Mike In East Texas, from this Monday, 6/13. Thanks again to the Texas Overnight Fan Blog.
Towards the very end of Part 2, Mike starts to discuss breaking up of monopolies. He states that big box stores like Walmart are monopolies at the local level, that in small towns, they dominate market share so much as to become monopolies. He states that Walmart and the like are monopolies that are killing small-town jobs.
He usually knows his stuff, but here I’ll take issue. Walmart decreases costs for everyone around them. Those who’ve been in small towns without a Walmart to control costs know this. Travel to a small town and see what businesses charge in the absence of competition. Penn & Teller pointed out a lot of this in their episode of Bullshit! about Walmart Hatred.
One of the major benefits is that Walmart will reduce prices on regular consumer goods. You can buy groceries there, buy a lot of household goods there, and in general save money on necessary items that you can then turn into disposable income. If you’re paying less for a pair of socks at Walmart (or paying less at a local store that has to reduce prices on account of Walmart), you have a few more bucks to spend at your local comic book shop or bookstore or coffee house or going to a rodeo or buying concessions at a minor league ball game or whatever. Walmart produces real jobs and forces businesses to compete. Do they have an unfair advantage due to their prices? No more unfair than an established business can muster by having quality and a locally-known and trusted name.
To give an anecdotal example of what amounts to an oligopoly of three stores (artificial scarcity due to government regulation), where I live there is a gun store that sells guns, a hardware store that sells guns, and Walmart that sells guns. The gun store overcharges to an insulting degree – I have seen them ask three times the market price of a rifle – they have odd hours and an unhelpful, and I’m told even insulting staff; their ammunition prices as I recall were so high they could be a joke, and accessories were sometimes used gear dishonestly repackaged and sold as new at high prices as well. The hardware store, by contrast, has merely exaggerated firearm prices and tries to keep close to pace with Walmart with conventional fare, but due to their maneuverability as a small business, sometimes has good deals on firearms and can sometimes order specific items; their ammunition prices are merely exorbitant, and accessories range from highway robbery to merely high to better than having it shipped. Walmart has some standard fare rifles and shotguns for the bone stock market price, and they have common ammunition at the most reasonable prices for the current market in town, and accessories are limited, but generally quite inexpensive.
If I want to buy a firearm at Walmart, I am limited to very common rifles and shotguns, and they don’t offer handguns or anything not in their catalog. If I want a handgun, or a specific rifle or shotgun, I can go to the hardware store and probably get in the ballpark of what I want. The ammunition costs there will be so high as to make most any firearm’s running costs seem unreasonable, but that’s where Walmart comes in. With the money I save buying ammo (and cleaning gear, etc.) at Walmart, I can afford more firearms at the hardware store, and I won’t write off a gun I find at the hardware store as costing too much to shoot. I may also save money on target ammo and buy specialty ammo at the hardware store.
Now, realistically, buying local costs a lot more than going to a bigger marketplace. If I order ammunition and have it shipped to me, even with shipping costs of heavy, special freight, I can save money on most types of ammo versus buying at any of the stores in town. If I can have a specific rifle, handgun, or shotgun shipped to a local federal firearms license holder to transfer to me, I can pay the bare market price plus shipping and FFL fee – which is often significantly less than the hardware store (to say nothing of the overcharging gun store) – and is a service that Walmart doesn’t offer. And that local FFL is his own small business anyway – so I am patronizing a different small business; and I as the customer get my exact choice, not what a store has in stock or in their catalog.
To add as a note to that, FFL fees are usually pretty low. Many FFL holders do transfers (that is, doing the 4473 background check sheet and NICS phone call), for as low as $20. In most areas, fees will range anywhere from $15-30. Here locally, there are only two stores that do them. One is the hardware store, that charges $50… or $75 if they claim that they “could’ve ordered it for you”. The other is the gun store, that charges $50… or 10% of the cost of the rifle, whichever is higher. For reference, something like a pretty nice Winchester Model 70 would run you a $75 transfer fee, while something like a DPMS 20″ AR for varmint hunting would be a $94 transfer fee, and something like a fancy Dan Wesson 1911 would run you a $178 fee, for what’s normally a $20 service. That fee for roughly 5 minutes worth of work filling out a sheet of paper and making one phone call is the result of a monopoly (or in this case, collusion of a two-store oligopoly – though I suspect that their practices derive from that the gun store used to be the monopoly). They can screw over the customer as much as they like – and guess what? You HAVE to pay it, or you have to drive, because they’re the only game in town.
The FN SCAR 17 would have a $290 transfer fee... for a $20 service.
With a small businessman who does FFL transfers, locally the fees range from $20-40, so even the highest of them is less than the two local stores that have controlled the market for years, and is much more amenable to doing business.
Now, extrapolate that same series of events above to every transaction. If Subway isn’t there, that footlong sub may cost $8 at the local place instead of $5. That pair of work socks from Walmart won’t be $4, it’ll be $8 at the local workwear store. That gallon of gas without the big chain won’t be absurdly high, it’ll be highway robbery high. With no Best Buy or Microcenter, that new budget laptop won’t be $500, it’ll be $700.
This all goes to reducing the consumer’s quality of life, reducing their amount of available income, and reducing the amount they can spend elsewhere. The local specialty store doesn’t stand a chance when they have to compete with costs of living. There’s no money to patronize fine arts if you have to spend all your disposable income funding the local extortionists. There’s no money to support a good local restaurant if food bills are high from the lack of a major grocery chain. Boycotting the businesses that allow for survival in difficult economic times will help no one but the local monopoly or colluding oligopoly.
$10 at Walmart. Or $20 at the local general store, since where else will you buy socks?
Without a store to stock an item you’d like to purchase at a price you’re willing to pay, it’ll be a return to the days of the Sears Catalog – where everyone ordered what they couldn’t get. Of course, local businesses and big stores alike are opposed to the internet, where you can find anything you want, often buying directly from your fellow consumers.
Small businesses often adapt by selling their wares online, and big businesses follow suit by expanding their sales online – unless that too becomes restricted – again hurting the customer. Mike’s erroneous anti-Walmart stance, and any other wistful luddite economic ideas ignore that protectionism within the United States is just a bad idea for the consumer and a bad idea for all but the specific business begging for a favor (i.e., the local monopoly resenting Walmart making them compete). Consumer choice benefits from the decreased expenses of necessities from either shopping at Walmart, or shopping at competitors who are forced to compete and reduce prices, and consumer choice benefits from having greater useable income due to those reduced expenses – which in turn helps good small businesses.