[OPE] The Economic Crisis: A Wal-Mart Economy Dimension

Wal-Mart offers a valuable window into the current economic crisis.
Before addressing the current crisis, let's put Wal-Mart in perspective.
Wal-Mart is, at least in part, both a cause and a symptom of what went
wrong in the economy, as well as a hint of what might be done to correct
the problem.
Wal-Mart represented a logical business strategy to an economy in which
real hourly wages have been stagnant for more than three decades.
Wal-Mart presented the face of low prices (which were not in reality
always lower than elsewhere). At the same time, Wal-Mart contributed to
the low wage environment that made it such a successful business.
Besides paying low wages to its own workers (and sometimes not even
paying all the wages that it owed), Wal-Mart helped to lower wages
elsewhere. For example, grocery stores have put enormous pressure on
their unionized workers because of competition from Wal-Mart's nonunion
operation. Admittedly, Wal-Mart displaced some small retailers that may
have paid lower wages.
As is well known, part of Wal-Mart's strategy was to rely on imports
from countries that paid low wages. Competition from these imports both
destroy jobs and limited wages from jobs that remained in the U.S.
According to a somewhat dated report, if Wal-Mart were a country, it
would rank as China's fifth-largest export market, ahead of Germany and
Britain.
More at
http://michaelperelman.wordpress.com/2008/10/17/the-economic-crisis-the-wal-mart-economy-dimension/

-- 
Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
www.michaelperelman.wordpress.com
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