Unstable Chain Reaction

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

This may be an unpopular opinion in California, but I’ll say it anyway: I like shopping at Wal-Mart.

Wal-Marts are clean, bright, safe places that stay open late. Their shelves are bountiful and stocked with good-quality merchandise with low prices. For everyday stuff – socks, toothpaste, tires – you can’t top Wal-Mart.

Now that I’ve confessed that, let me say something that may be heresy in California: I don’t feel guilty about shopping there. Not one bit.

Wal-Mart and similar superstores are blamed for destroying Main Street shops, but that’s a silly argument. The superstores have done exactly what businesses are supposed to do: They’ve brought efficiencies to their industry, resulting in lower costs and longer hours for their customers.

And the smaller competitors have done what they’re supposed to do: adapt, typically by going upscale and selling what the superstores don’t. If they can’t or won’t do that, they may go out of business. But I dare say, much the same competitive pressure is a reality in your line of work. (Besides, if small retailers are so threatened by superstores, why do they pay a premium to be located near them?)

I bring this up because some state lawmakers apparently fear everyday low prices. They want to prevent the rest of us from having the choice of shopping at Wal-Mart and other superstores. As reported last week in the Los Angeles Business Journal, state Sen. Juan Vargas of San Diego wrote a bill that requires cities and counties to conduct an economic impact study whenever a superstore of 90,000 square feet or more is proposed.

You know what that means. Opponents would use that process to bog down any proposed project for years and probably prevent many superstores from being built anywhere in the state. Look at how the California Environmental Quality Act has slowed and killed lots of developments. (The superstores would still have to abide by CEQA, by the way, which means they’ll have to wade through two regulatory swamps.)

The bill has passed the Senate and may go to the Assembly soon. It’s strongly backed by the California Labor Federation. A lobbyist for that pro-union group was quoted as saying superstores “displace existing higher-wage jobs at independent stores and shut down a lot of competing businesses.”

That kind of simplistic thinking is obviously flawed. I mean, who were these once lavishly paid clerks who sold socks, toothpaste or tires at independent stores? But this kind of bromide has been repeated so often that many – at least many in California – actually believe it.

There was an interesting op-ed last June in the Washington Post by Marc Levinson, who has just written a book about the history of big retailers vs. small ones. He wrote: “A chain-free United States wouldn’t necessarily be the utopia many imagine. …

“Without chains, there would undoubtedly be more independent stores, but few would be run by prosperous shopkeepers. Back when independent stores were to be found on every corner, their owners typically worked around the clock to eke out the most tenuous of livings. …

“Would an unchained world provide more well-paid union jobs? Not likely. The Retail Clerks International Protective Association — the forerunner of today’s United Food and Commercial Workers Union — had so few members in the late 1920s that it had difficulty staging a national convention.”

No, I don’t feel guilty at all for walking into a superstore. In fact, if anyone should feel guilty, it’s the legislators who would vote for this. They are either union-paid lackeys or foolish enough to cast a misguided vote to make it more difficult for the rest of us to have the freedom to choose where we can shop.

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