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Time to break up Wal-Mart

Marketplace Staff Aug 15, 2006

KAI RYSSDAL: Big day today at Wal-Mart. And not necessarily a good day. For the first time in 10 years profits at the world’s biggest retailer fell. It’s a little bit of a paperwork drill, though. The company took a billion-dollar hit for closing its German stores. Seems Wal-Mart couldn’t quite get its mind around the way Germans shop. Commentator Barry Lynn says there’s a problem with how Wal-Mart does business over here, too.

BARRY LYNN: Battles among corporate giants can seem so very distant from our lives.

When we hear of Wal-Mart telling Coca Cola how to blend its sodas, or dictating prices to Kraft, or brokering mergers like Procter & Gamble and Gillette, most of us drift swiftly on to thoughts of dinner, or where to vacation.

But it does matter who controls the heights of our economy.

Since the Reagan administration put antitrust law into the deep freeze, we’ve witnessed a radical consolidation of economic power.

Consider but two examples: Nike and Adidas control 60 percent of the world market for sneakers. Luxottica owns five of six national eyeglass chains in America.

But no monopoly comes close to the danger posed by Wal-Mart. That firm accounts for a phenomenal 20 percent of retail sales in America. And it plans to double that volume in five years.

The basic premise of the free market is that many ideas and products compete for the favor of many buyers.

But what we see in today’s consumer economy is the exact opposite. Wal-Mart increasingly is the only buyer that matters.

It uses its power to dictate the content of products, where suppliers make those products, how they ship those products. It dictates how suppliers manage internal information, how they compete with one another, even limits with whom they speak.

It does so for the sake only of its shareholders.

The cost of Wal-Mart’s power then is not merely low wages. The cost is that every day American citizens face tighter restrictions on where we can sell our labor and our ideas, even what sorts of enterprises we can launch.

Wal-Mart’s power, in other words, perverts our entire free-market system.

So, we have a choice. We can yield to the care and direction of this private monopoly, or we can defend a free-market system that has served us so very well for two centuries.

We must use our antitrust laws today to break Wal-Mart up.

RYSSDAL: Commentator Barry Lynn is the author of “End of the Line: The Rise and Coming Fall of the Global Corporation.”

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