WalMart takeover of Massmart delays

The WalMart's slash Massmart hearing delays are irritating me. I was asked a direct question on the box, are these types of government interventions preventing foreign investors from taking a closer look at South Africa. I said yes, that is the short answer.

I am still going to side with Charlie Munger here, Warren Buffett's right hand man and lifelong friend, who said this of Costco, "I believe Costco does more for civilization than the Rockefeller Foundation". He is trying to say two things, because the explanation then explains about the Rockefeller foundation: "I think it's a better place. You get a bunch of very intelligent people sitting around trying to do good, I immediately get kind of suspicious and squirm in my seat."

OK, that is the rich people argument second, what I am more interested in is the first part about Costco. Because what Charlie is trying to say is that by keeping prices as low as you can, and having as much competition in that space as possible, that you keep inflation low. You might or might not have seen reference to the WalMart effect. Both good and bad, depending on who you are. If you are a high street retailer in rural America it will be bad for you. But good for all of your customers, who will get cheaper prices.

I think in a South African context, bigger bargaining power with the suppliers is a good thing for the consumer. Lower prices equals lower inflation. Lower inflation means that the real cost of living is lower. A lower cost of living means higher disposable income. Which means greater spend. Which leads to more jobs. Or perhaps that is just the way I see it. I did a quick spot check on the WalMart website and looked for a similar sized bare bones Microwave and on the currency conversion could see that the American one was thirty percent cheaper. So much for inflation in the US, we have more to worry about here.

In the SENS release with the detail of the proposed transaction, WalMart say that their ".... core proposition is to save people money so they can live better, and this proposition has a strong appeal to consumers in emerging markets." How is this not good for consumers? And "Walmart is renowned for its operating, retailing, marketing and merchandising skills and its leading edge procurement and supply chain capabilities developed over many years of investing and trading across developed and developing countries." That again seems better for everybody.

I don't understand however the calls for the delay. This is irritating. Everyone of course except those opposing the deal, which are the same old folks. The General Secretary of the trade union Saccawu (South African Commercial, Catering and Allied Workers Union), Bones Skulu (I hope he supports Pirates with a name like that) said this: "We will tell the Competition Tribunal that we believe it is not in the best interest of South Africa for Walmart to be allowed into our country". Perhaps he should have just said that it was not in his or his members interests. And not the country.

I suspect that this might be politicking on governments part in order to keep labour unions happy. That might be why government have sided with that side. Pity the unions don't create jobs. Perhaps a reminder that WalMart employs more people (I mean associates) than government here. 1.9 million people. And all the while what is more laughable is that WalMart have pledged to buy more South African goods than Massmart do now. In my opinion, this is not a good outcome for business (the delay) and it is business who creates jobs.