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Why Wal-Mart is Good for America (and Maybe Your Portfolio)

A Rebuttal to the Beast of Bentonville's Critics


Over the past year, I've listened as various sides have weighed in on the issue of Wal-Mart. A few weeks ago, a Federal judge overturned a Maryland law that would have required the company to invest a specific amount of its payroll in medical benefits for employees. Given the fact that this debate seems to grow ever-larger each year and that Wal-Mart is one of the most important stocks in the world as both a member of the Dow Jones Industrial Average and as an economic indicator for the broader market, I thought I would weigh in with my position.

The American Economic System

We have been extraordinarily blessed to live in one of the wealthiest and inclusive societies in the history of the world. Although we still have a tremendous amount of ground to cover, the American civilization has been one of ever-striving for greater equality and, above all, individualism. It was formed, and continues to operate, on the bedrock that a man is responsible for himself and that he, and only he, has the empowerment and ability to build or destroy his own life. The bridge, as we know, is education; the ability to impart knowledge and synthesize it in a way that allows individuals to blossom as a person intellectually and emotionally, and put data to use in a way that results in a greater income for themselves.

Economics has been called the dismal science because in its true, unadulterated form, it doesn't seek to answer what is morally right or wrong; instead, it strives to discover how individuals, groups, and society chooses to allocate scarce resources among themselves. Today, we use a form of currency that is printed on green paper and has numbers engraved on either side. Likewise, sexual attraction, political connections, etc., are all a form of capital that can be exchanged as a claim check on society to fulfill ones own desires and wishes. The extension of this is the simple, basic truth that the wage situation in any given field is a result of the supply and demand curve. A cashier, for example, requires far less skill than, say, a neurosurgeon, creating a much larger pool of potential applicants to fill the former position.

The Gap Between the Rich and the Poor

This brings us to the point of transience within a society. At different times throughout our lives we occupy different rungs of the socio-economic ladder. In our early twenties, for example, a young couple with children is going to fall within the lowest levels of wealth. As time goes on, however, they are likely to buy a house, begin building equity by paying down the mortgage, and establishing a retirement fund in the form of a 401k. The traditional statistics, however, don't show this migration through the various layers of wealth and is partly why it is dangerous to rely on the figures espoused from politically interested parties on the nightly news.

The gap between the rich and the poor doesn't bother me in and of itself. What I think we should be concerned about as a society is the absolute well being of the poorest among us - not their relative wealth level (if given the option, I'd gladly double the gap between the rich and the poor if it meant the poorest were to experience a 100 percent increase in their standard of living). In other words, what really matters in a society is the standard of living experienced by the average citizen (which, for better or worse, is typically measured as Gross Domestic Product [GDP] per capita). In the 1950's, gas, as a percentage of household income, was far more expensive than it is today; middle class automobiles didn't boast things such as air conditioning, let alone CD players, heated seats, and navigation systems. Yet, here we are, lamenting the growing disparity between classes! We're spending so much time envious of the size of the other kid's pizza we fail to realize that in the last fifty years, the pizza has gone from a medium to a large so that in an absolute sense, even the poorest among us is far better off than they were just a short time ago.

People vs. Wal-Mart

That brings us to the philosophical case of People v. Wal-Mart. The cold, hard fact of the matter is that every occupation has a lifestyle associated with it. Retail clerks serve the social function of a migratory bridge between classes. To work their way through college, young students may choose to take a job at the checkout counter to help pay for textbooks. After retirement, a couple may choose to work together at a local store to generate extra income and become socially engaged in the community. The position also serves as an excellent gateway to move up the management chain. Take, for example, the Wal-Mart district managers who now make hundreds of thousands of dollars a year; virtually all started as an hourly sales associate.

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