I am amazed at how invested people are in defending Walmart.
See, there’s your trouble. You’re analyzing Wal-Mart’s behavior and motivations as if it was a business. As everyone knows, it’s actually an evil organization of supervillians, kind of like KAOS or the Galactic Empire. Its goals include misery, devastation, and the eventual destruction of Earth.
Then it has competetion!
It’s not about defending WalMart, it’s about fighting ignorance. That said, I’ve read poor and good arguments on both sides of this debate in this thread. WalMart does engage in questionable and illegal business tactics. Even with their very centralized management style, it is hard to tell at what stage the illegal practices begin, and how they may or may not be disguised up the line. Wal*Mart is also a huge target (no pun intended) with deep pockets and a negative image. Lawyers salivate at the chance to shake them down.
I said when debating Arthur Andersen that even though the damage was done by individuals not acting in the best interests of the firm, the repeated instances of this happening showed that the firm was not setting up a culture which valued ethical business practices. I believe the same about Wal*Mart. I believe the top stratas of management focus too much on the numbers and not enough on how those at regional levels are doing to achieve them.
I’m also assuming that they are building a conventional store. In reality, all Walmart stores can transform into a giant rocket and laser firing robot. Once they have stomped over the local community economically, they get up and stomp on them literally.
Yep! We have Wal-Mart and Home Depot here, and the locally owned hardware store (which is an Ace, but only for buying power – it’s locally owned) is thriving because of it. There are two distinct synergies going on here.
With Wal-Mart, the local knows they sell only in bubble packs, and only on the lowest common denominator. You can never find replacement parts, power cells for cordless tools, bulk sandpaper (I use tons of that stuff) or almost anything a self-respecting carpenter or woodworker would buy. When I’m doing home improvement, I go to Ace because I can take the busted thingy in and say, “I need one of these,” and they’ll help me find one. If it’s 2 a.m. and I need an emergency plumbing repair, I can make something from Wal-Mart work, but it won’t be permanent.
Home Depot, on the other hand, actually over-specializes. Before the store came here, HD corporate HQ examined the buying habits of customers from our zip code in its stores along the I-25 corridor. When they saw enough business coming from our area, they put a store in here, and stocked it with stuff we bought from those stores. This leaves little gaps in our needs, and we’re reluctant to drive two hours to get those low-cost items. So, the local Ace store looks at those gaps and fills them. Bingo! Not only am I not buying it from the local HD store, I’m not going to Fort Collins to buy it either – I’m buying it right here in my home town, where I never bought it before. And if I don’t have to drive 100 miles to make small purchases, I don’t make big ones there, either.
In addition, the Ace store provides stellar, customized service. I just walk in, tell 'em what I want and I’ve got it. And they are falling over each other to help me. I do about $10,000 a year in lumber and hardware, and easily $7,000 of that is spent locally. That’s up from $4,000 or $5,000 a year before, with the rest being spent on the Front Range.
Finally, the Ace guy saw that Home Depot had a contractor’s counter. So, to take better care of his contractors, he tours the sites of his biggest customers with a truck stocked with those things contractors often run out of – work gloves, shovels, nail sticks and so on. Talk about customer loyalty!
What are your real qualifications? You know, age, education and job/job experience.
What illegal practices are you talking about?
Not isolated, individual misdeeds. You know, institutional illegality. Patterns, instances etc etc.
Except that, at least for Standard Oil, when the anti-trust lawsuit began, by 1900, it did not try to force competitors out of business by underpricing them.; i.e. underpricing was not a component to the lawsuit.
Nonentheless, Standard Oil was already naturally losing its monopoly anyway, to Russian oil, I believe. If Rockerfeller ever had a chance to use monopoly power, he never did, as he couldn’t control prices nor prevent competition from entering. There is a growing consensus (at least amongst my econ friends) that the only monopolies that exist are the ones that the government allows.
Yep. If you find a true monopoly, chances are if you scratch beneath the surface you’ll find a cozy relationship with the government-- witness the cable companies in the US. It’s almost impossible to keep out the competition without having the law behind you.
This isn’t true.
John D Rockefeller was perhaps the most ruthless competitor in American business history. Rockefeller felt that unbridaled competition was not good for markets, preferring what he called “cooperation.” (read: managed markets, that as far as kerosene was concerned, would be led by Standard) He often bought out competitors (and in many cases he knew the operations worth worthless, and sometimes closed them) and made them shareholders in The Trust. Many of the people he bought out became very wealthy. Those who refused were often crushed by “The Standard.” Rockefeller once said of those who were driven out of business by Standard, [ something like], “We proposed cooperation between us. But they said, “no” preferring competition. And they didn’t like it when they got it.”
We take for granted that open competition is good for everyone, including consumers. Rockefeller may not have been underpricing in 1911, but he spent the prior 35 years crushing competitors. By any reasonable definition of ‘monopoly’ Standard was a monopoly and wielded power like a monopoly.
Just as I am amazed at how invested people are in attacking it.
Witness to me about the cozy relationship between the cable companies and the government. I’m not aware of any.
How many choices for cable TV do you have in your town? I have 1, which has secured a monopoly contract from the town. And they suck. Fortunately, satellite TV is becoming very competitive.
The cable companies have a monopoly because the multi-billion dollar infrastructure of miles and miles of cable, gear, and routers/switches and the like are theirs, built with their money over years and years.
It is the same case with telephony. Even after the 1984 breakup of AT&T the local companies still owned the local infrastructures (the so called “last mile”) and so even after the break up thwere was little—and in most cases no—competition for local phone service.
The government has had to [rightfully] struggle with competition in these markets because it is not economically feasible to invest the billions necessary to replicate these networks, whether it is cable or telephony. The local governments have negotiated contracts with cable companies as a result of these realities, much like they did in trying to make sense of telephone lines with resellers etc.
If originally there had been more than one network in place, cable competition would be in place. But in the early days of cable the operators were small companies and no company had the means of putting a national network. Most of the early cable companies were fairly small family companies. It was only years later that John Malone and TCI/Liberty began buying up these companies and stitching together national companies.
The fact that there is only one cable company in place in your town—and only one infrastructure—is because in the early days of cable there was no such demand, and no one company able to lay a national network. It is not as if your local government restricted competition by not allowing more than one company to build. In almost every city in America there was only one company able (or interested) to build. Twenty years ago there were dozens of cable operators, the majority of them serving a specific [small] area. By the 90’s guys like John Malone and later Michael Armstrong and Brian Roberts started consolidating the industry. Companies like Time Warner or Comcast were the results of many mergers/buyouts.
Cozy government relations is not why you only have once cable infrastructure in your town.
Uh, I’m not sure that is true. If my memory serves me correctly, in the early days of cable the municipalities franchised the right to install cable. They took competative bids and the company with the best bid or the most “grease” won the right to install cable in the community. Competing companies couldn’t just come in and start installing cable and try to attract customers. The rates were set and the consumers had no choice. Local governments and cable companies got very cozy. Of course, after the monopoly was established the rates started to soar. There was also a massive amount of consolidation of the business. That’s why we all experience cable Hell and curse out companies like Time Warner every day of our lives.
No
It is common here at SDMB to have these fantastic conspiracy theories that show these grand evils by companies like WalMart–and apparently these conspiracies include "cozy’ back door dealings with corrupt governments.
By today’s standards these companies were tiny. Further the cable industry (read: content & programming) was no where near as popular and diverse as it is today. Over the last 2 decades several industries were consolidated and national companies were made of them. The same guy who created Waste Management and consolidated dozens of mom and pop garbage haulers did the same with Blockbuster. Home Depot didn’t consolidate as much as drive out local hardare stores. The same can be said of WalMart.
I am no conservative, nor am I a fan of big business neccessarily. But this notion that the reason there are exclusive territories for cable is because of corrupt local governments taking illegal bribes and excessive “legalized bribery” is plain silly.
Would you wire the entire city of St Louis if you couldn’t be certain that there would be enough cable traffic to support the multimillion dollar investment? Would you gamble that way? Well…some people did. A handful of companies crossed the globe with fiber optic cable, including the oceans. The last time I saw something it said the world wide oversupply of FOC was so great that 97% of all FOC was ‘dark’. Ever heard of Global Crossing?
Ever heard of Nextel? Over years they bought up spectrum for pennies that was used mainly by companies like taxicabs. They stitched together a comapny that is now worth billions. Are they crooks? no. They saw the future of mobile telephony and made an educated gamble.
Are cable companies—like most other companies----- self serving? Yes! They employ armies of lobbyists and seek to put themselves in an advantageous position. But it remains true that wiring the country----or your city—is an expensive and risky proposition. Did the bet pay off? It sure did. And consolidation has been good to the cable companies and their investors. And so these exclusive territories are worth tons, and generate lots of revenue. And…the lack of a hardwired competitor in each area has created pricing that most people (including me) are too high.
I think cable companies suck. I have Time Warner and I can’t stand them. I think there needs to be more competition. And I hope that the telephone companies and satelite companies continue to grow.
But you cannot look at conditions today and retroactively impute bad motives (and corruption) for conditions and decisions that were made 20 years ago or more when most of these deals were set up.
You totally mischaracterized my post. You earlier infered that cable was a competative business in it’s early days. I pointed out that municipalities franchised the right to install cable. I never said it was all corrupt. The only competition was in securing the area franchises. The municipalities tried to control it so they could collect fees and taxes from the cable companies. I tried to set the record straight. It created local monopolies which, through later consolidation, resulted in the current cable jugernauts.
Review my posts from the start. I was the first to try to stop the mischaracterization of Wal-Mart as an evil empire. I think you need to go back and review the history of the cable companies and realize how the business was run in the early days. I’m not grinding an axe, I’m trying to assist in the fight against ignorance.
Perhaps we misunderstood each other. And, I think we basically agree.
I do not remember saying that cable was at one time a competitive business. I am fully aware that many municipalities ‘regulate’ or control their local markets. I’m also fully aware that exclusive rights are often given. My point was that in the early days of cable there was no comapny that could establish a national foorprint—a company that had the capacity to build a nationwide infrastructure. (Fron scratch, there probably still isn’t) And so the cable business was a local or sometimes regional business. Many of these companies were surprisingly small by today’s standards.
Fast forward 25 years. There is now a rich, diverse body of programming content available; so much content that hundreds of cable programs are possible. And…the consumer has shown an amazing willingness to pay for what had been free from NBC, ABC and CBS. (and a handful of independent UHF channels, some of which were consolidated into the Fox Network)
Theses cable ‘franchises’ are now golden. But the legacy of how this industry developed is such that there is limited competition. And so here comes John Malone (and others); the consolidators. In time, these once small companies are giants like Comcast and Time Warner. But the fact that there is limited competition (and often poor service) is a result of the early economics of cable and how it developed. It’s not as if there is/was some cozy backdoor dealings where city hall intentionally screwed the citizenry by keeping out tons of able, willing competitors. That’s just how the industry developed.
The Conspiracy Division of SDMB would like us to believe that behind every [large] business are criminals, and that city hall (or the state house) is in bed with them.
It’s just not true.
(btw, I think increased cable competition is what we need now that the industry has developed to to where it is now. Perhaps local governments or states can auction off rights in the same fashion that wireless spectrum was auctioned. I think cable rates are too high, way too high, and additional competitors would be best. I’m sure that the cable companies would lobby against that.)
No back at ya. First, I never said the government was corrupt. But the franchise was given, and another cable company can’t come in. You asked about government sanctioned monopolies and I gave you one. But note that they needn’t exist in this country to prove my point. I said that it’s unusual to find true monopolies that aren’t granted that status by the gov’t-- that doesn’t necessarily mean there are any. OTOH, I challenge you to name a privately operated monoply in the US. And just so we’re clear, it’s not that monopolies are illegal-- certain anti-competitive practices are illegal, but if you create a monopoly w/o using those practices, you’re legal.