Sunday, June 27, 2010

Thoughts on Walmart and local merchants

In Chicago for the last 6 years or so--perhaps longer--a debate has raged over whether to allow Walmart to build stores in the city limits. One of the many arguments against allowing Walmart an entree into the Chicago market is the claim that it chokes off smaller business that is locally owned and operated. The argument for Walmart hinges, at least in part, on the claim that the economy of many of the targeted neighborhoods in Chicago is so bereft of local merchants and the goods, services, and jobs they are supposed to supply that a Walmart would be a welcome addition.

I have heretofore expressed some reservations about the we-need-to-ban-Walmart-to-protect-local-businesses argument (see my post here, and a comment I made on a post at the Volokh Conspiracy here). In short, it is probably a good thing in the long run to have locally owned businesses in a neighborhood rather than larger, corporate owned businesses. With locally owned businesses, the money made locally is more likely to stay local, and locally located entrepreneurs have a stronger interest in investing in their communities. Still, and especially in the short term, it is the local entrepreneurs who benefit most. They want to be, and presumably still are in some cases, a local elite that wields considerable power over those in the community who lack the resources to start their own businesses. That these people are self-interested is no surprise, or even necessarily a bad thing, but they aren't the virtuous hoers of the soil that some who advance the anti-Walmart arguments would like us to believe.

The comment I made at the Volokh Conspiracy (linked to above) was answered very thoughtfully by another commenter (click here to read it in full). In part, she or he said the following:
Mom and pop companies are trying to make a buck like anyone else, but a huge factor in that is the first-person experience. The smaller the business, the more the business is truly human– the owners are more often in closer contact with employees and customers. It is much more difficult for most people to act in a cold and careless way towards other people they actually know and experience as other humans, than it is for them to act in a cold and careless way towards a set of numbers on a ledger. Thats not a solid rule, some people are simply bad people and will coldly treat other people badly regardless of how well they know them or how close their contact is. But I think they are the exception.
This commenter goes on to say
There are deeper social and cultural implications. A local economy being a network of families, reputation matters. Everyone involved knows that whether they are working for someone, employing someone, or buying from someone, they are participating directly in their community. No one wants to live in a bad community so doing good business (as worker, employer, or consumer)is a big part of maintaining a good community.

That is pretty much lost now, and National society being a massive network of smaller communities, is obviously suffocating and dying from lack of “good-business”. What we have instead is a media-market driven facade superimposed over the reality of a decimated, rotting society.
Aside from the claim that our society is "decimated" and "rotting"--no which I reserve judgment--there is little, in the abstract, that I disagree with. I would add that to some degree, however, it is a question of trade offs.

In a society where "reputation matters," there is huge incentive to do something deserving of a good reputation. But the "incentive" includes a certain amount of coerced conformity to social norms. Some of these norms might be benign or downright just. Some might be arbitrary or downright offensive to our sensibilities. What if the local community is homophobic? Does an openly gay person, or someone merely suspected of being gay, have as much of a chance as someone who does not? What if the local community is not-so-subtly racist? Does a person of color really stand a chance? (Conversely, would a white person stand a chance in a local community of color?)* What if someone has to move from one community to another? How easy is it to establish a reputation? (Short answer, I suppose, is, it depends how much money one has.) One (for example, me) is reminded of the old system of county poor relief that the US, to a large degree, inherited from England: the system where people without strong roots in the county were "warned out" if it was feared they'd become a charge or burden on the community.

The corporatization of our economy has few, if any, unqualifiedly good answers to the problems of racism, sexism, homophobia, or economic inequality. In fact, this corporatization has maintained and recreated a perverse form of "reputation" against which the system of "reputation" the commenter above talked about compares mostly unfavorably. (I'm talking of the quantification of "character" in the form of credit scores, credit reports, and criminal records for non-violent misdemeanors.**) Corporations' operations are notoriously opaque in certain ways, and in others are without accountability. See, for example, the difficulty of enacting and enforcing a workable system of campaign finance reform. See, also, the ability of large employers to "game the system" when it comes to bad faith negotiating tactics with employees, or even, more a propos, with Walmart's alleged "off the clock" work violations.

But corporate hegemony does offer some partial solutions. The laws that forbid discriminating against certain classes of people are perhaps more enforceable against corporations than against the small neighborhood employer. (Again, I don't want to wax kumbaya about this: there are plenty of allegations about unfair hiring practices and unfair treatment of customers by large corporation. All I mean to say is that such practices are more susceptible to redress. Or at the very least, a large corporate employer has much to gain, and little to lose, by appearing to be non-discriminatory.)*** As far unionization and workers' rights as workers (and not as members of a certain class designated by anti-discrimination laws) goes, the practices of corporate giants like Walmart are notorious for allegations of their antiunion activities and violations of workers' rights. And again, there are no easy answers, but worker representation seems to me much more possible in a large, "big box" store like Walmart than at the small mom and pop store.

Again, I cannot claim there are any easy answers. I just think we should think twice before opposing Walmart--or other "big box" stores--on the grounds that they supposedly ruin local businesses.

*I'm not claiming the two examples are precisely analogous. We live in a white-dominated society (for example, in my first example, the "unmarked category" was a white, racist community), and the social dynamics are different. But food for thought.

**Except, curiously (and usually), traffic misdemeanors. If people were made to answer for their traffic crimes, perhaps that would lead to a reconsideration of our car-centric culture. But that's another blog post.

***A few years ago, my university offered a screening of an anti-Walmart documentary (I forget the name of the movie), but a major motif of the film was that Walmart moved into local (mostly rural) markets and drove local businesses out of business. In the discussion that followed the presentation of this (very long) film, one young lady in the audience who was African American referred to one scene in a film where a white hardware store owner bemoaned the loss of his family's business. She asserted that there was no way that man would have ever given her a job, whereas Walmart would hire her. Of course, this is a lone example, and she speaks only for herself and not Walmart, the hardware store owner, or other prospective employees. But this anecdote at least qualifies what I sometimes find to be the unreflective celebration of locally owned businesses.


theolderepublicke said...


Your comment has most of the earmarks of a "spam" comment, and I am tempted to erase it, because it appears to have little or no relevance to anything I said above (except, perhaps, for the key word "credit reports"). Please give me a reason not to delete it, or I shall do so within a few hours.


Pierre Corneille (pseudonym)

James Hanley said...

Anti Wal-Mart folks frequently bemoan all the "good" jobs lost in those local businesses, when of course most small mom-and-pops only pay minimum wage. It's also worth pointing out that buying small quantities usually means having to pay higher prices, so a local economy dominated by mom-and-pops is usually one where people have to pay more for goods. And then there's the importance of what people dismissively call "mere convenience." Shortly after we moved to our current town, a hailstorm broke the skylight in the trailer we were living in, after which the rain poured through and down our walls. I had no ladder, tarp, or rope, and it was 1:00 a.m. The local mom-and-pop hardware (where I frequently shop, as it is conveniently located next to the grocery store) had closed at 6 p.m. Only Wal-Mart was open, and a quick trip there helped to limit the damage we suffered.

On the other side of the equation, my primary concern about large box stores is the wasteland they leave behind when they move to another location. The occasional former big-box becomes a mega-church, but many remain a blight on the landscape for years.

On the whole, though, I think consumers benefit considerably from the purchasing power large stores like Wal-Mart have.

theolderepublicke said...

Mr. Hanley,

Thanks for the comment!

I find it hard to believe that I left out the point about mom and pop stores generally being more expensive (and, I would argue, and do argue, often offering goods of as low quality as stores like Walmart supposedly do). Nevertheless, I did neglect to mention it.

The "big box wasteland" problem is a real one, which I did not mention and haven't given much thought about. I assume, without knowing, that a lot of poorer areas targeted by Walmart are already bereft of businesses, so there's little to lose. I wish I knew more about Chicago's Pullman neighborhood to assess whether there are enough small businesses nearby that stand to lose from a Walmart. (I visited the neighborhood briefly in 2004 or 2005--part of a labor history "walking tour" I helped write (the Pullman strike, and all), and it was a nice residential neighborhood, but I failed to take note about local stores or other businesses.)