brandonmason said:
Not to be a Wal-Mart apologizer or anything, but this is *too* harsh of a picture....
All retailers have relatively low wages and unimpressive benefits, Wal-Mart is no exception. BUT the wages and benefits Wal-Mart provides beat out those of other retailers in most communities.
The profits don't all go to Bentonville -- it's a public corporation and the profits go to shareholders everywhere.
I think Target, for example, offers better everything in the wages/compensation department when compared to Wal-Mart.
But the point is that if a Wal-Mart takes in $10k a day from a particular community that $8,000 of it is transferred nightly to HQ in Bentonville. It leaves the local economy immediately. I don't know what kind of money you have but Wal-Mart stock is trading today at $52.70 a share. Last year's dividends were $.28 per share. If you're an average Joe with 100 shares you made a whopping $28 - that's not even enough to buy another share.
Let's get real, the overwhelming majority of shares are owned by the walton family, the board, and other executives in the company. The rest are held by mutual and pension funds so I wouldn't exactly call the whole thing "public."
*** please see bottom
It gives back to the community (Wal-Mart is the largest corporate cash giver and most of this cash is distributed through community grants at the local level).
OK, so they give out a lot of grants. How much of it is tax-deductible? How much of it makes up for the local tax-breaks and land deals they receive? How much of it offsets the money they bilk from their vendors? In short, what positive effect of their gift-giving makes up for the negative impacts of their existence and how does this effect Wal-Mart's bottom line?
It generally is good for the local economy because it encourages competition and raises the standard of living. When Wal-Mart begins selling groceries in a market, the average cost of groceries in that community goes ****down 13 percent.**** Retailers that can't keep up might close down, but this isn't especially pervasive (most small retailers have a solid niche market)
Wal-Mart may, *may* lower the cost of groceries but it doesn't do much good when a Wal-Mart results in making other workers redundant or lowers the median wage - or worse, becomes the only employer in town. Wal-Mart isn't much different than Standard Oil in that regard. It remains successful by throwing its weight around. It can get a premium on groceries (or anything for that matter) because it is large enough to set the price. Being large enough to set a market price is breaking the first rule of a free market.
Vendors can choose to sell to Wal-Mart competitors at a higher price but nor for long because those competitors have no choice but to lower their prices as well. In effect, the price that Wal-Mart demands becomes the industry standard. It's a race to the bottom, plain and simple.
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this just underscores the popular misunderstanding that people buy shares in a company for the dividends they get. In order to make $40,000 a year on Wal-Mart stock dividends you would need to own 145,000 shares that would cost you $7.6 million to buy. Opening a restaurant in Center City would net you much more and cost you much less.
No investor expects to make stable money on dividends. The cash comes in from the sale of the stock - which is why the pressure is always to drive the share price higher by making the stock more attractive. This is what quarterly earnings reports are for. It's also why, if you've been paying attention, so many executives have been going to jail because they made it look like the company was earning more than it was, which drove the stock price higher, which triggered a flurry of investment - SPECULATION - and at the peak of speculation all the people in the know sold all or most of their stock and made a killing.
The people who make big money on stock trading are those that get in at the IPO, aka, insiders. If you're not an insider you're stuck buying the stock after the price has already risen. If you have the money to buy 1000 shares at $30 a share and you sell them ten years later for $40 a share, well then you've made a sweet $10,000 but really it's peanuts in the grand scheme of Wall St. But it's still good for investing your money in a non-productive enterprise. I mean Wall St. doesn't actually produce anything so $10k was created out of . . . what exactly?
If you're not buying at the IPO or subsequent stock issues you're not investing in the company. The cash you give at the IPO or later stock issues is the capital that goes to the company.
When you buy a share on E-trade and sell it later at a higher price the cash goes to you, not to the company the stock represents. The person buying the stock from you is only buying it because he expects its value to continue to climb so he can sell it for a profit as well. In all the whole thing is a ponzi scheme cloaked, not very well, in some free-market rhetoric.
