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Not a good idea. Wal-mart has over a million employees, but is not too big to fail. Problem with the financial sector is that everything is inter-connected. Lon

by btian 13y ago

Not a good idea. Wal-mart has over a million employees, but is not too big to fail. Problem with the financial sector is that everything is inter-connected. Long Term Capital Management was deemed too big to fail, yet the number of employees was tiny.

jzwinck 13y ago
Are you sure Wal-Mart isn't too big to fail? Do you live in a place where it is dominant? A lot of Americans do now live in such places, where Wal-Mart has out-businessed smaller shops. If your choices of where to shop are pretty much limited to Wal-Mart, Costco, and Home Depot, where does that leave you if one of them does something really bad? Do you think the US would be all right if all the Home Depots closed tomorrow? It would not be all right. Twenty years ago there was no such thing.
- btian 13y ago
  I live in Boston, MA, and I have not shopped at a Wal-mart except when I was in China. I'm quite optimistic that other supermarkets will be able to fill its shoes if Wal-mart were to fail. Perhaps Wal-mart is not a good example. My point is that when a 25000 employee company in any other industry fails (size of Lehman Brothers when it failed), the ripple is much smaller, and therefore, capping the number of employees is not a good idea. I do agree, however, that TBTF is bad. No entity should be TBTF and hold the country hostage.
- freehunter 13y ago
  In my area (Midwest), Walmart, Costco and Home Depot have some competition that would love to pick up that slack. Meijer is a super store challenger to Walmart, with Spartan Stores/D&W/Family Fare and Kroger challenging Walmart for food. Home Depot has Lowes (pretty sure they're nationwide). Costco has Sams Club (part of Walmart) for general merchandise and GFS Marketplace for food. The real monopoly in my mind is Best Buy. I don't know how they stay open, but I certainly don't see any competitors in my area. Walmart may drive out mom and pop stores, but there are plenty of regional chains still around.
- justincormack 13y ago
  It wouldnt matter if it failed, someone could buy it from bankruptcy and restart it. There are no real consequences.
- ams6110 13y ago
  It's not like other retailers wouldn't move in pretty quickly if WalMart suddenly vanished for some reason. They are big, but they are not the only game in retail.
deleted 13y ago
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bradleyjg 13y ago
They certainly are too big to fail. Do you really think the government would take steps that would lead to Wal-Mart going out of business and putting those million people out of work, and the communities that depend on Wal-Mart for retail service and tax revenue, in the lurch? I don't. Wal-Mart is TBTF, the question is whether there's anything the government could do that would cause it to catastrophically fail (and thus whether or not there's a moral hazard involved). In the case of Anderson, the government indictment killed the firm because no one wanted to be audited by a firm indicted for fraud. In the case of banks, there are automatic sanctions that go into place upon a criminal conviction that would constrict the ability of the bank to access capital markets, and thus could conceivably lead to rapid collapse. It's hard to see anything similar that could be done to Wal-Mart. If convicted of a crime most likely it would just pay whatever the fine was and keep doing business. On the other hand, take a business like Boeing -- that's both TBTF, largely because of it's giant workforce, and vulnerable to rapid collapse if government sanctions, such as those stemming from criminal conviction, made it ineligible for US government contracts (such contracts make up around 40% of revenue). As for the grandparent's proposal rather than a hard cap, I'd prefer to see some sort of feedback mechanism to counteract natural economy of scale effects. Perhaps some sort of escalating tax rate (per employee maybe or some combination of employee and revenue). For industries like banking with acute dangers something more tailored might be in order -- taking into account balance sheet size, nominal outstanding transactions, and counterparty centrality.

by btian 13y ago

jzwinck 13y ago

Are you sure Wal-Mart isn't too big to fail? Do you live in a place where it is dominant? A lot of Americans do now live in such places, where Wal-Mart has out-businessed smaller shops. If your choices of where to shop are pretty much limited to Wal-Mart, Costco, and Home Depot, where does that leave you if one of them does something really bad? Do you think the US would be all right if all the Home Depots closed tomorrow? It would not be all right. Twenty years ago there was no such thing.

btian 13y ago
I live in Boston, MA, and I have not shopped at a Wal-mart except when I was in China. I'm quite optimistic that other supermarkets will be able to fill its shoes if Wal-mart were to fail. Perhaps Wal-mart is not a good example. My point is that when a 25000 employee company in any other industry fails (size of Lehman Brothers when it failed), the ripple is much smaller, and therefore, capping the number of employees is not a good idea. I do agree, however, that TBTF is bad. No entity should be TBTF and hold the country hostage.
freehunter 13y ago
In my area (Midwest), Walmart, Costco and Home Depot have some competition that would love to pick up that slack. Meijer is a super store challenger to Walmart, with Spartan Stores/D&W/Family Fare and Kroger challenging Walmart for food. Home Depot has Lowes (pretty sure they're nationwide). Costco has Sams Club (part of Walmart) for general merchandise and GFS Marketplace for food. The real monopoly in my mind is Best Buy. I don't know how they stay open, but I certainly don't see any competitors in my area. Walmart may drive out mom and pop stores, but there are plenty of regional chains still around.
justincormack 13y ago
It wouldnt matter if it failed, someone could buy it from bankruptcy and restart it. There are no real consequences.
ams6110 13y ago
It's not like other retailers wouldn't move in pretty quickly if WalMart suddenly vanished for some reason. They are big, but they are not the only game in retail.

deleted 13y ago

[deleted]

bradleyjg 13y ago

They certainly are too big to fail. Do you really think the government would take steps that would lead to Wal-Mart going out of business and putting those million people out of work, and the communities that depend on Wal-Mart for retail service and tax revenue, in the lurch? I don't. Wal-Mart is TBTF, the question is whether there's anything the government could do that would cause it to catastrophically fail (and thus whether or not there's a moral hazard involved). In the case of Anderson, the government indictment killed the firm because no one wanted to be audited by a firm indicted for fraud. In the case of banks, there are automatic sanctions that go into place upon a criminal conviction that would constrict the ability of the bank to access capital markets, and thus could conceivably lead to rapid collapse. It's hard to see anything similar that could be done to Wal-Mart. If convicted of a crime most likely it would just pay whatever the fine was and keep doing business. On the other hand, take a business like Boeing -- that's both TBTF, largely because of it's giant workforce, and vulnerable to rapid collapse if government sanctions, such as those stemming from criminal conviction, made it ineligible for US government contracts (such contracts make up around 40% of revenue). As for the grandparent's proposal rather than a hard cap, I'd prefer to see some sort of feedback mechanism to counteract natural economy of scale effects. Perhaps some sort of escalating tax rate (per employee maybe or some combination of employee and revenue). For industries like banking with acute dangers something more tailored might be in order -- taking into account balance sheet size, nominal outstanding transactions, and counterparty centrality.