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Stand Up for Wal-Mart

by Christopher Chantrill
December 04, 2005 at 9:52 am

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SO NOW WE know. About 56 percent of Americans “believe that Wal-Mart is bad for America,”according to a Zogby poll conducted on behalf of wakeupwalmart.com, an activist group that is “working to change Wal-Mart.” Liberals can take heart that their years-long campaign against Wal-Mart is having an effect.

You can see why liberals hate Wal-Mart. Wal-Mart believes in “everyday low prices.” Everyday low prices means everyday low costs. That means lowering costs in the two critical areas that are presently putting unionized companies out of business nationwide: sky-high health care and pension costs. Wal-Mart offers its employees high-deductible health plans and no pension plan. Instead it offers profit-sharing and 401(k) plans. Obviously Wal-Mart is a missile aimed at every unionized retail establishment in America.

For generations Americans have been taught a nostalgic narrative about labor unions. But now, according to political columnist E.J. Dionne in the Washington Post, conservatives have succeeded in selling a different story to America, a story about Schumpeterian “creative destruction,” producer groups losing their monopolies and capacity for “rent-seeking.” Meanwhile the liberal story is a muddle. “Much of the left accepts a certain amount of creative destruction because, in Margaret Thatcher’s famous phrase, there is no alternative.”

Capitalism, all by itself, would never have achieved the rising living standards that were the pride of the United States in [the] 1950s and still are today. The rules enforced by the National Labor Relations Board made it possible for [unions] to organize by protecting workers’ rights.

That’s your story, E.J. But did you ever wonder why unions don’t ever appear at the founding of a company, eager to participate in a bright idea? Unions only appear on the scene after the bright idea has become money in the bank.

Capitalism, all by itself, creates the product. Then unions and governments come along with talk of workers’ rights. Government labor laws can help some workers obtain above-market wages and benefits for a while. But we’ve seen what happens in the long term. We’ve seen that unionized companies can’t adapt and compete. The unions won’t let them.

In the United States capitalism, all by itself, grew our remarkable and productive economy. The U.S. is No. 1 in global competitiveness, according to The Economist Pocket World in Figures for 2006. Of course, it competes head to head globally in all the sexy sectors like software and semiconductors. But there are only a few people working in the sexy sectors—less than one percent of the labor force. It is in the non-sexy sectors that the U.S. really shines. When American retail workers are twice as productive as Japanese retail workers, that makes a big difference. Retail employs 11 percent of the workforce.

Wal-Mart is America’s economic secret weapon. During the so-called tech boom of the 1990s half of the productivity increase was in retail. The tech boom was really a retail boom, and the retail boom was triggered by Wal-Mart. The old line retailers like Sears and K-Mart and the unionized supermarket chains like Safeway found that they had to match Wal-Mart’s innovations in efficiency and supply-chain management or go out of business. By 1999 they had achieved the productivity of Wal-Mart—in 1990.

It is good that E.J. Dionne is learning the language of public-choice economics and learning to be half ashamed of rent-seeking. In the old days left-wingers didn’t equivocate about rent. They were four-square against it. In the first chapter of Fabian Essays in Socialism George Bernard Shaw constructed a likely story about Rent, how the first landowner, “the original Adam,” got the best land and how he got thereby to collect unearned “economic rent” from the less fortunate. If the left’s message sounds muddled to Dionne it is because the left that once recoiled in horror from the outrage of rent now celebrates it when it delivers above market wages, inflexible work rules, and 30-and-out pension plans to the rank-and-file Adam of the union shop. Pity all that stuff drives corporations into bankruptcy.

Privilege and subsidy create rent for the few and poverty for the many. That goes not just for feudal aristocrats of the land and robber barons of monopoly capital, but also for labor aristocrats of the shop floor. And no artfully worded Zogby poll can change it.

The reason that the United States is No. 1 is that, riddled with privilege and subsidy and rent-seeking as it is, it still has less of it than anywhere else in the world.

Christopher Chantrill blogs at www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

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Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action


Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.”  —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison


China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing


Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm


Civil Society

“Civil Society”—a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churches—builds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the values and knowledge of that society are transmitted across the generations.
Francis Fukuyama, Trust


Class War

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Freeman Dyson, “The Scientist as Rebel”


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Conservatism is the philosophy of society. Its ethic is fraternity and its characteristic is authority — the non-coercive social persuasion which operates in a family or a community. It says ‘we should...’.
Danny Kruger, On Fraternity


Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph


Conversion

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James M. Ault, Jr., Spirit and Flesh


Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
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presented by Christopher Chantrill

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