How America subsidized the Wal-Mart chainstore massacre

The New York Times reported today how cities all over America have pumped up to $1 billion in subsidies into WalMart. The counter argument from WalMart is that in return they have "collected than $52 billion in sales taxes, paid $4 billion in local property taxes, and paid $192 million in income and unemployment taxes to local governments."

Its tempting to think, "well that's okay then" and conclude that subsidizing Wal-Mart is a good investment for cities. But that's a tempting but gross simplification. The point is, what if Wal-Mart hadn't come to town? Would people have spent that money anyway? Did Wal-Mart really increase retail spending by more than the $1 billion in subsidies? It seems unlikely especially given that by lowering average wages it keeps less money in local workers pockets, and more profits in Wal-Mart's koffers and more dollars on their capital asset balance sheet.

Certainly if you think that shopping at Wal-Mart is a great way to give foreign aid to overseas suppliers then you should shop there. But wouldn't a better way be to donate directly to the needy workers in these countries, or buy directly from overseas companies rather than involve some big US corporate middleman?

And as if to prove my point along comes a report that now the entire state of Vermont has been listed as an "endangered place" by the National Trust for Historic Preservation. Guess what the prime reason is for its endangerment? Yes, that's right, Wal-Mart. The finger is pointing firmly at the biggest of the big boxers, Wal-Mart and their irrevokable impact on driving out small retailers and "changing the fabric of community life" in Vermont.

So when you do the Wal-Mart math, perhaps you should subtract from all those tax revenues they say they generated, the amount you would have generated anyway, and also some value for the impact of loss of diversity in the retail and community. I think you'll find that the net result will still be a very substantial negative. That's what happens when you siphon money from a community that was previously circulating internally and channel it elsewhere without a balance of payments between the community and the place where the money went. When Wal-Mart is making $9 billion a year in profit, and our balance of payments with its primary supplier was $163 billion out of whack in 2003 ($12 billion of which is attributed to Wal-Mart) you can be sure that the money is most definitely not flowing back into our local communities as fast as Wal-Mart can vacuum it out.