June 6, 2005

The Market Should Regulate Wal-Mart

A letter writer in the Philadelphia Daily News recognizes something all too easily forgotten -- that markets perform regulatory functions:

But "Sprawl-Mart" and other companies should not be forced to offer the health benefits cited in your editorial. The market should regulate Wal-Mart's bad policies: employees should find other jobs at places that pay better and offer better benefits, then Wal-Mart will be forced to pay more and offer better benefits in order to compete. Likewise, people should boycott Wal-Mart, as I do, to show that they do not approve of their policies.
What's required to end the growth of Wal-Mart is much more than this; complaining and politicking is a feel-good response. Anybody who wants to crush Wal-Mart has to get a critical mass of geographically-concentrated consumers -- not newspaper owners, not politicians, not movie stars -- to do it for them. And to do that, you have to give them better alternatives. Wining about wages, bickering about benefits, and hollering about hours is just wind without meaning. My gut tells me that this battle will NOT be decided by ideas and philosophies.

What the letter-writer doesn't seem to realize is that the market is already "regulating" businesses in exactly the way she desires; it's using Wal-Mart to regulate WM's competitors. Inasmuch as Wal-Mart is crushing the little guy, the market is regulating the little guy... in a way he hadn't been regulated before.

The only way Wal-Mart will be stopped is if a real competitor figures out how to crush it. So if you oppose Wal-Mart, you should be doing your best to make local and state regulation as benevolent to competition as possible. I've often pointed out that big-box restrictions usually only apply to Wal-Mart; but that's not completely true. BB restrictions apply to potential future competitors too. By limiting the size of stores, and requiring too-onerous economic and environmental reviews, it is very possible that a locale is making it harder for the next generation retailer to overcome Wal-Mart.

Posted by Kevin on June, 6 2005 at 09:11 AM