Lobster in a Bucket

Matty, I don't have much to say about stocks (I did go to that website but only broused it) but wanted to let you know I have been faithfully reading your entries. Many are ingenious. It's unfortunate you like Wal-Mart so much though.

Now I realize that Wal-Mart can be a bit stifling to ones since of originality and spunk. But Wal-Mart is populist in its outlook. It was started by a man who was very earnestly trying to apply Biblical principles of servant leadership to his business. It sold Harry Potter for 16 dollars. It could have sold it for 20-something, making more profits. But in the interest of its customers, it didn't.

I'm a bit skeptical about Wal-Mart's generosity. It seems to me that Wal-Mart sold Harry for 16 dollars so that more people would buy the novel from Wal-Mart. That's undercutting the competition, something Wal-Mart can afford to do since it buys in such bulk. That's capitalism, especially in the age of manmmoth corporate entities. I don't see anything wrong with that. (There may be other problems with Wal-Mart, but this isn't one of them.) And it certainly benefits me, the customer. But it also benefits Wal-Mart. And that, I think, is the company's chief motivation. Bully for them, but it doesn't make them particularly populist, just capitalist. Or am I missing something?

Mesh...I feel like you're Uncle Junior here, and I need to play Bobby Buco for a minute. "Junior, you just don't believe in the goodness of anyone."

I dunno Mesh, Sam Walton was a Christian, and from what I've read of his bio and memoirs, he really was a guy committed to giving people the best deal possible.

I guess it's a matter of what side of the roof you wanna roll down on. Walmart makes money by buying in bulk and selling their products dirt cheap to their customers. But they also are able to sell their product dirt cheap by making lots of money to buy things in bulk.

Me, I'm an optomist. I'd like to think there's a little bit o' populist motivation goin' on behind the Wal-Mart behemoth.

It's the difference between selling at 19 dollars and 16 dollars. Wal-mart still would have been the cheapest at 19 dollars, that's still 11 of the cover price. They could have pocketed that 3 dollars, but instead they kicked it down to the everyman.

It is not always easy to tell what motivates a sale price. It is possible that Wal-Mart wants to deliver Potter books to its customers at the lowest possible price as a service. It is also possible that it wants to attract many younger shoppers to Wal-Mart so that habits of making purchases at Wal-Mart are established at an early age. It is also possible that Wal Mart, knowing how popular the book was even before official publication, chose to price the book below its actual cost in order to bring customers to the store in anticipation that their losses on book sales will be more than made up by other purchases made by the book buyers. Smaller retailers often can't use this sales strategy because they don't have the business volume to make up for book sale losses. But this sort of predatory pricing is used by large retailers to increase the number of customers flowing through their stores. Rather than "Christian", especially low prices on an in-demand product are regarded as pernicious.

Which leads to my main frustration with the Sam Walton empire: it drives business away from community centers and towards outlying strip malls, where the possibility of personal interaction is decreased. Smaller stores can't compete, and are driven out of business. Even if Wal-Mart's motivation is to benefit the populace's pocketbooks, a side effect is to undermine the feeling of personal belonging, of place. (One of the things that amazes me about Wal-Mart is the way that when I enter one, I feel like I could be anywhere in the country; I am "an anybody in an anyplace," as Walker Percy would say.) There are greater virtues than populism, and one of them is communitarianism.

Mesh, while I appreciate the thought behind your complaint that Wal-Mart and things of its nature drive "businesses away from community centers and towards outlying strip malls" I have to wonder if this isn't just the nostalgia talking. I can't personally name any actual community centers, nor, I suspect, can you. They've already died. Mourning the loss of the Mom and Pop store is mourning something that's been dead for decades.

In fact, the case can be made that in many places Wal-Mart itself is a community center. I can name specific cases in which small town kids who were previously bored out of their skulls for lack of anywhere to go now hang out regularly in front of the local Wal-Mart. Depressing as that may sound, it accomplishes the goal you seem to be seeking. Yes, it's true that if you go into a Wal-Mart they're pretty much all the same. But step outside for a minute, and you've found a hang-out spot for a lot of people. Rednecks mostly, but hey. The people with slightly more education are across Hamilton Place hanging out at Barnes and Noble, another corporate ediface that has replaced many smaller stores.

I think that this mass corporateification of commerce isn't killing community centers, it's actually creating them. Admittedly, they've moved away from residential areas, but the residential areas weren't doing so hot to begin with. I think Wal-Mart is the solution to this problem, not the cause.

Rye-Dawg,

First off, the reason why you think all community centers are dead is becuase you're from that utter whole of a state Pennsylvania, where, for the most part, community centers ARE dead.

Now in the South, and in places like California in my old home town, community centers in downtowns DO still exist, as opposed to Hershey, Palmyra, Carbondale, Scranton, {insert random PA town here}.

In Cali, there are TONS of little mountain towns that have great old mining town downtowns, and you can still know your barbershop and used-bookseller. And it's a great, great thing.

There was a great deal of noise made over the building of a Target some 20 miles from my town, in fear that it would drive away business from the downtown. They've yet to determine whether or not that has happened. I'm not sure it will, sinceu most of the folks where I'm from are die-hard old school anti-corporate hippie folks or retirees who wouldn't shop at a Target anyway. Heck, I sure like knowing my bookstore owner by name.

But I do agree with you that Walmart is in some cases creating communities. A specific example is my Aunt & Uncle who live in Flippin, Arkansas (a little town tucked away in the Ozarks). The Walmart there IS the only business in town, and without fail, as both reported to me by my relatives and experienced by me in my few trips out there, every pay day the entire damn town turns out to visit Walmart. It's quite incredible. You know everybody that both works and shops there, and it's one big festive community event.

Whew. That's all.

Hmm Populism and Communitarianism. Using those two words about hits it on the head. A populist thinks in terms of the masses. He looks for empowerment of people there. While starting with the masses in mind, it doesn't have to be a Marxist philosophy. Rather, it has a Marxist influenced worldview. Wal-mart, ironically, is the only successful example of populism I've ever seen in our country. Communitarians on the other hand have basically bowed to the post-modernist, the conceed that there is no real hope of empowering people short of re-inforcing their community identities.

Don't get me wrong, I think we need to start using communities as the building block for the future world order. I sincerely hope we are moving in that direction. It's at least true that current technology is doing more to enable tight-knit community life once again rather that pulling them apart as its done since basically the 2nd industrial revolution.

But, communitarianism in America isn't really popular. We still cling to this idea of being "American". As long as Nation-Statism holds strong here, a communitarian viewpoint can't really be relevant. At best it can be an ideology that hopefully looks towards the future.

So right now, the best we can hope for is populism, something that goes hand in hand with nation-statism. Wal-mart does this, so for the time-being I like it.

And SK. The difference between the application of the terms "Pernicious Business practices" and "Christian business practices" is very slim. If I cut prices in order to lure more people into my store, in hopes of making profit on other over priced things, (which doesn't really apply to Wal-mart since everything is dirt cheap), or if I slash the prices, cutting into my profit margin, because I think that is the right, Christian thing to do, no one outside of my confidence would be able to say which was the case.

In other words, the motives you assign Wal-mart depends on youy prior bias. For people our age, this bias is usually negative, we hated the generic quality of it when we were teenagers.

Matt:

Usually, we do make important distinctions between Christian business practices and other, more pernicious ones. When retailers use pricing to establish dominant market shares they discourage competition in two ways: (1) smaller competitors can't meet the lower prices and are forced out of business; and (2) start-up businesses are discouraged because they don't have the capitalization to survive predatory price wars. In fact, this sort of business practice is not merely pernicious, it is felonious. The Sherman Anti-Trust Act forbids it as anti-competitive.

Back in the "good old days", a rather pious Christian famously and successfully used predatory pricing to put his competitors out of business. It was no simple clash of populist versus communitarian ideals, it was unregulated and cutthroat every man for himself business. He was John D. Rockefeller, and using predatory pricing, he eliminated competition and built Standard Oil into a massive corporation and became the richest man in the world of his day.

One of the issues regarding Wal-Mart is the way that it tends to eliminate competition, not merely in Mom and Pop stores along suburban Main Streets, but in other large retailers such as K-Mart, Sears, and others which it is tending to put out of business.

In the long run, what guarantees good prices and good service is the competition for buyers. We may like Wal-Mart's low prices and hope that Wal-Mart does well, but not so well that it overwhelms competition.

My view of a "Christian" business strategy would be to offer "fair prices" (rather than merely the lowest price) and excellent customer service. I suspect that any retailer whose prices are fair and which treats its customers with respect will hold its own in a truly competitive market.

Before I leap over to follow his discussion through Ranting and then over to Wired Mesh (USE YOUR TRACKBACKING DAMNIT!) I want to point out to SK that...

Matt agreed that it can force smaller businesses out of the marketplace, but it's a matter of whether or not Wal-Mart has negative or positive intentions in why they give such low prices. Like Matt said, in our cynical post-modern age, we choose the negative rather than think anybody remotely related to a large business would do anything for any reason other than to squeeze another buck out of their customers...

JOsiahQ:

When the Anti-Trust Division of the Justice Department decides to prosecute a company for anti-competitive pricing (for example, patterns of retailing books at $16 which cost you $17 to purchase wholesale, and other retailers can't compete with your price) they do not consider if your intentions were negative or positive. If your behavior is anticompetitive, you have violated the law even if your intentions were not monopolistic. An evil motive is not one of the elements of the crime. The stated policy of the United States is: companies should fiercely compete, but no company should win.

So, if WalMart or Standard Oil or IBM or Microsoft is able to compete so well in the marketplace that it tends to put competitors out of business and thereby capture a dominant market share, they run afoul of the law. It is a serious matter since any company found to have violated the antitrust laws can be assessed treble damages--figure out the financial damage to other companies that your anticompetitive pricing has caused and multiply times three. The damages can be breathtaking.

SK, I agree with you, of course, but I'm not contending with what is or is not breaking the law (though I would contend motive has alot to do with most lawbreaking).

The issue at hand, or, was formerly at hand, or, what Matt was saying, dealt directly with the motives or the driving forces behind the entity known as "Wal-Mart" and it's effects on "community" or "communities." Further, the discussion was weather or not this "motive" or "corporate philosophy" could be seen as populist, which I'd like to think and hope that it is.

I have no beef with anti-trust anti-monopoly laws. I'm certainly not a raging free-market capitalist.

Now perhaps you're arguing that Wal-Mart's drastically low prices, even if they ARE populist, are still in fact hurting the peoples becuase they drive off competition, and then therefor would be self-destructive and non-populist. That makes sense, though again, I'm not so sure...which is why I made the distinction I believe over on Ranting to dev/null/ that Wal-Mart does sometimes foster communities, sometimes not. Which way is the majority, well, I dunno...

Three things of note,
First, Wal-Mart uses its massive purchasing power to leverage price breaks out of suppliers. So a book that is 17 dollars for Border's to buy Wal-Mart gets for 15. Wal-Mart kicks down the savings to its customers by selling it for 16. Still making a profit, but selling it at a price no one else can match. This kind of behavior could lead to a monopoly. But only in regards to other super-center style retailers like Target and K-mart.

In regards to the notion of Wal-mart killing the mom and pop main street. Wal-mart only did this in the south. In other areas of the country this had already been accomplished quite nicely by retail chains. Wal-mart's unique situation can be explained by the ripeness of the South. Wal-mart was able to take the lessons learned out of growing mass suburban retailing (of the 60s and 70s) learned in the old northwest and atlantic coast, and apply them to the south. Succeeding there, Wal-mart has been able to beat other retailer at their own game nationwide.

While this is not really the issue, I am perfectly comfortable with the idea that Christian business, when carried out really well, doing the best that it can, will achieve monopoly. If all monopolies were run by nice Christians then the consumers best interests will be fulfilled. However, they often are not nice, upstanding Christians, so our lovely Government of the People, By the People, and For the People (that order may be mixed up) has to step in with Anti-trust legislation.

Furthermore, even if Wal-mart was rabidly atheist, and was pulling in customers with harry potter books sold at a lost. This would not be a violation of Sherman Anti-Trust legislation. Wal-mart in this hypothetical case would not be directly inhibitting anyones ability to compete.