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The Wal-Mart Revolution By: Jamie Glazov
FrontPageMagazine.com | Monday, March 19, 2007

Frontpage Interview’s interview is Richard Vedder, a Visiting Scholar at the American Enterprise Institute. He directs the Center for College Affordability and Productivity, and is Distinguished Professor of Economics at Ohio University. He has written over 200 scholarly papers and writes frequently in popular media outlets such as the Wall Street Journal, USA Today, Investor's Business Daily, The National Review, as well as the more scholarly Cato Journal. Two previous books include Out of Work: Unemployment and Government in Twentieth-Century America (with Lowell Gallaway), and Going Broke By Degree: Why College Costs Too Much. His latest book, with Wendell Cox, is The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers and the Economy.

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FP: Richard Vedder, welcome to Frontpage Interview.

Vedder: I am glad to be with you today.


FP: What inspired you to write this book?


Vedder: People kept saying to me, "do you really believe Wal-Mart is as bad as its critics suggest?" I was skeptical about the criticisms, but uncertain, so I decided to look into the matter myself. I am an economic historian, and thought I could bring an objective empirical as well as a historical perspective to this debate.


FP: So why is Wal-Mart so popular?


Vedder: Wal-Mart has two huge advantages. Its prices typically are lower than at other retailers, and they offer a wider choice of goods and services than the typical retailer, particularly in the smaller towns that have been the historic core of Wal-Mart's business. Therefore, Wal-Mart is wildly popular with many shoppers.


FP: Is Wal Mart a force for good or evil in our society?


Vedder: On balance, Wal-Mart is a force for good. "Everyday low prices" means tens of billions of dollars of annual savings to Americans, and the firm also has provided some additional employment for some persons who otherwise would be unemployed. The technological advances in inventory control and other things have raised productivity of workers in retail trade, providing additional positive stimulus to the economy. To be sure, Wal-Mart is a huge organization, and occasionally there are some dubious practices observed at some stores, but I believe the firm has generally contributed to America's prosperity.


FP: Do consumers benefit from having Wal-Mart around -- and how much?


Vedder: Scholars differ a bit on the exact amount of gains that Wal-Mart brings in savings and welfare gains to consumers, but it is at least $25 billion a year, and maybe more than $50 billion. And that excludes gains to consumers shopping at Wal-Mart outside the United States.


FP: What about criticisms that Wal-Mart mistreats its workers, and does not provide health benefits?


Vedder: Wal-Mart pays its workers rather typical wages for the relatively unskilled and inexperienced workers that make up the bulk of its work force. A large portion of employees apparently are stockholders in the company -- a benefit not typically found among retail stores. As to insurance, around 45 percent of Wal-Mart employees are insured by Wal-Mart, but over 90 percent are insured by someone, often the insurance company of the worker's spouse or parent. The proportion of employees company insured at Wal-Mart is pretty typical of the American economy as a whole.


Many small local retailers who complain about Wal-Mart do not provide insurance for their workers either. It is true the insured Wal-Mart workers have to pay part of their insurance premiums themselves, but, again, that is the rule, not the exception, for American workers these days. If Wal-Mart mistreated its workers systematically, I would expect they would have trouble getting workers, would have lost unionization elections, etc. That is not the case, however.

FP: What does Wal-Mart do to local communities and their economies?


Vedder: On balance, Wal-Mart is typically a positive force to communities and their economies. Our research shows that after Wal-Mart opens in a town, employment is usually higher than before. To be sure, there is some loss of jobs among competing retailers, but typically less than the gains from new employment at Wal-Mart -- often 300 or more workers at a new Supercenter.


FP: Does Wal-Mart run smaller stores out of business?


Vedder: Some businesses typically close when Wal-Mart comes to town, but you could say that customers run them out of business. People flock to Wal-Mart simply because they prefer Wal-Mart to the alternatives. The economist Joseph Schumpeter once said that "creative destruction" was essential to economic progress, as people abandon old ways of doing things for new ways. Buggies and typewriters gave way to autos and computers, and we are better off for it. The same applies in the Wal-Mart case.


FP:  Is it true that Wal-Mart has contributed to loss of high paying factory jobs by buying goods largely from overseas suppliers?


Vedder: Wal-Mart, like most large retailers, buys lots of goods overseas. Some jobs in American factories are gone because of that, but even more new jobs have been created as foreigners recycle dollars back to this country, buying everything from Boeing jet airliners to stock investments in American businesses. Globalization has been accompanied by rising prosperity, and actually lowers unemployment. Unemployment today is far lower than was typical in the 1970s, before Wal-Mart was a major retailer on the national scene.  Most of the reason for the decline in American manufacturing has little to do with Wal-Mart, which is merely the middleman that gets goods from suppliers to consumers. And consumers prefer cheap goods to expensive ones.


FP: Overall, what do you think is the real motive of those who attack Wal-Mart?


Vedder: I am hesitant to impute motives to persons. Some critics are sincere persons, worried about various perceived problems that Wal-Mart allegedly causes. It is true, however, that labor unions are fuelling the anti-Mart debate because of a loss of union membership and the dues incomes members bring in, because Wal-Mart workers do not want to join labor unions. So part of the debate results from losers in economic competition with Wal-Mart trying to thwart that company's success through their anti-Wal-Mart web sites and other means.


FP: Richard Vedder, thank you for joining us.


Vedder: I have enjoyed it.


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Jamie Glazov is Frontpage Magazine's editor. He holds a Ph.D. in History with a specialty in Russian, U.S. and Canadian foreign policy. He is the author of Canadian Policy Toward Khrushchev’s Soviet Union and is the co-editor (with David Horowitz) of The Hate America Left. He edited and wrote the introduction to David Horowitz’s Left Illusions. His new book is United in Hate: The Left's Romance with Tyranny and Terror. To see his previous symposiums, interviews and articles Click Here. Email him at jglazov@rogers.com.

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