Thursday, January 26, 2006

Wal-Mart Strikes Back

No doubt out of righteous indignation, the city fathers of Chicago rejected Wal-Mart in its attempt to install a store in the Windy City. So Wal-Mart set up its store about a block outside the city limits. According to reports, Wal-Mart has received some 25,000 job applications, most from Chicago people.

The great city has acceded to Union demands and in so doing, has lost a huge amount in taxes. But they have kept the Great Satan, Wal-Mart, at arm’s length. Good for them!

Even though all of us must agree that Wal-Mart is a great evil, we must also see that there is a parallel between today’s battle against Wal-Mart’s low prices and the battle against Fair Trade laws of the 1950’s and 1960’s.

In that earlier era (from about 1931), manufacturers set prices for which retailer had to sell their products. Pricing regulations were enforced by state laws. The Supreme Court said these laws were in violation of the Sherman Anti-trust Act. So in 1937 Congress, under pressure from lobbying groups passed a special act allowing price-fixing by manufacturers. The laws generally worked as long as numbers of manufacturers were few and the banded together to establish prices.

But pressure from discounters began developing cracks in the “Fair” Price structure. By the late 1950’s manufacturers began dropping their suggested pricing and in 1975 Congress woke up and killed Fair Pricing once again.

There was a great deal of consternation in the market place as the Fair Trade laws faded away. Rumors were passed around that “Jews from New York” were destroying the local little guy, and that service would be non-existent. Also, cities would fail if prices dropped causing a decline in tax revenues. Few seemed to realize that an increased volume of sales due to lower prices might very well increase total tax revenues.

Well, today the same arguments are being used in one form or another as Jews like the Walton family continue to find ways to deliver goods to the average guy at prices he can afford. Unfortunately for his detractors, Sam Walton is a Christian and there is nothing wrong with Jewish (or any other) people winning at retailing, anyway.

What appears to be at stake is not what the politicians are saying; it is their financial support from unions. That and the fact that some political people instinctively dislike the winners in society. You would think they would want to help Wal-Mart in its pattern of supplying the average guy with goods that only the rich used to have.

It’s a strange world. But it is made stranger because politicians are so terribly ignorant of even recent history.

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