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October 26, 2005

Saint H. Lee Scott

Taking on a topic I've been meaning to get to all week, my boss Harold Meyerson writes:

Wal-Mart...will shift to more environmentally responsible practices -- demanding greater mileage of its truck fleet and better packaging of its products. It will offer more affordable health insurance to its employees, cutting the monthly premium in some cases to just $11. It will monitor the environmental and health and safety practices of its foreign suppliers. And it will lobby for a higher federal minimum wage.

There's an interesting argument here as to whether these policy shifts are wholly positive advances or mediocre markers of progress that'll weaken the case for organizing Wal-Mart. The answer, probably, is both: Wal-mart's proposed insurance plans are sound and include both preventive and basic care that's sheltered from the deductible. Monitoring its foreign suppliers while decreasing its domestic environmental footprint is good news all around. And pressuring for a minimum wage hike is disingenuous, but positive: Wal-Mart pays slightly above the absurdly low minimum wage, and since many who shop at their stores are lower income, raising the bottom's paychecks by a buck or two will give them more money to spend at Wal-Mart stores while not forcing Wal-mart to offer out an extra cent.

The problem, however, is one of incentives. Wal-Mart does not want a wealthy, economically secure society. Back in the day, the auto companies had to pay their workers enough to buy their cars, which meant raising their living standards up to the middle class. All Wal-Mart has to do is lobby against poverty so abject that the working class can't shop at dirt cheap big box retailers selling Chinese goods. But they don't want their workers or low income Americans to move up income quintiles. Give them much more money and current Wal-Mart begin going to Target, Coscto, supermarkets, Amazon. For Wal-Mart, the incentive is a moderately poor society, always teetering on the edge of solvency and terrified of what news the bills will bring. In that context, Always Low Prices is the preeminent concern, and where Wal-Mart makes its goods, how they cut costs, and what they do to the economy is ignored.

October 26, 2005 in Big Business | Permalink

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Comments

Wouldn't the argument that Wal-Mart doesn't want an economically secure society because they sell to poor people be exactly the same as the argument that Democrats/Progressives do not want an economically secure society because they politically cater to poor people?

I don't believe the latter, and I find the former to be spurious reasoning at best.

Posted by: Dave Justus | Oct 26, 2005 12:32:48 PM

Not really -- it's a question of objectives. Wal-Mart's aim is profit. If people start shopping upmarket, they lose profit. The aim of Democrats is economic advancement -- that's why they're Democrats, winning power is a means to the end, not the end itself. Plus, if w make poor folks richer, it stands to reason that they'll remain loyal to the party, much as happened after the New Deal.

Posted by: Ezra | Oct 26, 2005 12:54:56 PM

The problem, however, is one of incentives. Wal-Mart does not want a wealthy, economically secure society.

The problem is conjecture rather than discussing real subtantive issues and events.

Posted by: Fred Jones | Oct 26, 2005 12:55:22 PM

Okay, here's a real substantive event: Wal-Mart's workers require public assistance in overwhelming numbers and Wal-mart pays them below the industry's going rates. They also union bust. See? My case is proven. If Wal-mart wanted a more economically secure society, they could build one.

Posted by: Ezra | Oct 26, 2005 1:26:24 PM

I agree with you Ezra. Wal-Mart has no reason to lift (just moderately) the economic situation of it's workers. But what do you think should be done to change this? Though I would prefer that Wal-Mart change of it's own accord, I honestly think it would take government intervention to either force Wal-Mart to raise it's wages, create an arse-load of incentives to do so, or (the extremely unlikely) prohibiting Wal-Mart from union busting.

Well, all of those are extremely unlikely, but still.

Posted by: BrightNoah | Oct 26, 2005 1:38:18 PM

And pressuring for a minimum wage hike is disingenuous, but positive: Wal-Mart pays slightly above the absurdly low minimum wage

so this move hurts competing businesses -- another win.

Posted by: Allen K. | Oct 26, 2005 3:27:51 PM

Walmart is playing by the current rules. Don't like it:? Change the rules.

*Or*....you can sit around and bitch about how awful they are.

Posted by: Fred Jones | Oct 26, 2005 4:11:16 PM

If Wal-mart wanted a more economically secure society, they could build one.

Sorry, I was unaware of the awsome responsibility of business entities to make these value judgements and make societal changes (in an enlightened way, of course).

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