On Walmart
This isn’t about the Supreme Court case. It’s about Walmart, the store.
I know I’m supposed to hate it. I know its higher-ups eat little babies for breakfast. I know it’s full of goods from our creditor overlords, China. I know it’s the ultimate in declasse-Sarah-Palin-style-red-neck-Americana (even if she herself were to never darken its doors).
I know.
But I like it nevertheless. Not a huge and daily dose of it, but every now and then. I’ve even been known (shhh, don’t tell!) to buy clothing there on occasion, like a T-shirt or some underwear, in addition to the sundry knickknacks, cosmetics, shampoo, tools, odds and ends, and random this and that and the other thing that are so much cheaper there.
You get exercise walking the floors. People-watching is always of interest. They have just about everything. And sometimes you can even get somebody to wait on you.
And have you heard about the Walmart diet?
When the lefties attack Walmart for its low wages and limited employee benefits they miss the big picture. Suddenly the working and middle class have a place to buy basic necessities (food, drugs, toiletries, clothes, auto supplies) at prices well below what existed before. Thus, the material standard of living of an entire community is raised and people who had no job are employed.
The downside is lots of small businesses disappear and their owners are often community leaders and supporters of youth activities.
Shouldn’t surprise those who have read my earlier comments that I agree with you, Neo…wholeheartedly.
I’m retired so I don’t have to wear a suit and tie much anymore. Comfort is king. I’ve become addicted to sweatsuits in the Texas winter and even in the summer at my NM summer home in the mountains. I buy those at Walmart and they are perfect. I buy all my shorts and most of my t-shirts at Walmart. Same for socks and underwear.
I even bought a couple of pairs of fairly formal looking slacks that look resort, casual sharp with a white, starched Guayabera shirt I ordered online. I’ve gotten compliments on a pair of Italian looking (made in China) loafers I bought there for $12.95.
In Alamogordo, NM, the produce in the grocery section is MUCH better that that in the best grocery store in town because it turns over so much faster.
You’re right about the people watching too. In the Alamogordo store, you see everything from Holloman AFB jet pilots who are clean cut. sharp looking, and handsome (with their good looking wives) to scraggly looking mountain men who look like they just rode their donkeys down the mountain after a week of panning for gold.
In both of the Walmarts in my world, the store personnel are always extremely helpful. I hate looking for things so always ask for help in finding something after I have tried for about 90 seconds. I have had Walmart employees walk me diagonally across the store to take me to exact location of an item.
The exercise is good too…both inside and outside the store. Their parking lots are huge and I always park in an outermost location to keep folks from bumping my semi-classic Mercedes Benz’s. I get a good walk to the store and inside it.
I guess I’ve become easily entertained in my old age, but I always enjoy my trips to Walmart. 🙂
texexec:
That was supposed to be in reference to “my NM summer home in the mountains”.
Remember all the empty store shelves in the soviet union we all used to wonder WTF at? Now we know how they got that way. Lil commies busy as beavers building a more just and fair world for the little guy. Righhhhhhhttt.
I generally prefer Target because the local Walmart is messy and always has a lot of stock on the aisle floors.
However, Walmart has saved us on multiple vacations, when we’ve experienced bad weather (picking up rain gear & cheap fishing tackle when our sunny weather plans were quashed) or getting cheap replacement clothes & toiletries when my husband forgot to pack his duffle bag on a road trip (T’s, shorts, sock, undies, etc.).
Remember when a low-end store was J C Penney?
stumbley:
Cloudcroft…not far from Ruidoso as I’m sure you know.
Looking at the customers in Wal-Mart I always think of my lefty friends in the Bay Area, and remember their bleating about The People.
Hey, comrades, you wanna actually see The People? Forget Starbucks. Come to Wal-Mart!
Somehow I don’t believe that Wal-Mart customers quite what the comrades were thinking of.
I love Walmart. I buy groceries. Also exercise T Shirts and gym shorts. And whatever else I need.
My favorite visit occurred when I came upon 6 men who had tackled a shop lifter and were holding him down as they awaited arrival of police. They had dogpiled him just inside the entrance. Americana: take action! Norman Rockwell would have painted it!
Well I’m not nuts about Wal-Mart, but I will say this in its defense: It’s about the only place, coast-to-coast, at which over-the-road truckers (who essentially live in their trucks) are able to stop and stock up. Hardly anyplace else has truck-friendly parking, and it offers pretty much everything those guys need, right there in one place, and the prices are good. When I go out in the Big Truck with my husband, we are always grateful to find it there when we need it, and the people who work there are nearly always friendly.
texexec @ 5:20
Of course!
:^)
The redneck stereotype is ignorant, bigoted, and narrow-minded.
Sarah Palin is none of these things. You surprise me.
Hard-working “Salt-of-the-earth” is much closer to describing her.
As for Wal-mart — the problems can be put into two categores: first, the effect on the local retailers, who are driven out of business, along with all thier employees. The jobs at Wal-mart are considerably fewer per volume of goods sold (efficiency!), lower quality, and lower wage. More part timers, no benefits, and close to minimum wage. Fewer dollars flow into the local economy.
Then there is the merchandise. Most of it comes from China and other low-wage areas. The Wal-Mart way is to pit suppliers against each other and force them to become more efficient. They do this by only carrying the products of the “winner”.
This means the suppliers must eventually off-shore their production if they want to be on Wal-Mart’s shelves — many more jobs lost. Wal-Mart bears much responsibility for the loss of our manufacturing base.
Groceries: again, Wal-Mart only carries products from large-volume suppliers. You can be in the middle of New England apple country, but the apples and juice will not be from New England. Local growers need not apply.
Wal-Mart may be a great shopping experience with wonderful prices. It is deceptive. What good is friendly, clean, cheap Wal-Mart when you no longer have a job?
Avoid the big box stores. Support your local economy!
Correction — Sarah Palin has brightened Walmart’s doors. When campaigning for VP, she and her tour bus made an unscheduled stop at a Walmart to buy diapers for Trig. She’s also been to at least one on the Going Rogue tour.
Just imagine our pioneer ancestors hearing us complain about efficiency….
” Well Mr Donner we can get your family to California in four hours but it’s a bad idea for what it’ll do to your local mercantile and the covered wagon business”.
Avoid the big box stores. Support your local economy!
And avoid big box government. Support individual decision-making! Power to the people!
I don’t want to be in denial about the human distress involved, but IMO the benefits of creative destruction outweigh the costs.
Unfortunately, many say the same about destructive creation.
It’s convenient to blame Walmart for the demise of mom ‘n pop stores, but it’s just part of an overall globalized market. Why don’t we see the same hatred of Target, or Amazon for putting bookstores and other stores out of business? The value that these stores provide is convenience, and they make items available to shoppers that might not be affordable otherwise. And the small stores that learn to compete will likely survive (if this economy doesn’t do them in). For example, in Denver there is a children’s bookstore, Bookies, that has a huge inventory (they cater to teachers as well as families), offers a discount for cash payments, and a very helpful staff. I love Amazon, but for children’s books, we like to stop by and see/view them before we purchase.
This calls for a comprehensive fisking.
I’m still so upset that monks aren’t laboriously producing illuminated manuscripts. That bastard Guttenberg has so much to answer for. A positive enemy of the people he is.
Good point. We need to mandate inefficiency; maybe the Dems can pass a law to help with this. The government is certainly setting a good example in the War on Efficiency.
I’ve got the slogan: “Do something stupidly and inefficiently today! Follow your government’s example!”
Another good point. We should free up all those Wal-Mart employees to pursue careers as neurosurgeons.
The Yellow Peril redux! Why should they perform useful work? They should just sit on their butts and have us send them foreign aid, the way God meant for things to be.
Bastards!
I’ve got news for you: that is the American way. Inefficient suppliers lose. Efficient ones — and consumers — win.
This pisses me off too. I root for the San Diego Padres (that’s an American baseball team), and they haven’t been to the World Series (I know, I know, we Americans are solipsistic about this) in forever. It’s not fair. Why does the “winning” team from the National League (that’s one of the baseball leagues) always get to go? The teams should take turns!
This is a great point. Many troglodytes seem to think it has something to do with truculent unions and wage demands disproportionate with productivity. How ridiculous! You show me an industry (or country) with a strong union movement, and I’ll show you a vibrant, thriving enterprise. Just look at the auto industry. Everything was fine until Detroit residents heard about Wal-Mart. Now Detroit’s in the crapper. Damn Wal-Mart anyway!
You’ve hit on Wal-Mart’s cunning plan. Buy apples from New England and ship them to Washington; buy apples in Washington, and ship them to New England. Wal-Mart will do anything in its heartless quest to improve efficiency.
Bastards! The need for Democrat legislation grows apace.
“Be it resolved, that henceforth in this realm … er … collective, all retail store shall offer a lousy shopping experience, with outrageous prices, surly unionized staff, and poor selection. All those in favor?”
Yet another excellent point. What would those without a job want with a cheap place to buy necessities? They have the time to queue up at Nordstroms; after all, it’s not like they have a job to go to, right?
Seriously, though …
First, no one should have any benefits whatsoever. No one. That includes Congress. Think “auto insurance.” That’s the model. Coupling “benefits” with employment – a development that started at GM in WWII, to circumvent wage controls – distorts the economy (and reduces job mobility).
Second, what’s wrong with part-time work? Part-time work means time to pursue other options — e.g., another part-time job, school — to better oneself (or to play video games, as the case may be). Liberals are crediting Obama with creating “funemployment.” So part-time work would be … well, the portmanteau is not as euphonious as “funemployment,” but never mind that.
As for wages, people are paid over minimum wage what their labor is worth to others (unless they’re union members, welfare recipients, or government employees, of course). Want more money? Develop skills that are in demand.
The solution to blossoming efficiency in the area of basic needs is to unleash creativity to pursue people’s wants. We actually had that solution in the works in the form of a consumer society before liberals took the reins in 2007. Now we got idle people with dwindling funds to keep them from rioting. Great job democrats!
“Avoid the big box stores. Support your local economy!”
I’m afraid I have to support my family first. And that means living within our means and that means, yup…shopping at Wal-Mart. or sometimes we live high on the hog and go to Target.
Our budget usually can’t afford to avoid the Big Box stores.
Of course, it was unions and government regulations that drove American companies to outsource production to countries like China, where wages are much lower and environmental laws are nearly nonexistent. Walmart has taken advantage of that situation, but they are not responsible for it.
One possible remedy I have seen is to use tariffs to make up the difference, and make it less attractive for corporations to use wage and regulatory arbitrage. That will keep more industrial production and good-paying jobs in America; and it would provide an incentive for China to improve conditions there. However, by making imported products more expensive they would become less affordable to poor people.
But that’s not necessarily a bad thing overall: In what other society in history have poor people had access to cell phones, big-screen TVs, and air conditioning? Where did we get the idea that that was normal?
As my mom pointed out when we moved someplace where we could actually reach WalMart in about an hour: if slightly lower prices are enough to make your stores’ customers abandon your local business, you’re doing something wrong.
She’s actually had a couple of rants to similar effect, usually after a “local, mom’n’pop” place’s owner goes off on an anti-Walmart rant while they’re failing at filling her order. (Always seems to be the ones that give you no desire to ever darken their doorstep again that will go into these rants, too.)
I know a couple of the local stores on my folks’ side of the mountain have a sort of next-day order thing set up: if someone wants a part that they don’t have and can’t get through their supplier for a week or so, they call one of the guys who commutes over there to pick it up at the box stores. Their customer gets it first thing next morning, they get a mark-up, and they show how mom’n’pops can survive and thrive.
The nearest farm parts supply store is in the same town as the Walmart, and they have a similar “delivery” service– it goes home with the guy who lives in our valley, and folks can drive by the drop-spot and pick it up.
The “buy local” notion can be noble, but it also gets abused five ways to Friday by people who can’t keep customers if the customers have any option.
Amusingly, I have an easier time finding US made goods in WalMart than in Target, Fred Meyers, Safeway, etc. When they don’t have made in America, it’s not always made in China– which I have moral objections to, rather than it being a “buy national” thing. (One of my many, many peeves. :^p)
Never had a problem getting Washington apples, either, but we may be the best suppliers they could find. They also had California strawberries, instead of Mexican ones like Safeway.
Foxfier @ 9:25:
That’s really neat. That’s ingenuity, aka using lemons to make lemonade.
KBK: “redneck,” “Sarah Palin,” etc., was my attempt to channel the condescension a lot of people who hate Walmart’s feel about it. I was not expressing my own opinion.
Peter K: I didn’t mean Palin had never been to Walmart. I meant that even if she never had been there, people who hate Walmart’s would associate it with her and “her kind.”
I find it interesting that liberals who are supposed to be so compassionate towards poor people and the oppressed think that enabling Chinese peasants to end their back breaking subsistence sticking seedlings into wet rice paddies and make electronic goods in a fairly modern city a bad thing.
Aren’t they people too?
I love WalMart. My wife likes it but I like it even better. I only have to shop at one place to get anything. How great is that? Gift buying for my wife (something that is very difficult for me) is less painful at Walmart and I can even get help and I know the prices are good. I can even pick up some ammunition for my guns there.
Are you familiar with the People of Walmart blog (and book), Neo? Apparently you can search photos by state:
http://www.peopleofwalmart.com/?page_id=9798&paged=2
Funny, albeit in a mean-spirited sort of way.
I’ll admit it, Wal-Mart is my dirty little secret, too. You can’t beat their prices on groceries.
And hey, there are days when you not only need milk and eggs but also underwear, paint thinner and a bag of mulch (at 2 am). Wal-Mart to the rescue! One-stop shopping, 24-hours a day.
The thing that drives me crazy, however, is the lack of adequate staffing of the checkouts (at least in my neighborhood). If you go at peak hours you can expect to stand in line forever. Best time to shop is early a.m. when they are stocked up and uncrowded.
Speaking of milk, I recently read that Wal-Mart’s own label Great Value milk is one of the few brands now being sourced only from cows that have not been treated with artificial growth hormones.
This kind of information is priceless when discussing the merits of Wal-Mart with my snobby liberal family members and friends. Most of them proudly admit that they would never set foot in Wal-Mart, viewed as the locus of all evil.
And that, in a nutshell, is probably THE best thing about Wal-Mart, IMO.
Shopping there offends all the right people.
A simple thought: with the money I save by shopping at Walmart, I can buy art pieces from artists and go to symphony concerts and opera performances. So then other taxpayers wouldn’t have to support my peculiar “hi-brow” tastes.
But according to the liberal/progressive model, I should pay more for basics and eschew yucky Walmart. Then I should force “lo-brow” people to pay for my art pieces, my symphony concerts, and my opera performances.
It would be fun to flow chart for an economics textbook showing why I should support/not support Walmart.
Liberals should love Walmart. If you need to shop for ethnic produce, they have the best: Good prices, ample supply, and top quality. All those illegal immigrants they’re so in love with are big customers.
For those who complain about Wal-Mart, they should try living someplace where Wal-Mart isn’t an option. Like most places overseas. Right now, when I buy an item I use a lot, say, golf tees, I basically have three choices: get them at the course pro shop, for about the equivalent of $10 for 20 (these are ordinary wooden tees, not fancy, two-piece, friction-frees ones); buy them at a department or sports store, for a bit less; or buy on-line from the U.S. and lose any savings I may gain in shipping charges. When I’m back in the States for whatever reason, though, I can make a quick run to Wal-Mart’s sports section, buy a bag of 1000 tees for around $5 or so, and then stuff them into my luggage for my trip back overseas. Yes, the difference is that large–a penny for two tees at Wally World, compared to 50 cents per tee at the pro shop, a 100-fold price differential.
Buying an expensive tee when I can buy the same one for 1/100th the price does nothing to improve the lot of factory workers. The same factories churn out the tees sold by both the pro shop and Wal-Mart. Any difference goes to middlemen or the pro shop owners, who add no value to it. So why should I pay more for a commodity item like this?
I also happen to live in a place where there are many factories that provide items that are sold in discount retailers in the West, and let me just say this. While some factories are slave-wage hellholes, many others are not. They often offer above-average wages (relatively speaking), benefits like health insurance, paid vacations, overtime pay, and retirement plans. Perhaps they’re not comparable in pay or bennies to companies in the U.S., but when the other choices are farming rice for from sunup to sundown, driving a taxi, or selling one’s body, they look pretty good. That’s reality.
For Occam:
San Diego Padres (that’s an American baseball team), and they haven’t been to the World Series…
Yeah, they were, in 1984. The Detroit Tigers (my team) beat ’em in five:-).
waltj:
For those who complain about Wal-Mart, they should try living someplace where Wal-Mart isn’t an option. Like most places overseas.
– – – – – – – – – – – – – –
Indeed.
I’ve lived in Europe and now live in Israel – in both places I got completely fed up with the “kiss my @ss” approach to consumers.
American idiots gush about the picturesque little shops – not knowing that many of them close in the middle of the day, and close before working people can get to them. Prices? Service? Ha.
And G-d help you if you need to buy an imported item from the local, exclusive agent. Prepare to pay through the nose for appliance replacement parts and consumables.
These experiences have ground out of me any residual New-York-liberal pity I may have had for shopkeepers and retail “workers”.
Israel started out as a socialized country with just this mindset. Fortunately steps to liberalize the economy have transformed much of retail.
We don’t have Walmart, but we do have Ace, Home Depot, and some other familiar chains. Several grocery chains have taken a page from the Walmart playbook by opening superstores including clothing and housewares. And electronics stores know they are competing against Amazon and Dell shipped from Europe.
Some years ago, I heard NPR interviewing the author of a not-sympathetic book on WalMart So the following is what L&O calls an admission against interest.
When WalMart comes to town, the price of groceries, in any store which survives, plus WalMart, goes down by 15%, which amounts to about six weeks’ free groceries.
Those who want all of us to continue to pay a premium to maintain a smalltowndowntown theme park are, by default, requiring the poor to pay a premium for their groceries. IMO, the supporters of the smalltowndowntown theme park should write large checks to the local merchants to cover the losses when WalMart moves in.
Problem solved.
Except the supporters of the smalltowndowntown theme park want everybody else to pay for their theme park, and to do so as a matter of necessity. Of law–zoning keeps WalMart out, for example.
The likelihood that the majority of workers at the local Spartan store, or Piggly Wiggly or its equivalent or a non-franchise grocery store or general merchandise store are getting good wages and good bennies is an assertion without any supporting evidence–actually, the pay isn’t terrific and many employees are part time. It’s a planted axiom that the folks in the local shoe store have great jobs with great pay and good benefits. Like many planted axioms, it’s planted so that you don’t think about it for a few seconds and realize it’s false.
One poster said something others have mentioned in other venues: If you pay the rock bottom rate for necessities, you can do the boutique thing for luxuries, and more of them. It’s the middle-range merchandisers who are hurt here. Not low enough prices to attract volume, not enough quality or choice in quality to attract the high-dollar folks. Quality in this case may include both actual quality in production and things like brand snootiness for which some people will pay a premium.
I’ve been reading about mom and pop stores that have been closing in my home town. In most cases it was because the owners had passed retirement age. Their children had gone to college and made their way in the wider world so there was no one to take over.
About a block from where I now live there is a butcher shop with a booming business. Many others in the general area have closed due to competition from supermarkets. How did they survive? By cooking take out lunches for the many guys who work in the area. It has home-style cooking; it’s reasonably priced; and it has lots more variety than McDonalds. They found a niche and they are becoming a local institution.
One of my problems with the ever bigger chains is that they leave a trail of half-empty strip malls behind them as they expand. That seems to be more of a local zoning problem though.
Re this hatred toward Walmart, I think it’s part of the Alinsky tactic to “pick a target” and focus attention on it. Remember how Halliburton became the target? The Koch brothers? Oil companies?
I asked my Bolshevik friend (her parents were actual Bolsheviks) why she is working so hard to keep Walmart out of our neighborhood. She said that it exploits workers and we don’t need it because we have other grocery stores. I asked her if she knew how much Target, Home Depot, and the various grocery stores paid their workers.
She obviously didn’t. I never push these conversations because it’s clear from 10 years of experience that my liberal friends and family have heads made of concrete. Although I love them, I never talk to them about anything that violates the received doctrine.
Ever notice liberals who complain about humans behaving seperate from nature are the same ones who insist the competition for life that dominates nature can’t be for humans?
San Diego Padres (that’s an American baseball team), and they haven’t been to the World Series…
Yeah, they were, in 1984. The Detroit Tigers (my team) beat ‘em in five:-).
Of course, but I meant in the live ball era. /g
I’ve lived in Europe and now live in Israel — in both places I got completely fed up with the “kiss my @ss” approach to consumers.
Hear, hear! (Or should I say, “There, there!”?)
A vignette: grocery stores didn’t bag groceries; quite the contrary. When I requested bags, the checkout clerk jerked a thumb at a pile of bags in a heap on the floor, and told me that they’d be $0.08 each. Also, that I’d better be quick about it, because the store closed shortly (at 5 pm).
It’s a planted axiom that the folks in the local shoe store have great jobs with great pay and good benefits.
I believe Al Bundy put that planted axiom to rest. And drove a stake through its heart.
Damn I miss that show! Crude, iconoclastic, irreverent, and funny as hell.
Generally, grocery stores like Safeway get a pass because they’re unionized.
I only know this because Winco recently opened a branch in my area– I like them because they’re employee owned, have good prices, offer bulk and I have yet to have my usual “polite conversation” thing fail with any of their employees– and the store has been picketed for the last… month? Two? Since before it opened, anyways, there have been a half-dozen paid protesters on hand from the grocery packer’s union with big signs saying “don’t shop non-union Winco.”
The place has been packed every single time I’ve gone in, even though I shop at odd hours; the only time I was able to park in the marked out Winco lot was during the first long weekend after school got out. (Usually I shop at times like after 8 on Sundays.)
Amusingly, when I first went in to shop there, I got into a conversation with the guy behind me in line who’d been so disgusted with the local gov’t union he was part of that he quit. (conversation starter: the union goons that were blocking traffic on the way in to the lot)
Then the clerk chirped up that part of why she’d jumped on the job is because it wasn’t union– and the lady running the check out across the way vented a little about how a friend of hers had been Done Wrong by the grocery union, and mentioned that she’d transferred to this store because she liked the other ones she’d worked at.
First, I’m no lib — very far from it. I’m surprised how partisan the discussions of Wal-Mart are…I hadn’t really paid attention to that, but now that I notice it, it’s pretty obvious. IMO that’s too bad, because the ideologies distort the discussion.
Wal-Mart is aggressively efficient, to the detriment of their suppliers and employees. I’m in favor of efficiency and competition, but that doesn’t mean I will support extreme examples which degrade the local community. And to me, the local community is all-important.
An interesting topic: how does local economic development occur? Wal-Mart and similar stores take far more dollars out of the local economy than they return. They employ few people, and at much lower effective wages. Given the friction of taxes on business transactions, ask yourselves: How do dollars flow into my community? How does my community create exportable value to compensate for Wal-Mart etc. and taxes? Did we formerly manufacture things or process (“exploit”) our local natural resources? Are we just a bedroom community or a tourist destination now?
Take our local Tractor Supply, which operates on the Wal-Mart model, but not as aggressively. When they opened, they had about 20 jobs to fill. There were over four hundred applicants.
Today, they have only three full timers. The rest are a mix of 36 hour per week “part timers” who get no benefits, and real part timers. All of the 36 hour people would like to be full time, but it’s Tractor policy to staff with full-time part-timers. This is legal.
And “benefits” means more than health care. These full-time part-timers get no 401K matching (and they are not saving for retirement, they can’t afford to), no vacation, and no sick days.
The average person working there makes around $8.50 an hour. Many of these people have had extensive retail experience, and several are store managers who were caught in the recent downturn. They now have McJobs, and the old jobs aren’t coming back.
Everyone likes low prices. That’s not really the core of the discussion, which is the sharp practices of an effective monopolist, and how that affects local communities. What Wal-Mart does is legal. The question is, is it ethical? I say no, and that’s why I don’t shop there, or at “The Tractor”.
The powers-that-be in this country (Republican or Democrat, makes no difference in our statist politics) have decided to fair trade human services. While there’s no doubt that the world will eventually “flatten”, our policies have caused an undesirably aggressive offshoring of our manufacturing base. The jobs and prospects of middle America have been gutted over the last couple of decades.
Ask yourself: what will most of the people in this country be doing two decades from now? With manufacturing gone, tech services moved to India, and agriculture employing less than five percent of the workforce? You’d better be working in the financial sector, health services, or in a government job.
We’re in a fix. If people are unqualified for the high-tech jobs (check our lousy schools) and unneeded for manufacturing jobs or even service jobs (no bank tellers)(how long until a McDonalds is staffed by robots?) how do they make a living?
I see two paths: socialism — where everyone receives a living wage by taxing the few highly profitable producers. Or by some major upheaval to our economic system to return contribution of true value (not burger flipping) to the individual. I’m sorry to say this, but the former is easier, and therefore more likely. Your opinions?
[Not only that. If we were to get into a war in the Far East in the next few decades, and trade with that part of the world was cut off, how would we get our manufactured goods? Do you know how many tens of billions of dollars just one semiconductor wafer fab costs? Or how many years it takes to build one? Or that we effectively have no wafer fabs in this country? Or that the semiconductor equipment manufacturers have moved all their production offshore, and even their design staffs? If we wanted to build wafer fabs to support our military’s need for electronics, where would we even get the equipment? And how long would it take to re-establish that manufacturing base? Or train people to replace the now retired engineers? Bottom line: We are crazy.]
In closing, here’s an interesting debate on Wal-Mart:
Stop the Bullying, Wal-Mart
and
The Man Who Said No to Wal-Mart
which is an excerpt from the book:
The Wal-Mart Effect
Here’s an interesting book on how 19th century jobs compare to McJobs. Even our white-collar jobs are being engineered to have no creativity or discretion. Most of the jobs we work at today are unworthy of a human being. The “can-do” American spirit is fading as the quality of our jobs declines.
When I was just a kid, say 10, I fixed the lawn mowers so I could take care of the yard. Then I fixed the cars. Then I built a car. Nowadays, if the Wal-Mart mower doesn’t work, you put it at the curb and buy a new one. Hell, I ran one 20 year old machine around for a couple of years with three wheels and almost no compression. But I kept it working.
My kids (and virtually all kids) don’t know a thing about such things, they have no interest to pull out of the web to deal with reality. And when you put them to work at practical tasks, they don’t know where to start. They are, sadly, ignorant of how things actually work. They are users, no makers, and that’s what this country has become, thanks to the final stage of industrial “efficiency”.
Shopclass as Soulcraft
Use Neo’s Amazon search link to find them.
KBK In your local community, how many of those jobs lost had the good pay and benefits? See? Planted axiom.
And I didn’t see any concern for the folks trying to stretch a dollar and getting the best deal at Walmart.
You’re going to blame Walmart for the horribly punishing taxes on hiring new full-time workers?
Having worked at a “mom’n’pop” drive through (an hour’s drive to the nearest McD’s) there is nothing new about hiring lots of part timers so you don’t get stuck paying double for an hour’s work, plus there’s the unemployment and other hidden costs….
My kids (and virtually all kids) don’t know a thing about such things, they have no interest to pull out of the web to deal with reality. And when you put them to work at practical tasks, they don’t know where to start.
Whose fault is that?
My folks taught all their kids how to do stuff, where technologically possible. Hey, guess what! You can even use the web to deal with reality, like how to repair a lawnmower– or at least find out what’s wrong with it!
Interesting rant KBK. If I understand you correctly Walmart is evil because they are too efficient, and because kids don’t know how to fix lawn mowers.
On the latter, it may be that some of the fault lies with the lawn mower manufacturer. I try to do some of my own repairs. Often the cost of replacement parts exceeds the value of the machine. (British Aerospace was notorious for doing the same trick with airplanes.) Still, I have a wonderful backyard mower repair guy in my county. He does whatever I cannot handle. But, if his repair bill will exceed the cost of a new one; I go to Home Depot, Tractor Supply Co, or Walmart.
It seems to me that KBK pretty well sums up most of the gripes about Walmart.
I really have not done a comparison of “made in China” labels in Walmart compared to other stores. I have noticed, as a frequent Walmart shopper, that they carry most of the name brands that I find elsewhere. At a better price.
Continuing with the made in China discussion. Does anyone believe that Walmart, given their ruthless efficiency, would not buy “made in America” and save on the over-ocean transportation costs, if the merchandise were available? Does it tell you anything about the state of American transportation to know that it is cheaper to ship goods half way around the world, than to manufacture them in the U.S.?
When Walmart came to town I tried to continue shopping at the local shops. I still do for many items. But for basics I simply cannot justify the luxury of paying the significant difference.
Face it folks. Walmart has simply become the poster child for trends that people don’t like. Too bad, but it isn’t just Walmart. Over the years that I worked in England, I saw the same trend away from the small shops toward the super markets. I haven’t been elsewhere in Europe in the past couple of decades, but I imagine the trend is the same.
I have a local buggy whip shop, if you are ever in the neighborhood, stop in between 10 and 5; closed for lunch from 1 to 3.
Oh. oh. Meant to say: “the state of American manufacturing”. Still trying to get the sequence right. Proof, then enter. Well, NYT and Washington Post, among others, seem have the same issues.
@foxfier: Neat link. Of course, the local library is still full of Chilton’s, and then there’s Amazon. I taught my kids how to build computers, program, and cook, but the mechanical stuff was too dirty and real electronics required too much thought, I think. The distractions are just too easy and attractive these days. The kids really seem to have very short attention spans before the have to get back to the net. So they know how to plug things together, but very few know how things actually work. You can’t learn much ripping apart an iPhone — it’s not like the vacuum tube radios that got Feynman started.
BTW, what are all the “horribly punishing taxes on hiring new full-time workers” you are referring to? I can’t think of any.
Working in a drive-through is a McJob. What’s gone are the real jobs, driven offshore.
And you do raise a good point about unemployment benefits, another thing full-time part-timers don’t receive.
@Oldflyer: Sea transportation is essentially free. That, plus modern communications and information systems, plus government policies allowing offshoring of human services has brought us to this situation.
The cost of transportation in this country is not really relevant when the cost of labor overseas is a tenth or a hundredth of what an American laborer needs to survive. Production goes offshore to get lower labor costs. We are rushing to level the world on the backs of the American middle class, who increasingly have nothing worthwhile to do:
Why the Jobs Situation Is Worse Than It Looks
Yes, Wal-Mart is the poster child. They are the biggest, and they lead the way. They push hard. Yet they get a lot of partisan support that doesn’t accrue to the other big box stores. Sure, the prices are great, but I see no reason to support the company itself, given their sharp practices. Can someone explain why all the partisan support for a company that continually tightens the screws on suppliers and employees so they can get more market share in your community?
There more to life, a lot more, than industrial and retail efficiency. You can trade your birthright for a mess of pottage, but it’s not a great idea. And if people are so strapped that they have to shop at Wal-Mart to survive, then I’d ask whether they think they are adequately compensated for what they do, and if not, why not? (If you’re making 17K a year working at Wal-Mart, I can see your problem.)
For more on buggy whips, read that Shopclass book.
Oldflyer said:
“Over the years that I worked in England, I saw the same trend away from the small shops toward the super markets. I haven’t been elsewhere in Europe in the past couple of decades, but I imagine the trend is the same.”
When I go to Paris to spend a few weeks there, I rent an apartment. So I live somewhat like a native there. I shop for groceries and other everyday items.
Paris still has the nice little butcher and fresh produce shops and tiny grocery stores. But the big volume in sales is at Monoprix (Paris’ version of Target). I shop side by side with the Parisians who want the best values for their needs. Same market forces apply there as here in the USA.
The store personnel are usually helpful to a Texan trying his best to speak French. (Government personnel at the train stations are another story.)
Tariffs, government subsidies for industries, government price controls, and all other artificial mechanisms don’t work.
Even sentiment for the way things were done “in the good old days” doesn’t work either. People will always find ways to get the best deals. Think smuggling, black market, etc.
The genie is out of the bottle. Anyone who thinks you can legislate or persuade learned efficiencies out of the marketplace needs to just grow up to the big real world.
OK, guys, what’s your solution for our middle class? Socialism?
Instead of telling us that an effective tariff on human services won’t work, tell us why it won’t work.
KBK . . .
Check out today’s Ace of Spades. This website always gives interesting economic information.
Also read some books and articles by Thomas Sowell, who is a terrific writer on economic issues.
One solution for our middle class is to stop the drain of money that goes to union thugs, useless government workers (lightbulb checkers? TSA pervs? EPA enforcers of recycling?) and corruptocrats. That would leave more money for people to invest in specialty items. For example, I could use a really topnotch carpenter/cabinet maker. That’s a skilled job that many people could get into.
“Instead of telling us that an effective tariff on human services won’t work, tell us why it won’t work.”
It won’t be effective because people and organizations will cheat and not pay them. Just like they have done with similar things in ages past.
The solution for the middle class is to let the markets work. Let all those millions of transactions made freely by buyers and sellers determine how things are done. That’s the opposite of socialism.
Wal-Mart has never put anyone out of business.
It’s Wal-Mart’s customers that put Wal-Mart’s competitors out of business.
jfm
Correct. Absolutely. And, you know the liberals don’t like how the bitter-clingers choose to live their lives.
“And if people are so strapped that they have to shop at Wal-Mart to survive, then I’d ask whether they think they are adequately compensated for what they do, and if not, why not?”
Well, that’s just dandy, KBK. Why didn’t I think of that?
I thought shopping at Wal-Mart helped us live within our means and control our finances in a responsible fashion.
When in reality, I should have been looking for a better job so I can break free of the hold Wal-Mart has on my life. With the economic outlook being what it is, should be a snap.
Sarcasm aside, it’s easy to preach about taking some kind of supposed high road when you have the resources to do so.
Save it and sell your crap to people who can afford it.
@ KBK 3:12 pm. When I was just a kid, say 10, I fixed the lawn mowers so I could take care of the yard. Then I fixed the cars. Then I built a car. Nowadays, if the Wal-Mart mower doesn’t work, you put it at the curb and buy a new one.
When I was just a kid, the last thing I would have wanted to do was fix a lawn mower. I would have considered it some sort of punishment for which I would not have been capable of committing a crime deserving of it. Same thing with fixing or building cars.
So, what you seem to think is a turn for the worse, I see as a most welcome improvement.
KBK:
How about getting government’s boot off the throat of the private sector? How about dramatically paring back government regulations, and killing entire government agencies, which for the most part are public jobs programs for lawyers and “studies” majors?
How about we let the free market work for a change? That arguably hasn’t been done since the New Deal.
BTW, what are all the “horribly punishing taxes on hiring new full-time workers” you are referring to? I can’t think of any.
Might want to go talk to the owners of your local tractor store, then. I know my father in law has to figure on an employee costing about two and a half times his pay in gov’t required payments– ie, taxes.
Working in a drive-through is a McJob. What’s gone are the real jobs, driven offshore.
Wow! Real people don’t have to eat, and don’t want it to be quick and simple? There’s something inherently “mcjob” about being able to make an order from a bakery/burger joint and get the food without leaving your car?
Amazing. Are there any other mom’n’pop businesses that don’t qualify as real work?
I guess that means my folks’ job as ranchers is a “McJob,” too– they focus on customer service a lot, especially when it comes to making it easy for the customer, and even sell the (certified natural grass-fed Black Angus) calves via video auction.*
I taught my kids how to build computers, program, and cook, but the mechanical stuff was too dirty and real electronics required too much thought, I think.
Not thought, just the ability to find and read diagrams and the equipment to fix it. Same way that fixing an engine takes the proper equipment.
It sounds to me more like you couldn’t get your kids to do what you want, and decided it’s a flaw inherent to all kids of their generation.
Sea transportation is essentially free.
Are you insane, or just have no clue? It takes fuel to move things, even on the sea, and ships take upkeep and need people to run them. That’s before any of the legal issues come into play, or the time involved in shipping.
Can someone explain why all the partisan support for a company that continually tightens the screws on suppliers and employees so they can get more market share in your community?
Now I’m wondering if you’ve read a single thing here…. let’s ignore your continuing use of the already discussed planted axiom (thanks, Richard!) and spell it out, in part:
Walmart offers:
good prices
polite staff
good selection
good hours
a clean store
fair paying jobs with local promotion of skill
GOOD local stores offer:
fair prices
knowledgeable staff
great customer service
flexible hours (part of that great customer service)
general flexibility and ingenuity (like the ‘delivery’ service I mentioned)
history/tradition
an effective selection (ties in to the knowledgeable staff angle)
fair wages, generally with intangible benefits
limited promotion (being largely onsite-owner-managed) but great job experience
BAD local stores offer:
poor customer service
bad hours
the lowest possible wage
no chance of promotion or pay increase (because the owner just wants extra hands, not to train someone to do management and be paid for it)
bad prices
uncertainty (the opposite of flexibility– if you call to see if they’re open, there’s a chance they won’t be when you get there; if they say they have something, and ask for it to be put aside, it may not be there)
Walmart’s sin in your eyes seems to be that they say: “Hey! We’re going to buy from the folks who offer the best price for what we want.” Same as the local stores, but they’re more effective at it.
*for those who know me and are raising eyebrows, this is part of why I hate “organic”– certified natural means that the cows and calves have their vaccines, get good medical treatment, can have nutritional supplements like fortified salt and don’t become a haven for pests, but they don’t get any growth shots and the only hormones involved are to synchronize the cow’s cycle.
@Promethea — What caught your eye over at Ace’s? I have read plenty of Sowell, and he’s great. I’m currently working on his “A Conflict of Vision”
Although on Wal-Mart he and I differ: He thinks they have done wonderful things for the poor, and he’s no doubt right about that, but my beef with Wal-Mart is what they have done to their suppliers and employees. They bully them, and, as the largest employer outside of the US government, they have the power to do so.
As for your comments about unions, excess government, and corruption, I’m in agreement with you. But if you fix those things, that’s even more middle class people out of work. The link I posted indicated that “One fifth of all men of prime working age are not getting up and going to work.”
Even Adam Smith never contemplated trade in which one party had one hundredth of the labor cost of the other. Well, he did, and it was called slavery. They made molasses.
The Shopclass as Soulcraft book makes a strong case for people becoming craftsmen again. It’s hard to compete, though, with Home Depot bringing in knocked-down cabinets from the Far East. Many of our cabinetmakers have turned into Home Depot installers.
People have to be willing to pay for the quality of hand-built cabinets. The problem is the same as with Wal-Mart (and the other big chains): almost all the potential customers are looking for the best deal, and there’s no competing with the double whammy of cheap labor and economy of scale.
If you’re really good, and have the skills to market yourself, you can make a good living and have an interesting life. But people like that are exceptional. The average craftsman has a very tough time competing against mass production.
@texexec: People cheat, but we still collect lots of taxes. A tariff based on the labor content of a product and some fraction of the difference between the wage paid and an average US wage for similar work could be effective, I believe, and would result in repatriation of many of the jobs lost. Sure, it would be complex to administer, but what are bureaucrats for?
Markets do work, and work well. But they have to be regulated. Serious people understand that laissez-faire capitalism has been dead for over a century. You have to take into account basic human greed. Sowell describes the recognition of this fact as the “constrained vision” in the book just mentioned.
As an example, we have the recent financial debacle — and the fox is still in charge of the hen house! Who would think that a capitalist would make a loan to someone who was obviously going to default? But they did, because they could lay off the loan to some other sucker. We failed to regulate the loan industry (20% down, loan payment not more than 30% of take-home pay) and we failed to oversee the security rating industry, e.g. Moody’s, who rated junk as AAA. Our government failed us, and the same people are still in charge of the hen house. We voted Barney Frank back in for another term.
Looking back on it, I wish we had not fair-traded human services without introducing some friction, e.g. a tariff. I’m not so altruistic that I would wish to level the world in fifty years at the expense of our middle class, which was doing better in the ’60s, IMHO. It may not be too late.
KBK Says:
June 22nd, 2011 at 11:29 pm
WHAT? It wasn’t “capitalists” who deliberately made bad loans to people who they knew couldn’t pay them back. Have you not heard of the Community Reinvestment Act? The government decided that traditional lending standards were “racist” and forced banks to lend to unqualified minorities as social policy. That is what started this whole ball rolling.
What do you mean “we”? I never voted for that disgusting sodomite.
Rickl-
I think KBK simply ignores any government influence that’s already in place, or simply doesn’t know it exists.
They sure seem to play fast and loose with claims and evidence– I’m still trying to get my mind around thinking that ocean based shipping is essentially free, even if you ignore that once stuff crosses the ocean it has to be trucked just like any other product!
Gotta love the way they devalue true craftsmanship, too– not everyone has what it takes to be a real craftsman, same way not every “local business” deserves support. Ignores that non-assembly line things are WAY more expensive, too.
Wait a minute… how long until KBK blames the job losses on ATMs?
As for your comments about unions, excess government, and corruption, I’m in agreement with you. But if you fix those things, that’s even more middle class people out of work. The link I posted indicated that “One fifth of all men of prime working age are not getting up and going to work.”
No… if you get the government, unions and corruption out of the way, people can afford to hire more workers, start their own business, maybe even open a factory in a new state without the union’s permission!
@foxfier: Employee taxes: the employer pays fica equal to the employees deduction, and also a share of Medicare. Then there’s futa and suta (unemployment) and worker’s compensation. None of these amount to that much, certainly nothing like the one and a half times earnings you mention. Now health insurance, that’s another matter — it can amount to over half of the employee’s salary. But many small businesses can’t afford to pay a major part of health insurance these days. Wal-Mart provides health insurance for half of its employees, but I don’t know what their contribution percentage is.
McJobs: I’d say that any job that can be learned in less than a day which pays within 20% of minimum wage is a McJob. But that’s just my opinion 🙂 Ranching is hardly a McJob — it’s one of the most highly skilled occupations, requiring a diverse assortment of skills and much diligence and perseverance.
Electronics: Having a schematic in hand doesn’t do it. You have to understand how electronics “works”, and that takes months or years of study and experience if you want to troubleshoot at the component level. In any event, electronics these days aren’t repairable; at most you can swap out a module. A failed video card, for example. In the past, there were plenty of people who could tell you exactly how a radio worked, down to the electron flow in the tubes. But today virtually no kid under 25 can tell you exactly how an iPhone works. It’s way too complicated, and they aren’t interested in making the effort because it won’t do them any good beyond satisfying curiosity.
My kids are doing fine, thanks, but what I see in them I’ve seen in others of their generation. Users, not makers. There are some glimmerings of a retro maker ethic in the youngest cohorts. One can hope.
Sea shipping: containerized shipping from China to the US is about $5000 per 40 ft container — about $2 per cu ft. So, you wouldn’t want to ship toilet paper that way, but for most other things, the extra shipping cost is minor compared to the labor cost savings.
I’m not disputing your characterization of Wal-Mart, except possibly the last point. They pay close to minimum wage. Perhaps that’s all the jobs are worth. After all, all they do is wand boxes and ask the customer to sign the screen and tap “done”. Or stock shelves. I’m sure that Wal-Mart would have them working for much less if there was no minimum wage, given the number of applicants for each job.
On the other hand, I’m not going to abandon what I consider to be the valid premises of “fewer, lower paying jobs” and “Wal-Mart puts the screws on suppliers and employees” just because someone wants to label it with the rubric “planted axiom”. No, those premises haven’t been discussed, much less refuted. What’s been put forth is different: “Wal-Mart has great low prices”. I don’t dispute that!
But to answer @RichardAubrey more directly:
Since we know Wal-Mart has fewer jobs per volume of sales, and pays closer to minimum wage, I think the above supports my premise.
I can’t speak to my local area, because the nearest Wal-Mart is 40 minutes away, and I’m thankful for that. I like the retail community here the way it is.
Wal-Mart is perhaps more of a symptom than a cause, but as the major employer in the country (and the largest corporation in the world), they are definitely a cause.
Well, I hope I’ve made my point, for whatever it’s worth. I apologize for any typos (and hope that blockquote worked 🙂
Ref loans:
No capitalist will loan money to a known risk. Thing is, he can’t lay that off on some other sucker because other sucker wants the paperwork. If it looks bad, no sale. If it’s marginal, the price is negotiated downward.
Except under government regulation. See CRA.
Got a relation who was in the biz of making loans on manufactured housing. Toward the end of his career, the pressure to make crazy loans was nuts.
Remember all the noise about how blacks couldn’t get favorable loans like whites, even though they had the same financials? That was false–don’t bother, I did the research–but it was necessary as what we used to call, “prepping the battlefield”.
Some people are depending on an awfully short memory in the people they are trying to convince.
KBK –
Goodie, you did find the most of the direct, regular, federal taxes! Now look for the state and county ones, the insurance costs, the licensing costs, the business taxes that are based on number of employees, and then look at any benefits and their legally required costs (taxes), like COBRA.
Your definition of “McJob” would be any customer service one, then. And most farm hands don’t get more than a day’s training.
You failed, however, to notice that I said you have to be able to read the diagram of what you’re fixing– it’s almost like you’re looking for an excuse to beat up statements that aren’t made.
It doesn’t take years to learn, either– the Navy has been turning out component level troubleshooters in about six months for decades, now, going from zero knowledge to effective if unpracticed. 10% failure rate, and that includes those who get booted for non-class issues.
Sea shipping: containerized shipping from China to the US is about $5000 per 40 ft container – about $2 per cu ft. So, you wouldn’t want to ship toilet paper that way, but for most other things, the extra shipping cost is minor compared to the labor cost savings.
That is a WILDLY different thing than your prior claim.
I’m not going to abandon what I consider to be the valid premises of “fewer, lower paying jobs” and “Wal-Mart puts the screws on suppliers and employees” just because someone wants to label it with the rubric “planted axiom”.
Then you’ll have to prove that
1) the jobs pay less than those offered by the “local” shops
2) that Walmart makes money by reducing their employee’s pay
3) Walmart puts pressure on suppliers to an extent that goes beyond other buyers of similar size.
No-one has asked you to abandon them, the demand is that you support your claims.
Since we know Wal-Mart has fewer jobs per volume of sales, and pays closer to minimum wage, I think the above supports my premise.
Really? Where did you show that? For that matter, you keep claiming that they take money out of a community– do they ship in these minimum wage slaves when they build the place?
On the Walmart pay thing– don’t forget that you’ve got to compare floor-workers to floor-workers, instead of the really popular trick where they compare “employees of companies with 1000 or more workers” and ignore that they have a higher number of outlets and thus require more specialized people. (For an idea of how this works: look at RiteAid or Walgreen’s– there will be maybe two people stocking the shelves, two on the registers and two or three at the druggist’s; go to Walmart, and there are two or three at the druggist’s still, but there are five to eight on the checkouts, another dozen or so assigned to specific areas and at least four people working in the back. And each of these will have one shift manager, and/or one store manager.)
@Richard Aubrey: But those capitalists did make loans to people they knew would default! As I said, this was only apparently risky because they were in fact able to repackage the loans into pools known as CDOs and sell the tranches to the international community, e.g. Norway. Paperwork was not an issue then (although the shoddy quality of that paper has now come to light) — the CDO buyers gladly bought the securities offered, at least until 2007. Then the bankers learned how to repackage the CDOs into CDO-squared, etc., which upgraded even worse junk.
Normally, regulations on proper underwriting (20% down, 30% payment/takehome) and proper securities rating by Moody’s etc. (systemic risk was ignored, “residential real estate never declines”) would prevent those abuses. But our government failed us on several fronts and the egregious management abuses at Fannie Mae ad Freddie Mac were ignored by Congressional committees in spite of reports by regulators.
We both know that the CRA was a cause of the subprime mortgage crisis, but it was not a sufficient cause, and not even a necessary one. Is this a true statement: “If we fix the abuses seen under the CRA, a future, similar subprime crisis would be impossible.” ? No, because greed (e.g. Countrywide, not subject to the CRA) and lack of regulation are sufficient. All the mechanisms are still in place, no one was jailed (so far), and we now hear reports of pressure to resume subprime lending.
After wading through several thousand pages in recent books on the topic, I think I like Roger Lowenstein’s “The End of Wall Street” the best.
We need to be careful with overly simplistic talking points like, “The CRA abuses caused the subprime debacle.” It’s a good opener, but the exaggeration is easily exposed.
The effect of the CRA on the crisis is controversial and tends to be partisan. Normally, Wikipedia is unreliable for controversial topics, but there’s a section with a lot of detail which is heavily referenced, so we can all read the secondary materials and make up our own minds:
[CRA] Relation to 2008 Financial Crisis
Are you saying that your research showed that a black family in a pre-CRA redlined area would be able to get a mortgage if they qualified?
kbk
The bad loans were considered good business because the GSE–F & F–were supposed to back up the whole thing. Buy crap if necessary. If F&F had not been doing that, if there had been no market for bad loans, there’d have been no reason to write bad loans because they couldn’t be sold. If you can’t sell a loan, you have to depend on it being a good loan. If you don’t have to depend on it being a good loan, you can buy it, sell it, sleep with it if you wish, and know that its value will be upheld by F&F on the taxpayer’s dime.
In other words, if the government had not done anything, the makers of the loans would have had to try to write good stuff because they’d have lost their butt if retaining it, and lost their butt if trying to sell it. But down the line is the F&F fairy godmother.
Now, let’s look at the collapse in home prices. We had a bubble. Why? Lots of money chasing limited opportunities. Then we had people–not banks–using their increased equity (phantom money) to treat their homes as ATMs. No equity, and, with an economic turndown, problems making the new, higher payments. Hence foreclosures, and, once that starts, the bubble bursts and people look at home prices and say, “What was I thinking?”
Only answer I ever had other than a positive feeback loop was that the laws had changed to allow lenders to consider the spouse’s income in calculating the maximum mortgage allowed. If that is true, then prior to that, we had a number of two-income families making payments on a mortgage calculated for a one-income enterprise. There’s plenty of room in that scenario to ride out a problem.
However, with the ability to mortgage based on both incomes, more expensive homes became reachable, even if the fudge factor was small to non-existent. The demand went up, prices went up.
Anyway, other than allowing people to believe The State would bail them out and creating a moral hazard, the government didn’t force anything. They allowed–or forced in the context of the CRA–bad loans by allowing people to expect to be bailed out.
People who would take advantage of that, take advantage of a moral hazard, might not be the best sort of folks around, but they won’t do the dirty thing if THERE IS NO OPPORTUNITY. The government provided the opportunity. Shouldn’t have.
@Richard Aubrey: Yeah, that seems pretty accurate. But not all loans went to the GSEs — many (maybe most) went into CDO pools which were again split into new CDO pools. The tranches eventually went to places like Norway. Or to hedge funds, that’s what took down the Bear Stearns hedge fund and Bear Stearns itself, among others.
I remember back in the 70’s I tried to get a mortgage when the rates were 15%. Even using both our incomes, we simply couldn’t qualify. It was the opposite situation! Before the recent crisis, a hairdresser could qualify for a 700K mortgage.
In addition to what you mention: Another problem was the predatory practice of issuing subprime ARMs (80% were ARM!!!) to people who clearly couldn’t afford the reset. They were told, “Hey, no problem, you’ll just refi at that point and even be able to pull more cash out.” And, believe it or not, many did — until the fit hit the shan and they went underwater and couldn’t refi. Foreclosure time! Now, that’s positive feedback!
@foxfier: re “horribly punishing taxes on hiring new full-time workers”. The FICA and Medicare payments made by the employer apply to part-time, also. COBRA is not a tax — it merely gives the employee the right to pick up and pay the employer’s share of his health insurance in return for a continuation. County and other local taxes are generally not based on the level of full time employees, and I doubt there’s a significant penalty on taking an employee full time from that quarter. Insurance isn’t a tax, and neither it nor business fees relate to the number of full time workers.
It sounds like you are trying to justify not advancing someone to full time based on the specter of “horribly punishing taxes”, when all I see are suta, futa, and workman’s comp. And the latter may well apply to part-timers, anyway. The other things you mentioned are not taxes, or are not based on whether employees are full-time or part time.
The thing employers like Tractor Supply (which is more aggressive about part-time than Wal-Mart, I think) are trying to avoid is health insurance. I’m with @Occam’s Beard — health insurance should not be tied to employment. (I’m assuming he’s good with other benefits such as vacation and sick days, and 401K matching).
(off-topic rant) The problem is the national discussion confounds three separate things: catastrophic health insurance (you had a heart attack), health cost pooling (you want to share your routine medical expenses with others on the speculation that that would be cheaper than paying your own way, or expect a negotiating advantage from pooling, which is, unfortunately, correct), and health care welfare (you can’t afford to pay for major medical insurance and your routine health expenses and want someone else to pay for you).
We put this into one barrel and claim that only the government can solve the problem, when actually it’s three problems. Personally, I’d argue that people should be required to carry catastrophic health insurance unless they can demonstrate substantial assets and that health care welfare is necessary in many cases out of basic humanity. But health cost sharing should be entirely optional.
Further, people should be able to buy health insurance pre-tax (or save for health expenses pre-tax) without it being tied to employment. They should be able to buy it across state lines and there should be one published price for a given procedure, with no kickbacks, negotiated rates, or other under the table deals. Until that last aspect is corrected, the system can’t be fixed, IMHO.(/off-topic rant)
Back to Wal-Mart: less than 50% of their employees have health insurance. With CostCo, it’s over 90%. So Wal-Mart has a savings there.
It’s also a lot easier to terminate a part-time employee — much less paper trail (or none) is required to justify it. And you don’t have to keep giving them merit and cost-of-living increases; you just hire new ones at the base rate.
*McJob: Skills brought to the job count. So, for example, a kitchen designer at Home Depot is not a McJob. And many farm workers bring very significant skills to their work, so that’s not a McJob. Burger “flipping” at McDonalds is a McJob. A good short-order cook is a skilled person. A chef-de-cuisine is very highly skilled, and makes much more than minimum wage.
McJobs at minimum wage are supposed to be entry level, and they are in a normal economy. Our economy is abnormal, both due to excessive government interference and insufficient regulation which allowed our middle class to be hollowed out as their jobs were off-shored.
That was a strategic mistake — we can’t build a PC from scratch in this country anymore, and it would take many years to re-establish that capability.
*Electronics: We’re in agreement at this point, I think. Sorry for the off-topic diversion!
*Sea shipping: No, not wildly…for example, shipping a flatscreen HDTV would be less than two dollars. That’s virtually free compared to a $900 selling price. Even a car can be shipped for less than $2000, and it has a lot of empty space inside. Many products are shipped knocked down to eliminate empty space. I received a Weber grill for father’s day. You should see the assembly instructions! I’m glad the guys down at the local Ace hardware did it. Even with mechanical aptitude, going through that for the first time would have been annoying. Grant me a little hyperbole to keep the discussion lively!
*Taking money out of the community: What Wal-Mart puts in is the wages paid to their staff and any outside contractors they hire, plus local taxes and utility costs. What they take out is the entire selling price of the products purchased. Those dollars have to be made up by local wealth creation or by people bringing in dollars from outside the community. Maybe it’s a bedroom community and the workers create wealth elsewhere.
*Prove my premises that Wal-Mart has fewer, lower paying jobs and puts the screws to its suppliers and employees: As the largest retailer with the lowest prices, it’s clear that Wal-Mart has the lowest cost. I’ll refer you to the book I mentioned previously.
I understand your point about employee distribution in a CVS v Wal-Mart, but don’t forget that a Wal-Mart has much higher volume than a CVS, so they need more employees per store. They are known and respected for their labor efficiency. I don’t think it would be hard to prove they have fewer employees per dollar of revenue than their competitors.
For more information on Wal-Mart’s supplier and employee policies, I’ll also refer you to this interesting interview with economics professor Nelson Lichtenstein :
That interview is also worth reading for its take on the global aspects of Wal-Mart as not just a retailer, but a global manufacturer. There is further commentary on how Wal-Mart squeezes its suppliers.
KBK –
It sounds like you are trying to justify not advancing someone to full time based on the specter of “horribly punishing taxes”, when all I see are suta, futa, and workman’s comp.
Yes, I noticed your skill at not seeing anything you don’t want to see– Richard apparently has more tolerance than I do, because I’m not going to keep spelling things out only to have you ignore what you don’t want to hear and going on your merry way. Not worth the research time when you’re just going to ignore it, and it’s unlikely to influence anyone else.
kbk
Point about mortgages is not that F&F bought all of them, but that they would buy any of them at any time if offered.
Keeps the price up. Even the Norwegians trusted in it.
Now, if you want to say some of the bulging brains in the financial industry didn’t read the fine print, that’s a possibility. Problem is, with the ultimate bailout, enough of them got away with it that it didn’t function as the wet-sandbag-upside-the-head lesson they needed. Now, anybody who thinks he’s a fed crony has no reason to worry.
In any event, the difficulties seemed to stem not from lack of regulation but from an increased moral hazard. One banker said the rule used to be don’t lend on anything you can’t see from your front door–presumably the bank’s front door. In a more mobile society, it might be updated to say, you don’t drive past sometime in your average week. IOW, don’t make bad loans. Why make bad loans? ’cause if they’re backed up by F&F, they’re not bad, are they? Whose idea was it?
Let the market work and people who will ultimately be accountable for the quality of the loans will be the ones making them, not the taxpayer.
@Richard Aubrey: I read a book, I forget the name but I could dig it out if you’re interested. One chapter had a couple of guys going out to visit Countrywide at the height of the boom. Bunch of guys who looked like tennis pros with gold chains, with no previous experience in the industry, would go out and write these loans by the dozens. They were compensated on volume.
Countrywide (remember “friends of Angelo”) would package these loans up as quickly as possible and ship them to New York, where they were re-packaged into CDO pools and sold quickly. It was like a game of hot potato, and everyone took a bite on the way by. Problem was, some of the banks like Lehman got greedy and kept a portion of the high yield tranches for themselves, to their later regret.
@Richard Aubrey: I forgot to add that I’ve discussed lending policies with a couple of highly rated local banks. They underwrite exactly as you describe, have no exposure to subprime whatever, and never sell their loans. That’s my kind of bank!
KBK,
You’ve done a lot of thinking about the issues, but I think you have missed a couple of important parts of why we no longer have as many well paying jobs in this country as we used to.
It started with the Endangered Species Act (ESA), which was signed into law by Nixon. This was a well intentioned idea, but it was poorly thought out and has, in effect, given the environmentalist movement a huge club with which to pound on businesses that extract natural resources. Oil and gas exploration and production (Ever listen to any Sarah Palin speeches about such?) provide good paying jobs and the energy provided, when it comes from the U.S., actually increases our wealth and security. The same is true of oil refining. No new refineries built in the last thirty years. Then there is the lumbering industry. It used to be a bulwark of the economy in the Pacific Northwest. No longer! Fortunately, we still have Boeing, but how long will it be before it is forced out of the country. Then there is the mining industry. We still have some big copper mines, but they are always under pressure from big Green and when coppper prices go soutyh they are the first to get shut down. The Greens are against nuclear power, when we should be building several new plants each year to replace aging plants and coal fired plants. Those nuke plants would provide many good jobs, and energy security for the future. It takes 7 years to go through the permitting process, and the Greens can shut you down with endless law suits after construction has begun. Who wantys to do that? We have abundant hydro power here in the pacific Northwest, and they want to take the dams down. I call it Green insanity.
Want to build a new factory. Once again, a long permitting process and if the Greens don’t want it it’s going to cost three times as much to build.
Go overseas, it’s easier.
The environmentalists have a utopian vision of going back to the way things were before the European settlers arrived. Well I’m sorry, the genie is out of the bottle. We have the most pristine country in the world. I’m not against being careful about pollution and environmental damage, but what is happening now environmenatlism on steroids. An example from a few days ago – The Federal Fish and Wildlife Service is in the process of declaring the Sand Dunes Lizard of West Texas endangered. When that happens it will shut down oil and gas production from the two most prolific oil producing counties in the U.S. Do we want that? My guess is that 75% of the people don’t, but if the Greens want it they have the lawyers and clout in Congress. It’s likely to happen and will destroy over 20,000 good paying jobs.
The other issue is the legal system we are saddled with. Almost everyone in business in this country spends too much time and money trying to avoid law suits. The class action law suit has become a weapon of mass capital destruction. We need to take the profit out of suing businesses with the hopes of hitting the lottery. No other developed nation in the world allows this kind of legal roulette used against their businesses. Those who are injured or have been damaged should have their day in court, but if they lose they should have to pay the winner’s court costs. That’s the way it’s done elsewhere in the developed world.
So, we need to defang the ESA and encourage the wealth creating natural resource indistries and reform our legal system.
Of course having a Federal government that is somewhat business friendly wouldn’t hurt either.
Keep in mind, JJ, that Van Jones wanted to destroy capitalism by Green–he being President Training Pants’ green adviser during the campaign.
Co-founder of Greenpeace said the lefties left homeless by the end of the Cold War went green with the same goals.
Richard, very true. But Jones was in diapers when ther ESA was passed. It is a tool, which they have wielded with more and more effectiveness as time has passed.
Oh, for the whole story about the Green agends go here:
http://www.crossroad.to/text/articles/la21_198.html