Big Boxes effect local economies but local culture?
Researchers Not Buying The Wal-Mart Effect
Local governments subsidize the world's richest retailer while many residents criticize the behemoth. Such a subsidy is an example of why it might be a good idea to shift the power of discretionary spending from politicians to residents. Do that by paying residents a dividend, a share from the flow of local land values. Interestingly, the act of recovering location values means the stores would have to pay more "land dues" for their huge asphalt parking lots than for the land under their buildings. That should disadvantage the chains and favor businesses downtown. This shift of taxes and subsidies -- called geonomics -- is a powerful tool to shape the world many of us want. This 2009 article was posted at Miller-McCune, Feb 3. The writer, a PhD candidate in political science at the UC Berkeley, has worked as a staff writer for the Philadelphia Inquirer and the Providence Journal.
by Lee DrutmanOnce Wal-Mart sets up shop in your town, many say that drives down wages, kills jobs, puts local stores out of business, and degrades the fabric of communities across the country.
Wal-Mart's entry does seem to drive down prices and hurt local retailers, though the effects on overall employment and small businesses generally are more heavily debated. For example, one argument is that new small businesses spring up to replace the older ones.
A recent article in the journal of the American Agricultural Economics Association had found Wal-Mart drove down social capital -- as measured by the number of social capital-generating associations (ranging from bowling alleys to chambers of commerce); voter turnout, tax exempt nonprofits, participation in the 2000 Census, and religious adherence.
Enter economics professors Art Carden (Rhodes College) and Charles Courtemanche (University of North Carolina, Greensboro). It could appear that Wal-Mart is degrading communities when, in actuality, its arrival is merely an indicator of a community having diminished levels of social capital.
Carden and Courtemanche expanded on the prior study, using 20 different indicators of social capital (instead of five), ranging from playing cards to entertaining at home to visiting friends at the individual level and while still measuring things like the number of nonprofits, associations, and voter turnout levels at the community level.
They found: Wal-Mart has no noticeable effect on social capital; its arrival seems to help people lose a little weight; people spend more leisure time with items they can purchase at Wal-Mart when the store comes to town; and Wal-Mart's arrival does not change people's values.
Wal-Mart's penetration seemed to cause a slight reduction in obesity, especially among women and poorer people, though the effect was pretty small. "People increase their consumption of fruits and vegetables and eat a less fatty diet when Wal-Mart is more prominent," Carden said.
Not only do Wal-Mart and other big discounters reduce the price of fresh produce, making it more affordable, but cheaper prices also allow people to spend more money on healthier food.
Similarly, those who drank and smoked before drank and smoked even more when retailers made their vices of choice cheaper. And greater big-box penetration led to a slight decline in exercise. Overall, these effects balance out to make for a slight weight loss.
Increased Wal-Mart penetration leads to people spending less time playing outside and spending more time watching DVDs (and other forms of entertainment they can purchase cheaply from Wal-Mart). However, they do not find any decrease in "cultural" activities, such as visiting art galleries or going to classical music concerts -- "suggesting," they write, "that Wal-Mart does not contribute to the 'dumbing down' of society."
"Wal-Mart and stores more generally have the ability to influence some choices about how we spend our time," he said. "But they don't have the ability to influence our deeper core values. They can't really penetrate on a deeper level and lead to cultural change."
While there might certainly be cases where Wal-Mart's arrival had a negative impact on various aspects of social capital, effects were far from uniform. Their findings are reported in the January 2009 issue of Public Choice.
"The takeaway for communities is that the alleged negative effects are way overstated," said Carden, who noted that the professors received no funding from Wal-Mart for their research. "But there don't appear to be any positive spillover effects either, so any subsidies to Wal-Mart are just a transfer from communities to the largest corporation in the world."
Courtemanche said, "Wal-Mart has come to be seen as a symbol of everything evil about capitalism, and when you look at what does it actually cause, well, there are substantial price effects but not a whole lot much else."
Jeffery J. Smith runs the Forum on Geonomics.
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