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Paid Enough to Buy the Product
In the past several years, a virtual industry has been created in bashing Wal-Mart. From leftist church groups to the AFL-CIO to the Chronicles, Wal-Mart has been the favorite whipping boy of people on all sides of the political spectrum. Thus, it was no surprise when I recently received an emailed article from the quasi-Marxist Sojourners magazine not only attacking Wal-Mart for the usual set of "sins" that the critics claim, but also a new transgression: Wal-Mart's business practices, on net, make our economy worse off and leave us poorer.

In its latest example of Wal-Mart bashing (Sojourners gives its readers the links to anti-Wal-Mart websites and pathologically publishes attacks on the retail giant), David Batstone and David Chandler compare the company unfavorably with another giant, Ford Motor Company, or at least the Ford of the early 20th Century. Before going into detail about the contrasts that Batstone and Chandler make, however, let me say that their choice of comparison is odd, considering that Ford was the premier target of leftists of his day and socialists considered him to be the worst "reactionary" on the industrial scene in that era....

...Here is the problem with their economic argument: it makes no sense. It is based upon the assumption that Wal-Mart faces no competition from other employers and can cut pay at will with no resultant loss of employees. Furthermore, if they are correct about Ford, it would seem self-contradictory that other employers would not have "discovered" the passageway to the "virtuous circle," given that such actions would make their businesses more profitable. That other employers do not follow what the authors claim was the Ford path can be due only to evil motives on behalf of employers or gross ignorance of history....

...Indeed, Ford's ideas were revolutionary, but not in the way that Batstone and Chandler might think. Ford was able to apply new production techniques and relentless cost-cutting approaches to manufacturing. The result was twofold: his workers were able to be paid more than workers in other industries, and individuals across the economy were able to purchase high-quality automobiles.

Ford's triumph was due to his following the standard approach of cutting costs and boosting production. Ironically, Ford's approach was no different than what Wal-Mart has been doing. Yes, as the authors claim, Wal-Mart's success does result in less efficient producers going out of business. However, think of all the carriage makers and buggy whip manufacturers that disappeared in the cloud of dust left by the Model T.