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May 18, 2005

Wal-Mart in Vermont

A Non-Religious Query from Enkidu, Theologian-in-Residence

Sometimes moderate Republicans I chat with are surprised to meet an actual Liberal. Having grown used to considering all “liberals” to be Socialist, they are a bit stymied to find themselves faced by an ardent Democrat who argues in their own language.

My Socialist friends are less surprised by my Liberalism, but are equally frustrated when, on occasion, we differ on policy decisions.

A recent bill proposed in the Vermont Legislature is a case in point of the latter.  The issue at hand is the increasing difficulties experienced by country stores in the small towns of that state.  Apparently they are being under-priced by the Wal-Marts going up in every other county. 

As a devout Liberal who admires the gains of the labor movement over the past 150-odd years, my first reaction was “if these stores have the organizational capacity to lobby the state legislature, why don’t not pool their buying and advertising power to compete with Wal-Mart head-on in Vermont?” 

Alternatively, as a New Yorker who shops at their own corner store rather than trekking a few blocks to the Big Box on the avenue might propose, specialization rather than broad-product competition might be an answer.

Actually, however, the bill in Vermont imposes a limit on the size of retail outlets, and accompanies this legal dam with a $50 million dollars in state grants and loans to small-business owners. 

Readers: please advise me as to how this regulatory solution is in the interests of the citizens of Vermont, and how it is superior to the alternatives that I and my New Yorker counterpart recommend?

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To begin I want to make one thing clear to Eli, when I talk about "the folks I know in VT" I am not talking about the latte-sipping liberals in Stowe and Burlington. I am talking about people who run a dairy farm and breed draft horses. I suppose you could call them 'rural romantics', but I doubt they match the yuppies in Eli's mind.

Now me on the other hand, I'm sure I match most any stereotype you have in mind. So have at it.

I do think however, that when a WallMart moves in 20 miles down the highway then what is left to a small town? The small shops were the center of the town. With those gone, what's left?

I think this post itself is evidence of lobbying power from "small country store owners." It makes structural sense, as well, that small business owners would have more lobbying power than the more diffuse and poorly-funded constituency of lower-income consumers - they are more concentrated and focus on a few issues.

The BnN here does have local magazines, and, of course, the much more multitudinous local newspapers and alternative newsweeklies. I really don't have any clue how many, if any, zines are around here these days. But, honestly, if you think it's justifiable to heap the colossal costs of maintaining inefficient businesses forever on taxpayers and consumers when the sole verifiable gain is that local zines can be more easily procured - well, I've got no rebuttal to that other than that those are some pretty narrow priorities. Maybe your favorite zine writers could be introduced to blogger and flickr as some sort of compromise.

Padraig: I haven't seen anyone assert yet that the small businesses in question are empirically much better employers than Wal-Mart is. Historically, small businesses have been among the most vocal opponents of minimum-wage and maximum-hour legislation on both the state and national level. Certainly, the owners themselves would likely have worse jobs in a post-Wal-Mart town, but that's a small number of people. I don't see any of the business owners in the article making the assertion that they can provide better medical coverage, wages, or hours to their employees. What I do see them admitting is that Wal-Mart is cheaper, so although loss-leaders like that are exploitative, they're not relevant - and, as a side note, they could be combatted through education which would be a lot cheaper than these regulations, which would only stop large stores from engaging in the practice, not all stores. And I'm not saying anything about who should make the decision - obviously, in our political system, it'll be the relevant local governing entities' decision to make. I'm just arguing that this particular decision would be a bad one.

And, once again: $50 million dollars in grants and loans...that's a considerable cost to taxpayers, and one that'll likely be renewed when those grants run out. Would a few Wal-Marts put so many new people on public assistance who wouldn't be there anyway from unemployment, underemployment, or poor wages elsewhere that it'd cost that much? And would the cost still outweigh the benefits when you consider the decrease in the tax base created by this retail size-restriction and its effects on property values? I'm really wondering...if there's solid evidence of this, please point me to it.

Could you explain how my post is evidence of any lobbying power by small business owners? And the lobbying power of small business owners outweighs the lobbying power of WalMart?

$50 million dollars is a fraction of the money spent on the new infrastructure and new roads that WalMart-induced sprawl makes necessary. Supporting small businesses in existing population centers, which have been nearly wiped out due to the subsidization of sprawl, would likely pay for itself in decreased infrastructure costs.

Agree w/Toby.

Well, the post is about an article that establishes three things: the lobbying power was strong enough to get Jeffords introducing proposals in the Senate (which might succeed, as pork to romanticized induestries often does); the lobbying power was strong enough to get a very aggressive bill introduced in Vermont (which may well succeed); and the lobbying power was enough to catch the attention of the Boston Globe. This lobbying power is likely less than Wal-Mart's on a national level and maybe larger in some localities, but I really don't care too much about Wal-Mart's interests - Wal-Mart can fend for itself. The less-organized lobbying group is low-income consumers, whose interests often diverge from small business owners', and often diverge from Wal-Mart's.

This post was about two specific legislative measures - it wasn't a "clap if you hate Wal-Mart" referendum. I tend to share the view of Wal-Mart as "neutral-selfish" in its own disposition (and I imagine the same phrase could describe a lot of smaller businesses just as well), and I think there are governmental actions that can be taken to control its negative effects on local economies - I don't think setting up a never-ending regime of small business subsidies should be one of those measures, nor do I think caps on the size of retail outlets should be.

But the post is only about lobbying power if you assume the only basis for proposed legislation is lobbying power. Why can't the politicians that introduced the legislation just have their own convictions that smaller retail and support for small country stores will benefit their constituents? Why can't we believe that these politicians were elected by people who share their convictions, and that democracy is working for once to promote a general public interest that is not promoted by an unregulated market?

I do think we should vigorously investigate corruption and we should try to limit the special interest control of our government. But I don't think that special interest control can be assumed in every case. I'm not a small business owner, but I believe, based on readings of the aforementioned Jane Jacobs (Nature of Economies), that local, diverse, self-sustaining economies are crucial to a high quality of life. And though Jane Jacobs may not agree with me, I believe that the government can take a role to promote these type of economies, especially when past and current policies are doing so much to destroy them.

Are all your arguments proof of the lobbying power of the status quo and the very rich, which (I believe) an unregulated market benefits? Or do you sincerely believe in the benefits of an unregulated market for everybody? I would wager it is the latter. So why can't people who don't agree with you base their opinions on their beliefs, not just some special interest's lobbying power?

A big box store is basically a warehouse, where you become your own retail distributor. It relies on publicly funded highways to bring customers from miles away. As big boxes become more common, more and more people feel the need to drive trucks (which we call by the euphemism "SUV's") - and once you own a truck, why not use it?

So instead of having paid truck drivers bring goods to a neighborhood store - where you pay more but spend less time - we have moms driving their own trucks to the Wal-mart.

New York is one of the very few places that this strategy doesn't work - for obvious reasons.

Certainly most policies that make it as far as these do have some sort of combination of special interest and either political conviction or indifference.

I don't think I've ever argued for either the status quo or the very rich, so, no, my statements can't be attributed to their lobbying power. The arguments advanced by the people in the article are hardly worker-friendly, revolution-inspiring rhetoric - nearly every appeal is to the sentimental value of the stores, a value which I imagine is most strongly held by people who can afford to pay higher prices but don't want to subsidize their sentimentally-valued stores on their own. Informed resistance to Wal-Mart may have many justifications - but blanket resistance to large, efficient stores which profit from the non-local economy can, as far as I can tell only be justified if: A) you think, for some coming-apocalypse reason, that any town that doesn't have an almost entirely localized infrastructure is doomed in the next few years; or, more likely, B) you think consumers and taxpayers should subsidize what are largely upper-middle-class aesthetic tastes. The first is an empirical case to be made, and I haven't seen it made yet. The second seems to be very popular but hard to defend under any level of scrutiny.

Why can't we believe that these politicians were elected by people who share their convictions, and that democracy is working for once to promote a general public interest that is not promoted by an unregulated market?

Because in the real world, democracy isn't working and politicians don't vote based on convictions. Even those with reputations for honesty are simply a lighter shade of gray.

I'm not a small business owner, but I believe, based on readings of the aforementioned Jane Jacobs (Nature of Economies), that local, diverse, self-sustaining economies are crucial to a high quality of life.

As far as I know, Jacobs' local economies are cities, not small towns, which are in her view economically backward regions.

So instead of having paid truck drivers bring goods to a neighborhood store - where you pay more but spend less time - we have moms driving their own trucks to the Wal-mart.

First, you're exaggerating; in terms of weight, for instance, SUVs are a lot closer to sedans than to real trucks. Second, a great advantage of the second scenario is that instead of paid truck drivers bringing a limited range of goods based on what profits the small business owner the most, you get consumers bringing the goods they want. Third, another advantage you're omitting is that at least in theory, eliminating a middleman reduces prices.

That's a fair point, Eli, however it's hard to see how small businesses could be paying less than Walmart's $8/h or so. But it is a question of empirics. However, my larger point that these are issues to be confronted in the political arena remains. My problem is with the version of Liberalism that says that people are stupid for protecting their interests. Most Vermonters have a vested interest in keeping wages high, since most Vermonters work for wages. Economists, historically, have not been so friendly to economic protection for the many at the expense of the profits of the few.

Most Vermonters have a vested interest in keeping wages high, since most Vermonters work for wages.

Keeping Wal-Mart out will protect the wages and jobs of only those workers who work in retail. These workers deserve to be protected rather than screwed over for some greater good of low prices, but there's no point in romanticizing small stores for that purpose. I don't think Wal-Mart is a good corporation - far from it. I just think the answers to it are Target et al and federal intervention to criminalize Wal-Mart's union-busting; mom-and-dad shops are too bad for the consumers for keeping them to be worth it.

>Because in the real world, democracy isn't >working and politicians don't vote based on >convictions. Even those with reputations for >honesty are simply a lighter shade of gray.

Alan, I thought we were having a discussion based on economic principles. The real world has nothing to do with it. The real world costs of new infrastructure for each new wave of temporary big-box retail stores are unimportant, because our economic theory says it must be the most effient use of tax dollars and land. Any real world democratic solution must be pork and the result of special interest lobbying, not because you can show any real world corruption or influence, but because our economic theory says so. Any concern about the real world problems of oil dependence, paving over the country, obesity, alienation from your community and losing local economies is just an upper middle class aesthetic taste, because it doesn't fit into our economic theory.

I feel like the sprawl issue is the main concern of the bill - it allows for larger stores if they are within a downtown retail district or similar area. How can you just ignore and denigrate the sprawl issue and say that people shouldn't be able to take governmental action against it?

I would hardly call the current "free trade" policies "real world", they're a philosophy that in execution isn't working.

You can't have record budget deficits, while having record trade deficits, while borrowing record ammounts of foreign capital. That is a "borrow and spend" economy that is threatening not only the financial stability of the US, but the economic underpinnings of the stock market and the whole world.

The financial investors... largerly China, and other have begun liquidating their US holdings and transferring them to Yen and Euros:

"International investments in U.S. securities dropped to $45.7-billion (U.S.) in March from $84.1-billion in February, the U.S. Department of Treasury said Monday, further evidence that foreign central banks may be diversifying their holdings away from U.S. assets."

In short they think that the US has dug itself into a financial hole that it may not recover from. The real estate market which has been one of the principle economic sectors still driving this economy is now shakey and analyst are now wondering when the bubble will burst.

Greenspan has been warning about this for sometime and asking the Congress to pass legislation that would reign in the "Fanny Maes", fearing mortgage defaults when federal subsidies for low income families ends this year enmass, threatening a bank failure cascade.

He testified before Congress about three weeks ago and when he was asked about the Presidents tax cuts and why he supported them when they obviously exacerbate the deficit problem, he shocked the Congressmen saying, "I never said that the tax cuts were a good idea and you won't find it in print any where that I said so." Critics have come down on them for not saying they were a bad idea.

The greatest fear of the world's investment community is that we will have a "market correction" far greater than the one that occurred in the late 80's. In short a crash... big time!

So what does this have to do with Walmart?

A lot... they are the biggest importer of Chinese goods and a significant part of the massive 164 billion dollar trade deficit that we have been running with China.

Both parties in congress have been expressing frustration with this administration's lack of leadership with getting a coherent trade policy. They are getting hammered by their constituents about the factory closings and loss of jobs from the death of family business. Small businesses account for 60% to 70% of the employment in this country.

This has been exacerbated by the flood of illegal aliens across our southern border at the rate of 3.5 million a year. Some are in the system, but many are not and now comprise a hidden economy... the estimates of which run into the hundreds of billions of dollars.

Walmart has been one of the largest employers of illegal aliens. So now you have them dumping cheap foreign goods and using cheap foreign labor. Small businesses can't compete and neither can American manufacturers.

The textile industry has been devastated... over 150 factories have closed and a loss of over 16,000 jobs in the textile sector alone.

The Bush administration was reluctant to press aggressively on China until just recently in the last 30 days, because they have been lending us the cash to fight the wars.

They have recently has begun to act with legislation for new import quotas and tarriffs on Chinese textiles and goods, as well as finally making complaints in the WTO about the artifically low Chinese currency scheme that has hit Europe hard as well. The Europeans are joining in this effort and also attacking their intellectual property rights violations.

There have been some recent modest reductions in the trade deficit as American exports have showed some increases... but analyst have called this "only slowing the leaks in the boat" privately.

But for the American manufacturer's and family run retailers who have failed businesses is is too little too late.

Additionally, American based companies have been transferring key technologies to China and manufacturing skills there as well, such as Boeing aircraft and IBM. China's military has shown a dramatic expansions estimated by Jane's to be about 37% increases per year. Much of this technology has military applications and many of these trade deals were either fast tracked by the President or done in secret committees in Congress.

The Chinese have not been acting in concert with the Bush administration on policy issues regarding North Korea and Taiwan. What was a regime destined by the "free traders" about to become a democratic capitalist society have realized that the Communist party has an agenda of its own. Now the GOP leadership in congress and administration officials are talking openly about the "Chinese threat."

China's economy is red hot and they now have labor shortages, the "trickle down economics" of the past no longer work because they trickled down overseas.

Additionally, the Chinese and India ahve become consumer nations as the "Free Traders" predicted, but not of goods or services... but of resources and they are directly competing with the US for the key vital resource... oil.

They are negotiating long term contracts with Venezuala and African nations for oil. The US gets more of its oil from Venezuala than it does the Middle East. This is part of the dramatic increases in the cost of gas at the pump.

The Bush administration was further alarmed when the European allies that it alienated refused to stop arms sales to the Chinese. The Bush administration had awarded several key helicopter contracts to Lockheed over Sikorsky, the American based ,manufacturer in Pennsylvania. Lockheed is using foreign manufacturers, principly British, French and German firms to build their helicopters. This put the US military in the position that they could be facing a Chinese military armed with the same basic weapons platforms as the US, a realization that has Pentagon officials privately alarmed.

I could go on... but what is the point except to say... The Bush "Free Traders" and Walmart... building a bigger, better, stronger... Chinese Communist state.

People can decide if they want to build a park instead of a allowing a factory, even if it reduces their material standard of living and state GDP. Banning Wal-Mart is just the same, a preference for beauty over material consumption.

Good for them. Not every law has to be about improving the economy. Vermont has a per capita GDP of 45,000+. We don't need to be richer, we need to be nicer and happier. Wal Mart disrupts communities and makes people unhappy with its ugliness and bloodsucking business practices. Good for them for keeping it out of the state.

I'm interested in knowing to what degree alienation from the community is real rather than an invention of rural romantics.

WHY YOU AMERICAN LIKES TO CRITICISE AT SUCCESSFUL PEOPLE LIKE WALMART.YOURS A FREE COUNTRY ,NOT COMMUNIST. MAKE YOURSELF BETTER,LEARN MORE ABOUT HOW WALMART SUCCEED,AND MAKE YOURSELF WEALTHY.WHY KEEP HAMMERING WALMART.WHO WANT TO LISTEN TO YOU

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