Wal-Mart Is Good for the Economy

To some, Wal-Mart is a “corporate criminal.” A variety of critics have accused the company of engaging in questionable and exploitive practices on its way to becoming the largest business in the world. It has more than $250 billion in annual sales, which means that Wal-Mart has more revenues than legendary giants like Exxon, General Motors, and IBM.

To get this big, Wal-Mart allegedly exploits its own employees by paying poverty wages and forcing them to work unpaid overtime. It also allegedly squeezes vendors, forcing them to lay off American workers and ship their jobs to foreign sweatshops. On top of this supposed economic stinginess is the accusation that Wal-Mart disregards the concerns of small communities. While such charges fuel the passions of competitors who are losing customers to Wal-Mart, they are without merit.

Those people who rant against Wal-Mart do not understand economics. In a market economy, success goes to those businesses that best and most efficiently serve consumer needs. Businesses must induce customers to hand over money in exchange for their merchandise. Customers are completely free to ignore the offerings of any business. Every business, Wal-Mart included, must win its customers’ patronage each and every day.

Everyone knows that consumers like bargains. Getting something for less money is considered savvy shopping. Wal-Mart has opted to ensure that its prices are as low as can be. This focus has enabled the company to promise “always low prices, always.”

Low prices benefit both the consumers and the overall economy, besides being a winning strategy for Wal-Mart. Every dollar a consumer saves on a purchase enables them or her to buy other items. More of consumers’ needs and wants can be fulfilled when prices are lower than when prices are higher. Because a consumer’s dollars go further at lower prices, more merchandise can be manufactured and sold. All the businesses making and selling these other products and services are helped.

The sheer size of Wal-Mart attests to the success of its strategy and the benefits to the economy. Growing into the largest business on the planet indicates that it is accurately interpreting consumer needs and efficiently serving them. This is exactly what we want businesses to do. This is what the free market encourages them to do.

But what about the methods Wal-Mart uses to achieve its goal of low prices? What about its exploitation of labor? No one is forced to work for Wal-Mart. The wages it pays must be adequate to secure the services of its employees. Would Wal-Mart’s employees like to be paid more? Sure, everyone wants higher pay. If its employees could get higher pay elsewhere, Wal-Mart would lose its best workers to the businesses paying those higher wages.

Neither can Wal-Mart squeeze