Monday, September 19, 2016

More Silly Arguments About Walmart

By Don Boudreaux

Here’s a letter to a new and quite insistent correspondent.  This correspondent tells me that he’s a college student, but he’s yet to say what college he attends.  (One thing is certain: he’s no GMU Econ student.)
Mr. Jared Jordan
Mr. Jordan:
Thanks for your follow-up e-mail challenging me to “rebut” what you describe as your professor’s “air tight argument that Walmart imposes costs on taxpayers” because “it [Walmart] refuses to pay its workers enough for them to break out of welfare.”
This argument is completely nonsensical; no competent economist gives it any credence.  (You don’t say what this professor of yours teaches.  If it’s economics, you deserve a tuition refund.)  As it happens I’ve addressed this argument several times; see the links below.*  But because this argument is distressingly widespread among non-economists I offer here a few words beyond pointing out what should be (but seemingly isn’t) obvious – namely, this argument implies that workers have no desire for wages above those that are minimally necessary for them and their families to survive.  The fact that the vast majority of workers in the industrialized world – including most Walmart workers – earn wages much higher than subsistence is itself powerful evidence against this silly argument.
Yet you and your professor condemn Walmart because, you allege, it can “afford” to pay its workers more.  How do you know?  How do you know that if Walmart arbitrarily raises its workers’ wages that its rate of return won’t fall so low that shareholders and other investors flee and, thus, eventually force that company into bankruptcy?
You, in fact, don’t know what you presume to know.  You likely suppose that because most Walmart shareholders live well above subsistence that they are blameworthy for not dipping into some of their ‘excess’ wealth in order to pay Walmart workers arbitrarily higher wages.  But if this supposition is valid, then why are only Walmart shareholders blameworthy?  Why isn’t your professor also blameworthy?  I’m quite sure that he lives well above subsistence and, therefore, can afford to share some of his wealth with Walmart workers.  Ask your professor when he last went to his local Walmart to hand out arbitrary sums of his own money to the workers there.  (They would certainly appreciate the gesture.)  If your professor is honest, he’ll confess that he has never done so.  So when he makes this confession, ask him if he believes that his failure to give more of his money to Walmart workers means that he, too, is blameworthy for failing to prevent some people from receiving taxpayer-funded welfare.
Do let me know your professor’s answers.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek


  1. The mechanism is that welfare causes workers to bid their labor lower because they are better off with a lower paying job and welfare than they would be with no job and welfare (the low bid gets them the job over someone else) or a higher paying job and no welfare (the welfare cliff).

  2. If Walmart pays them too little and that imposes costs on taxpayers, what about what I pay them? I pay them *nothing*! Am I not more guilty than Walmart of this charge? Isn't the student who advanced this argument more guilty than Walmart? Isn't *anyone* who does not hire these people and others guilty of a larger transgression than Walmart?