A Moment of Silence for John Walton … and Wal-Mart?

Published July 12, 2005

On June 27, Wal-Mart heir John Walton died in a plane accident at the age of 58. In recent years, the company founded by his father, Sam, has been a lightning rod for anti-business activists and protestors. The tragedy is unlikely to silence Wal-Mart’s critics for even a moment.

Wal-Mart remains under siege from impassioned political activists, intellectuals, and unions who accuse it of exploiting vulnerable workers and plundering the environment. Some conservatives accuse it of wiping out smaller independent stores.

Thanks to these zealous crusaders, Wal-Mart spends tens of millions of dollars–none of which benefits consumers–to defend itself against dubious lawsuits and legislation designed to shutter or shackle it. California nearly banned Wal-Mart entirely, and various communities are mulling similar laws.

Does Wal-Mart warrant such hatred? Absolutely not!

Occasional legal transgressions by some of Wal-Mart’s managers and employees are inevitable, given that the company has 1.2 million employees in more than 3,600 stores and must heed thousands of complicated legal strictures.

There is nothing reprehensible in the fact that Wal-Mart is non-union. Less than 13 percent of the U.S. workforce is unionized. Unions are free to try to organize Wal-Mart’s stores–which they do and fail.

Wal-Mart must be doing something right to justify its astounding rise to become the world’s largest retailer. But has its growth come at the expense of others?

Consider the accusation that Wal-Mart it wreaking havoc with small-town America. The plain-to-see truth is that the romanticized “Mom and Pop enterprises” were failing in the marketplace long before Wal-Mart arrived. Wal-Mart is only a tiny part of the changing retail landscape.

All savvy shoppers are familiar with T.J. Maxx, Marshall’s, Filene’s Basement, Big Lots, the Dollar Store, Costco, and countless other deep discounters hawking inexpensive imports. OfficeMax, Toys-R-Us, Home Depot, Barnes and Noble, Best Buy, and other “category killers” have long tormented independent retailers.

Add catalogue retailers, online shopping, the Home Shopping Network, street vendors, factory outlet malls, traveling liquidators, flea markets, or even garage sales! More than 100 chain store malls largely decimated locally owned downtown merchants during the 1970s. Today, Wal-Mart is just giving those chains a taste of their own medicine.

Wal-Mart is not some unstoppable bio-engineered monster. Other dreaded and seemingly unstoppable cost-cutters have come and gone. Let us not forget today’s lackluster Sears, Montgomery Ward (long disappeared), K-Mart (merged into Sears), Grants (a distant memory), Woolworth (dead), A&P (almost defunct), and countless other merchants.

Wal-Mart is hardly unique or eternal; it is only momentarily better. And it does occasionally err: It recently abandoned its mail-order DVD business and shipped its customers to Netflix. Industry observers are already speculating that the more upscale Target may be the wave of the future.

What about Wal-Mart’s alleged stinginess, paying “near-starvation wages” with scant benefits? Paying the minimum wage is not a crime, and Wal-Mart employment is entirely voluntary. Wal-Mart haters should shop at Saks Fifth Avenue, where salespeople can earn $100,000 annually, and see the difference it makes when they reach the check-out counter.

To insist that clerks and cashiers deserve executive-level compensation, or that all U.S. employees must be unionized, is naive and invites corporate suicide–no small matter to Wal-Mart employees with profit-sharing and pension plans. Working for a survivor, albeit with lower pay, outshines better wages paid by an employer tottering on the brink of bankruptcy. Disbelievers might ask those 25,000 soon-to-be-laid off General Motors workers about once-welcomed employer generosity. Many might now prefer that GM resisted union demands for gold-plated health benefits.

Finally, Wal-Mart’s success is fair and square. Low prices do not depend on some secret formula. Its merchandise is commonplace and consumers can certainly buy it elsewhere. Nothing hinders copycats, nor is a huge capital investment required–Sam Walton started with a single store on a shoestring.

Everything in the Wal-Mart business plan is transparent–Sam’s autobiography explains most of it. Or just visit a store. It hardly takes a CIA code-breaker to figure out that prices will be lower if manufacturers travel at their own expense to Bentonville, Arkansas to hawk their wares versus having paid buyers visit manufacturers.

Wal-Mart is not “unfair” or ruthless; it is just better than its rivals. Sad to say, in today’s world it is increasingly difficult to admit that at least some are more talented than others.

Robert Weissberg
Professor of Political Science-Emeritus
University of Illinois-Urbana
99 Battery Place #28A
New York, NY 10280
212 945 1964

Robert Weissberg ([email protected]) is a policy advisor to The Heartland Institute and emeritus professor of political science at the University of Illinois – Urbana-Champaign. He owned and operated a clothing store for 13 years.