Anyone who doubts that Wal-Mart is bad for America is invited to spend some time here.
But let us spend some time on another little point. At one point in the Frontline program the Wal-Mart representative makes an impassioned assertion that Wal-Mart is good for American consumers because by taking advantage of Wal-Mart’s low prices consumers have more money left over in their wallets for other purposes. What’s wrong with this picture?
a) The bulk of the purchases made at Wal-Mart (as at most other places) is on credit. There is no bag of money that is being judiciously apportioned.
b) Wal-Mart’s interesting concept of the lowest opening price point – it’s a bait and switch, remember. People get lured in and end up buying some other model / make / item that is anything but lowest price. So there is definitely no guarantee that ‘there is money left over for other purposes’
So, in reality, Wal-Mart is making people use up more of their credit to pay China. Let us express it another way: $18 billion worth of imports from China are being paid for by $30 or $40 billion worth of credit in America and Wal-Mart is making 50% to 90% margins on this transaction most of which goes straight to the bottom line because Wal-Mart does not exactly splurge on anyone but the most elite of it’s employees.
The credit card companies then keep extracting the payments with 20+% interest from the consumers as a result of which they can go nowhere else but to Wal-Mart because they have gotten into their heads that Wal-Mart always has the lowest prices!
Wal-Mart thus has a captive vendor chain as no one dares to rock the boat at that end and it has a ‘captive’ customer base thanks to a brilliant piece of deception.
And this is the free market at play? It isn’t free, it isn’t a market and it isn’t play. This is about as rigged as a game can get.
