Commentary

Ban Wal-Mart, Hurt Families

Ban would cost Southland families a lot of money

The City Council may soon owe each Los Angeles household $482.

In the coming weeks, the Los Angeles City Council is expected to pass an ordinance that would forbid Wal-Mart Supercenters from coming to the city and selling groceries. The council fears the low-cost giant would crush smaller competitors and bring the “wrong” jobs to Southern California – the lower-paying, nonunion kind.

Of course, no one likes watching stores go out of business, and we all prefer higher wages. But the City Council’s actions would cost Southland families a lot of money.

Compared with the average supermarket, Wal-Mart charges about 15 percent less for groceries. The U.S. Department of Labor says the average Los Angeles household spends $3,215 per year on groceries, and 15 percent of that is $482. In other words, for many families, banning Wal-Mart would actually be costlier than keeping the short-lived car tax increase.

The upcoming vote might be a bit different if council members had to reach into their own pockets to pay us for our lost savings. And remember, this isn’t just a one-time deal. We’d be owed a $482 reimbursement each year the council prevents Wal-Mart from opening stores in the city and lowering our grocery bills.

And of course, we would have to insist on some caveats – no diverting money from transportation funds to pay us off, or anything like that. In fact, no using tax dollars of any sort.

Perhaps the City Council could share the refund burden with the other local governments bent on thwarting Wal-Mart. Inglewood passed an ordinance to block Wal-Mart, as did Oakland and Alameda County. San Diego is expected to consider its own anti-big-box ordinance shortly.

And since Wal-Mart hopes to open 40 Supercenters – 200,000-square-foot stores that combine the company’s traditional discount stores with full grocery stores – in California over the next several years, chances are other politicians will jump on the ban-the-box bandwagon as well.

Thankfully, not everyone is against saving money at the grocery store. Los Angeles City Councilman Bernard C. Parks has actively opposed the council’s plans because he knows restricting big-box stores hurts low-income neighborhoods by depriving them of cost savings and jobs. Parks says his South Los Angeles district could use another employer, and thinks entry-level jobs offer much more value than collecting unemployment checks. Employees learn the importance of punctuality, accountability and hard work, and such experience ensures that a lower-paying job is merely a training ground for bigger and better future opportunities.

Imagine if the City Council applied this anti-competitive spirit to other businesses. Competition has dramatically reduced long-distance phone rates, air fare and countless other services. Would the City Council recommend banning Southwest Airlines from Southern California’s skies because it cuts into other airlines’ ticket sales? After all, Southwest is really just Wal-Mart at 35,000 feet.

Luckily, the airlines and telecom companies aren’t in the City Council’s jurisdiction.

Certainly Wal-Mart’s presence wouldn’t be good news for everyone. If 40 Wal-Mart Supercenters enter the state, chances are some smaller stores will go out of business and others will be forced to change their business models to compete.

But instead of propping up the grocery stores already in business in California, politicians should recognize Wal-Mart’s emergence as part of a larger process in which one innovator replaces the previous one. In fact, the stores that today fear being displaced by Wal-Mart used to be the ones doing the displacing.

Alan Zaremberg, president of the California Chamber of Commerce, offered some valuable perspective. “I grew up in Pennsylvania. My father had a corner market there,” he said. “When I was 3 or 4, the A&P moved in and put him out of business. That was tough for us, but I don’t think anyone would go back and say we shouldn’t have supermarkets.”

Most Southern Californians would probably agree, and they’d also probably welcome the opportunity to save $482 per year at Wal-Mart.

Ted Balaker is the Jacob’s Fellow at Reason Foundation.

Ted Balaker is an award-winning filmmaker, journalist, and founding partner of Korchula Productions, a film and new media production company devoted to making important ideas entertaining.

Ted is the director of Can We Take a Joke?, a Korchula Productions feature documentary about the collision between comedy and outrage culture featuring comedians such as Gilbert Gottfried, Penn Jillette, Jim Norton, Lisa Lampanelli, and Adam Carolla. Ted is producing Little Pink House, a Korchula Productions feature narrative about about Susette Kelo's historic fight to save her beloved home and neighborhood. The film stars two-time Academy Award nominee Catherine Keener (Capote, Being John Malkovich, The 40-Year-Old Virgin) and Emmy nominee Jeanne Tripplehorn (Big Love, The Firm, Basic Instinct).

Ted produced the award-winning shorts The Conversation and Cute Couple. He is an executive producer on the feature documentary Honor Flight, and produced the film's first trailer, which attracted more than 4.5 million views. The Honor Flight premiere attracted an audience of more than 28,000 and set the Guinness World Record for largest film screening in history.

Ted is a founding member of ReasonTV, where he produced hundreds of videos and documentary shorts, including Raiding California, which introduced a nationwide audience to the Charles Lynch medical marijuana case.

Ted is co-creator of The Drew Carey Project, a series of documentary shorts hosted by Drew Carey, and creator of the comedic series Don't Cops Have Better Things to Do? and Nanny of the Month.

His ReasonTV contributions have been featured by The Wall Street Journal, MSNBC, Fox News Channel, and on the he John Stossel Special Bailouts and Bull, a first-of-its-kind joint project between ABC News and ReasonTV.

During Ted's tenure, ReasonTV received the Templeton Freedom Award for Innovative Media and in 2008 Businessweek recognized his short Where's My Bailout? (created with Courtney Balaker) as among the best of bailout humor.

Prior to joining Reason, Ted spent five years producing at ABC Network News, producing hour-long specials and 20/20 segments on topics ranging from free speech to addiction.

Ted's written work has appeared in dozens of publications, including The Los Angeles Times, The New York Times, The Huffington Post, Reason magazine, The Washington Post, and USA TODAY. He is the author or co-author of 11 studies on topics ranging from urban policy to global trade, and his research has been presented before organizations such as the Mont Pelerin Society and the American Economic Association.

Ted is co-author (with Sam Staley) of the book The Road More Traveled (Rowman & Littlefield, 2006), which Chapman University's Joel Kotkin says "should be required reading, not only for planners and their students, but for anyone who loves cities and wants them to thrive."

Ted has appeared on many radio and television programs, including ABC World News Tonight and the CBS Evening News, and has interviewed hundreds of thinkers and innovators, ranging from X Prize recipient and private spaceflight pioneer Burt Rutan to Templeton Prize-winning biologist and philosopher Francisco Ayala.

Ted graduated Phi Beta Kappa from the University of California, Irvine with degrees in political science and English.