Art Carden  

The Empire Strikes Back: Walmart Responds to the New York Times

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On Friday, the New York Times ran this article by Timothy Egan, which discussed the new Starbucks initiative to pay for associates' college degrees but which was mostly a hit piece aimed at Walmart. Walmart VP of Corporate Communications David Tovar decided to hit back, taking an editing pen to Egan's article.

How are wages determined in competitive labor markets? Egan is mute on the issue, and I suspect we're to believe that we have poverty and inequality in no small part because Walmart's executives just aren't nice enough. Egan cites Fortune.com's Stephen Gandel, writing that he "concluded that Walmart could give workers a 50 percent raise without hurting shareholder value." If this is the case, why aren't Egan and Gandel and others rushing to mimic Walmart (plus 50% higher wages), take over the Big Box retail market, and use the profits for causes they deem worthy? Markets are pretty competitive, which makes me very skeptical of claims that this company or that company could do this or that Very Noble Thing without hurting the bottom line.

This is where we trot out the usual list of libertarian reasons to criticize Walmart (subsidies, eminent domain, etc). Most of the criticisms of Walmart with which I'm familiar are not criticisms of their successful participation in the rent-seeking society. They're criticisms of their successful participation in commercial society. A few years ago, I wrote a post titled "Against a Ruthless Libertarian Criticism of Everything Existing" that takes this on in more detail.

I've done a lot of work on Big Box retail (the site needs an update as the Costco paper has been published). A friend and I are working on a chapter for an Edward Elgar handbook on the economics of retailing and distribution that will be available by the end of this year. Here's a working paper version of a chapter on retail that appeared in a 2013 volume on major events in American economic history.


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CATEGORIES: Labor Market



COMMENTS (2 to date)
Massimo writes:

That Egan article is a really predictable naive easy target. The Walmart edit was pretty funny. This is a nice calm rebuttal.

LD Bottorff writes:

I think it is pretty obvious that Egan thinks that Congress should set wage levels. They currently set minimum wage levels and I suspect there are many who would like to impose maximum wages on corporate leaders.
I find this comment amusing: it's a sad day when we look to corporations for education, healthcare, etc. I think it's a sad day when opinion leaders like Egan think that we should look to government for more and more services. Is the quality of government-provided education improving so fast that we think that more government-provided healthcare is a good thing? Is Egan totally unaware of the issues at the Veterans Affairs Healthcare centers? Is he not aware of all the efforts that the government has made over the last 50 years to supposedly make college more affordable? And when did we stop offering the GI bill to veterans?

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