, which consists of twelve chapters divided into four parts.

Part I is "Why Wal-Mart Matters" and provides a simplified explanation of how innovation and efficiency in retail makes customers better off through consumer surplus, the positive and negative externalities caused by changes in the marketplace, public attitudes towards the retail trade in America, the criticisms leveled against the company, and who these critics are.

Part II is "The Wal-Mart Revolution". It begins with a fascinating discussion of the history of retailing. When the first chain stores began putting the local shops out of business, people were just as upset as they claim to be today and yet shopped at the more efficient stores with the lower prices, as they do today. Here is a quote from the speaker of the Indiana house: "The chain stores are undermining the foundations of our entire local happiness and prosperity." Sounds quite familiar, doesn't it?

The authors also provide a history of Wal-Mart as well as its competitors and imitators. I found the charts on pages 47 and 48 quite fascinating. The retail trade in America has grown from around $250 billion in 1960 to around $800 billion in 2004. However, the retail trade for all those years has stayed at right around 8% of a growing GDP. It is interesting to note how these imitators and competitors are all more similar than different. Why? Because they are constrained by the marketplace and its competitive forces. People have only so much discretionary income and want to get the most for it. Therefore, those who offer the most equivalent goods (as perceived by the consumer) at the lowest cost will almost certainly be the winner in the marketplace. This has been proven out multiple times over the past century and more.

In Part III the authors consider "Wal-Mart: Good or Bad". They look carefully at the employment information available, the impact the store has on communities, its cost/benefit to the taxpayer, its impact on the poor, the impact of the big box revolution on productivity and compare what is known to the claims and assertions made by the company's critics. The claims are often over blown or unsubstantiated. However, even when they do have a point stated more or less fairly, they fail to balance the negative with the positives.

Part IV looks at Wal-Mart's future. It notes the impact the criticisms of Wal-Mart have had on its behavior, how it is faring in its moved outside the borders of the United States (mixed), and further evaluation of the critics of Wal-Mart and a consideration of what "we should do about Wal-Mart".

I found this to be a breath of fresh air and a helpful source of information to balance the popular notions all too often that Wal-Mart is a force for evil in our economy. While this negative image cannot be squared with the reality of consumer and employee behavior, it is one that is too often accepted and discussed as if it were a fact. If you are interested in this public discussion and want to know the other side of the issue and get a more balanced view of the situation, then please read this book. It is not very long, easy to read, and I found it very interesting.

A book about a benign revolution
The title of this book rather obviously mocks Leftist talk about revolutions but it is pretty accurate nonetheless. One of the authors is an economist so he brings to the subject the sort of cool rationality that is sadly missing from the standard Leftist boilerplate about Wal-Mart. The book gives you in detail all the facts you need to dismiss every single one of the Leftist criticisms. I liked the following paragraphs:

"We reject the idea that Wal-Mart destroys communities and adds to urban sprawl. Downtowns were declining long before Wal-Mart became an important retailmg force, and the big-box retail revolution is but one additional factor in thc demise of retailing in central business districts where parking is typicaLl relatively scarce. While it is true that some stores go out of business when Wal-Mart enters a community, the opening and closing of stores in response to changing tastes and technology has been part of the retail landscape literally for centuries. Wal-Mart does not force stores out of business. Customers do, by voting with their feet and going to Wal-Mart with its lower prices and greater choices than the local alternatives. People prefer Wal-Mart and, in exercising their preferences, they are enhancing their own welfare, and thus that of the communities the stores serve.

Wal-Mart serves customers at all income levels and walks of life, as do Target, Home Depot, Best Buy and other big-box stores. They appeal to consumers at all income levels -- but Wal-Mart disproportionately serves the poor. Wal-Mart stores are more often located in areas with below-average incomes, and surveys show that a larger proportion of lower-income people shop at Wal-Mart than people from affluent families. So the store's consumer welfare benefits particularly aid the poor -- and consequently, attempts to keep it out of communities hurt the poor far more than the rich....

Wal-Mart has not been particularly adroit in handling criticism. It has mounted a campaign to appease organized labor and environmental groups, tinkering with health care plans and entering the organic fish business, among other things. It strikes us that it may be abandoning its principles of everyday low prices to pander to its opponents, many of whom probably do not represent mainstream American thinking. We wonder whether Wal-Mart is trying to "appease the unappeasable"."

I think the authors have hit on the crux of the matter in their phrase "appease the unappeasable". Leftist opposition to Wal-Mart is based on hatred of other people's success and all the PR efforts of Wal-Mart and all the detailed information in the book about it will not quench that hate. Wal-Mart's sin is the same sin that Leftists see in America as a whole and in Israel: Success.

Boring and Easily Summarized
The authors begin by using other peoples' data to estimate at least $55 '05 benefit per consumer, double that if Wal-Mart practices adopted by competitors is included. (My own experience, buying both grocery and non-food items at Wal-Mart, suggests a much higher figure - about $600.)

As for negatively impacting producers, the authors use arcane and skimpily covered methods to estimate that the net benefit is still about $110/year. Again, I suspect the negative impact on American workers is much greater than the authors contend.

Regardless, "The Wal-Mart Revolution" then adds on charitable giving - as though the Mom and Pop stores it often replaces never made charitable gifts.

Many blame Wal-Mart for hiring workers at relatively low pay and offering skimpy benefits. Wal-Mart is not the source of the problem, however. The real problem is our government allowing such extensive outsourcing that employees are left with no choice but to accept such positions. If Wal-Mart didn't do it, others would - and to a large extent they do.

Look at the packaging on boxes being brought into department stores and specialty shops - far too often they show the same "Made in China" printing that is found on Wal-Mart merchandise. Lately we have even learned that much of our food is also produced by China.

Bottom Line: Don't blame Wal-Mart for offering the best deal while protecting itself from others. Blame the American government and short-sighted economists that think losing millions of jobs to outsourcing is a good thing.