Republicans Against Wal-Mart/Getting it Wrong on Detroit

Sunday, February 27, 2005
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A leading Bush Supporter gives a weak case against Wal-Mart, and someone asks: “What Is It With People Hating Wal-Mart?” Says Bainbridge:

does anyone seriously doubt that Wal-Mart often gets breaks on things like zoning, property or sales taxes, and other regulatory issues that small business competitors don’t receive?

So how is that different than any other large company in the modern corporatist state? Why is this always solely a Wal-Mart issue? This is the government given to us by these Republicans that vote for this government, and otherwise cheer it on. Then:

So opening a Wal-Mart has a small positive effect on consumer prices and employment for the community. The latter effect dissipates over time as Wal-Mart drives competitors out of business or, at least, the area.

Where’s the evidence of this? The mom-and-pop shop has long been ineffective in regards to employing large numbers of people, giving employment benefits, and maintaining competitive pricing.

By trampling small businesses underfoot, through its mix of volume pricing and subsidies, Wal-Mart and its ilk undermine the possibility of “wide participation in businesses.” Prospective entrepreneurs are thus pushed out of fields like retail.

“Trampling?” How is conducting a business on one’s private property considered trampling? How is competitive pricing considered trampling? There are no barriers to entry within the retail industry. That which Wal-Mart sells are commodities. Small businesses in the US can no longer engage in commodity selling competitively, because they cannot be efficient or price competitive.

Of course, maybe Wal-Mart makes up for that by buying products from small entrepreneurs in places like China. But do we really want to encourage our nation’s most likely future superpower rival to further build up its economy with massive trade deficits?

More trade deficit hysteria? Why doesn’t the author say why this is a bad thing? It’s because these folks merely repeat that which they hear hawked by the mainstream media over at Fox News and elsewhere. What is this – Republicans for Protectionism? A trade deficit merely implies a net capital inflow, and capital inflows = investment (Econ 101). And furthermore, from the author:

Finally, there is an aesthetic/humanistic argument to be made. I come back here, as I do so often, to Russell Kirk’s description of his beloved Detroit:

“All my life I have known the city of Detroit, called-during World War II “the arsenal of democracy.” … In the shocking decay of that great city nowadays, we behold the consequences of an inhumane economy-bent upon maximum productive efficiency, but heedless of personal order and public order. Henry Ford’s assembly-line methods had much to do with the impersonality and monotony of Detroit’s economic development; and so, in some degree, did Ford’s concentration of his whole productive apparatus at the Rouge Plant; but of course Henry Ford had no notion, in the earlier years of his operation, of what might be the personal and social effects of his highly successful industrial establishment; nor did the other automobile manufacturers of Detroit. Indeed, they seem still to be ignorant of such unhappy consequences, or else indifferent to the consequences, so long as profits continue to be made. Consider the wiping out of Poletown through the unholy alliance of industrial, municipal, and ecclesiastical power structures, regardless of the rights and the wishes of Poletown’s inhabitants-all to build on the site of Poletown a new industrial complex, which already, far from supplying the promised increase in tax revenues for Detroit, is involved in grave difficulties.

Outside the most heavily urbanized areas, Wal-Mart typically builds on the edge of town, putting up a huge (and butt-ugly) big box building surrounded by acres of bare concrete parking lots. There are few sights in the American scene less attractive or appealing to the eye.

Kirk observed that “Detroit, during my own lifetime, has produced tremendous wealth in goods and services. But it has been a social failure. And so have nearly all of America’s other major cities.” I put it to you that Wal-Mart contributed to moving those failures into small town America by shuttering local business and creating huge barriers to entrepreneurial entry into fields traditionally the province of local small business men and women.”

I understand and appreciate so much about Kirkian conservatism. I have almost his entire set of writings sitting less than two feet away from me as I write. He was one of the most interesting people ever. However, Kirk got it wrong on Detroit, and that’s because he was no great friend of the free market.

Kirk saw everything as timeless, and any progress whatsoever was necessarily endangering tradition. He would put prudence before private property, surely, in order to maintain a status quo.

Having lived in the heart of the city for many years, an issue with Detroit related to the above is this: until the Dennis Archer administration took over the mayor’s office in 1994, there was hardly a single chain store anywhere that was willing to locate inside the city’s borders. This was a phenomenon only known to Detroit. Most people whom I talk to, from other areas, cannot comprehend that the city of Detroit did not have mega-stores, shopping malls, retail giants, chain grocery stores, chain video stores, etc. within its city limits. This seems like a fairy tale to them. Phoenix, Chicago, Indianapolis, Philadelphia, Dallas, etc. – they have all had the benefit of economies of scale in their cities.

Detroit? Hardly a single K-Mart, Kroger, Meijer’s, Blockbusters, or otherwise, was located in the city borders. Starbucks? Not a chance. The only businessmen left were the Arabs – many are Chaldeans – who opened up independent grocers, video stores, dollar stores, makeshift retailing outfits, etc. As one who had to shop at these places as a financially struggling 19-year-old, I can attest to the fact that these stores were absolutely awful: high prices, rotten food, poor selection, nothing fresh, and they were all dirty as all heck. It left city consumers with having to purchase their daily needs from these brave-but-less-than-efficient businesses, or make trips into the suburbs to find a place to shop. (Poor Detroit residents have consistently fought against these stores, what with their unkempt ways and high prices, but these people were the only ones, for the most part, willing to dare risk any kind of entrepreneurship in the city of Detroit.)

Chain businesses just didn’t happen until Dictator Coleman Young finally hit his sickbed, and left Archer to spend 8 years of relationship building with big business. Even now, it is a gradual process. It was only a few years ago that the city of Detroit got its first Starbucks, and to this day, the city only has about 3-4 of them. That’s as many Starbucks as you will find on a given corner in Boston or Chicago.

The complete economic analysis of this scenario would be near-endless. But the gist of it is important to deflect the protectionist and anti-private property arguments presented by the Bush Republicans. Price gouging, trade deficits, protectionism, unfair employment practices – these all used to be strongholds of the left, but how times change. It is, in fact, the chain retail and grocery giants that will perhaps save Detroit, but sure as heck not ruin it.

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