Wal-Mart is one of the great shining examples of what a market economy can achieve. If I were to give a tour of the United States to visitors from a socialist country, who are used to experiencing chronic shortages of almost everything, Wal-Mart would be one of the first places I would take them. It is a perfect symbol of one of the most remarkable things that we have — an enormous variety of high quality, low cost products that are available to virtually everyone throughout the United States.

Wal-Mart stores are indeed impressive sights, housed in gigantic structures, capable of serving many thousands of customers every day. Wal-Mart's most common type of store — the Supercenter — offers customers an indoor, air-conditioned shopping area larger than three football fields. These shopping behemoths provide so much — such a staggeringly huge range of well-made products — that a person could practically live his whole life without having to shop anywhere else.

Walk into a Wal-Mart Supercenter and look around; the place is amazing! It boggles the mind to think of the enormous complexity that must be involved in running a store that accomplishes all this, which is truly responsible for an improvement in our standard of living. For Wal-Mart to provide so much, for so many, as efficiently, reliably, and inexpensively as it does is an economic miracle. Never in human history have so many people had such affordable and convenient access to all the products that Wal-Mart offers, and the number of people with this access is growing all the time. As Wal-Mart's late founder Sam Walton said:

"…we'll lower the cost of living for everyone, not just in America, but we'll give the world an opportunity to see what it's like to save and have a better lifestyle, a better life for all. We're proud of what we've accomplished; we've just begun."

This is a company that deserves to be praised and admired the world over.

Wal-Mart's Critics

In spite of Wal-Mart's outstanding achievements and tremendous benefits to the public, a determined group of Wal-Mart critics has appeared on the scene. These people have made it their life's mission to smear and obstruct Wal-Mart at every turn, many of them behaving with the same passion that one might expect from religious fanatics. The critics are utterly ignorant of economics, yet they pretend to be authorities on the subject, and loudly proclaim such things as: "Wal-Mart causes unemployment," "Wal-Mart lowers wages," and "Wal-Mart reduces access to healthcare." In addition to these alleged economic sins, they say: "Wal-Mart destroys communities," "Wal-Mart treats its female employees unfairly," "Wal-Mart causes greedy consumerism," "Wal-Mart desecrates sacred ground." To listen to these critics, one might think that Wal-Mart was the source of all evil.

Every time Wal-Mart tries to open up a new store, there is a good chance that these anti-Wal-Mart crusaders will be there to interfere, attempting to persuade zoning boards and local governments to intervene and make it impossible for Wal-Mart to operate. They've created websites such as Wakeupwalmart.com and Walmartwatch.com that provide "public education" on their incorrect version of the economic effects of Wal-Mart. They've held anti-Wal-Mart demonstrations, and put out advertisements, books, and movies. They've called for crippling regulation of Wal-Mart, and increased taxes on Wal-Mart. One of their favorite activities is to point to someone who they believe has been, or could be, negatively affected by Wal-Mart's success — no matter how temporarily — misinterpret the meaning of this phenomenon, and proceed to work themselves into a frenzy because they are convinced that this proves that Wal-Mart is destroying the world.

All of their objections are based on profound ignorance of Wal-Mart's actual economic significance, and their behavior is destructive to themselves and everyone else. The huge amount of media attention given to these critics by many willing accomplices has strengthened their negative influence. The critics have succeeded in making themselves impossible to ignore. They have dragged Wal-Mart's good name through the mud, causing the general public to associate Wal-Mart with the endless list of accusations, rather than with the incredible service they provide.

High profile individuals such as Theresa Heinz Kerry, who came very close to being first lady of the United States, have taken public stances in favor of these critics. According to a recent Zogby poll, 56% of Americans now believe that "Wal-Mart is bad for America."

Wal-Mart managers now have a new challenge; not only do they have to run one of the biggest organizations in the world; they have to do it with an army of fools waging a constant war of propaganda against them. They are forced to waste an increasing amount of their time and company's resources defending their highly efficient, very successful, and perfectly legitimate organization against these vicious saboteurs.

Wal-Mart's Response

Wal-Mart's response has been superficial and somewhat counterproductive. At times Wal-Mart accepts the false premises put forth by the critics, and thereby allows the debate to be improperly cast. Instead, it should boldly dispute the false premises of its critics and confidently present its justification for the Wal-Mart business model. This essay will attempt to expose the erroneous views of the critics, as well as present an accurate picture of the economic significance of Wal-Mart. To make my case, I rely extensively on some of the economic ideas developed by George Reisman in his book Capitalism.

Wealth

To understand Wal-Mart's economic significance, the concept of wealth must first be understood. Economic progress means an increasing level of wealth, both for the individual and for the entire economic system. Wealth, in an economic sense, is material goods that have been produced by human labor. This includes cars, houses, lipstick, silverware, garden hoses, television sets, and anything else that has been taken from nature and changed by man into something that is more valuable to man. It can include land or natural resources to the extent that humans perform labor to make them useful.

Wealth is not the same thing as money. Money is simply a medium of exchange for wealth. Money derives its value from the wealth available for trade in an economic system. For example, if someone were stranded alone on a desert island with few supplies, it would not be accurate to call this person wealthy even if he had $5 million in cash with him on the island. His money is valueless here because there is no wealth on the desert island for him to buy. Since money derives its value from wealth, as an economic system produces more total wealth, its money supply becomes more valuable.

To learn what policies would create the most wealth is the most fundamental concern of economic science. It is not primarily concerned with consumer spending, or jobs, or interest rates, but with wealth. And it is not about how to make some particular group wealthier; rather, it is about how to make the entire economic system wealthier. It is no coincidence that one of the most influential economics books ever written is titled The Wealth of Nations. This innovative work was one of the first to focus not on the wealth of steelworkers, or the wealth of blacksmiths, but on the wealth of entire nations. We should use this same focus in deciding whether or not "Wal-Mart is bad for America."

Productivity

There are many reasons why Wal-Mart has been so successful. It offers a wide variety of products, it has customer-friendly service, it effectively communicates its value through advertising and promotions, it selects merchandise that people want, and much more. But the major reason that Wal-Mart has had such a meteoric rise is that it offers its products for consistently lower prices than its competitors. Its motto is "Always Low Prices. Always." And it has lived up to that promise. Wal-Mart customers have come to expect good deals on virtually all Wal-Mart products at all times. Its lower prices have attracted large and growing numbers of customers, and have resulted in large and growing volumes of sales.

These lower prices are possible because Wal-Mart is more productive — more efficient — than its competitors. This gives it lower costs than its competitors and because its costs are lower than theirs it is able to charge less than they do while still making a profit.

To increase productivity is to increase the amount of wealth that can be produced per unit of input. To illustrate this concept, consider the effect of a modern technology like telecommunication. Before the telephone, telegraph, or radio were invented, communications had to be physically carried from the communicator to the recipient either in person or through letters. When telecommunications became widespread, people were able to instantly communicate with each other from all over the country. Imagine all the labor that was saved from no longer having to physically carry all communications from one party to another. This caused a vastly increased ability to produce more total wealth. The economy could produce everything that it could before, plus whatever could be produced with the labor that was no longer needed to carry communications.

This is an increase in productivity. It is an increase in the ability to produce. It is more wealth with less expense.

Increases in productivity are achieved economy-wide, by single businesses, and by individuals. They can be as simple as a hot dog stand owner finding a more efficient way to cook his hot dogs. Anyone who has figured out a way to produce more with less has found a way to increase productivity, and all increases in productivity cause an ability to produce a larger total amount of wealth in the economic system as a whole.

The history of Wal-Mart is a history of increases in productivity. Wal-Mart started off buying products in larger volumes to get them cheaper per unit. It was one of the first to use self-service in its stores for goods other than groceries, thereby saving money on employees. It opted for less extravagant store presentation in favor of lower prices.

Wal-Mart saved money through the years simply by being frugal when it came to its manager's accommodations. It prefers to have small and cheap offices in cheap locations. It has been known for requiring managers to fly coach on business trips, stay two to a room in cheap hotels, rent cheap cars, and eat at cheap restaurants.

Wal-Mart increased productivity through new methods of training its employees. It used its own central distribution centers and trucking to improve the efficiency of its flow of incoming inventory. As its business grew and volumes of sales continued to increase, Wal-Mart began utilizing advanced technology to help it further increase productivity. It was one of the first to use electronic scanners to capture the movement of an item at the point-of-sale. It was one of the prime movers in the push for the development of the Universal Product Code (UPC), which increased productivity for retailers all over the world by streamlining the processing of orders, management of inventory, and tracking of sales.

Wal-Mart was one of the first to use Electronic Data Interchange, which allowed it to transmit purchase orders, invoices, and other communications electronically with suppliers. It created a system called Retail Link, which integrates all its suppliers directly with its computer system so they can coordinate more efficiently.

Wal-Mart owns the largest private database in the world, along with the largest private satellite system in the world. This has linked every Wal-Mart store directly with the home office. This has sped up its communications, integrated virtually its entire business, allowed it to automate an increasing number of processes, and enabled it to analyze business and sales data to an unprecedented degree.

Wal-Mart is now the driving force behind a movement towards RFID (Radio Frequency Identification) technology as the successor to bar codes. This involves the use of identifying tags inside the packaging of each item that can be detected by radio frequency. Instead of having to scan each item by putting its bar code in the line of sight of an optical scanner, with RFID, many items can be scanned at once simply by being in their proximity with a tag reader. This could potentially increase productivity in many ways. It could revolutionize the tracking of items through the supply line. Whole truckloads of products could be accounted for in seconds. RFID technology could enable customers to purchase all their products by walking past a tag reader without having to stop and have each item's barcode individually scanned. Since RFID tags can be hidden in packaging, shoplifting could be virtually eliminated, and the management of inventory could be radically improved.

All of the foregoing merely scratches the surface of everything Wal-Mart has done or plans to do to increase productivity. The meaning of all these increases in productivity is increases in our ability to produce more wealth. The result of this process can be seen in the history of many products, such as television sets. When the television set was first invented, it was very expensive to produce, and only a few people could afford it. As productivity increased in the television indust