The Case for Small Government

A Libertarian Perspective on Economic and Social Policy

April 11, 2006

Wal-Mart Banking

Wal-Mart wants to enter the banking business. Many Wal-Mart critics oppose the move and want federal regulators to block it, suggesting Wal-Mart already wields too much power in the U.S. economy.

This view is misguided. If Wal-Mart can do for prices in the banking sector what it has done for prices in the retail sector, everyone should be delighted (except existing banks). The reason Wal-Mart wields power is because it is efficient. That is exactly as it should be.

13 Comments:

At 10:14 AM, Blogger KRMcKenzie said...

A problem arises because the policies of the Fed and FDIC are effective subsidies to banks. Many people are okay with these subsidies because they are for banks only (I don't agree with the logic, but that's what they feel). However, because of U.S. legislation, if Walmart got into the banking business the FDIC would have to subsidize Walmart. Many people would be upset about this. If one is to argue for Walmart banks it is also beneficial to argue for a reduction in banking regulations/FDIC policy. I support this reduction in regulations and therefore Walmart banks wholeheartedly.

 
At 1:10 PM, Blogger Al Brown said...

This comment has been removed by a blog administrator.

 
At 1:13 PM, Blogger Al Brown said...

Most people don't think of what the Fed and FDIC is a subsidy for banks, so I don't know if that is the source for their objection.

I think people have a problem in general with Walmart because of how efficient it is. Its not that Walmart is doing things that other US companies aren't; its just doing them better.

For example, I think its ludicrous that Walmart is targeted because its contractors use undocumented labor when the rest of us aren't for doing exactly the same thing.

 
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