Walmart Nation

Is it good for America if Walmart is the only store in town?

Walmart is hungry and, after a decade long loss of 25% of its stock value, ready to eat.   It is determined to eat everything and anything in its path.  Toy retailers, clothes sellers, grocers, auto servicers. Everything.

Sure prices are low at Walmart now, which is good for people in such hard times.  And from a shareholder perspective, the economy is already doing much of the heavy lifting of knocking out rivals.  Now does seem like the time to finally make Walmart the only game in town (and the country).

This is capitalism, pure and simple.  What’s good for Walmart must also be good for people, right?  We live in a capitalist society and like to see economic winners.

Walmart is expanding because it can still capitalize on global wage arbitrage – finding ever cheaper labor to offset increasing material and transport costs.   This keeps prices down.   However’ there are two main problems with this model.  One, wages in most countries with a skilled work force are rising. Two, material and transport costs are directly at the mercy of peak oil.  Peak oil will make distance matter a great deal.  So shipping South American cotton to China to be made into jeans and then shipped back across the Pacific to be off loaded onto trucks to be spread across the U.S. is a very vulnerable business model.

Then what?   Cut labor costs?  Walmart pays barely subsistence level now.  Are we so addicted to cheap shit that we will gladly keep others in desperate poverty?  (Oh, wait, I know the answer to that.)  But lets assume that wages can’t be lowered enough to offset dramatically increased material and transport costs.  Then what?  Higher prices.

You don’t care you say?  You’ll just shop down the street?  Really?  Where?  Walmart ate everything down the street, remember?

This is the real reason we shouldn’t cheer a merciless capitalist corporation on a binger.  In the end, it reduces our choices, our freedom.  It is a bad day for all of us when Walmart becomes the only store in town.   This is the opposite of resilience, and portends hard times ahead.

Link:  Walmart’s Project Impact: A Move to Crush Competition - http://news.yahoo.com/s/time/20090909/us_time/08599192069800

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Filed under Economy, Peak Oil

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