Free Lunch (14 page)

Her reasoning was pure corporate socialism and haughty to boot. And her analysis collapses under the
mildest scrutiny as self-serving nonsense.

Williams said that in the previous decade Wal-Mart
had collected more than $52 billion in sales taxes from customers. That cost Wal-Mart nothing; it just acted as the collection agent.
Wal-Mart was even paid a tiny sliver of that sales tax money to cover its costs in processing the money. But since Wal-Mart
customers would have bought the same merchandise from some other business, then government gained nothing from having
Wal-Mart collect these sales taxes. In fact, if Wal-Mart really does charge lower prices, then it collected less in sales tax revenues
than if people had shopped at other, more expensive stores.

Williams said the next biggest
piece of this “jackpot” for local government was that Wal-Mart paid $4 billion in local property taxes in the past decade. That, too,
seems like a lot of money. But in the context of Wal-Mart's size, the fact that the money was paid out over 10 years, and the burdens
of other property owners, Wal-Mart paid very little in property taxes.

The $4 billion in property
taxes amounts to less than 25 cents out of each $100 Wal-Mart rang up at the cash register in that decade. It is the equivalent of a
homeowner with a $50,000 job paying a property tax of just $10 per month. That's $120 a year. In reality, the homeowner at that
income level is likely to pay at least that much per month in property taxes. That the Wal-Mart property tax bill is so low indicates
just how much it benefited from demanding tribute in the form of paying reduced property taxes or not having to pay any at all on
some of its stores and other properties.

There is yet another way in which Williams's reasoning
was specious. Wal-Mart builds cheap, windowless boxes, not fancy stores. The very design of Wal-Marts means their property
taxes are low because the buildings are not all that valuable. Most retail stores are more expensive to build than a Wal-Mart, what
with display windows, iconic designs, and various amenities. Some even add to the physical beauty of a place, landmarks instead
of Wal-Mart's huge white pimples. A proper measure of Wal-Mart's property taxes would take into account any reduction in the
value of these other buildings, especially any that fell vacant because Wal-Mart came to town. The fiscal jackpot from Wal-Mart
property taxes? There is none.

Making sure Wal-Mart got credit for every possible part of this
imaginary jackpot, Williams also revealed that the company had even paid $192 million in income and unemployment taxes to
“local governments.” Presumably Williams meant to say state governments, since they are the ones usually that impose such
levies. At first blush $192 million seems like a big number, but in the context of Wal-Mart revenues it is smaller than the interest on
the interest on a widow's mite. Wal-Mart's revenues in those ten years totaled more than $1.6 trillion. That means that the “local”
income and jobless taxes she referred to amounted to about a penny out of each $100 of revenue.

Said Williams of the Good Jobs First report on Wal-Mart subsidies:

Beyond doubt, subsidies “are a great
thing” for Wal-Mart. Williams made it clear that Wal-Mart plans to continue collecting all the subsidies it can. But if local
governments follow her advice and do the math they will see that giving subsidies to Wal-Mart makes America worse off than if
Wal-Mart did not exist.

If there were no Wal-Mart, people would still buy the disposable diapers,
lightbulbs, and everything else Wal-Mart sells. The businesses that would have sold those goods would still have collected sales
taxes, paid property taxes, and even paid those “local” taxes Williams mentioned.

If it is true
that Wal-Mart's prices are lower, then local governments would have collected more in sales taxes from those merchants because
higher prices means more sales tax. And because those merchants built nicer buildings than the windowless concrete slabs that
Wal-Mart erects, they would have paid more in property taxes than Wal-Mart does. And if those businesses did not seek subsidies,
but instead competed in the market, then state and local governments would not be taking from the many to give to the few who
own Wal-Mart. That would mean taxes could be reduced or that there would be money for modern textbooks so that no child in the
twenty-first century would read about how someday the human genome would be decoded.

That $30 would be there whether Wal-Mart existed or not. It would likely be $31 or more, assuming Wal-Mart
really does charge lower prices. And without having to pay tribute to Wal-Mart, state and local governments would have more
money to carry out the functions of government.

Government handouts convey clear benefits
to the recipient. For Wal-Mart, eager to expand and take market share away from other retailers, government handouts reduce the
costs of competing in the market. They also reduce risks. Subsidies add a layer of financial insulation to buffer the company from
the inevitable unexpected developments in the market, from management errors to changes in consumer tastes. By soliciting
subsidies, Wal-Mart shifted some of the risks of its expansion onto the majority of Americans who are not regular Wal-Mart
shoppers.

Ignored in Williams's remarks is the fact that Wal-Mart relied on the power of
government to force people to give up some of their substance for its benefit. People choose to shop at Wal-Mart; when Wal-Mart
takes subsidies it forces them to pay it tribute. In forcing people to give to Wal-Mart, the company placed a burden on them,
increasing its power by oppressing those with less political power and less money. That the burden on each individual was mild
does not invalidate the principle. Wal-Mart and other subsidy seekers exercise unrighteous dominion and oppress those with less.
This is a moral evil denounced relentlessly throughout Old Testament and New. Do we excuse a thief because the sum he took was
from a holder of such great wealth that the victim did not suffer privation?

Wal-Mart earned
greater profits than it could produce on its own thanks to these forced payments. The tribute people were forced to pay Wal-Mart,
even if they never set foot in one of its stores, also meant they gave up some of their tax dollars that could have gone to schools
and roads and parks. They had fewer tools to advance themselves and fewer amenities to enjoy life just so that the Walton family,
which controls the company, could add to its enormous riches.

The Waltons are among the
least generous of the wealthy families in America, the annual surveys of giving by the rich show. Relative to the size of their
fortunes, and the giving of people with far less, they can be reasonably described as parsimonious. Clearly they fail to meet the
biblical test of charity, which requires sacrifice. That they force others to pay them tribute and then give so little relative to their
riches is conduct reproved in every great book of religious and philosophical insight. The Book of Proverbs, at 22:16, is instructive
in understanding how forcing the many to give to the few hardens hearts while tearing at the social fabric, impoverishing all of
society. The King James version reads:

The
twisted genius of this strain of corporate socialism promoted by the Walton family, and embraced by the Cabela family and Johnny
Morris, the owner of Bass Pro, is that it forces their competitors to pay for the demise of their enterprises. Subsidies help Wal-Mart
to charge lower prices. So the existing department store that sells the same television set or towel, but gets no tribute, is taxed to
benefit Wal-Mart. In this way do retail subsidies steal from the honest to benefit the greedy who manipulate the powers of
government, thwarting the market. Corporate socialism made it possible for Wal-Mart to grab market share by undercutting the
competition that did not get subsidies, while appearing to win because it was just more efficient.

Wal-Mart's fuzzy math, and its rationalization for taking welfare, is modest compared to Cabela's, which has
made its reliance on handouts a core part of its expansion strategy. In fact, Cabela's virtually boasts about its solicitation of welfare.
In its 2007 report to shareholders, Cabela's declared:

Relative to the size of their businesses, the Cabela
family is far greedier than the Walton family. Even if the actual Wal-Mart subsidies are 100 times the billion-dollar estimate that
Matera and Good Jobs First calculated, Cabela's has collected far more in subsidies relative to its size than Wal-Mart. In 2006,
Wal-Mart took in $348 billion in sales, which is roughly 177 times more than Cabela's revenues. To be in the same league as
Cabela's, Wal-Mart would have to have collected several hundred billion dollars in subsidies since it first got on the dole more than
three decades ago. And no one believes Wal-Mart got anything close to that in handouts.

It is
not only general sales and property taxes that some of the rich pocket. In Atlantic City, the moguls who own the casinos arranged
to take money from the poor. A state law directs that 1.25 percent of the amount casinos win from players be used to relieve urban
blight and provide housing and related assistance for the state's poor. More than $400 million, a fifth of the money raised from 1994
through 2006, has been diverted back to the casinos. Getting the law changed to allow this subsidy also involved persuading the
legislature to eliminate one of the watchdogs of industry in New Jersey, the state Public Advocate.

The casinos used the subsidies to pay for 13,000 hotel rooms, parking garages, and even subsidized trips to
the Jersey shore. Donald Trump's Taj Mahal casino hotel got money for new road signs. His Trump Plaza casino hotel will share in
an $89 million subsidy for retail and entertainment space. Thus does the supposed billionaire take from the poor to magnify his
profits.

The tribute Cabela's demanded from Hamburg amounted to roughly $8,000 for each
man, woman, and child in town. Hamburg was not a unique example, but part of a strategy to build Cabela's stores across the
country. Multiply the tribute in Hamburg by as many struggling little towns off the interstates as Cabela's has plans for retail stores
and the figures balloon. Cabela's plans to build stores until, like Holiday Inns, it is everywhere. Imagine how many of those towns
are run by burghers who could be persuaded to opt for hope and forget about reason. To become the dominant outdoor retailer
Cabela's would need only to find a few dozen or, if it could, a few hundred towns whose political leaders were willing to pay tribute.
By doing so it could cut the risks of expansion and gain an advantage over business owners like Jim Weaknecht who offered
better service and lower prices. Mining local and state governments for tribute could even turn into a business more lucrative for
Cabela's than actually selling sporting goods.

It already has.

In the three years after it had become a company with publicly traded stock, 2004 through 2006, Cabela's
earned $223.4 million in profits. On the 10 stores and several distribution centers it opened outside Nebraska in those years it made
deals for subsidies worth at least $293.7 million, a third more than its reported profits.

On the
first 15 stores Cabela's built outside of Nebraska, in the years 1998 through 2005, it made deals for subsidies of about $25 million
per store. The actual subsidies are certainly larger because many of the deal terms have been held back or are described in public
documents in ways that only hint at their full value. Cabela's has fought to keep some of these documents secret. It wants
government to force people to give it money, but it also wants to operate behind as thick a veil of secrecy as it can get away with,
hiding full knowledge of how deeply it legally picks pockets.

Over time the subsidies Cabela's
collects are getting bigger, not smaller. This is true even though each time any of the big three—Cabela's, Bass Pro, and Gander
Mountain—opens a new retail mega-outlet the whole theory of a sporting goods store as a destination resort loses
value.

When Bass Pro, for example, opened its own megastore in Harrisburg, less than an
hour from Hamburg and at the confluence of busier interstates with more lanes, it surely cut into whatever desire existed for travel
to Hamburg to shop at Cabela's. So, too, do the 11 stores that Gander Mountain operates in Pennsylvania.

The tribute local and state governments pay to Cabela's keeps on growing even though the market for
hunting and angling is getting smaller, not bigger. One in six Americans goes fishing, the Census Bureau said in 2001, down from
one in five just a decade earlier.