The Wal-Mart Question

Here is something I have heard a couple times from various economists at events I have attended, so I am not sure whom to give credit to.

But the saying is: Wal-Mart does not put mom and pop stores out of business, we do.

One of the central points underlying the standard argument against Wal-Mart is that it shows up one day in Smallstown, Midwest where there was a happy Main Street, come back a year later and now happy Main Street has turned into depressing Main Street with all the jolly shop keeps now wearing blue at Wal-Mart as exploited employees while the towns people brainlessly shop there.

What the above saying highlights is our role as consumers in this process. Wal-Mart does not bulldoze existent businesses when it enters a community. If it did, that would be immoral. As far as I am aware, they do not use violent Mob techniques to run business owners out of town either. If Wal-Mart shows up in your community, you have a choice: continue shopping at Main Street or go to Wal-Mart. If Main Street is so fantastic, than it would still be around. And places like that are, even in areas with Wal-Marts, i.e Laguna Beach, so it's not a hard and fast rule.

A standard rebuttal is that Main Street shop keeps can't possibly compete with Wal-Mart's supply chain, stock, etc. This is true. Whenever a better, streamlined process comes along, stores/industries go out of business. Think of what the automobile did to the carriage industry, or the PC to to the typewriter industry or (to borrow Bastiat's idea on a similar line) what the sun does to the light bulb (or candle) industry. This creative destruction is an economic fact of life and while painful, provides a better quality of life in the end, as can be seen by cars, PCs and any other advance in technology.

So while Main Streets sadly do change, it is a process in which we as consumers have a role. As long as you have choice and means, you can keep shopping at Main Street or check out that new Wal-Mart. In the end it works itself out.