Media in Trouble: All the news thats UNfit to print!: Wal-Mart Cheerleaders

"The information of the people at large can alone make them safe, as they are the sole depositary of our political and religious freedom." --Thomas Jefferson 1810

Wednesday, August 03, 2005

Wal-Mart Cheerleaders

So as usual I ignored the Friedman column in the NYT oped page and skimmed the headlines through the silly woodpecker editorial, and found the word Wal-Martin this one's lede. I left it open in a Firefox tab and said, let me see if there is anything else going on before I get to this one. Perhaps I will save it for the toilet.

Well I finally got to it. Turns out it was just as I thought by reading the lede, a cheerleading piece in the NYT oped page. There is a guy from Harvard Business School and some Consultant from Toronto. I came from Rutgers and am a consultant as well, I consult in the clinical research field. I apparently am worthy of a post at Harvard myself. Let me prove it to you.

First, let's take a gander at these essential-to-the-author's-argument paragraphs:Second, most of the value created by the company is actually pocketed by its customers in the form of lower prices. According to one recent academic study, when Wal-Mart enters a market, prices decrease by 8 percent in rural areas and 5 percent in urban areas. With two-thirds of Wal-Mart stores in rural areas, this means that Wal-Mart saves its consumers something like $16 billion a year. And because Wal-Mart's presence forces the store's competitors to charge lower prices as well, this $16 billion figure understates the company's real impact by at least half.

These kinds of savings to customers far exceed the costs that Wal-Mart supposedly imposes on society by securing subsidies, destroying jobs in competing stores, driving employees toward public welfare systems and creating urban sprawl. Even if these offenses could all be ascribed to Wal-Mart, their costs wouldn't add up to anything like $16 billion.

Hmmf. Sure let's let any company employ tens of thousands of minimum wage earning employees so long as the cost to society does not equal or surpass its presumed savings in their pockets. Yes because buying ju ju beans at Walmart for 39 cents is way more important than being able to afford say, life sustaining medicine!

As preposterous as that statement is I am surprised that the men from Toronto and Harvard didn't do their homework long enough to actually calculate the cost to society of Wal-Mart's low-paying rural extravaganza experiment. They seem to have calculated everythign else. Why not the cost to the taxpayer? It is widely known that Wal-Mart employs not only the most people in this country, but the most people earining minimum wage. A wage so low that it earns Wal-Mart the added prestige of being the employer who employs the most Medicaid beneficiaries (in Alabama for example it doubles MacDonalds in this stat alone). Granted that most studies that come out regarding WalMart's cost to society are typically flawed (one estimate pins it at perhaps $2 billion yet this general $16 billion pull-it-out-of-your-ass figure doesn't seem well founded to me). Either way, even if WalMart is saving the rural public an average of $16 billion a year, those costs hardly wind up making up for any of the loss in tax payer dollars. Wait, I forgot, people spending money at Walmart are somehow saving money while at the same time boosting the nations economy and thus increasing the tax revenue for the states, thus the 6% sales tax on those 39 cent ju ju beans adds up to real tax revenue that more than pays for the insulin Medicaid doles to that ju ju bean eating diabetic in rural america!

Yes Harvardite and Torontonian, you are convincing me! Keep it coming!
Similarly, the savings to customers also exceed the total surplus the company generates for its shareholders- a surplus that would be wiped out if Wal-Mart's million-plus employees were to receive a $2-per-hour pay increase, modest though that sounds. Such a possibility would be unacceptable to Wal-Mart's shareholders, who include not only Sam Walton's heirs but also the millions of Americans who invest in mutual funds and pension plans. Instead, the more than 100 million Americans who shop at Wal-Mart would most likely just end up paying higher prices.

This last point suggests that the debate around Wal-Mart isn't really about a Marxist conflict between capital and labor. Instead, it is a conflict pitting consumers and efficiency-oriented intermediaries like Wal-Mart against a combination of labor unions, traditional retailers and community groups. Particularly in retailing, American policies favor consumers and offer fewer protections to other interests than is typical elsewhere in the world. Is such pro-consumerism a good thing?

Is pro-consumerism a good thing? I don't know genius you are the one making the argument that if people didn't consume at WalMart the savings to the planet wouldn't be justified. Besdies, if you are talking about a lower sales tax (by European standards) as pro-consumerism, then I say this to you, the tax pays for health care dipshit.

Also, if the American economy and Wall Street are so hard wired to one company I think we have bigger problems than worrying about the Walton heirs waking up in the middle of the night with a sudden sobriety/generosity attack and draft a memo saying everybody gets a $2 raise. Unless they get visited by the ghosts of Christmas Past Present and FUture on Christmas eve, this is as likely as President War Criminal being Impeached for his best friend and top dog outing a spy for political retribution (plausible yes, likely...uh no).

Oh yeah bonus points for the gratuitous use of Marxism (eluding to commie libruls no doubt) in the Grey Lady's pages.

And finally to top it all off we get this doozy:
The answer depends on who these consumers are, and Wal-Mart's customers tend to be the Americans who need the most help. Our research shows that Wal-Mart operates two-and-a-half times as much selling space per inhabitant in the poorest third of states as in the richest third. And within that poorest third of states, 80 percent of Wal-Mart's square footage is in the 25 percent of ZIP codes with the greatest number of poor households. Without the much-maligned Wal-Mart, the rural poor, in particular, would pay several percentage points more for the food and other merchandise that after housing is their largest household expense.

(Thank god this is the last paragraph cuz I am getting tired of this deconstruciton. Channeling Pandagon isn't easy, I don't know how Jesse does this regularly.)

So, the final point is that Wal-Mart is really helping rural America because that is where most of its stores are! Yes well if they built their store in rich areas who the hell would they find to work there?!! Can you picture it, Beverly Hills Wal Mart - where the cashiers drive to work in a Bentley to go make $5.15 an hour.

All this juice from a guy who wrote something called "The Dubious Logic of Global Megamergers" and his sidekick from Toronto.

So Harvard Business School you can email me to find out where to send that MBA or better yet, that teacher job contract.

xp at dk