Robert Reich: Don't Blame Wal-Mart

http://www.nytimes.com/2005/02/28/opinion/28reich.html?hp=&pagewanted=print&position=

BOWING to intense pressure from neighborhood and labor groups, a real estate developer has just given up plans to include a Wal-Mart store in a mall in Queens, thereby blocking Wal-Mart's plan to open its first store in New York City. In the eyes of Wal-Mart's detractors, the Arkansas-based chain embodies the worst kind of economic exploitation: it pays its 1.2 million American workers an average of only $9.68 an hour, doesn't provide most of them with health insurance, keeps out unions, has a checkered history on labor law and turns main streets into ghost towns by sucking business away from small retailers.

But isn't Wal-Mart really being punished for our sins? After all, it's not as if Wal-Mart's founder, Sam Walton, and his successors created the world's largest retailer by putting a gun to our heads and forcing us to shop there.

Instead, Wal-Mart has lured customers with low prices. "We expect our suppliers to drive the costs out of the supply chain," a spokeswoman for Wal-Mart said. "It's good for us and good for them."

Wal-Mart may have perfected this technique, but you can find it almost everywhere these days. Corporations are in fierce competition to get and keep customers, so they pass the bulk of their cost cuts through to consumers as lower prices. Products are manufactured in China at a fraction of the cost of making them here, and American consumers get great deals. Back-office work, along with computer programming and data crunching, is "offshored" to India, so our dollars go even further.

But they are very much part of the problem. They could treat their workforce better. They don't need to keep unions out and they don't need to destroy main street.

I'm a long-time, proud Democrat and I just joined DU. You've got a great thing going here! I had to weigh in on this issue since my neighborhood is facing the very real possibility of a giant Wal-Mart Super Center right smack next to our old, working + middle class, pleasant "sidewalk suburb" of Emsworth, just NW of Pittsburgh. The 15K additional vehicles expected through an already busy main drag was the most disturbing aspect of this...until I heard news of Wal-Mart's ruthless, sleazy behavior in Quebec. My wife and I were so incensed by the news of this, that I sent a letter into our local weekly paper, which is very popular and widely read for coverage of news unique to our string of towns overlooking the Ohio. Since there's no website for the small, private paper, I'm posting my letter below as it appeared in The Citizen newspaper of Bellevue.

Below is the text of my letter. The site where the proposed Super Center will sit is called Dixmont, after the long closed state hospital (founded by Dorthea Dix) that occupied it for decades. The township adjacent to us is Kilbuck Township. The site is prime land overlooking the Ohio River and a 1/4 from I-79. The owner and developer have never considered less controversial alternatives, even though there are many...

Title: Another Wal-Mart Danger

Recently, in Quebec, Canada, Wal-Mart chose to abruptly, permanently close a store where it was negotiating a contract with its workers who recently formed a union affiliated with the United Food and Commercial Workers. They didn't like the workers' proposals, so they packed up and locked up for good. Proponents of the Dixmont Wal-Mart Super Center in Kilbuck will claim I'm pulling out a late-hour scare tactic-I wish I were. Unfortunately, it is fact. This has been reported in all major local and national news outlets.

Let's say the workers at the proposed Dixmont store vote to form a union, as retail and grocery store workers in large corporations often do to help ensure fair treatment, wages and benefits. In a free market society where workers are permitted by law to organize without intimidation, and in a region where union membership is not uncommon, this should be no surprise to Wal-Mart. But we now have every reason to believe that, if negotiations ever get uncomfortable, the new store will be shut down for good, just like
the one in Quebec.

So, a massive, empty Wal-Mart Super Center overlooking the Ohio River could become a reality several years after it's opening. The size of a jet airliner hangar, it's hard to conceive of any business filling it. And this could occur shortly after most competing large stores in our area have already closed (these closings are well-documented in areas where new Super Centers have taken hold). The store would be high and dry, and so would we.

The events in Quebec certainly give weight to Wal-Mart's critics who say, despite its rosy commercials, it's a fair weather neighbor and a schoolyard bully. What they hold in wealth and power they clearly lack in integrity. Just ask the cashiers, stockers, sales clerks, janitors, parking lot attendants, meat-cutters, etc., at the Jonquiere, Quebec store, who tried to work out a fair contract with the world's largest, richest retailer.

With ground yet to be broken at Dixmont, it's still not too late for a smarter, less controversial choice for this site.

Sincerely,
Jim Joyce
Emsworth

Below is the link to the community group--Communities First!--that is fighting this Wal-Mart Super Center. BTW, we already have a Wal-Mart 10-15 minutes up the highway in a large retail corridor made up of multiple strip malls. They do not plan to close that one, rather they are also making IT a Super Center. Two Super Centers 12 minutes apart? Brother!

http://www.tidescenter.org/WPAproject_detail.cfm?id=200005.0

Please consider lending them a hand if you can!

I have been posting on the DemocraticUnderground for over a year (and have been a proud member). I have seen some of the most intellectual, well-informed discussions!

Post a question on anything - and you will have all kinds of helpful input within minutes!

It has provided me with unbelievable comfort and unbelievable enrichment. If you go down the left side of the main screen, and hit on DU Groups, you will find many 'discussion clubs.' Many very well-informed people post there; they are well-educated, and their posts, based on both literary information and personal experience, are very enlightening.

Again, welcome!

for signing NAFTA.
Wal-Mart didn't grow to this size just for having low prices. They got to where they are today by putting stores in markets where people had few other shopping options.

...but that only tells half the story. We had a major debate in my community about whether to grant Wal-Mart a zoning exemption it sought to build a store here-- the nearest wal-Mart is otherwise about three hours away. Roughly half the community decried the economic ruin that follows Wal-Mart like a grim entourage, while the other half accused the Wal-Mart detractors of being elitists who wanted to deny the poor an opportunity to obtain consumer goods at low prices.

Reich is correct in the sense that personal self interest often trumps the common good, so folks will take their business to Wal-Mart in pursuit of lower costs even while Wal-Mart is draining the life from their local economy and from the network of retail products manufacturers that might otherwise have supplied those goods through other channels. Wal-Mart capitalizes on selfishness-- people shop there to maximize their personal profit, and Wal-Mart in turn does the same.

But that's the side of the equation that Reich is missing. Yes, Wal-Mart customers are myoptic in their pursuit of lower prices, but Wal-Mart is absolutely venal in its willingness to give them the trinkets they desire while sucking the life from their communities.

BTW, voters here ultimately said no, and the nearest Wal-Mart is still three hours away. I like it that way, but then I'm an elitist who hates to see less fortunate folks get a break.

I don't have time to write now on how entirely shortsighted that thinkin is:

Here is a site selling a new movie I heard about on AAR: http://www.americanjobsfilm.com/

Couple of other sites:

http://www.rescueamericanjobs.org/

http://www.lostamericanjobs.com/

There's lots of info out there as to why this is a stupid and short-sighted policy

Suppressing prices until they drive every other retailer in the locale out of business?

What does the Walmart CEO get paid?

If WalMart is not breaking any laws, then I have a simple question. What direction would any of us take if WE were the CEO? How long would shareholders keep us around if we shut down all expansion and doubled what we pay employees, which is now at least above minimum wage?
And how many of you who shopped at WalMart last year would care to sit down and make out a check for the money you saved to "Save Mainstreet USA" or whatever?
I detest the corporate mindset in this country as much or more than anyone, but we have to understand that executives of any corporation have one interest and one interest only.......the bottom line. If WalMart is following the law, then maybe the anti-trust laws need to be changed to include WalMart and the WalMart-types in their growing monopolies. But, I believe we're off base when we criticize the executives for doing what the shareholders are simply paying them to do.

Firing people who even think about unionizing is against the law. Forcing employees to work extra hours off the books in order to circumvent minimum wage laws and deny them benefits to which the law entitles them is against the law. Proving those claims against a corporation which spends more money on lawyers to crush suits than any other corporation in history is, well, challenging. Our legal system isn't perfect: those with the biggest baddest lawyers tend to win in courts, regardless of the merits of their position. And MalWart retains most of the biggest and baddest lawyers in the country and uses them aggressively. David's victory over Goliath is a charming fairy tale; in the real world, Goliath cleans David's clock pretty much every time.

Unfortunately they seem to always get off with a slap on the wrist in the form of easy settlements and small fines for their violations of labor laws and environmental protection regulations and city ordinances. The Justice Dept recently gave them a huge break in their child labor law violation settlement by instituting a two week notice procedure before investigations will start in the future when whistleblowers allege wrongdoing. There must be a lot of money greasing the wheels for them to get so many big breaks when they are caught in violations.

I don't shop there, I have spent time and money going to meetings and sending hundreds of letters to local politicians and city planners to prevent SuperWalmart from invading residential neighborhoods and I donated money to pay for attorneys to represent us in fighting the developers. However although we got a few mitigating concessions (some of which they already violated during construction), they won through their use of big money (funneled through developers) including large campaign donations to their hand picked candidates to run TV ads to get elected and payment of Walmart supporter 'plants' to speak in favor at City Council, etc.

But along with their steamrolling tactics and political maneuvering, Walmart has benefited tremendously from the need for jobs in many areas and from our consumer driven culture that values abundant cheap shopping as such a high priority over other considerations.

Oh? Is a crack addict in withdrawal the best judge of his or her best interests, or of his or her community's best interests? Does a domestic abuse victim know best what s/he wants?

People are only the best judges of what they want insofar as their judgement is not impaired by externalities beyond their control. How many of those people who's Faustian choice leads them to buy cheap goods at the expense of others would make the same choice were they themselves being paid a decent living wage? Or knew that their actions were impoverishing families and communities around the country?

One obvious solution is don't shop there. However, Reich would use the power of the state to insist that corporations such as WalMart to pay their workers wages on which they can live and offer health insurance. It's our government and we can tell them what we expect in order for them to get a business license.

The only way for the workers or citizens in us to trump the consumers in us is through laws and regulations that make our purchases a social choice as well as a personal one. A requirement that companies with more than 50 employees offer their workers affordable health insurance, for example, might increase slightly the price of their goods and services. My inner consumer won't like that very much, but the worker in me thinks it a fair price to pay. Same with an increase in the minimum wage or a change in labor laws making it easier for employees to organize and negotiate better terms.

He exonerates WalMart, which is nonsense.

He knows better too.

Walmart hires lobbyists on the Hill and makes political contributions with a heavy tilt toward Republicans. They are hardly blameless.

Here's the deal.

The lobbyists water down or kill necessary new laws, while creating new anti-worker and anti-community laws.

The management lawyers prevent the laws from being enforced.

The legal fees and political contributions grease the wheel so the bicycle never sqeaks.

And workers get the shaft.

However, I also think he's right in that the benefits to Americans of hammering WalMart out of existence are too hidden to make it an attractive mass movement. It's like the Christian conservatives who vote Republican. Most of them would be much better off if the Democrats were in control of the government, but they can't see that through other issues. In the case of WalMart, the argument that WalMart is hurting them by driving down wages and not offering benefits is arcane; however, the benefits of WalMart, low prices, aren't.

I think we'll have an easier time getting Christian fundamentalists to abandon the Republican Party because the issues of abortion and gay rights don't directly affect them; no one is making anybody get an abortion and no one is forcing a straight to be gay. When Christian fundamentalists start loving their own families more than they hate gay people, they'll vote for Democrats. On the other hand, it's going to be a little difficult to tell someone to pay higher prices today because it could help him get a bigger paycheck tomorrow, even if that is the case.

The laws and regulations need to be strengthened. Even if Wal-Mart went out of business tomorrow, other retailers would follow their example. Republicans have demonized regulation so much that we're almost back to the Gilded Age.

Wal-Mart may have broken labor agreements and environmental laws. And they certainly should obey the law. But the solution is to insist that regulatory, police, and judicial functions do their jobs. Somehow that basic issue also seems to have fallen off the table.

The Repukes control all elements of government.

Dems have contributed to the mess too.

One of the first orders of business when the shrub usurped President Gore's office back in 2000 was to go through the Department of Justice's litigation divisions and demote all of the chief counsels engaged in suing corporations down to mailroom duty and replace them with new attorneys freshly imported from... you guessed it, the corporations who but a moment before had been defending themselves from DOJ suits. You aren't going to believe this, but by an incredible fluke, all of those newly appointed attorneys decided that there were insufficient grounds to continue the actions against their former employers and they promptly settled out of court for a six pack of Bud and a quart of pork fried rice. Is that an incredible coincidence or what? :grr:

namely that pressuring Wal-Mart though actions such as letter-writing campaigns or boycotts, are not the best way to address the problems. We're better off pressuring our representatives than a private company.

Laws are not being enforced. The federal government has an obligation that it's not fulfilling. And where Wal-Mart is being economically destructive within the law, the laws may have to change. It's true that Republicans control the federal government now, but they're paying no political price for abusing their power.

This is one place where the corporatization of the Democratic party is extremely harmful. And letting Republicans define the terms of the debate takes theses issue completely off the table.

Letter writing and boycotts should not be abandoned as a tactic against WalMart. However, their effect would be limited unless we can legislate better protections for worker's rights and simply enforce labor laws already on the books.

You're right about not letting the Republicans define the terms of the debate. If this is class warfare, let us make the most of it.

Most ironic and insidious how they accomplish their ends, no?

And I bet when you were studying law, you imagined it had something to do with truth and justice and all that good stuff, right? Kind of a long fall back to reality once you see how it's actually practiced. Well, at least as a lawyer, you've got the tools at your disposal to resist it. Best of luck to you! :hi:

Spirit-willing ... if I passed this last bar.

I'm in my mid-40's - and this is just a fun third career.

BUT ... I retired from social work five years ago. During my social work years is when my eyes were OPENED as to this kind of stuff. And I laughed out loud - I do remember a time when I believed in 'truth, justice, and the American way.'

During my S/W-years, I realized that the poor were 'reported upon' in widely disproportionate numbers, etc.

It's gone downhill from there - in terms of realizing the manipulation in the system that goes on.

I been invited to practice with my old lawyer friends that routinely practice in Social-Worker-Court (Dependency Court). It would be nice to be with my old friends again (in a different capacity).

Take care, KevinJ.

The store is too big and I can't stand walking all over looking for something I can't find because it's so disorganized and there aren't any help or maps.

Then there is how Walmart treats its labor force.

THen there is the quality of the merchandise.

that laws and regulations can be used to level the playing field. For example, so long as there are no reasonable worker protection and environmental regulations in China and other countries doing the manufacturing that we used to it will always be impossible for American workers to compete. Level the playing field a little by requiring at least some basic laws in the countries of origin for the goods we buy and the superior innovation of American managers and the superior quality and productivity of American workers wil bring a good deal of manufacturing back.

philosophies that have sent our capital out of the country. He has said he was wrong about outsourcing but he still holds to the fantasy that the market is ultimately moral. He is not a bad guy, but he has been an extreme "enabler" and gave a lot of legitimacy to Socially Darwinistic economic theories.

Don't hate the player; hate the game.

prices to an extreme. They did not have to start with the shoddy labour practices if they were getting such great deals from China. And the bullying of their employees and paying less than a living wage so that welfare has to step in.

He should have put Sears or something in the title. And these mid sized corparations didn't disappear because how we shop - they disappeared because that is the projected and understood outcome of deragualtion (a whole pile of small businesses & a few monster sized corporations - with nothing in between).

I wrote this a few months back for my college newspaper, the West Liberty State College Trumpet. I feel that it is eminently applicable to the discussion at hand...

BE WARY OF WAL MART

Hello again, West Libertarians, it’s your favorite agitator, me! Now I know that all politics, all the time can become rather boring, so I have another grievance to air… The Scourge That Is Wal-Mart. I’d wager that more than one of you is proverbially scratching your head and thinking, “What could he possibly have against Wal-Mart?” Well, let me begin with a few facts.
Wal-Mart is the world’s number one retailer. Its revenues were $259 billion in 2003, making it three times larger than the next largest retailer, France’s Carrefour. Wal-Mart recently surpassed ExxonMobil as the world’s largest corporation, in terms of revenue, and posted 2003 profits totaling $9 billion. Wal-Mart, with over 1.5 million employees, is second only to the Department of Defense as the largest employer in the nation. Wal-Mart currently boasts a total of 3,710 domestic retail outlets, and owns 30% of the domestic market for ALL consumer goods, including 20% of the music/video sales, and 15% of grocery sales.
Now you might be thinking, “Well, sure, it’s a giant corporation. But they do have the lowest prices and best selection!” And right you would be. But at what price, ‘progress’? A 1995 Iowa study showed that within two years after Wal-Mart’s introduction, the state lost 50 percent of its clothing stores, 42 percent of variety stores, and 30 percent of its hardware stores. Most telling were the statistics on net job creation and salary differential. For each job created by Wal-Mart, 1.25 jobs were lost in the community at large. The Wal-Mart salary is on average 25% less than that of the job it destroys.
The Wal-Mart corporation’s unethical business practices, coupled with its tremendous complexity and sheer size, give it such a powerful advantage over competitors that the American retail landscape is being altered, not just in small towns, but indeed, all across the country.
Whenever a new store is constructed, they methodically set out to put local retailers out of business, by having management travel to local competitors of all stripes, record prices, and undercut them. The corporation is willing to take a loss for several quarters, provided that the local competition is eliminated. They nearly always succeed. Because their volume is so large, suppliers are usually willing to give them substantial discounts. Those that are not willing to cut them bargain-basement deals are told, “Sell at this price, or we don’t do business. It’s as simple as that.” The supplier is caught in quite a quandary. Should they slash their profit margin radically, and hope that the volume will make up the difference, or refuse and risk all of their customers at the traditional selling price slowly wasting away into nothingness?
Usually, Wal-Mart wins the supply side battle. Small town businesses disappear. Then Wal-Mart closes the first wave of stores, and starts building superstores, Wal-Marts with groceries. Many towns lose their local Wal-Mart stores, as fewer superstores are built than the original stores, and often in new locations entirely, in order to have better geographical coverage. Now, not only have the local retailers been forced out, but also the Wal-Mart that people had come to depend on is no longer there. The result is that people have to travel farther to meet their basic needs.
A corporate entity of Wal-Mart’s size is almost impossible to police, with regard to labor, import, and other relevant trade laws. Employing illegal immigrants at wages far, far below those of American workers is commonplace. Deliberately mislabeling imported goods as made in the U.S.A. also occurs with startling regularity. Wal-Mart is able to make a mockery of traditional principles of supply and demand by using its great volume of trade as an economic gun-in-the-back for both distributors and consumers. I am a firm believer in free-market capitalism, the idea that the many of the needs of society will, by and large, be taken care of by competition between business interests vying for customers. When there is no competition, there is no protection for the consumer. Left unchecked, Wal-Mart will become the only choice available to us. They will be free to price goods as they wish, as there will be no true market to dictate prices. That is not the American way. That, readers, is thinly veiled corporate communism. Don’t believe me? Think I'm just a tinfoil helm alarmist? Just wait and see. My fondest wish is that my predictions never come to pass.

MojoXN

While they may be unethical, the simple fact of the matter is that they got the job done. They stomped out the competition (smaller retailers and mom & pop outfits), and they are now the world's largest retailer. If we simply look at the dollars and cents of the situation and leave out ethics and human considerations, Wal-Mart is the best at being capitalists.

Am I justifying it? No, I find it deplorable, but if my goal was to be the biggest and the most powerful, I'd emulate Wal-Mart's tactics to drive out competition, win over customers, and gain more market share. They simply pull out all the stops in achieving greater profits. They simply refuse to allow ethics to be an anchor that may hold them back from cutting costs and increasing profits.

It is all about money and power. What people have to come to realize is that the American dream has been replaced by a nightmare that states in no uncertain terms that the man who dies with the most stuff wins. It is not about finding happiness anymore. It has now degenerated into finding money instead.

If you don't limit yourself to abiding by the law, sure, it gives you one hell of a competitive advantage over those who do obey the law. Making a living would be much easier if one could simply kill people and take their money, but that sort of behavior is generally frowned upon. Simply because MalWart has enough high-powered lawyers to defend themselves from the efforts of their victims to seek justice doesn't mean that they are to be commended from getting rich by violating pretty much every labor law in the book.

and it breeds greed. When you build a system based on competition and exploitation, you will always find folks who are willing to do anything to bend the rules as far as possible and find the smallest loopholes to gain a competitive advantage. You don't get this if it is an issue of mutual cooperation, not seeing if you can stomp the other guy into the ground.

I blame Wal-Mart for breaking labor laws and hiring illegal aliens and environmental degradation whenever they plow over woods and throw up a warehouse they call a store, but I wouldn't blame them for paying 9.00 bucks an hour for work or using Chinese suppliers as opposed to domestic ones. That's not breaking the law. That's capitalism.

rent alone is $550/month , and I have a wife who can't work . the $450 left must be enough for bills , food , etc.

even if walmart was satan himself I don't see any other option , either shop there or survive on ramen noodles 50% of the month . Tried that once ... our health got screwed up and being without insurance we figured that eating properly is untimately cheaper.

maybe after I finish school .... but now , I'm afraid I'll be selfish and look after my own . sorry.

That having been said, I do not blame or spend time negatively judging those who are so poor that they have no other choice but to shop there.


But I do have choices.

I will not shop there because of the censorship - they would not carry Jon Stewart's book.

I will not ship there because their pharmacies do not carry The Morning After Pill - because they seek to impose the effects of their personal philosophy as to birth control et al on the rest of us. I know. I asked.

Those reasons are in addition to the ones discussed above.

She made the comment that Walmart is her second job and they have just told her that since she is SOOOO inflexible (her other job is a full time job Mon-Fri, so I'm not sure how she can even work at Walmart) they will either have to let her go or find a less "distinguished" position for her. Read into this, lower her pay and/or fire her ass because she isn't willing to work 2 full time jobs and be treated like a second class citizen!

Walmart doesn't get a dime from me and I hope their inflexibility puts their ass right out of business. IMHO, that is EXACTLY where they are headed because this is at least the third no go I have heard of with regards to EXPANSION of their stores.

Now if only the damn courts would tell them to follow labor laws, Workman's comp laws, and common decency maybe they would FINALLY close their doors for good!

http://www.useless-knowledge.com/1234/jan/article312.html

shopping At Walmart


By Robert Paul Reyes
Jan. 18, 2005

I find a parking space a half mile from the Walmart entrance and I begin my trek to the behemoth monopolizing the horizon.

At the entrance a Walmart greeter welcomes me with a toothless smile, and I thank the heavens that I have a pension waiting for me in my old age.

I grab a shopping cart large enough to stock provisions to feed the Brady Bunch for a whole month, and I clear a path in front of me.

My cart rapidly fills up with cheap electronics, groceries, toiletries and assorted items. Walmart perfectly exemplifies the new paradigm: Greedy shoppers in a consumer nation stockpile cheap products manufactured by slave laborers in China.

An ethnic-looking housekeeping subcontractor cleans up a spill made by a harried shopper and I wonder if he has a green card or health insurance card.

I bump into somebody I used to work with and we both say "Hi" and quickly continue our shopping expedition. Walmart is like a watering hole in a jungle where you will find both predators and prey. Walmart is not the place to go away from it all, you can't turn into an aisle without running into somebody you know.

I pay for my goods and make my escape and once again vow never to return to Walmart.

"My name is Robert and I am a Walmart shopper..."

------------

About the author: Robert Paul Reyes is a columnist for the Lynchburg Ledger.

Email: rreyes4966@aol.com

He was teaching at Brandeis, but I've heard him recently speaking on NPR from Berkeley.

Is he now bi-coastal?