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Posts tagged Wal-Mart

Welcome, Reasoners

Since my article on the Coalition of Immokalee Workers, Walmart, and alt-labor is appearing this morning at Reason.com, a fair number of y’all passing by may be readers who are more or less new to the blog.

Shared Article from Reason.com

Free-Market Labor Wins Wage-Boost Victory

Economic liberty shouldn't simply assume a pro-business stance, or discuss only the privileges government extends to unions.

Charles Johnson @ reason.com


So–welcome! I’m Charles W. Johnson; often, I write online under the handle Rad Geek. (Not because I’m trying to hide who I am, but because it suits me, and because sometimes it helps me avoid being confused with some folks I am not.) I’m an individualist anarchist, living in Alabama. I write this blog, I co-edited (together with Gary Chartier) the left-wing market anarchist anthology, Markets Not Capitalism (Minor Compositions/Autonomedia: 2011). I write occasional columns for libertarian and anarchist outlets including The Freeman, Reason.com, Free Voices, and The Industrial Radical. I publish a lot of small-press anarchist and left-libertarian literature through the Distro of the Libertarian Left. If you’re new to the blog here, and trying to get oriented, here’s some things you might find interesting to read, which will give you some broad idea of where I’m coming from, and what I care about.

I’ve written a lot over the years about the C.I.W., both basic event coverage of some of their main campaigns, and also a fair amount of my own commentary on what I take to be the significance of their use of social protest and state-free, market-based methods in their activism.[1] If you’ve come here from the article and you want to read more about the C.I.W. or the context of its campaigns, I have some links, both to my own writing and also to a number of other sources that I consulted while preparing the column on the recent Walmart victory. Those are at the bottom of the post, though, so feel free to scroll right down past the following, which is mostly just orientation on me and where I’m coming from.

Speaking generally, I am a market anarchist: I am radically opposed to any invasion of economic liberty and to the state as such, and I am in favor of freed markets, free exchange, voluntary association, open competition and individual ownership of property. But, unlike many pro-capitalist libertarians, I argue that one of the likely and important features of freed markets is their tendency to cut against socioeconomic inequalities, to provide a space for economic alternatives to status-quo corporate capitalism, and to undermine and replace traditional top-down firms or employer-employee relationships. The kind of things I believe are often called free market anticapitalism or left-wing market anarchism. For more on what I mean by all that, and why I believe it:

I also think that rambunctious nonviolent social activism, worker-owned enterprises and radical labor unions, based on voluntary association without government privilege, and an anti-authoritarian culture of worker solidarity, are all an important part of a flourishing free market.

Since Walmart is at the center of the story, I should say that, while I am immensely pleased to see Walmart signing an agreement for the Fair Food Program, I think that many of the common criticisms of Walmart’s business model, exploitative labor practices, and economic dominance are justified, and that I would be quite happy in general to see Walmart constantly confronted and challenged with some really vigorous and uncompromising competition, social criticism and alt-labor organizing and activism. I say this not because I object to business, or to low prices, or whatever, but because I object to highly centralized state-capitalist business models that depend on, and heavily exploit, corporate welfare, eminent domain, and other favors from corporatist local governments.

More broadly, much of my writing on economic questions aims to focus attention on the relationship between the economic privileges granted by the State, class, poverty, and corporate power.

I am an Anarchist. I don’t care about smaller government, or limited government, or about Constitutions, or about electing libertarian candidates to political office. I am the farthest thing possible from a conservative. I believe in abolishing the State as such, and in doing so through the practice of education, solidarity, and direct action.

As an Anarchist, and as a human being, I am utterly and irreconcilably opposed to all forms of government warfare.

I believe that the nationalistic violence of the warfare State is closely linked with the paramilitary patrols, police state, and nationalistic violence of government border controls — which are nothing other than international apartheid. See for example:

I also believe that the violence of the U.S. government’s imperial military abroad is closely linked with the repressive violence of (increasingly militarized) paramilitary police forces within the U.S. See for example:

And as a feminist I think that the violence of men’s wars and of men’s law enforcement are closely linked with the violent ideals of masculinity and patriarchy that men are brought up with in our society. For more, see:

I’m against all forms of Intellectual Property restrictions, which represent not genuine forms of property, but a grant of monopoly privileges over the minds of other people — which I view both as tyrannical in themselves and also as immensely, lethally destructive in the effects of the coercive monopolies that they grant:

Thanks for coming on down; I hope you stay a while, do some reading, and enjoy the blog. So, come, let us Reason together . . . .

Further reading on C.I.W., the Fair Food Program and Alt-Labor

As I mentioned, I’ve been following the Coalition of Immokalee Workers and the Fair Food Program for over a decade now. Here are some other articles that I’ve written on C.I.W.:

And here are a bunch of things that other people have written, which I consulted at some point or another recently while preparing my column, and which you might find useful as elaboration, context or backdrop about C.I.W., the Fair Food campaign and the creative activism used to win it, or the development and direction of alt-labor groups in general.

  1. [1]Full disclosure: besides having written frequently about the C.I.W., many years ago I was also indirectly involved in setting up an organizing workshop for C.I.W. that led to an impromptu radical cheerleading picket at our local Taco Bell in Auburn.↩

Subsidized Order

Here’s a recent paint-by-numbers column on Spontaneous Order by John Stossel. It’s a passable introduction to the concept, and I will say that the opening illustration of spontaneous order in an ice-skating rink is nicely chosen. Then there is this:

At last January's State of the Union, President Obama said America needs more passenger trains. How does he know? For years, politicians have promised that more of us will want to commute by train, but it doesn't happen. People like their cars.

— John Stossel, Spontaneous Order, in The Freeman (May 2011)

It would be more accurate to say that people like their cars when they come with a massively subsidized network of government roads and a government-imposed glut of subsidized parking spaces.

Some subsidized trains cost so much per commuter that it would be cheaper to buy them taxi rides.

— John Stossel, Spontaneous Order, in The Freeman (May 2011)

As if subsidized highways and parking had no costs!

People’s cars are useless without this subsidized and monopolistic infrastructure, which is in artificially great supply due to the government’s monopolization of land use, which the people in question have to pay for, whether they use it or not, and which the people in question do then get to use at little or no marginal cost above what they were forced to pay in taxes. I wonder how much people would be liking their cars if alternatives weren’t locked out by government’s use of eminent domain and land-use mandates, or if people were free to pay — or to withdraw — the real marginal cost of driving, rather than the deformed structure of costs that government’s Infrastructure Monopoly has produced.

This is of course no argument for the desirability of ridiculous government-fueled high-speed heavy rail boondoggles, or any other sort of government funding of mass transit. Those are stupid too, and guaranteed to stay stupid as long as they are enacted through the political means. It’s not even an argument against the desirability of cars. But American car culture is no example of spontaneous order emerging from revealed preferences in a market free-for-all. It’s a perfect example of pervasive, intensive, map-redrawing government planning, from the repeatedly bailed-out, sometimes government-owned auto makers down to the parking lot of your nearest strip mall. The only way to find out how people will like to travel in a free market is to leave people free to experiment — and the current massive exertion of force to channel land into roads and parking lots, and wealth out of people’s pockets and into fancy new roads for the benefit of downtown merchants, billionaire sports team owners, and Wal-Mart distribution centers is anything but a free experiment or a spontaneous social process.

The War on the Informal Sector (cont’d)

WASHINGTON — If you’re planning a garage sale or organizing a church bazaar, you’d best beware: You could be breaking a new federal law. As part of a campaign called Resale Roundup, the federal government is cracking down on the secondhand sales of dangerous and defective products.

The initiative, which targets toys and other products for children, enforces a new provision that makes it a crime to resell anything that’s been recalled by its manufacturer.

Those who resell recalled children’s products are not only breaking the law, they are putting children’s lives at risk, said Inez Tenenbaum, the recently confirmed chairwoman of the Consumer Product Safety Commission.

The crackdown affects sellers ranging from major thrift-store operators such as Goodwill and the Salvation Army to everyday Americans cleaning out their attics for yard sales, church bazaars or — increasingly — digital hawking on eBay, Craigslist and other Web sites.

Secondhand sellers now must keep abreast of recalls for thousands of products, some of them stretching back more than a decade, to stay within the bounds of the law.

. . . Scott Wolfson, a spokesman for the agency, said it wouldn’t be dispatching bureaucratic storm troopers into private homes to see whether people were selling recalled products from their garages, yards or churches.

We’re not looking to come across as being heavy-handed, he said. We want to make sure that everybody knows what the rules of engagement are to help spur greater compliance, so that enforcement becomes less of an issue. But we’re still going to enforce.

— James Rosen, McClatchy (2009-08-20): Seller, beware: Feds cracking down on garage sales

Like most invasive government regulations, the rules of engagement for this particular war hurts all of its targets — that is, they ratchet up fixed costs for all resellers, hurting them directly and also hurting their ability to provide a cheaper alternative to their main competitors (in this case, mainly big discount retailers like Wal-Mart). But within the resale market, it hurts some players more than others:

Staffers for the federal agency are fanning out across the country to conduct training seminars on the regulations at dozens of thrift shops.

Even before this law, we had good mechanisms in place for pulling recalled products, said Jim Gibbons, the chief executive of Goodwill. The law just kicks it up a notch, so Goodwills around the country will continue to improve our process.

Goodwill uses $2 billion in annual sales at its 2,300 thrift shops nationwide to pay for its job-training and employment placement programs.

— James Rosen, McClatchy (2009-08-20): Seller, beware: Feds cracking down on garage sales

Those of us who want to resell old toys but don’t have $2,000,000,000 in annual sales to dip into for regulatory compliance and who don’t get training seminars from the United States federal government may have a harder time kicking it up a notch. As usual, regulation props up big established incumbents and hurts grassroots, ad hoc, or just plain small-time players; state corporatism artificially enforces consumerism by burning out reuse markets, and props up the strip mall by burning out the bazaar.

See also:

Three notes for the critics of the critics of apologists for Wal-Mart

I’m a few weeks late to the party over Roderick’s Wal-Mart post. For various reasons; I’ve been meaning to write down these notes for a while, but other things have been grabbing my attention. But today seems like a good day to sit down and get to it, and in any case I expect that exactly the same old debate will be coming up some time in the next month or two, so I’d like this to be on record before the next go-around, because there are three arguments from the anti-anti-Wal-Mart side of things that I’m getting tired of reading, two of which I haven’t seen much in the way of substantive replies to, and all of which I’d like, if it is even remotely possible, to make some contribution towards killing dead.

Roderick complained about an article by Fazil Mihlar. Mihlar claims that Wal-Mart deserves both the Nobel Peace Prize and, in fact, sainthood. (I’m not sure that the Vatican has yet started canonizing corporations or other artificial persons. But never mind.) The reason he offers is that Wal-Mart does a lot of good in the world (providing jobs, making donations, making valued goods available at low prices), and that they are able to do that good because of entrepreneurial innovations and expertise in the market, especially the market for the inputs for their business.

Roderick pointed out, in reply, that this account left out a crucial factor: government interventions against the free market that benefit big retail business models, such as the seizure of land through eminent domain, corporate welfare, regulatory suppression of competitors, and government-subsidized infrastructure for long-distance transportation. Thus:

Both Wal-Mart's critics and its defenders usually see it as an embodiment of the free market. But to me Wal-Mart looks like just one more special interest feeding at the taxpayers' trough.

I'm opposed to Wal-Mart because I like the free market.

— Roderick Long, Austro-Athenian Empire (2009-03-31): Advocatus Diaboli

I think that’s straightforward enough. But it brought the usual complaints from the usual suspects. There’s a long and very interesting and sometimes illuminating discussion in the comments, which you should read if you haven’t already. But what I want to focus on now is a couple of counter-arguments, which have been repeatedly raised by critics of this line of criticism (notably J.H. Huebert and Stephan Kinsella) which I think involve serious economic errors and a healthy dose of special pleading.

Before I begin, though, let me say a couple of things. First, this post will have absolutely nothing to do with the question of whether or not Wal-Mart is a morally criminal enterprise of the sort discussed in Confiscation and the Homestead Principle, and hence it will have nothing to do with whether or not Wal-Mart enjoys legitimate private property rights over its land, stores, trucks, goods for sale, bank accounts, or anything else, and hence it will also have nothing to do with whether or not it’s O.K. for people to vandalize their stores, loot them, shoplift from them, expropriate their means of production, or otherwise get up in Wal-Mart’s grill. In fact almost nobody who’s been a party to this particular conversation so far (as opposed to some other, separate conversations about protest tactics and Macy’s) has been talking about this, except for a dialogue between Stephan Kinsella and an imaginary left-libertarian in his head. I have my own views on that (which are fairly uninteresting; in short, that there isn’t one answer for the whole corporation and that it depends on the case), but it’s not the issue at hand in Roderick’s article, and it’s not an issue I’ll be addressing here, either.

Second, this article will also have very little to do with whether or not Wal-Mart deserves the Nobel Peace Prize, or sainthood, or praise, or censure, or some mixture or combination of the two. The arguments that I’ll be discussing might feed into a larger discussion about how to parcel out praise and blame, but that’s not my concern here. My concern has specifically to do with the extent to which Wal-Mart ought to be regarded as an example of free-market entrepreneurial success. (That’s related to but distinct from the question of whether Wal-Mart ought to be praised or blamed or neither by free-marketeers. If you’re curious about that topic, this post will disappoint, but you might get something out of my exchange with Will Wilkinson in the post and comments at GT 2008-11-10: The ALLied invasion of Cato.)

With that cleared out of the way, here are the specific arguments that I do want to address.

  1. Why single out Wal-Mart? When left-libertarians point out that Wal-Mart benefits from certain aggressive government interventions, and suggest that this is a reason not to cite Wal-Mart’s bidniz practices as an example of the free market at work, we are constantly asked — with the utmost innocence, even though this has been addressed over and over again every single time it has come up, generally without any response — why we are singling out Wal-Mart for criticism, given that many other market actors also benefit from the same interventions, or from other similarly objectionable interventions. Thus, for example, when Sheldon Richman writes:

    It would be impossible to sort out which profits are legit and which are not. I don't think that's the point. The point is to stop the machinery that makes illegitimate profits possible. That's the state and its various methods of privileging and burdening.

    Kinsella replies:

    Yes. We libertarians are of course against this. So why single out Walmart? By imprecise, lax standards, 99% of society is criminal/suspect. Where does that get us?

    Let me just repeat here the same damn thing that I have repeated every time this stupid question gets asked. There are two main reasons that Wal-Mart gets singled out here. The first reason is often because some conventionally pro-capitalist libertarian brought Wal-Mart up as an example of the free market in action. Since Mihlar brings Wal-Mart up as an example of free market success, then it would be bizarre for Roderick not to have mentioned Wal-Mart in his reply; if we are informed that Wal-Mart ought to be praised because of a characteristic X that it possesses, but it turns out that Wal-Mart does not actually possess characteristic X, then the responsible thing to do is to discuss some specifics about Wal-Mart (not every other market actor toiling in this unfree market of ours) in order to demonstrate that it hasn’t got X. This is, in fact, what actually happened in the exchange that Kinsella was supposedly commenting on.

    The second reason why Wal-Mart often comes up is because Wal-Mart is a convenient example of something broader that they want to discuss — for example, the specific system of state interventions that tends to privilege big box retailers, as a group, at the expense of alternative channels of distribution, and of alternative uses of land more broadly. Of course, Wal-Mart is not the only retailer that benefits from eminent domain seizures, or from government-subsidized infrastructure for long-distance shipping, or from corporate welfare packages in the name of development. So does Target; so does Best Buy; so does Barnes and Noble; and on, and on, down the line, for just about any strip mall chain store you could think of. But Wal-Mart is a convenient example of the broader trend, because of its unique size, scope, and name recognition. If I intend to talk about a certain kind of business model and its relationship with state power, then I hardly think it's unfair to pick a specific example to talk about, and leave the extension of the analysis as an exercise for the reader. And I hardly think it's weird or wrong to pick the most prominent and largest example of that particular business model as my specific example. When I write about bad things that the city government in Las Vegas does — for example, its fierce devotion to police brutality, economic cleansing, and using eminent domain to ensure that land gets used the way the tourism and convention industry wants it used, rather than the way that its owners do — I often go beyond simply reporting on local events, and I draw quite broad conclusions about government in general, or city governments in particular, but even then, I don’t feel compelled to mention, in the same breath, every other large city government in the world that does similarly awful things. It’s not picking on Las Vegas, or singling it out, to focus in on it as an example for the sake of discussion. And it is sheer bluster to go on accusing critics of apologists for Wal-Mart of singling out Wal-Mart when they have explained over, and over, and over again why we are mentioning it as an example of broader trends.

  2. Who are Wal-Mart’s competitors? This is, actually, somewhat related to the earlier question, but the issue goes deeper. When Roderick and others (Kevin Carson, especially) point out that the success of Wal-Mart’s business model depends heavily on Wal-Mart’s capacity to convince city governments to grant them corporate welfare giveaways and steal land on their behalf, or on Wal-Mart’s having access to a large network of reliable interstate roads available at a low marginal cost, which are funded in a way that heavily subsidizes those who use them for high-volume cross-country heavy trucking (which is, after all, exactly what folks like Mihlar are referring to when they extol Wal-Mart’s genious at transportation, distribution, and logistics) it is often replied that Wal-Mart is just making better use of available resources than its competitors; that these resources are available not only to Wal-Mart but to its competitors as well, and that, therefore, Wal-Mart’s advantages over its competitors must be the result of something other than the availability of those resources — must, that is, be the result of greater acumen at serving its customers needs. Thus, it is argued, even though Wal-Mart depends on coercively-funded government resources for its current business model, they would (it is argued) have the same advantages (whatever those may be) that make them successful, in this an unfree market, even after the transformation of the market into a free market. Or, at the very least, they oughtn’t to be blamed for being able to successfully make use of those advantages under the present circumstances. Thus, for example, J.H. Huebert in an earlier reply to Roderick:

    We are still not sure why Long believes big businesses, and Wal-Mart in particular, disproportionately benefit from the existence of government roads. No one disapproves of government roads more than we do, but the roads are there for anyone to use — the would-be competitor has just as much access to them as Wal-Mart does. Where is the unfair advantage?

    And again in the comments on Roderick’s more recent post

    How does the existence of government roads hamstring Wal-Mart's competitors? Anyone can use the roads.

    And Stephan Kinsella, in the same thread:

    Why do the subsidies help Walmart more than local mom and pop competitors? They all get goods shipped from far away

    The main problem with this kind of response is that it betrays a curious sort of anti-economic blind spot about just who Wal-Mart’s competitors are. It is true that, if we lookonly at the other actually-existing businesses that provide substitute goods and services — K-Mart, Target, Home Depot, and other big box retailers, or, expanding outward, smaller, non-chain retailers trying to sell some subset of the goods that Wal-Mart sells — then it is clear that those sorts of competitors do have access to the same kind of government privileges that Wal-Mart does; Wal-Mart just has succeeded more than they have at exploiting those privileges in such a way as to offer the goods most in demand and to offer them at lower prices. Fine. But of course, those aren’t all the competitors that Wal-Mart has — not if you consider the competitors for Wal-Mart’s inputs as well as the competitors for Wal-Mart’s outputs. In conversations like these, it is typical for conventionally pro-capitalist libertarians to act as if the business under discussion were only competing with other large chains in its sector — as if we were just picking on Wal-Mart because they’re an easy target, and rooting for Target instead — or as if it were only competing with retailers more broadly. But it’s not. The market does not just consist of passive consumers and a handful of formalized joint-stock companies. The market is a big and messy place, and whatever you might say about the ways that Wal-Mart gains advantages over other businesses that do basically what Wal-Mart does, it is certainly clear that Wal-Mart’s advantages over competing uses of the land, labor, and infrastructure that are currently devoted to serving its business model.

    Thus, for example, Wal-Mart currently enjoys preferential access to long, straight stretches of land that it needs to ship its goods in trucks. Preferential access compared to whom? Well, not to Best Buy or Mom & Pop’s; they both can get things shipped along the same stretch. That much is seen. But what is not seen is that they — Wal-Mart, and other retailers as well — do have preferential access to those resources when compared the people who used to have, or might have had, homes, farms, parks, small businesses, car-only roads, or any number of other competitive uses of the land, which would have won out if the question were decided by homesteading and voluntary exchange, rather than by tax-funded acquisitions, government land grants, and eminent domain theft. Similarly, other big retailers also typically get at least some of the same government privileges in corporate welfare giveaways and eminent domain seizures in the name of development. Thus, Wal-Mart may not have much advantage over, say, Target, or other fellow big chain retailers, when it come to this kind of government boodle. But those who were using, or would otherwise have used, the money or the land that the government seized, for purposes that government’s don’t count as development, since they don’t increase property or sales tax revenue — keeping up their own homes, growing their own food, running down-market or informal-sector businesses, street-corner hustling, and the like — those people are also would-be competitors for the use of the land, money, or other resources that Wal-Mart is having the government seize and redistribute by force. And those competitors certainly are hamstrung by the government’s redistribution of money, or its expropriation of land. We know that they are because the government is seizing it by force, and people were using it for other things, and would continue to use it for other things unless they were paid more than Wal-Mart and other development beneficiaries pay for it in the forced sale. That is, after all, the point of eminent domain.

    The problem here is that when you fetishize competition as the struggle between similar businesses to provide substitute goods or services, and forget about the other forms of competition for scarce resources that are at issue — often uses by individual property-owners, often uses of the property that may be heavily tied up in local communities and in the informal sector, and may be governed by incentives different from those faced by large, formalized, for-profit corporations — it will, no doubt, seem incomprehensible that someone would focus on how Wal-Mart uses the roads that anyone can use. Because the real nature of the problem is the fact that resources that are currently devoted to those roads cannot be used for what they would be used for in a freed market, which results in a big splash and some major ripples in the market distorted by that particular rock. Not because Wal-Mart alone benefits at the expense of K-Mart or Target, but rather because Wal-Mart, K-Mart, Target, and all the other big-box chain retailers — and, to a lesser extent, also locally-owned, small retailers — all benefit at the expense of somebody other than retailers, and at the expense of uses for land other than the servicing of retail sales, when the government uses force to seize long, straight strips of land, to build and maintain big highways on it, and to open up those roads, mostly without tolls and mostly without price discrimination, to anyone who cares to use it, regardless of what the marginal cost of the use may be. If those big highways weren’t being laid down according to political considerations and development politics, and if they weren’t being heavily subsidized by coercively-seized taxes, the land might well (would probably) be used for something quite other than a large, subsidized national shipping network; and if so, those who intend to go into retail, especially those who want to go into the retailing of goods from an international network of bargain-basement suppliers, might well lose a lot of the comparative advantage that the sword of the State currently grants them over other, non-retail uses of the same scarce resources. It’s not that Wal-Mart is special here among retailers, in anything other than degree; it’s that Wal-Mart is one prominent example of a larger dynamic — the way in which State coercion, State expropriation, and State redistribution sucks scarce resources out of one sector of the economy and spits them out into another — forcibly redirecting them towards large, centralized, formal-sector cash businesses, and away from other, smaller, more localized, more informal, or less commercial uses of the resources (like housing, open space, small farming, cottage industry, local nightclubs, and other typical victims of the Development machine). The reason that Wal-Mart is not a good example of free market dynamics is not because it somehow owes its advantages over Target to government intervention, but rather because Wal-Mart, Target, and the rest of the big retailers all owe their advantages over every other competing use of resources to the heavy hand of government. The result of removing those coercive advantages probably wouldn’t be to hurt Wal-Mart in particular in its competition with Target; but it would remove a mighty big subsidy that Wal-Mart, Target, and all the other big box retailers enjoy over alternative, non-retail uses of the same property. Which might just make for some changes in how our cities look, and in how we get around and make our livings in them.

  • Diamonds, water, and roads: Finally, when Kinsella and Huebert try to exonerate Wal-Mart from blame for the government interventions that it exploits, they often fall back on an argument that it has just made the best entrepreneurial use of a situation that it found but did not create, and in order to support that claim, they have often portrayed Wal-Mart’s relationship with the state as being quite different from what it actually is. Thus, on roads, J.H. Huebert puts it in the most starkly silly terms here:

    Kevin Carson writes: Wal-Mart's business model is heavily reliant on susidized roads. It supplanted competitors which had local supply chains.

    Yes, but Wal-Mart found the roads there, it didn't create them, and it used them better than its competitors to serve consumers.

    The funny thing about this kind of argument is watching an Austrian economist suddenly forget everything that he ever knew about marginal analysis, in order to paint a picture of Wal-Mart just bumbling along until — by George! — it finds a road out in the wilderness (perhaps by tripping over it), and thinks why, I might just be able to use this to efficiently serve consumers! Of course, if we are talking about the whole entire Interstate Highway System, then it is true that Wal-Mart did not play much of a role in creating that, and doesn’t play much of a role in the political process that maintains it. It was created largely at the behest of the military-industrial complex and the construction-pork-barrel complex, back in 1956, when Sam Walton was still running a local Ben Franklin franchise. And the political support for it hardly depends on Wal-Mart; the notion that the federal government shouldn’t be involved in seizing land and seizing taxes for the purpose of a huge network of toll-free interstate highways is so far outside the horizons of acceptable dissent in D.C. that nobody would need to lobby against that. So, yes, fine, in that sense Wal-Mart is benefiting from the situation at competitors’ expense (for the reasons I mentioned above), but it did not create the situation that it benefits from; it just got better than some other similar companies at dealing with it.

    But, of course, if you want to do a serious economic analysis of Wal-Mart’s business model, what you really need to know about is not the whole stock of its inputs. What you really need to know about is the marginal units of its inputs. And if we are going to talk about the highway system that services Wal-Mart, we need to look not only at Wal-Mart’s relationship to system of government roads as a whole, but also Wal-Mart’s relationship to the specific stretches of highway that Wal-Mart uses.

    And when we look at it that way, we’ll find that Wal-Mart is heavily involved in every sort of lobbying in order to get various levels of government involved in subsidizing its access to that. Just about every time Wal-Mart decides to build a new store, or especially a new distribution center, they turn to local governments to demand that they grab some money out of working folks’ pockets and put it towards building up business park infrastructure and highway interchanges, or widening or extending some existing stretch of road to service Wal-Mart’s trucking needs, or simply to build a new spur out to service nothing but the distribution center. (A few examples gleaned from a few minutes on Google: 1, 2, 3, 4, 5, 6, 7, 8.) Wal-Mart solicits and actively lobbies for this sort of thing all the time so that they can improve the marginal benefits they get from the road network, while being able to pass along the marginal cost to taxpayers and to those who would have made alternative uses of the land, capital and labor involved.

    So how far is Wal-Mart merely taking advantage of a situation that it did not create, and how far is it actively collaborating in, and pushing for, wider and more intense aggression by the state against private property owners, when it comes to roads? Well, it depends on what you look at. The problem is that those who have wanted to defend Wal-Mart have done so based on lazy arguments based on Wal-Mart’s relationship to the existence of the interstate highway system as a continent-spanning whole. Once you actually look at the construction and improvement of new stretches of road on the margin — which is, remember, what’s important for understanding how far Wal-Mart’s bidniz model does or does not depend on successfully wielding the sword of the State, since it is only on the margin that they are making all of their decisions, counting all their costs, and reaping all of their profits — it becomes clear that Wal-Mart is not just finding the roads there as some sort of given; it went to the government and got the roads it uses put there, typically by force and typically at the expense of unwilling third parties.

If you want to try and defend Wal-Mart, or its apologists, against their left-libertarian critics, fine, let’s talk about that. But please try to find some arguments other than these.

Hope this helps.

See also:

Against privateering

From an excellent recent feature on Strike the Root on a distinction I’ve discussed here before — what he calls a distinction between privatizing and marketizing, and what I called the distinction between privateering and the socialization of the means of production:

… [I]f the New York subway system is basically a government monopoly, then simply leasing, selling, or transferring it from our local Transit Authority to a politically-vetted outside agency doesn't make it less of a monopoly per se. It's just the same system with a different face and attitude to hide its statist legacy. All that's changed is that the privatized option is supposedly run more efficiently.

Indeed, schemes like these are more about efficiency than they are about reducing the state's presence and legacy.

So many problems arose with the Indiana deal championed by Stossel that even the local arm of the Indiana Libertarian Party opposed it. The contracts were for a 75-year lease in return for $3.8 billion to the government's coffers – pretty sweet deal, no? The bidding process wasn’t very transparent, nor did it even involve local community input as a courtesy. Ultimately the foreign firms that were awarded contracts by the Indiana government to take over and manage its toll highway are now profiting from an infrastructure put in place neither by their own free efforts nor on their own dime, but by the state. It's a de facto double charge to drivers, who have to pay high tolls to access the very infrastructure they financed through their exploited tax dollars in the first place. Is that so unlike the government taking away a family’s home via eminent domain, giving the land to a corporation like Wal-Mart, and then celebrating this criminal act as if it were a part of free enterprise?

Every market enterprise involves risks, costs, and profits. The market way is that all three aspects are privatized. . . . But Indiana ‘s privatization scheme involves privatizing the profits while passing on many of the original costs and risks to everyone else whether they like it or not. Governments aim to socialize all three factors — though here again it’s usually small cliques of the politically-connected who reap the most benefits at our unwitting expense. How utterly revealing! Why do so many privatization cheerleaders, however libertarian they may be otherwise, ignore that?

Because they want it both ways.

The appeal of public-private partnerships is that they seem to be a win-win situation — capitalists are happy because they get to make profits through shifting day-to-day management from politicians to themselves; politicians are happy because they still have ultimate control and bargaining power, and can claim to cut waste and big government just in time for the election; customers are happy because the services become nominally more efficient and there’s no taxes or surly public servants involved. Yes, they look like market entities on the surface, and yet we can still have the aegis of the State in the background so as not to appear too radical for the Zogby polls. After all, we love capitalism, right?

The idea that you can somehow run government like a business and get the best of both worlds is absurd because the incentives and economic calculation just aren't there. Public-private partnerships reek of the Original Sin of state privilege, monopoly and exploitation, and they can never escape that legacy. Even the very language of privatization alienates so many people already that when libertarians talk about replacing government services with market-based ones, folks assume we're shilling for corrupt things like Halliburton or Blackwater or wimpy school vouchers. Instead of merely privatizing the management of existing monopoly government infrastructure, let's focus on augmenting and replacing it outside the statist complex, through marketization.

We’ve never had a central state agency handling food production and distribution to all 300 million Americans. We have thousands of independent enterprises big and small that have evolved instead, and this works just fine even with state subsidies and agencies in the mix. This is marketization in essence. We certainly don’t need a monolithic Food Agency to develop, and then evolve into an equally monolithic public-private partnership, because it would be no more effective than the decentralized market structure that currently feeds us.

So I propose to Indiana (and New York for that matter): Instead of just transferring a government-run highway into the hands of some politically-connected firm in a sweetheart deal, why not simply permit firms to build and run their own independent (privately built and owned) highways, subways, schools, hospitals, and taxi/limousine services to supplement and replace the existing statist monopolies? Or better, ignore the state and do it anyway?

— Marcel Votlucka, Strike the Root (2009-03-27): Don’t Privatize, Marketize! Boldface is mine.

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