Wednesday, July 9, 2008

The High Cost of Low, Low Prices


Wal-Mart is a big deal in small Southern towns. People are either for it or against it, and most likely have personal reasons for their strong opinion. I used to poke fun at the heated debates over the existence of Wal-Mart until I moved here and began to observe its effects firsthand.

Unfortunately, once Wal-Mart takes hold and flourishes in a small community, it soon becomes just about the only gig in town. Over the first five years after a Wal-Mart opens, retailers' sales of apparel drop 28% on average, hardware sales fall by 20%, and sales of specialty stores fall by 17%. Food stores lose 17% of their sales. The flow of money into the local economy dries to a mere trickle. Local businesses are forced to close their doors; Main Streets and old downtown store fronts are boarded up.

Since this once-remote issue is now just outside my back door, I've been doing a lot of reading lately. I once ignorantly thought that Wal-Mart provides jobs and thereby benefits the economy. Alas, the jobs it provides come at a high cost to the community.

A recenty study by the National Bureau of Economic Research used Wal-Mart's own store data and government data for all counties where Wal-Mart has operated for 30 years. It found that the average Wal-Mart store reduces per capita earnings by 5 percent in the county in which it operates.

The majority of Wal-Mart employees' earnings place them far below the poverty line. In addition, Wal-Mart has a habit of forcing employees work off the clock in order to avoid having to classify them as full time and therefore provide benefits. The result is that one 200-employee Wal-Mart store may cost federal taxpayers $420,750 in federal assistance per year.

I was amazed to find that state and local governments actually subsidize about one-third of all Wal-Mart retail stores--at least $1 billion to date.

We have all seen the political cartoon where Wal-Mart is handing U.S. Dollars to China, but here are the actual statistics:

70% of the commodities sold in Wal-Mart are made in China.

Wal-Mart was responsible for about 1/10th of the U.S. trade deficit with China in 2005.

If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada.

I don't know about you, but I find it absolutely scary that a corporation has that much power to influence the U.S. government and the world economy. Wal-Mart is not the only corporate entity we should be calling to account...the oil companies and pharmaceutical giants are members of this echelon, too. Oh, how far we have fallen in just six decades!

In 1945 most of the United States' six million family farmers were still rotating their crops and cultivating a wide variety of fruits, grains, beans, and vegetables organically, fertilizing with natural compost, and generally practicing sustainable farming methods they had learned from their parents and grandparents.

The nutritious, primarily non-processed foods that people cooked for their family meals were purchased from locally owned grocers who stocked their shelves with a wide variety of items - typically grown or raised within a 100 mile radius of our communities.

The post-war generation was relatively healthy in terms of low rates of diet-related diseases such as cancer, heart disease, obesity, diabetes, food allergies, birth defects, and learning disabilities. In spite of the fact that average life expectancy has increased over the past several decades, the health of the general population has declined drastically.

Sixty years later we have become a Fast Food Nation, stuffing ourselves on the industrialized world's cheapest and most chemically contaminated fare. We allow out-of-control politicians, corporations and technocrats to waste our tax money on corporate welfare, destroy the environment, and starve the poor.

Does this mean that I'm becoming a grass roots activist for socio-economic change? What next? Stay tuned for part two...



No comments: