Out of Control Policy Blog

Common ground on Wal-Mart wars?

The Wal-Mart wars may be the closest the LA Times and Tom Sowell get to agreeing on something, so it's worth noting.

From this Times editorial:

The world's largest corporation pays its employees such stingy wages and medical benefits that many turn to food stamps and overburdened public hospitals – at taxpayers' expense. Meanwhile, numerous studies, including one used to develop the proposed L.A. ordinance, say Wal-Mart's aggressive expansion into grocery sales is driving unionized grocery stores that pay good wages out of business.

OK, we expected to hear something like that. But then, later, there's this:

Regular Wal-Mart stores have helped revitalize dying shopping centers in Crenshaw Plaza and Panorama Mall, serving as anchors after other department stores moved out. That's what's wrong with a one-size-fits-all ban: It fails to take into account communities' differing needs. It also invites a backlash from consumers who have made Wal-Mart the retail leader that it is. Surveys show that even some union members shop there.

Now here's Sowell on Wal-Mart's market power, and how tenuous that power can be:

The people who shop at Wal-Mart can decide whether that is good for them or not. But the intelligentsia are worried about something called Wal-Mart's "market power."

Apparently this giant chain sells 30 percent of all the disposable diapers in the country and the Times reporter refers to the prospect of "Wal-Mart amassing even more market power."

Just what "power" does a sales percentage represent? Not one of the people who bought their disposable diapers at Wal-Mart was forced to do so. I can't remember ever having bought anything from Wal-Mart and there is not the slightest thing that they can do to make me.

The misleading use of words constitutes a large part of what is called anti-trust law. "Market power" is just one of those misleading terms. In anti-trust lingo, a company that sells 30 percent of the disposable diapers is said to "control" 30 percent of the market for that product. But they control nothing.

Let them jack up their prices and they will find themselves lucky to sell 3 percent of the disposable diapers. They will discover that they are just as disposable as their diapers.

Much is made of the fact that Wal-Mart has 3,000 stores in the United States and is planning to add 1,000 more. At one time, the A & P grocery chain had 15,000 stores but now they have shrunk so drastically that there are probably millions of people -- especially in the younger generation -- who don't even know that they exist.

An anti-trust lawsuit back in the 1940s claimed that A & P "controlled" a large share of the market for groceries. But they controlled nothing. As the society around them changed in the 1950s, A & P began losing millions of dollars a year, being forced to close thousands of stores and become a shadow of its former self.

Ted Balaker is Producer


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