Wal-Mart is always a leader. Now they are leading in a relatively new economic reality. In economics there are two well-known cycles. One labeled as a Virtuous Circle where positive events reinforce and lead to other positive events in your economy and the other, obviously, is the Vicious Circle where negative events reinforce each other and lead to more negative events in your economy.
What Wal-Mart has done, remarkably, is create a virtuous circle for themselves that simultaneously leads to a vicious circle for their employees, customers, cities they do business in, everybody; everybody but them. Which even they must know is not sustainable.
The Wall Street Journal reported that Wal-Mart currently takes in about 18 percent of all SNAP (Supplemental Nutrition Assistance Program) dollars spent. This lays the foundation for a Vicious Circle of poverty we seem to be trapped in today. This circle operates two ways.
In the first, Wal-Mart’s employees are subsidized by the taxpayers. Part of that subsidy is that in almost every state the workers of Wal-Mart are the biggest beneficiary of public aid, which includes the program formerly known as Food Stamps, now called SNAP.
So in addition to having the working poor from other places shop there Wal-Mart also has their own built in labor force spending their tax subsidized food dollars at?Wal-Mart. The perfect vicious circle.
If Wal-Mart paid their workers more money their workers would then make enough money to shop elsewhere and Wal-Mart would make less money. Therefore it is bad business for Wal-Mart to pay a living wage; leaving about 80 percent of their workforce on public assistance including SNAP.
You can check out how Wal-Mart steals money from your state at Wal-Mart Subsidy Watch.
To put this into perspective, Wal-Mart’s profits this year are going to be about $17 billion. When you account for government subsidies, their profits decrease by over $2.9 billion. Then we have to guesstimate how much Wal-Mart makes off of collecting and reporting sales taxes; which is estimated to be in the hundreds of millions. Then account for property tax discounts Wal-Mart asks for and gets. ?That incredible profit isn’t really a profit at all. Wal-Mart is a badly run, government subsidized poverty creation program!
We can decide if our government exists for a either a Virtuous or Vicious economy. Forty years of bad economic thinking has led to the rise of unprofitable businesses being propped up by the tax payer. It is time for that to change and for the creative destruction of capitalism to do its work.
Edited by SS
