This from Professor Bainbridge:

I freely admit that much of my dislike for Wal-Mart is rooted in aesthetics, but it's also got a free market component. I'd find Wal-Mart much less objectionable if it stood on its own two feet instead of leaning on government subsidies.

This is why the debate over Wal-Mart is so uninformative. Wal-Mart's liberal critics would have to admit that big government is part of the problem, while Wal-Mart's conservative defenders would have to admit that their hero would have a much harder time competing in a truly free market. And neither is willing to do so.

This is just silly. Lets first call things by their right name--these aren't subsidies, they are incentives and as well all should know, incentives are the foundation of the free market. The fact is that Walmart and other retailers generally negotiate with local government, not "big" government, unless of course we are talking about a warehouse that can have a regional, state and even multi-state impact

Ask yourself the question--if potential tax revenue is estimated at 5 million a year for the foreseeable future by having a Walmart located in the city limits, would you hand back a million to insure that they build in your town? What about 2 million? 3 million?

The answer of course depends on the opportunity cost. Walmart competes against a broad range of retailers and other tax-generating entities. Any reasonably competent city manager is going to understand the market value of raw land in tax terms--which makes this comment so incomprehensible:

even if the subsidies given Wal-Mart by many local communities to encourage opening a store are not as large as Wal-Mart's critics claim, does anyone seriously doubt that Wal-Mart often gets breaks on things like zoning, property or sales taxes, and other regulatory issues that small business competitors don't receive?

What is the point of this comment? Of course Walmart receives greater discounts--they provide greater potential tax revenues than Joe the Cobbler does for the same square footage. A better question would be whether Walmart would get preferential treatment over Neiman-Marcus.

I seriously doubt that.

The bottom-line is that so-called government subsidies are part and parcel of a free market in tax jurisdictions. Retailers have a choice of where to build, which of course creates a natural competitive environment among municipalities hoping to attract big sales tax dollars.

There is another element to consider in the negotiation for a Walmart site--Walmart is an anchor that attracts all sorts of other businesses to the area--businesses without the same market clout as Walmart, and therefore not subject to the same level of tax discounting.

Consider a major commercial development in my city.

For years, several hundred square acres of land, between two exits off of the I-15 lay fallow, zoned for commercial development, but unable to get over the very large hurdle that there was no existing commercial base there. Finally, a few years ago, a Super Walmart and Home Depot were contracted to build on the site. The road infrastructure was improved to handle the new volume of traffic. I have little doubt that Walmart and Home Depot drove killer deals--woe, woe woe--the tax revenues that we foreswore!

Yet almost immediate, subsidiary development began occuring--an IHOP, a Chilis, a few banks, some strip malls, a few fast food restaurants. Then came a Kohls, a multiplex, more strip malls. The decrepit old K-mart was redeveloped into a new Sears site. A Target was installed, Pier 1 Imports and finally--the piece de resistance--a Lowes and Costco.

Building continues and there is substantially more land available. What kind of discounts did this second, third and fourth wave of retailers get from the muncipal tax man?

Right.

Don't feel sorry for Joe the Cobbler--he's collecting the Benjamins at his new digs in the strip mall...