Posts Tagged ‘Wal-Mart’
May 8th, 2012 at 2:37 pm
First Lady Blows Off Free Market, Fails as a Result
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We here at CFIF have always cast a jaundiced eye on First Lady Michelle Obama’s nanny state attempts to hector Americans about how they eat. Whether it’s Ashton pointing out that the program consistently fails in public schools because kids don’t actually like the food or my observing that this trend has actually led to black markets in the cafeteria, we’ve primarily focused on the initiative’s shortcomings for America’s children. It turns, out however, that it’s just as robustly failing adults. From Bloomberg:

After vowing to open more than 1,000 stores selling fresh fruit and vegetables in underserved urban neighborhoods, or “food deserts,” grocers have opened a fraction of them, putting in jeopardy Michelle Obama’s effort to improve food choices for low-income Americans.

Wal-Mart Stores Inc., which said last July it would have 300 food-desert stores nationwide by 2016, has opened 23 and delayed opening some locations after a backlash from activists. Supervalu Inc., which pledged to double to 2,376 its Save-A-Lot stores, has slowed the pace of openings amid declining sales and scarce financing for its licensees. Meanwhile, grocers are opening stores in wealthier urban enclaves.

Food desert locations, by definition, aren’t profitable, according to Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California at Santa Barbara.

“The whole phrase ‘food desert’ sort of implies the weather created it,” said Lichtenstein. “It’s not the weather — it’s because people don’t have any money.”

Shoppers who live in low-income city neighborhoods “don’t fill up a basket and spend $100, they buy $10,” said Lichtenstein, who wrote “The Retail Revolution: How Wal-Mart Created a Brave New World of Business.”

There’s a couple of worthwhile takeaways here. The first is how often politicians and corporations earn praise from press releases and hollow promises. Wal-Mart undoubtedly got more fanfare for announcing the “food desert” stores than it will get scrutiny for failing to build them.

The second is the pervasiveness of the liberal creed that undesirable outcomes must be the product of systemic oppression. Mrs. Obama has long suggested, at least implicitly, that a neglect of urban communities is to blame for the absence of fresh produce in the inner city. It seemingly never occurred to her that the absence of a service in a given market might owe to the fact that there’s not enough demand to make it profitable. The First Lady’s real problem isn’t that corporations aren’t producing what people want; it’s that consumers don’t want what she thinks they should.

That gets to the core of the Obama Administration’s problem. They don’t simply want to change public policy or see corporate practices altered. They want to see human behavior reengineered — whether in the form of the food we eat, the cars we drive, or the doctors we visit. Sooner or later, however, reality will catch up with the White House, as it has in the case of the “food deserts.” No government edict can make straight the crooked timber of humanity.

April 25th, 2012 at 1:35 pm
“Bribery” in Mexico Not that Different from “Public Policy” in America
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In recent days, Wal-Mart has been rocked by the New York Times‘ reporting on a bribery scandal in Mexico, where the firm reportedly paid over $24 million to government officials to fast-track the permitting process for stores built south of the border.

The left, of course, is all over this because Wal-Mart is their corporate bete noir of choice. Personally, however, I think the party that bears the most guilt is the Mexican government, which has created an atmosphere in which graft is the easiest way to do business. Absent those conditions, the need for bribes would have been minimal and the issue would’ve been moot. Regardless, however, there’s an important angle here that gets fleshed out by the American Enterprise Institute’s Nick Schulz, writing for Forbes:

… While we’re on the topic of companies having to pay the politically powerful for access to markets, can we stop for a moment to examine how things sometimes get done right here in the United States? It’s not uncommon for big box retailers to pony up cash and other unearned benefits in order to break new ground on stores.; what’s different here, however, is that members of our political class often force them to do it. And it’s all perfectly legal.

Consider a recent bill in Maryland, where I live, aimed at big box retailers. Firms like Wal-Mart, Costco, and others hoping to expand operations in wealthy Montgomery County, just outside Washington DC, would be forced to negotiate legally-binding “community benefits agreements” as a condition for building and operating new stores. These sorts of bills are not uncommon when big retailers want to expand or enter into new markets.

The upshot is that politically well-connected local stakeholders – unions, community organizers, and other interest groups – get cash, hiring promises, and other benefits from the retailer in exchange for dropping any opposition to a new store.

Among the possible benefits are “assistance to community organizations and programs.” These organizations can, in turn, use this “assistance” to support the political candidates who push this kind of legislation in the first place.

What Schulz is describing is no more representative of free-market capitalism than the bribery going on in Mexico. As long as business owners have to compensate others who have contributed absolutely nothing to their efforts as the predicate for setting up shop, political power over business is still excessive. At least the folks in Mexico have the decency to call this what it is.