December 7, 2005

LET'S PLAY TWO (via John Resnick):

Is Wal-Mart the Answer to France's Problems? (Charles Wheelan, Ph.D., December 7, 2005, The Naked Economist)

I recently found myself asking a fairly bizarre economic question: Would the disaffected youth torching cars in France be happier if they could get jobs at Wal-Mart? If you think I'm kidding, I'm not.

France and the United States have two distinct "flavors" of capitalism. The U.S. has the more "Wild West" version. Our economy is relatively unregulated compared to a place like France. We promise our citizens fewer benefits than the French. We offer our workers and firms less protection. Our government meddles less in how businesses operate and our overall tax burden is significantly lower.

The French have the more coddling flavor of capitalism. Citizens receive more benefits from the state, such as guaranteed health care. Workers have far more expansive benefits: Longer maternity leave and vacations, higher minimum pay, and the government has capped the workweek at 35 hours. Perhaps most significant, French workers have extraordinary job protection. Once hired, they're hard to get rid of.

Which brings me back to Wal-Mart and the French riots. Rarely have the strengths and weaknesses of these two flavors of capitalism been on such stark display.

Dr. Wheelan's analysis of Wal-Mart's economic effects seems as dubious as the assertion that they pay folks $5.15 an hour--in reality folks start at over $8 an hour nationwide, which means with just one spouse working one job at Wal-Mart a family of four is nearly above poverty level. Meanwhile, if you're trying to support a family and only have a skill set suitable for an entry level service job, why should you expect to have one family member work just 40 hours a week? Work two and you're above the French GDP per capita.

Posted by Orrin Judd at December 7, 2005 2:43 PM

A note of irony.

The Wal-Mart just up the hill from our suburban place occupies the building once built for a failed "hypermarket"--actually quite similar in concept to Wal-Mart--known is Carrefour.

Carrefour had been a little more into food than Wal-Mart, but the operations were sufficiently similar that few physical changes were made.

The irony--Carrefour was a French concern, from France, that is, and now Wal-Mart is going back to show them how to do it rightly.

Posted by: Lou Gots at December 7, 2005 5:25 PM

Where my son lives in Montpellier (France), there is at least one very large store that sells everything from groceries on up, so the concept is not unknown there.

Their prepared food is excellent and varied and the bread divine. We didn't walk though the whole store, but they had clothing and the other usual stuff found in our big box stores and if I remember correctly, they even had furniture and appliances on the second floor.

Posted by: erp at December 7, 2005 5:37 PM

French supermarket chains are quite efficient at outcompeting small town / village groceries, so at least parts of France get to experience capitalism.

Posted by: Daran at December 7, 2005 5:41 PM

Although Quebecers are generally not like the French at all, one trait they do share is a defiant sourness about service. We have one just a few blocks from here and the experience of shopping there is mostly pure hell, although the prices and selections are unbeatable. Americans who defend mega-stores tend to take for granted a "Have a Good Day" sunnyness that doesn't always travel well, or at all. The reason why the French hate MacDonald's, Walmart, etc. is that they are staffed by the French.

Posted by: Peter B at December 7, 2005 6:51 PM