Recession seems to have quieted the anti-Wal-Mart crowd

FROM JASON’S CHECKBOOK – As recession’s grip persists, it’s no surprise I’ve been hearing less bourgeois bitching about the “evils” of Wal-Mart.

I’ve been arguing with friends for years about the merits of the world’s largest retailer. It seems they have many reasons for hating the big box stores: perceived “unfairness” toward employees, impact on local economies, a classist dislike of the organization’s clientele, and a schadenfreude-esque attitude about Wal-Mart’s success.

But it’s been my contention that Wal-Mart is heroic, that its everyday low prices have done more for the American poor than any welfare initiative. When you can buy a can of corn for $0.79 instead of $1.29 at the local grocery, it saves families an enormous amount.

Estimates show the company saves Americans $12 billion a year.

My wife and I shop there for groceries every week, and end up saving $40 or so each trip on standard groceries. I get savings of five to 10 percent on standard goods like deodorant, video games, and weed killer. Putting that kind of discretionary income back in my pocket is one hell of an economic stimulus plan.

Increasing purchasing power is a good thing. And if you can do it for the lower class, then it’s a doubly good deed.

If you want to talk about really evil corporations, let’s talk about ones like Hollister or Abercrombie & Fitch. Those are corporations that put a premium on peer pressure, and use it to reduce purchasing power by convincing young people that paying more for less is a good thing.

They prey on pre-teenagers, convincing them it’s ok to waste $80 on a single pair of jeans in order to attain social status. They create artificial class divide.

In my mind, creating low prices for toothpaste, bread, milk, underwear, paint, pencils, and plates is far more admirable. It provides inexpensive goods, reduces opportunity cost, and provides jobs. And it’s a hell of a lot better than handing someone a check and inducing a state of welfare dependency, because it creates wealth.

Wal-Mart has often been criticized for being too big for its own good, for “monopolizing too much of the retail industry. But clearly it hasn’t. There are Wal-Mart competitors who carry their own weight: Lowe’s and Home Depot have cornered the hardware industry by providing better selection and supply. Amazon destroys Wal-Mart in online sales by providing a better ‘Net store. Netflix, iTunes, et al are quickly moving to crush traditional on-the-shelf media sales. Target is eating away at Wal-Mart’s clothing sales margins by providing better-quality threads at competitive prices — and that’s an area where entrenched retailers like JCPenney and Macy’s still hold sway.

Wal-Mart might be the biggest, and often has the best deals, but it’s still just the biggest tuna in the economic ocean. It can’t eat all the other fish.

In fact, BusinessWeek reported in November that the great supplier’s advantage is already eroding as sleeker business models evolve.

Wal-Mart isn’t immune to shifting market trends. If consumers demand something better, then Wal-Mart has to change its strategy. Right now, though, the strategy seems to be working. Wal-Mart’s quarterly sales rose 1.7 percent in March while rivals struggled just not to lose cash (and while many retailers, such as Circuit City, close their doors altogether). At the same time, the company actually raised its first-quarter share guidance!

“Wal-Mart’s performance last year would be considered strong at any time and for any retailer, and certainly during one of the most difficult global economies in decades,” CEO Mike Duke wrote to shareholders last week.

“Our U.S. stores are delivering faster checkouts, a friendlier shopping experience and cleaner presentations,” he continued. “We are on the move internationally and today have more stores in more markets. People who have never shopped with us previously are now loyal customers.”

The company created 33,000 jobs in the U.S. last year.

Uber-critics of the Wal-Mart model always paint this weird vision of a future where we all wear gray jumpsuits issued by our local big-box masters, who have usurped the government and turned America into a corporatocracy. That’s just silly. As long as people want something, there will always be someone who can come up with a newer, better idea to provide it than the establishment.

The other complaint that seems most prevalent about Wal-Mart — and this one really gets me — is “how bad” the company is to its workers. This is usually presented in a twin argument: That Wal-Mart does not let its workers unionize, and that the workers are not paid enough to survive.

First: If you want to hurt the poorest of the poor, support unionization at Wal-Mart.

The problem is that pro-union activists don’t look at their track records. They see unskilled labor as a market that demands a living wage, but they don’t look at the failures of their efforts. Ford just posted a $1.7 billion loss because union labor has hijacked its profitability, and the unions can’t stop the plant closures and lay-offs.

Want another example? Just look at the U.S. steel industry. Or how about grocery stores? Prices at grocery stores that use unionized labor are much higher.

I’m not suggesting all unionization is bad. Look at what education unions have been able to do. The problem is that unions tend to work well inside a monopolized market, but elsewhere they only generate massive inflation by creating an artificial wage hike. Too many unions are busily pricing themselves out of jobs, and then wailing when industry fails and begging government for a bail-out.

Wal-Mart shouldn’t be unionized. Shelf-stockers and check-out operators were never intended to earn living wages in part-time, unskilled positions. Upping hourly wages and benefits for unskilled workers might seem like a humanitarian thing to do, but consider the ripple-effect it has on pricing; higher pay means higher prices means less purchasing power for the lowest earners. Lower purchasing power means less consumable utility, which means recession, which means lower purchasing power for everyone, not just the poor.

The average hourly pay at Wal-Mart is just under $10, and is always heads and shoulders above the minimum wage. That’s not bad for the hundreds of thousands of non-skilled workers they employ — who in many cases would not be elsewhere employed.

Wal-Mart has helped me. Wal-Mart has helped you. It has helped the poor, and has generally evened the playing field and slowed class divide. What more can you ask for?

I suppose you could ask for $250,000-a-year jobs for every man, woman, and teen in America, with a free convertible in every driveway and 55-cents-a-gallon gas at the pumps. But does anyone really think that’s realistic?

At some point, the “gimme-gimme” entitlement attitude here in America became the norm, and we all became complacent. We forgot that we became an economic superpower because we worked hard and were competitive.

The old tax-and-spend slur is laughable in the face of a $10 trillion debt

FROM JASON’S TAX STATEMENT — The Anti-Federalists were right in 1780s when they rallied against Big Government.

Since then, they’ve become Republicans.

I used to be one, at least from a fiscal point of view. The Republicans say they believe in limiting the size of government, preventing a nanny state, lowering taxes, protecting privacy, and keeping hands off business.

Good ideas, right?

But while they’re chanting those mantras, and while “Tax-and-Spend-Democrats” is a label used as a slur in Sen. John McCain’s campaign advertisements, the Republicans are spending us all into a black hole of debt.

The National Debt has increased an average of $3.6 billion per day since Sept. 28, 2007, reaching $10 trillion on Sept. 30, 2008. In 2006, the government spent $406 billion paying just the interest on the National Debt.

The total debt has jumped more than $500 billion every year since 2003. Meanwhile, the federal budget for 2008 is the largest ever — with a record $438 billion shortfall.

What could you buy with $10 trillion?

I don’t think people understand how much money we’re talking about. I have a calculator.

With 305 million people in the United States, $10 trillion would be enough to cut a check for $34,000 for every man, woman, and child — including illegal immigrants.

There are 124,000 chronically homeless people in the U.S. With $10 trillion, we could afford to give each of those homeless people $80 million.

The 2009 Honda Civic base model is priced at just over $15,000. You could buy 649 million of the cars with $10 trillion.

The Statue of Liberty cost $530,000 to build in 1886 (the statue and the base included). With $10 trillion, we could build 827,458 of them today, adjusted for inflation.

The Space Shuttle Endeavor cost $1.7 billion to build. With $10 trillion, we could build 5,582 space shuttles.

If we fed every single person in the U.S. a McDonald’s double cheeseburger for breakfast, lunch, and dinner every day, with $10 trillion we could feed everyone for almost 30 years. I’m not saying it would be healthy.

Jacob’s Field (now Progressive Field) in Cleveland cost about $176 million to build. You could build 56,818 of them with $10 trillion.

The average teacher for grades K-12 makes $46,752 per year. With $10 trillion, we could afford to hire nearly 214 million teachers.

As of August 2008, the average home in the U.S. cost $203,100. That means with $10 trillion, we could buy a house for everyone living in Atlanta.

Who is spending all this money?

We didn’t used to have  much debt as a nation. From World War II through Vietnam, it held fairly steady at well under $300 billion. It started to seriously spend up under Gerald Ford (R) and continued at a steady clip under Jimmy Carter (D).

The real problems began when Ronald Reagan (R) took office. During his eight years as president, the debt ballooned by $2 trillion, and continued on that line under George H.W. Bush (R). Spending only slowed when Bill Clinton (D) put tight restrictions on budgetary benchmarks.

This chart says it all: Mathematical proof that Republicans have not only outspent Democrats in the past half-century, but they have done so at an incomparable rate.

{CLICK CHART FOR LARGER VIEW]

At the end of the Clinton presidency, the National Debt was nearly flatlining at under $6 trillion. Then George W. Bush was elected, campaigning hard on the old Republican bread and butter of lower taxes, smaller government and more restricting federal spending policies.

“Spending without discipline, spending without priorities, and spending without an end,” he criticized Democratic candidate Al Gore in 2000 during a speech in Minneapolis. “Al Gore’s massive spending would mean slower growth and higher taxes. And it could mean an end to this nation’s prosperity.”

Under Bush II’s leadership since 2001, the debt has increased by $4 trillion — that’s more than 60 percent — and America’s economy has been plunged into chaos. That is not fiscal discipline. That is not small government.

In the first five years of Bush’s administration, while he had the backing of a Republican congress, federal spending exploded by 45 percent. In his final year in office, Bush has asked for $3.1 trillion going into 2009, which is a spending increase of 6 percent over 2008 and 67 percent over 2001.

Cut taxes and spend

Democrats have been labeled as the “tax and spend” party since the days of Franklin D. Roosevelt and the New Deal. But no president since FDR has orchestrated such blatant expansion of the federal government and its spending as Bush II.

Worse, his initiatives have been riddled with problems. The House Committee on Oversight and Government Reform found $1.1 trillion was spent between 2002 and 2008 on 700 projects that were mismanaged, wasteful, fraudulent, or abusive.

At the same time he was spending recklessly, the Bush congress agreed to lower taxes. So less money has been coming in to feed more programs, which in turn means the country has to borrow even more to stay “solvent,” by which we apparently mean choked on debt but not officially pronounced dead.

The Tax Policy Center has projected the impact of the Bush tax cuts will cost $1.9 trillion in lost revenue between 2008 and 2017. By that same year, the tax cuts will have increased the National Debt by another $3.4 trillion.

Republican fiscal conservatism, according to the math, is a joke. No, it’s a myth. If you want better government, choose a party that won’t lie (as much) about its spending policies. But for the love of your pocketbook, don’t let the Republicans continue to choke us to death while telling us they’re good with money.

Face-to-face with Barr pushes me further to the left

FROM JASON’S FURTHER ELECTION ADVENTURES – Bob Barr lives in a perpetual set of parentheses.

Slumped in a chair a few feet away from me last week, the former Georgia congressman tried to explain his position on the economy.

Along the way, he got bogged down in a string of his own subclauses. As soon as he got rolling on one idea, he would abandon it in favor of whatever new one sprang to mind, shifting directions mid-sentence.

It wasn’t going well for him: The day’s stocks had fallen about 500 points, and he was having trouble (in my opinion) justifying his hands-off economics approach with reality. It’s hard to champion deregulation when it’s so very visibly destroying the fabric of an entire nation’s economy.

“Bob the Builder,” as he christened himself, finally jumped that line of thought and instead tried persuading me we need to repeal the 16th amendment.

It’s a very Libertarian idea, after all, and he’s the party’s candidate for president, which is why he was sitting with me during a stumping pit-stop in Ohio. National polls show him with tentative support from about 4 percent of voters. He told me he expects to be on the ballot in at least 47 states, but he’s not expecting to win.

I wouldn’t expect him to, either. With the exception of his rather ardent opposition to the Iraq war and open-mindedness about legalizing marijuana, on most issues he comes across as distinctly neo-con.

He authored the Defense of Marriage Act, asked the Pentagon to ban Wicca in the military, is anti-abortion, wants to “secure our borders” (by which he means cracking down on immigration), is a former member of the NRA’s board of directors, and supports dropping pretty much all government programs except ones connected to national security.

During my few minutes with him, he got pretty heated about the banking bailout. His argument: Let failing businesses fail, no matter how many people will lose their jobs and homes.

“We’re really going to pay $700 billion to save these businesses? That’s not government’s job,” he said, grinding out the words in a Tony Clifton-esque voice. “We’ve got to get rid of this inequity between individuals and big companies.”

The framers of the Constitution didn’t think the government should be involved in the economy at all, he said.

Well, that might have been fine when building ships and exporting slave-picked cotton and tobacco was our economic forte, but things are a little different now. The economy is no simple machine and as much a free market idealist as I’d like to be, history’s proven that when it’s left to naturally balance itself without regulation the result is a lot of financial suffering for the nation’s poorest citizens.

What really got under my skin was how Barr transitioned from a laissez faire rant to pushing for a Fair Tax. Now, I’m no economist. And I haven’t been through the Washington hellfire like Bob Barr. But I don’t need Alan Greenspan perched on my shoulder to tell me a consumption tax is a bad mechanic.

If you really want to stagnate an economy, try attaching a heavy tax on purchasing goods and services.I know people who will cross county lines now to avoid a one-percent sales tax difference; what would happen with a 25 percent-or-so consumption tax?

Keynesianism is all about spending. Slap a high enough tax on, say, a Ford Mustang, and *BAM!* they’ll stop selling. When people stop buying, producers lose money and lay off workers. A nasty cycle begins.

When I raised the point, Barr looked at me as though I were a two-headed Gidra and told me it was no problem — businesses wouldn’t have to pay income taxes, so his plan should work.

Just when I thought it couldn’t get more muddled, Barr brought up the silver standard.

The supporters of metal-backed money seem to be very vocal these days, forcing my brow to wrinkle in frustration. Linking the value of money to a mineral supply is bad for so many reasons. I thought we’d figured that out in 1857.

What these nickle-heads don’t get is that fiat currency is pervasive and useful. Credit helps grow the economy by encouraging spending. It allows for upward mobility by allowing people to make investments in homes and vehicles. The sheer volume of money alone — thanks to electronic transactions like debit and credit cards — that exists today could never be covered by the silver supply. And that’s a good thing, because it allows for incredible liquidity and versatility.

If you want more on problems with gold- and silver-backed currency, just listen to FDR’s 1933 radio address about how it caused the 20th century’s worst banking crisis.

I left that room last week not much enamored with Bob Barr. He seemed a pleasant enough fellow, though a bit erratic, but he lacked any kind of presidential charisma. More importantly, I simply don’t think he has the intellectual capacity I would expect from the leader of the free world — or even the leader of a free economy.

But what bothered me most was that he also seemed to lack compassion. His viewpoints were couched so much in terms of moral and idealistic absolutes that I don’t think he was seeing the millions in this country who fall through the cracks. I fear that if he were president, he would zealously walk over the backs of many hurting Americans in the name of freedom.

Does being the economic superpower excuse American self-interest?

Click to embiggen.

FROM JASON’S SHREDDED NATIONALISM — This depiction of the US appeared a while ago on the Strange Maps blog, but I colored it in Photoshop and I feel that gives me the right to resurrect it. The map labels states with the names of nations that have similar economic output and I find it fascinating.

Not long ago, a Canadian friend of mine referenced this map and asked whether the data excuses Americans for “being so self-interested… It certainly explains a bit, and makes the rest of us feel a bit small,” he wrote. I’ve been beating that question around in my mind for the past three days and doing stupid amounts of research to satisfy my curiosity.

Let’s deal with the premise first. Americans are self-interested. I’ve complained before about Americans’ xenophobia and ignorance of geography. A survey by the Rand Corporation shows only 14 percent of respondents could give a rough estimate of the global population (about 6 billion people at the time). Only 6 in 10 Americans ages 18 to 24 could find Iraq on a map of the Middle East, a 2006 study by National Geographic-Roper Public Affairs found.

The Pew Research Center said last year that 68 percent of Americans know the US has a trade deficit, but only 32 percent knew that Sunni was a branch of Islam. The best educated Americans got their primary news from The Daily Show, that report said. Another non-partisan research group, Public Agenda, found that most Americans did not know who Yasser Arafat was, and the Harris Poll Group had 57 percent of respondents say they “dislike learning about political issues in other countries.”

Still not convinced? Watch Rick Mercer have his way with clueless Americans (including then-governor Mike Huckabee) on Canada’s This Hour Has 22 Minutes:

So back to my Canadian friend’s question — is that American ignorance justified by our economic superiority? Call it childish if you must, but Andre the Giant’s line from The Princess Bride kept ringing in my head as I thought about it: “It’s not my fault I’m the biggest and strongest. I don’t even exercise.”

We are the biggest and strongest, at least as an individual nation. Take a look at Gross Domestic Product information for some of the most advanced countries via the CIA World Factbook:

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GDP by purchasing power US – $13.86 trillion China – $7.43 trillion Japan – $4.35 trillion Germany – $2.83 trillion United Kingdom – $2.15 trillion France – $2.07 trillion Italy – $1.8 trillion Russia – $2.08 trillion India – $2.97 trillion Canada – $1.27 trillion Australia – $766.8 billion

GDP per capita US – $46,000 China – $5,300 Japan – $33,800 Germany – $34,400 United Kingdom – $35,300 France – $33,800 Italy – $31,000 Russia – $14,600 India – $2,700 Canada – $38,200 Australia – $37,500

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To be fair, the US is outclassed in terms of per capita GDP by Luxembourg, Qatar, Bermuda, Norway, Kuwait, the United Arab Emirates, and Singapore — but that gets into some tricky statistical business.

The US continues to dominate as a production powerhouse, and as a single nation it is the superpower. But the European Union with its 27 member nations has already surpassed the US in cooperative production with a combined GDP of $14.45 trillion in 2007. No wonder the Euro is devaluing the dollar so efficiently. So far, we’ve managed to stay ahead by translating technological advances into corporate productivity, the New York Times argues.

No throne is ever 100 percent secure for life, and this is why the pesistent American attitude of unalterable, isolationist superiority and willful disregard of world affairs has me worried. True, the US continues to profit from huge consumption spending but high trade deficits and federal debt are perched to trump that and destroy our meager 2 percent annual growth rate.

That’s why the value of the US dollar is falling so quickly — and why it should be. One of the things that truly irks me about my fellow Americans is an attitude that the US deserves by the sheer force of its reputation to retain its position as the sole, indefatigable superpower. But as other nations reach post-industrial status, there will have to be a major shift in global economic balance.

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