[Vision2020] Re: Joan and her arguments against a WalMart Supercenter

[Andreas Schou]

On 1/31/06, Donovan Arnold <donovanjarnold2005 at yahoo.com> wrote:
> Andreas,
>
> I really am shocked to say the least by this post. I really did think that
> you had a better understanding how the retail industry and economics works.
> However, your statements show your understanding to extremely poor:

Translation: I will deal with most of your points by simply insulting you.

> I unfortunately, with two jobs and full-time grad school, I do not have the
> time to give your reply the full justice it deserves. However, I will
> address a few points.

Translation: I will deal with some of the others by snipping the rest
of your post and claiming to be too busy.

> First, Wal-Mart does not "Force" manufacturers to move overseas. Wal-Mart
> does not have any legal authority to do so. Wal_mart knows what a product a
> must sell in order to buy it.

Translation: I will deal with the rest by insulting unions and
oversimplifying the issue.

> They are not going to buy a DVD player for $75 that
> will not sell and just sits on their shelf preventing an item that can sell
> from from being there. If the manufacturer cannot produce the DVD player for
> less
> then $75 they have four choices,
>
> A) Find another buyer besides Wal-Mart, like Target, Sears, ShopKo, etc.
> B) Give everyone pay cuts
> C) Move overseas
> B) Shut down
>
> You seem to fail to realize that Wal_Mart does not set the price, consumers
> do.

Wal-Mart makes business decisions. They influence the curve.

> People in the United States will not pay $250 for a cheap DVD player so a
> US union worker can be paid $35 an hour + free medical. The product will
> just sit on the self collecting dust.
>
> You seem oblivious to the reality that if Wal-Mart does not sell the $250
> DVD player made in China for just $15, that somebody else will, perhaps a
> foreign owned company.

The problem is that the $15 Chinese TVs* player cost the Chinese
company that made it $17 to make. Selling products at a loss to drive
competitors out of business is illegal predatory pricing. Separate the
criminal act and the criminal actor by one step, and you have
something that isn't, in fact, illegal: if the buyer forces the seller
to sell at a potential loss -- and I'll discuss tactics that Wal-Mart
uses to force this below -- and then makes a comfortable margin on the
product sold at a loss, nothing illegal is being done.

Furthermore, with China in particular, you have the issue of the
overvaluation of the yuan -- a condition caused by the Chinese
government's peg of the yuan to the dollar. This gives China has an
immense export advantage to the United States. Now, this has other
economic disadvantages, but it gives China an immense export advantage
(while overvaluing American goods reimported to China), thus promoting
foreign direct investment from the United States.

These unfair trade conditions are (1) bad for Chinese companies,
*except* those receiving foreign direct investment, (2) good for
American companies, (3) bad for Chinese consumers, (4) good for
Chinese workers, and (5) bad for American workers. Imposing a simple
tariff on Chinese goods equal to the difference between the "real" and
"pegged" value of the yuan would be a simple solution to this issue*.

Oh -- and Wal-Mart is China's eighth-lergest trading partner. That
includes the vast majority of countries.

> You also seem to lose site of the reality that people are clamoring for
> Wal_mart jobs in China and the US. Chicago, a union town, has a Wal-Mart
> coming in and it got 25,000 applications for 500 positions. Same thing
> happened in California, and many other places. In an economy with less than
> a 5% unemployment rate.
>
> I do agree with you on two points however, Andreas.
>
> First, I do agree that Wal-Mart is wiping out businesses. The worst
> five percent of businesses, the ones that charge too much and rip off
> their customers will be wiped out, no doubt.

You and Crabtree are demanding a tautology from the rest of us.

By "good", you mean not "responsible," or "useful," or "providing
useful services," but "financially competitive." By "bad" you mean not
"irresponsible," or "harmful to American workers," or "not providing
useful services," but "financially uncompetitive." So, no, Donovan, I
don't think that *using your definitions*, a "bad" business has ever
wiped out a "good" business, because, *using* your definitions*, a a
good business is "one which has successfully competed."

By "worst" you mean "businesses that can't compete with Wal-Mart."
Wal-Mart will not wipe out the worst 5% of corporate citizens -- it'll
wipe out whichever bu

> Wal_mart will do to the
> retail industry that CDs did the record companies, the combine did
> to the farmer, what the automobile did the horse and buggy industry.
> Change and growth hurt, and sometimes hurt good people. But aren't you
> glad Moscow did not prevent automobiles from coming into Moscow to protect
> Bob and Cindy's buggy dealership? Aren't you glad we did not prevent CDs
> from coming in to save sweet Mary's record album manufacturing Co.?
>
> Second, that overseas working conditions are not satisfactory. We
> should set up a Federal law that mandates a certain set of standards
> be made for working conditions in overseas factories. If any ship coming
> to US shore contains any goods made by workers not meeting those standards
> it shall be returned back to where it came from.

Uh-huh. So, you support workers' rights in China, but not in the
United States? And you support Wal-Mart despite using sweatshop labor?
Under what conditions are you against sweatshop labor?

> I am going to
 bed.
>
> _DJA

-- ACS

* Actually, I don't know how much the TVs actually cost. $15 and $17
are placeholders.

* Actually, not so simple, because the Chinese also own a great deal
of dollar-denomination debt, including US Treasury bonds: essentially,
a great deal of the national debt becomes owed to China, Korea, and
Japan. Do we really want that?