The death of small businesses

POSTED BY: SignyM
UPDATED: Monday, August 10, 2026 21:52
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RIPWASH

Friday, March 20, 2009 11:03 AM

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Originally posted by Kwicko:
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Originally posted by Storymark:
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Originally posted by RIPWash:
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Ah yes . . . the "Big, Evil Wal-Mart" routine. It's not their fault that Americans want to buy things for less.

But it is their fault that small businesses get driven out of town by unfair practices.

"I thoroughly disapprove of duels. If a man should challenge me, I would take him kindly and forgivingly by the hand and lead him to a quiet place and kill him."

Indeed.

Rip, you should look into a little book called "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)" by David Cay Johnston. He lays out a pretty good case against the megaretailers, including Wal Mart and others, and illustrates with FACTS how they've gamed the system. In many places, they demand - and receive - multi-year abatements of property taxes. That's normal enough, and while not ideal, it's done in many places in order to lure in the "big box" stores that tend to anchor most shopping centers.

But what you likely DON'T know is that, in many, many instances, these megaretailers are also allowed to keep the sales taxes they collect on the goods they sell. That's a huge part of why they can sell so cheaply; it's not all economies of scale, you see, or that they're just so much better or more efficient at doing business. They've got an unfair competitive advantage - if they can COLLECT the sales tax (they charge you that tax, remember; look at your receipt to confirm that) and not PAY IT to the city, county, or state, then they've automatically got a 5-10% "cushion" whereby they can undercut other retailers who are forced to pay their taxes. And these, like property tax abatements, are generally multi-year deals. In other words, that great "boon to the tax base" that Wal Mart is supposed to bring to the area is paying neither property NOR sales taxes for several years.

Now, combine THAT with the economies of scale, and you have a retailer that is already able to undersell its local competitors. With the strength and size of the Wal Mart corporation behind it, though, a new store is also able to price items BELOW what anyone else can even buy them for at wholesale - so there is simply no way to compete, unless you're shopping other stores out of the goodness of your heart. And not many of us practice altruistic shopping, unfortunately...

Just something to ponder... (Hey, that's getting to be my tag line!)

Edited To Add: I've nothing against fair competition; I just don't like unfair competition, especially when it's shoved down our throats and sold to us as "fair".

Mike

A baby seal walks into a club...

The "On Fire" Economy -
The Dow closed at 10,587.60 on January 20, 2001, the day GW Bush took office. Eight years later, it closed below 8000 on the day he left office - a net loss of 25%. That's what conservatives call an economic "success".

I get all of that, don't worry. I also know that their size offers them the ability to buy things from suppliers for less because of the sheer volume of product they order. THEN they sell some items for less than they buy them for in order to lure more people in the store to buy that item PLUS other stuff at regular price.

I see what you all are saying. Is this particularly "fair"? No. Because the mom & pops can't keep up with that. But because Wal-Mart CAN do it and they take advantage of it . . . I dunno. They're in business to make money. The goal of any business is to get the biggest market share of an area they are in. The same goes for Pizza Hut, Lowes, JC Penny. That's all I'm saying.

On the other hand, my employer is the largest in the country at what we do. No one is bigger than us. Because of this, we get some product for less than our competitors because of our size and the volume of product we purchase from our suppliers.

SERGEANTX

Friday, March 20, 2009 11:24 AM

Quote:
Originally posted by Kwicko:
Indeed.

Rip, you should look into a little book called "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)" by David Cay Johnston. He lays out a pretty good case against the megaretailers, including Wal Mart and others, and illustrates with FACTS how they've gamed the system. In many places, they demand - and receive - multi-year abatements of property taxes. That's normal enough, and while not ideal, it's done in many places in order to lure in the "big box" stores that tend to anchor most shopping centers.

But what you likely DON'T know is that, in many, many instances, these megaretailers are also allowed to keep the sales taxes they collect on the goods they sell. That's a huge part of why they can sell so cheaply; it's not all economies of scale, you see, or that they're just so much better or more efficient at doing business. They've got an unfair competitive advantage ...

Thanks Kwicko. This is basically the post I was considering adding, though I haven't had the time. Also didn't figure it would gain much traction here. ("Capitalism's evil, mmkay?")

I haven't read this book, but what you cite is all too familiar. I'll see if I can find a copy. Sounds like a good read.

One of the things I've been pushing for, with the relatively few people who can even 'hear' such an idea, is a constitutional ban on such governmental whoring. The practice fundamentally violates the concept of equal protection and is antithetical to a free market.

The real problem is the attitude that causes this crap to be so commonplace to begin with: namely the notion that it's the responsibility of government to foster economic growth and supply citizens with "jobs". Until we can get past that presumption it will be hard to convince people how insidious this sort of preferential treatment really is.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

SERGEANTX

Friday, March 20, 2009 11:27 AM

dp

SIGNYM

Friday, March 20, 2009 2:12 PM

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The real problem is the attitude that causes this crap to be so commonplace to begin with: namely the notion that it's the responsibility of government to foster economic growth and supply citizens with "jobs". Until we can get past that presumption it will be hard to convince people how insidious this sort of preferential treatment really is.

Maybe if capitalism did a better job at fostering economic growth and providing jobs, people wouldn't feel the need for another avenue. But it can't and it never will, because the whole point of capitalism is to reduce labor costs.

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It's the end of the world as we know it, and I feel fine.

SIGNYM

Friday, March 20, 2009 2:15 PM

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Signy today, Rue tomorrow

I happen to know Rue personally and am fairly certain I'm not her sock puppet, nor is she mine! The fact that we agree on a lot of things on-line is simply because we agree on a lot of things. (We DO disgaree on how aggressive to get with our posts.) Can you say the same about Geezer?

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It's the end of the world as we know it, and I feel fine.

SERGEANTX

Friday, March 20, 2009 2:21 PM

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Originally posted by SignyM:
Maybe if capitalism did a better job at fostering economic growth and providing jobs, people wouldn't feel the need for another avenue. But it can't and it never will, because the whole point of capitalism is to reduce labor costs.

Maybe. Anyway, it's a really bad idea to have government selling it's services to the highest bidder, don't ya think?

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

SIGNYM

Friday, March 20, 2009 2:34 PM

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Maybe. Anyway, it's still a really bad idea to have government selling it's services to the highest bidder, don't ya think?

Of course. Although I would extend that statement farther.

It seems to me there is more than one avenue of power: military, communications, money, religion. Sometimes the powers are at odds with each other: religion fighting the military, the media against the government. When people REALLY wind up in deep doodoo is where the powers coalesce: government and religion. Religion and money. Money and the military. Military and the media.

And it seems the way power works in human society is that power coalesces, and different kinds of power glom onto eachother. The FF had it right in that they tried to create an internal balance of powers within government, but (1) they didn't go far enough and (2) they didn't realize that power distributed among many (eg Congress) will inevitably bow to power wielded by a few (Executive Branch). If I were to "design" a society, the various forms of power would be divorced from each other as much as possible.

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It's the end of the world as we know it, and I feel fine.

SERGEANTX

Friday, March 20, 2009 2:48 PM

Quote:
Originally posted by SignyM:
And it seems the way power works in human society is that power coalesces, and different kinds of power glom onto eachother. The FF had it right in that they tried to create an internal balance of powers within government, but (1) they didn't go far enough and (2) they didn't realize that power distributed among many (eg Congress) will inevitably bow to power wielded by a few (Executive Branch). If I were to "design" a society, the various forms of power would be divorced from each other as much as possible.

Ayup. But regarding the practice of local and state government competing for corporate investment, I'd argue in somewhat the opposite direction. (i.e. in favor of national consensus as opposed to decentralized power) It's vitally important to maintain the equal protection ideal embodied in the constitution throughout the nation. I've never understood why we allow local governments to grant special favors to corporations like this.

I can understand why local governments feel pressured to do it - if they don't, the next one will. But that's exactly why it needs to be addressed at the national level. Has anyone here even heard of a national rep pursuing such legislation?

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

SIGNYM

Friday, March 20, 2009 2:56 PM

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Has anyone here even heard of a national rep pursuing such legislation?

There a are lot of "minima" set by the federal government (minimum wage, minimum pollution controls etc.) but my understanding is that the current interpretation of the constitution keeps the Federal government completely out of the loop of state and local authorities raising money (which is why state and local taxes and bonds are Federal-tax free.)

The problem is when you get a company the size of Walmart... which dwarfs most small cities, many counties and even some states in terms of sheer economic power..."bargaining" is very unbalanced: David and Goliath (only in this scenario Goliath wins). So how do you get an entity "big enough" to go toe-to-toe with Walmart? I don't know....

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It's the end of the world as we know it, and I feel fine.

SERGEANTX

Friday, March 20, 2009 3:05 PM

Quote:
Originally posted by SignyM:
... my understanding is that the current interpretation of the constitution keeps the Federal government completely out of the loop of state and local authorities raising money (which is why state and local taxes and bonds are Federal-tax free.)

That's why I'm thinking it needs to be a dealt with at the level of a constitutional amendment, something that clearly prohibits state and local government (federal too, for that matter) from taxing, or providing services, preferentially.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

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