Commentary

John McClaughry: The benefits of ‘grotesque inequality’

Editor’s note: This commentary is by John McClaughry, the vice president of the Ethan Allen Institute.

In a recent talk before students at St. Johnsbury Academy, Sen. Bernie Sanders declared that although we are living in the wealthiest country in the history of the world, “the nation’s wealth is in the hands of a privileged few,” producing what he called an “unfair and grotesque level of income inequality.”

This is a familiar theme for Sanders, who has attacked the unworthy rich in every campaign he has run since 1972. His socialist playbook has always called for a sharp focus on perceived injustices that can motivate people to vote for redistribution of income and wealth from rich to poor. Its strategy is to make the incontestable fact that some people are rich, or just well-to-do, a source of resentment and envy among voters who have little or nothing. Then urge them to put socialists into power to redress this “unfair and grotesque” injustice, at the expense of unworthy others.

The premise, of course, is that “the rich(er)” got that way by stealing the “surplus value” created by the labor of the working class.

As an example of the unworthy rich, Sanders told the students that “the family who owns Wal-Mart alone possesses more wealth than the bottom 42 percent of all Americans combined.” The company’s stock has been publicly traded since 1970, but it’s certainly true that the heirs of Wal-Mart founder Sam Walton (died 1992) have a greater collective net worth than the bottom 42 percent of all Americans combined, only part of which is Wal-Mart stock.

Forbes magazine’s latest “Top Four Hundred” wealth ranking includes seven Wal-Mart heirs, who together have a net worth of $134 billion. (There may be others below Forbes’ $4 billion cutoff.)

By comparison, the bottom 40 percent of U.S. households have a total net worth on the order of … zero. The Bernie Sanders household alone has a greater net worth than all of their fellow Americans in those two lower quintiles.

Sam Walton’s strong principles, honesty, hard work, risk taking, innovation and concern for his co-workers built an astonishingly successful enterprise that has served the needs of millions of consumers, especially those on tight family budgets. And yes, the result was great inequality.

 

What’s so unfair about this? Let’s do a quick trip through Wal-Mart history.

Sam Walton earned his way through college, served in World War II, and worked and saved to buy a Ben Franklin “five and dime” store in Newport, Arkansas (1950 pop. 6,000). After 17 years opening small stores in small towns, Sam hit on the idea of Wal-Mart. He opened the first one in Rogers, Arkansas, in 1962.

As it developed over the years, Wal-Mart prospered by offering a wide range of products at prices attractive to rural small town and often lower-income customers. Sam’s innovations included an almost fanatic attention to squeezing out waste, driving hard bargains with suppliers on price, quantity and delivery, and installing a pioneering computerized inventory management system that brought goods to the shelves just before they were purchased by consumers.

Sam created his own trucking fleet and regional distribution centers. Over time the company expanded with Sam’s Club, aimed at small business customers, Super Centers that include groceries, and online marketing. Wal-Mart’s motto is “everyday low prices,” and it operates almost entirely without advertising.

Wal-Mart early adopted a profit-sharing plan. According to business historians Richard Vedder and Wendell Cox, “while profit sharing was offered partly to help keep out unions, Walton believed that the carrot of building an ownership interest in the company (financed by company contributions) did more to increase loyalty, stimulate innovation, and reduce employee turnover (and therefore training costs) than anything else he did.”

Wal-Mart pays competitive retail industry wages in the localities it serves. The company also offers its employees contributions to 401(k) investment plans, tuition assistance, disability insurance, and a health plan that pays on average 75 percent of eligible employee premiums, 100 percent of preventive care costs, and employee-owned health savings accounts funded with $600 company contributions.

As a result, Sam Walton’s heirs, and many of their longtime employees, became very wealthy, and make enormous charitable contributions. Last year the Walton Family Foundation announced it would grant $2 billion over the coming five years (in addition to corporate grants) to support environmental, education and community improvement projects.

There is a lesson here, that the academy students surely will never hear from Bernie Sanders.

Sam Walton’s strong principles, honesty, hard work, risk taking, innovation and concern for his co-workers built an astonishingly successful enterprise that has served the needs of millions of consumers, especially those on tight family budgets. And yes, the result was great inequality.

Would a monopoly chain of taxpayer-capitalized, government-owned bureaucratically managed retail stores, created to put an end to “grotesque inequality,” be likely to achieve as much? Students, let’s have a vote: Sanders-Marts, or Wal-Marts?

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  • Howard Ires

    Sam Walton’s heirs can make their enormous “charitable contributions” by paying employees so little they often qualify for government benefits. Bernie Sanders has never advocated for “government-owned bureaucratically managed retail stores,” he has advocated that businesses pay their employees a fair, livable wage so they don’t require food stamps to feed their families. He has advocated for fair, progressive taxation so the “heirs” who collect dividends of millions aren’t paying taxes at a lower rate than the managers who actually run the company.

    • Karen Chickering

      yes, Howard Ires, and anyone defending Walmart for their wages and benefits needs to include some statistics about the PERCENTAGE of employees who are only allowed to work part-time, which also translates into none of those benefits Mr. McCloughry just praised so highly. I’ll take Bernie’s slant on Walmart any day over the lie of Walmart being an honest and worthy employer.

      • Matt Young

        “Only allowed to work part time?” Does that mean employees cannot leave Walmart for greener pastures or work an additional job?

    • John Grady

      Howard Ires

      “Bernie Sanders has never advocated for “government-owned bureaucratically managed retail stores,”

      He doesn’t have to because the people who own the businesses, own the government.

      http://www2.ucsc.edu/whorulesamerica/power/corporate_community.html

      https://en.wikipedia.org/wiki/Interlocking_directorate

      “Network diagram showing interlocks between various U.S. corporations and institutions and the Council on Foreign Relations, in 2004”

      https://upload.wikimedia.org/wikipedia/commons/2/2b/CFR-Interlocks-2004.jpg

      55% of Groceries are sold by Wal-Mart here in Food Stamp Nation. In 25 years they took over the grocery business destroying how many union warehouse and trucking jobs ?

      Stay tuned for Aldi’s to crush the rest of the full line grocery stores. Limited selection and they don’t even bag peoples groceries. Desperate people working part time McJobs will seek out low cost food.

      We are being governed by the CFR.
      You-Tube has a video of Hillary admitting it.
      Trump was installed in the White House.

  • John Grady

    I heard he married a bankers daughter and took full advantage of the economic situation created by Federal Reserve Chairman Paul Volcker who raised interest rates to 20% putting 10% of the labor force out of jobs so desperate people willing to work for minimum wage and no benefits enabled Sam to undercut existing retailers who had better paid union employee’s in distribution & trucking that had benefits like health insurance and pension plans.

    In the mid 1980’s I went to Bentonville Arkansas to their warehouse complex which was a bunch of wooden shacks on a former farm ? Pavement, yeah right. Set up like a Army Depot ? Did Sam get a deal from the government ?

    Truly amazing 3 companies from the back woods of hickville Arkansas took off to dominate industries and crush union jobs like Wal-Mart, J.B. Hunt trucking started by a 6 grade graduate with a loan from Mr Rockefeller and also Tyson Foods that now dominates meat packing after crushing the Meat Packers union by hiring illegal immigrants to become the largest meat packer for beef, pork and chicken.

    Yes the American Dream in action and just by chance 3 companies in the back woods of Arkansas crushed tons of Union Jobs and Bill Clinton just happened to be Governor and Hillary Clinton just Happened to sit of the Board of Directors of Wal-Mart and Sam’s father in law just happened to be a banker.

  • John Grady

    http://revcom.us/a/v19/920-29/920/storm.htm

    https://migration.ucdavis.edu/cf/more.php?id=154

    Libertarian utopia, young throw away labor. Exploit them until they can’t keep up or get injured and throw them away.

    https://www.bloomberg.com/news/features/2017-03-23/inside-alabama-s-auto-jobs-boom-cheap-wages-little-training-crushed-limbs

    Yesterdays cheap labor is todays old and worn out seniors trying to survive off $800 a month from social security while in need of HUD senior housing and medicare & medicaid which Paul Ryan wants to screw them out of after the labor racketeers got done exploiting them for all they could and than throwing them away.

  • walter carpenter

    “His socialist playbook has always called for a sharp focus on perceived injustices that can motivate people to vote for redistribution of income and wealth from rich to poor.”

    He’s right because they got it from the poor in the first place, either directly or indirectly, and SamWalton proves it.

  • bobstannard

    Now, John how about your rewrite this column taking out Sam Walton and inserting Donald Trump, Donald Trump, Jr., Eric Trump….

  • Janice Ohlsson

    I heard too of the many WalMart employees who had to use food stamps. I am not so sure his version of a WalMart employee is as rosey as he portrays. also WalMart gets many things from companies that manufacture outside US (OUS). How is that helping the US economy on a whole?

  • Ray Mainer

    All Walmart did was to shift manufacturing from the USA to China.

    • Mike Burnham

      Walmart has no factories

  • Jay Eshelman

    RE: “Would a monopoly chain of taxpayer-capitalized, government-owned bureaucratically managed retail stores, created to put an end to “grotesque inequality,” be likely to achieve as much?”

    The problem with Mr. Sander’s point of view is that he compares one unique individual in our society to another unique person, when the more relevant point is to compare the progress of each individual’s standard of living over time. Are you better off today than you were a year ago, or ten years ago, or a generation ago?

    And why is Wal-Mart always the whipping boy for the envious masses who are unwilling to take the personal risks inherent in entrepreneurial dynamic economies? What about Apple, for example? Apple Inc., the education and social services technology darling, has enough cash on hand ($237 Billion+-, nearly all reportedly held overseas) to hire Wal-Mart’s 2.1 Million employees to sweep Apple’s office floors for a couple of years.

    • Mike Burnham

      But Apple is progressive and liberal, that’s why.

  • John Snell

    During Walmart’s huge expansion, especially throughout rural America, I watched as small town after small town dried up and blew away. Not entirely Sam W’s fault, but he was there to make a profit on the millions of small stores he helped close. I like to think even Sam would be horrified by what has come to pass. Personally, I vote for an income cap, maybe a million bucks per person; we could all earn more but it would go into a fund that would then pay for the incredible damage such wealth harvesting does to the planet and humanity.

  • Karen Schwartz

    Key missing fact: % of part-time employees not eligible for that list of benefits. % of employees eligible for subsidized child care and Medicaid due to low wages.

    • Mike Burnham

      Walmart did not invent part time jobs or low wages and is not the only business that offers both.

  • John Grady

    Walmart The High Cost Of Low Price

    https://www.youtube.com/watch?v=jf-Sr3SjBzk

    How Many Jobs Do Robots Destroy? Answers Emerge

    http://wolfstreet.com/2017/03/29/how-many-jobs-do-robots-destroy-answers-emerge/

    Investors see Bennington project as spark for ‘renaissance’

    https://vtdigger.org/2017/03/28/investors-see-bennington-project-spark-renaissance/

    The Comment by Pete Novick is a gem.

    It seems many people in this country live in a fantasy dream world totally oblivious to reality. 4 young people died in the small Vermont town I live in. The media doesn’t cover it so all I can do is guess about suicides & drug overdoses which can also be suicide if that was the real intent.

    Dead bodies all over southern Vermont and the fantasy dream world people still cling to the make believe world they live in while living in total denial about what is going on here in McJob Nation. It’s surprising more people aren’t going postal.

    “Is the US facing an epidemic of ‘deaths of despair’? These researchers say yes”

    https://www.theguardian.com/us-news/2017/mar/28/deaths-of-despair-us-jobs-drugs-alcohol-suicide

    Insanity is doing the same thing over & over an expecting different results.
    American society is melting down, the future for the majority of young people & children is horrible looking yet we cling to our failing and obsolete SYSTEMS and defend the status quo instead of reinventing our society for the 21st Century.

  • John Wagner

    Bernie Sanders is the most popular politician in America, and John McClaughry is… wait, who is he again? Oh yeah, the candidate for public office who has been soundly defeated in elections at every level in Vermont. John — let me also point out that Wal-Mart is the largest dependent on government aid of ANY US corporation; its employees (and therefore the owners) are subsidized by Section 8 housing vouchers (which Wal-Mart openly counsels their employees to use!), as well as food stamp, welfare, and Medicaid. Wal-Mart MAY offer health care to “eligible” employees (notice John’s use of the qualifying term) , but the company does not offer adequate healthcare to it workers at large. It’s nothing short of a crime that a tax provision is not in place to remove the ill-gotten wealth from the Wal-Mart family’s pockets and distribute it, in the form of fair wages and health care insurance, to the people who actually created that wealth.

    • Matt Young

      If Bernie is the “most popular politician in America” wouldn’t he be our president? And we would all be getting everything for free… Lol

  • Scott Greene

    There are too many counter points to even begin. Walmart started off with a Made in the USA campaign, and then became the “experts” of the shipping container based rural retail monopoly. They drove up an insane import/export deficit, all the while undermining any attempt at import tariffs. They also created one of the other wealthiest individuals in the world, whose wealth came simply from back hauling all of the left over cardboard.

    Why Sam Walton???

    What about some other libertarian cause; protecting our privacy, resisting the creation of an authoritarian state, conserving our environmental well being, defending states rights…………

  • David Ellenbogen

    To see how Walmart exploits our tax dollars to provide healthcare for their underpaid part-time employees, watch the film “Walmart – the High Cost of Low Price”.

  • Dave Bellini

    Walmart or Bernie…… Let me think about that…… Who would be a better employer..???
    “LOL” might be an accurate response.

    • Neil Johnson

      🙂 What is most sobering, the net worth of 40% of Americans is zero. This is BECAUSE they are on section 8, being tenants FOR life.

      We in Vermont could have $90k homes. A 4% mortgage at 30 years would be only $429.68 Then people would actually have a net worth. They could get ahead, they could pass on this home to children, who intern would immediately have more disposable income ON MINIUMUM wage than many people earning $60k per year.

      Why don’t we have it? ZONING and REGULATIONS don’t allow it. Instead our State is promoting tiny homes on landscape trailers, surely the way to economic prosperity.

    • Matt Young

      Walmart would be a better employer, Bernie would go out of business pretty quickly.

  • John Fairbanks

    Okay, let’s clarify some things here:

    First, Mr. Walton borrowed $20K in 1945 from his father-in-law (about $271K today) to purchase that franchise in Newport. While not quite in the same league as the kind of dough Mitt Romney or D.J. Trump got from their fathers, it’s still nice to have seed money to get you started. Second, Wal-Mart’s success is, at least in part, built on the use of child labor, as has been alluded to elsewhere on this thread and was documented in an NBC Dateline report in 1992. Even Mr. Walton admitted the “Made in America” campaign was something less than advertised. Third, income inequality is the product of both market forces (technology, out-sourcing, the transformation to a service economy) and public policy (taxation, for example), and the decline in workers’ power to negotiate, precipitated by the decline in unions, which Wal-Mart fought for decades. Mr. McClaughry’s economic analysis seems to boil down to, “shut up and work harder, peasants.” As a former hard-working peasant, I find that just a wee bit short of convincing.

  • sue prent

    If I correctly understand your argument, it pretty much boils down to the Gordon Gecko position that “greed is good.”

    I disagree. Few great human achievements have resulted from greed, but many have been undone by it.

    Walmart does not have a particularly sterling reputation for treating either its suppliers or its hired help fairly. Many are the American companies that have been destroyed by the ruthless Walmart business model; and many are the Walmart employees who have been denied a living wage, job security, fair representation and reasonable benefits in Walmart’s race to the bottom.

    The astronomically over-compensated Walton family has built its wealth, not on the hard work of the family members, but on exploitation of a workforce with no other options, and on the captive buying force that they ultimately become for cheaply made goods sold in the “company store.”

    For the privilege of working at Walmart, this captive customer/workforce must accept low wages, uncertain hours, intimidation when they attempt to organize, and dismissal at the whim of management.

    The Walton’s interest in keeping the poor poor doesn’t end there. The family has long been heavy contributors in the political effort to end public education. ‘Looks like they may have finally bought their way with the appointment of fellow public education opponent Betsy DeVos as Education Secretary under Donald Trump.

    You ask: “Would a monopoly chain of taxpayer-capitalized, government owned bureaucratically managed retail stores, created to put an end to ‘grotesque inequality’, be likely to achieve as much?”

    Do you seriously think that Walmart is NOT a monopoly?

    The answer is “yes.”

    ‘Ever heard of the network of commissaries, BX and PX stores that serve the needs of American military families?

    • Glenn Thompson

      That coming from a person who fought Walmart coming to St. Albans for years! How is that revitalization of downtown St. Albans looking now? Much of that funding came from Walmart….correct?

      • sue prent

        It’s very pretty, but most of the practical downtown stores have closed.

        The city had to build a new hardware store in order to coax ACE into staying.

        We lost our only privately owned drugstore, our book &toy store, all of our clothing stores except second hand, our florist, our only department store, our dollar stores and several others.

        • Glenn Thompson

          Having worked in Franklin County for 33 years, those stores most likely would have closed anyways with or without Walmart. The issue with Franklin County, a majority of my former colleagues either went on their shopping sprees to Chittenden County or Plattsburgh. Being out of there since 2010, I have no idea if anything has changed since Walmart moved in? I’m not a fan of Walmart period, and that one in St. Albans isn’t much different than the one in Williston. That being said, Franklin County needs to focus on attracting businesses to encourage area residents to shop nearby. The revitalized downtown area is a step in the right direction and should improve over time. If not, then there is something else going on in that community I’m not aware of.

        • Matt Young

          I think some of the store closings may be more a product of online shopping.

  • John Fairbanks

    There has been some pretty solid scholarly research in this area, including this, which is, more or less, hot off the presses: http://voxeu.org/article/economic-growth-us-tale-two-countries

  • JohnGreenberg

    “AS A RESULT, Sam Walton’s heirs, and many of their longtime employees, became very wealthy ….” (Emphasis added) McClaughry’s equation of heirs to workers is incredibly misleading.

    Employees who became millionaires shared in the profits of the operation after years of hard work. That’s a great story. But Sam Walton’s heirs inherited the BILLIONS that Sam had accumulated without lifting a finger. They chose the right father.

    Americans believe “all men are created equal:” Each individual should have an equal opportunity to get rich regardless of their birth status. Our founders explicitly rejected the European aristocratic system, which passed wealth from generation to generation by inheritance.

    The real story of Walton’s heirs concerns individuals born rich beyond imagining because of tax policies which favor those best able
    to buy Congress, while hundreds of thousands of part-time workers have to receive government subsidies to make enough to live on, DESPITE working hard for the company.

  • Matt Young

    Those complaining about the type of jobs being offered by Walmart or others should go into business and hire all of the people Walmart and others are treating so “horribly.” Obviously all of these workers would instantly leave Walmart and you would all make a fortune. Make everyone full time employees, pay the highest wages, give lots of paid vacations and the very best benefits. The job being performed and worker experience shouldn’t be considered when hiring.

  • DougHoffer

    Mr. McClaughry noted Bernie’s “socialist playbook ” and efforts to “motivate people to vote for redistribution of income and wealth from rich to poor.”

    In the case of WalMart, the wealth moves in the other direction. WalMart’s aggressive tax avoidance schemes “cost state and local governments more than $400 million a year in lost revenue.” Who makes up the difference?
    http://www.goodjobsfirst.org/sites/default/files/docs/pdf/walmart_shiftingtheburden.pdf

    • Jay Eshelman

      So it’s Walmart’s tax avoidance schemes, not the State’s excessive and inefficiently spent revenue, …..with no mention of the Walmart Foundation and its more than $1 Billion in annual charitable donations.

      It’s clear on which side of slice your bread is buttered…and we better not see you shopping at Walmart.

      • David Bell

        “with no mention of the Walmart Foundation and its more than $1 Billion in annual charitable donations.”

        So, less than 1% of Walmart’s income…. yeah they just give until it hurts.

        It’s clear which side of slice your bread is buttered… and we’d better see you driving on those evil paved roads created by evil government.

        • Jay Eshelman

          Please take the time to review (and understand) Walmart’s financial statements before making grossly inaccurate claims. In 2016, Walmart had $14.7 Billion in net income. The last time I checked my math, the Walmart Foundation’s $1 Billion+ in charitable donations was equal to more than 6.8% of its income….. 7 times more than your incorrect assessment.

          http://www.nasdaq.com/symbol/wmt/financials?query=income-statement

          • DougHoffer

            Not accurate. The company and the foundation are separate entities. BTW – WalMart Foundation did not give $1 billion in cash. The website says it gave $1.4 billion in 2014, but that $1 billion was in-kind and only $300 million in cash.

        • Jay Eshelman

          P.S. Government doesn’t create our roads…taxpayers do.

          • JohnGreenberg

            ‘Government doesn’t create our roads…taxpayers do.” Hunh?

            Taxpayers may pay the ultimate bills, but they don’t create roads without the intermediation of governments.

          • Jay Eshelman

            Let’s hit on these equivocations all at once.

            RE: Intermediation = creation?

            Who are you kidding? Hard working Individuals and Businesses pay for our roads, period. They pay for the ‘intermediation’ too (politicians skimming their brokerage fees off the top), for what that’s worth. And don’t forget the private engineering and construction companies that actually do the road work?

            RE: $300 Million in cash and $1.1 Billion in ‘in kind’ contributions?

            OK. Kind of like donating food to the Food Bank, or clothing to Good Will, or construction materials to Habitat For Humanity…. and to the rest of those ‘worthless’ organizations. By your logic, these charities are just money laundering schemes.

            RE: “… that $1 billion [sic] was in-kind and only $300 million in cash.”

            OK, so it was $1.4 Billion in total Walmart charitable contributions. I stand corrected. The Walmart donation was 9.5% of net income, not 7%, and certainly not the paltry ‘less than 1%’ reported at first blush.

          • JohnGreenberg

            Jay Eshelman:

            I’m not trying to kid anyone.

            Without government, there would be only toll roads, assuming they would be built on spec. Call it “intermediation,” “creation,” or even “spaghetti” (if you like), governments get roads built. And just as those “private engineering and construction companies” do their jobs only when they have contracts to be paid, so too government requires taxes to pay for them.

            Honestly, Jay, I don’t understand what you’re trying to get out. Spell it out for us.

          • Jay Eshelman

            If you review the thread, you’ll see that I responded to Mr. Bell’s judgment that driving on roads was the same as shopping at Walmart, a perspective as illogical as the claim that ‘intermediation’ is the same as ‘creation’, or Auditor Hoffer’s partisan reference to the assertion that Walmart “cost state and local governments more than $400 million a year in lost revenue”. All pure sophistry. I’m simply taking the opportunity to express an alternate perspective for anyone who may still be reading. Clear enough?

      • John Fairbanks

        Correct me if I’m wrong, but my understanding is that about $1B in Walton “charitable” giving is to support school choice. That’s political, not charitable.

        • Jay Eshelman

          “The Walton Family Foundation — which says it has given some $1.3 billion in K-12 education across the country over the last two decades, largely to support charter schools and fuel the “school choice” movement — announced this month that it is committing $1 billion over the next five years to help expand charter and other school choice options across the country.”

          Your reference is to a pledge over the next five years, not an actual charitable donation. And it’s in addition to the previously referenced annual $1.4 Billion of charitable donations, be it cash or ‘in kind’.

          Perhaps the misinformation you reference has a logical source after all. I wouldn’t be surprised to learn that its the anti-school choice crowd, including elected officials and public sector unions like the National Education Association, AFT, AFSCME, SEIU and others, who derive their money and power from the great government watering trough… otherwise known as the ‘intermediation’ crowd.

        • Matt Young

          John, anti school choice folks scream that choice will make taxes go up, why on earth would Walmart or anyone else want to pay more taxes? Could it be that there are some smart people at Walmart (I’m guessing there are) that see the many advantages of school choice? Maybe they understand children are more important than the big Ed monopoly.

  • John Grady

    http://www.oftwominds.com/blogmar17/trickle-down3-17.html

    Spending funded by debt is the real trickle down economics. McMansion Nation has been funded by $60 trillion dollars of debt over the last 40 years and a few Generations of people believe they earned their bloated standard of living. We are a bigger version of Greece.

    The wealth of the top 5% or 25% is on paper. Glorified appliance makers like Apple & Tesla aren’t worth $100’s of billions.

    Wal-Marts customer base of old and poor will flee to Aldi’s to buy groceries as Aldi’s no frills markets expand across the country. Other Wal-Mart shoppers are service industry workers only employed in hospitality jobs as long as the upper middle class benefits from the wealth effect and is spending money eating out, in bars, on entertainment, for vacations and shopping. A major recession will cream service industry jobs only made possible by trickle down economics from a upper middle class that feels secure enough to spend money.

    $60 trillion of debt over 40 years fueled the economy in Wal-Mart Nation, it was a massive stimulus year after year to pile more and more debt on the national credit card to fund a standard of living beyond what was affordable.

    Wal-Mart undercut other people and stole the business. It didn’t create jobs, it stole jobs & destroyed jobs. Ames, Caldor’s, Bradlees, Jamesway, K-Mart used to employee tons of people who earned a living. Wal-Mart employees tons of people who require government assistance to live.

  • Edward Letourneau

    In the comments here I don’t see any evidence that the progressives who love Bernie, want to work like Sam did!

    • John Fairbanks

      Evidence? I support Bernie. I used to work for Bernie. I started my career as a hardware store stock boy, graduated to running a drop hammer on the second shift ($3.65 an hour), then to throwing 100-lb sacks of flour into boxcars (that got me over $4). Worked more than one job more than once to make ends meet. Lots of people work hard, but they don’t have fathers-in-law to hand them $20,000 (now about $271,000, back then nearly five times the average household income in America) to get started. And I’ll bet Sam never in his life worked as hard as those children who were making the products he sold.

      • Matt Young

        So a $20,000 loan is all it takes to create one of the biggest business empires in the world? That’s how you credit Walmarts incredible growth and success? Further, by all credible accounts Mr. Walton worked extremely hard. Lots of people sure do hate success.

        • John Fairbanks

          Don’t hate success at all, and, yeah, $200G can get you off to a flying start. Wal-Mart is a financial success, no argument there; however, it’s important to take into account on whose backs that success was built. But, as noted other places in this thread, this really isn’t the point, if the issue’s inequality (which ends up being bad for business, BTW). The point is, wealth is created by lots of people working to provide goods and services. How much of that gets allotted to whom, and who decides? The fact that someone gets rich, in and of itself, is beside the point. Even how that person got rich, while a consideration for some, isn’t really at the core of the debate about inequality. Inequality, as I have noted elsewhere in this thread, has various causes, but the main thing is who controls the distribution of the wealth created. Back in the 50s, for example, the country was enormously prosperous (there were other problems, but we’re just talking economics here). That prosperity was divided differently–people like me would say better–because labor unions were strong, so workers had leverage in wage negotiations, and taxes were structured differently. Market changes determine how wealth is created. Public policy and worker strength determine how it’s distributed.

          • Matt Young

            So if someone loans you 200k, you will have a successful business? Sounds a bit naive. It always amazes me that many of the same folks who are advocates for the ridiculous amount of regulations are the same folks that complain about “the rich getting richer.” The wealthy are the only ones who can afford to navigate through all of the anti-everything regs. Someone starting out with very little doesn’t have a shot anymore, roadblocks at every turn put in place by folks who have never created anything. The unions that Mr Fairbanks speaks of have driven more business out of our country by their demands, the self serving teachers unions have done terrible damage to our country. “As far as how much wealth is created and how it is allotted.” Consumer choices and a free market.

        • John Fairbanks

          BTW, Wal-Mart, post-Sam, has been nailed for tens of millions of dollars in wage theft. Is that “success”?

  • Norm Etkind

    At once I thank John McClaughry for raising this point while I draw different conclusions.

    Rich people pay a lot in taxes and many of them do wonderful things with their money. And, for that matter, they can choose to spend their $s however they like. That’s not the issue.

    What we have seen is the inevitable flow of money to the top due to such things as globalization, computerization, business consolidation, government and tax policy, and automation.

    The issue is instead: what kind of civilization do we want and how should it be paid for?

    According to the relevant statistics I’ve seen, all but the lowest and the highest ends of the income spectrum wind up paying nearly the same percentage of income in taxes when all taxes are added in.

    But that leaves out the biggest tax that is hidden from most of us – – health care.

    The $25,000 per family cost of health care is a tiny percentage of income for the family with a million dollars in annual income but is about a third of the income for the $75,000 annual income family ($50,000 in pay plus the $25,000 health care cost paid by the employer).

    To address the dual problem of globalization and automation, we need to reduce the cost of having an employee. The best way is to remove the burden of health care costs from the employer.

    To be fair, the cost of health care needs to be paid for by general taxes (income and/or consumption) and not by, essentially, a fixed cost per person, often paid by an employer.

  • John Grady

    http://www.oftwominds.com/b
    Spending
    funded by debt is the real trickle down economics. McMansion Nation
    has been funded by $60 trillion dollars of debt over the last 40 years
    and a few Generations of people believe they earned their bloated
    standard of living. We are a bigger version of Greece.

    The wealth of the top 5% or 25% is on paper. Glorified appliance makers like Apple & Tesla aren’t worth $100’s of billions.

    Wal-Marts
    customer base of old and poor will flee to Aldi’s to buy groceries as
    Aldi’s no frills markets expand across the country. Other Wal-Mart
    shoppers are service industry workers only employed in hospitality jobs
    as long as the upper middle class benefits from the wealth effect and is
    spending money eating out, in bars, on entertainment, for vacations and
    shopping. A major recession will cream service industry jobs only made
    possible by trickle down economics from a upper middle class that feels
    secure enough to spend money.

    $60 trillion of debt over 40 years
    fueled the economy in Wal-Mart Nation, it was a massive stimulus year
    after year to pile more and more debt on the national credit card to
    fund a standard of living beyond what was affordable.

    Wal-Mart
    undercut other people and stole the business. It didn’t create jobs, it
    stole jobs & destroyed jobs. Ames, Caldor’s, Bradlees, Jamesway,
    K-Mart used to employee tons of people who earned a living. Wal-Mart
    employees tons of people who require government assistance to live.

  • I guess Walton’s success can’t be attributed to being innovate, providing quality valued service that millions of American’s willing paid for over and over again.

  • To prevent someone from getting wealthy by providing value that people are willing to pay for, perhaps the government should each regulate consumer’s individual spending. Imagine, after an individual spent their maximum limit at Walmart, they would have to shop at their second best option and so on. Think about how many inefficient, lower value businesses would “prosper” and get their fair share of the pie.
    I’m sorry Mr. Edwards, you can only buy one happy meal here at McDonalds. you’ve reached your spending limit. the rest of your family have to eat at a different business.. unless you’ve reached your spending limit there too.

  • Ray Gonda

    “Would a monopoly chain of taxpayer-capitalized, government-owned bureaucratically managed retail stores, created to put an end to “grotesque inequality,” be likely to achieve as much?”

    This is one of the finest examples of creating a straw man to attack I have ever witnessed. Congratulations, Mr. McLaughry.

  • John Fairbanks

    In case anyone’s still following this thread: https://promarket.org/market-power-inequality/

  • John Fairbanks
  • John Fairbanks

    If anyone’s still following this thread, a paper you might find interesting: http://www.nber.org/papers/w23321

  • John Fairbanks

    One more thing, this study on how tax evasion at the upper end promotes inequality: http://gabriel-zucman.eu/files/AJZ2017.pdf