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Wal Mart - The Capitalist Pig

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We make up words all the time too, Vitaliy.

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"I got two words for that: Who cares? Care about them? Why? They didn't care about you. They sucked you dry. You have no responsibility to them. For the last ten years this company bled your money. Did this community ever say, 'We know times are tough? We'll lower taxes, reduce water and sewer.' Check it out: You're paying twice what you did ten years ago. And our devoted employees, who have taken no increases for the past three years, are still making twice what they made ten years ago; and our stock -- one-sixth what it was ten years ago."

- Larry the Liquidator, Other People's Money


The nice thing about being a capitalistic "Red" pig is that I don't have to think about political correctness. I am shielded by economic (efficient allocation of resources) immunity. Oh and the best part I can be an equal opportunity offender as I am not running for election so I don't have to sell my soul to please everybody at once.).

What will be called "The Memo" by the media will create a lot of discussion about the evils of Wal-Mart Stores (WMT). So to serve as balance to a very unbalanced discussion here are my capitalist "Red" pig thoughts.

The majority of the associate jobs in Wal-Mart are commodities. Associate's skills are true commodities - skills are very generic, they add very little value to the end product and their skills are as abundant in society as leaves on the trees. To work at Wal-Mart (or any other retailer) associates have to meet a very low standard: have legal working papers, smell appropriately and speak a small amount of English. They don't need to have a high school diploma as they don't need to know how to count (cash register will do it for them). Writing skills are preferred but not required as "skilled" management will help to fill out the job application.

In general, it is extremely difficult to differentiate in the retail space; price is the biggest differentiator. To be the low price leader one needs to have the lowest cost, which is achieved by being extremely efficient.

We assume that a clerk that works in a store for seven years should make more money than the one that works there for one year. Why? The only reason is that he/she should make more money if he/she is more experienced and thus more efficient than the one who worked at the store for fewer years. The learning curve of stocking shelves is not very steep, thus it makes sense that after a year on the job an employee is at the peak of his/her performance. I am a true believer in meritocracy, but one's compensation should not be based on the time served - timetocracy (this is what I love about English I can make up my own words).

I admire Wal-Mart as it is one of the purest capitalistic forms in existence; it drove less efficient competitors such as K-Mart and Montgomery Ward out of business and forced unionized socialist grocery stores to put themselves on the auction block.

I believe Wal-Mart serves as a very important role in the economy - it forces people to go to school. In fact high schools and colleges are missing a golden opportunity to use Wal-Mart in their stay-in-school commercials. I worked at a grocery store (not much different than working for Wal-Mart) for two weeks - I am still thankful for that job as it motivated me to go to college.

Wal-Mart is run for shareholder benefit which makes a lot of sense since it is still largely owned by insiders. Larry the Liquidator would have really admired that company.
No positions in stocks mentioned.

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