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WalMart In The Balance

Stephen Bainbridge from the right and Max Sawicky from the left mount a joint communitarian (Max uses the word "populist," but that term's become such a semantic football that I think it's best left aside) against WalMart. My tendency is to take the Kevin Drum line, instead. The problem with WalMart begins with the fact that it has an extremely low-wage, non-union workforce whose non-union status is maintained by foul means. The problem with WalMart also comes close to ending there. Give me a unionized WalMart with decent labor policies, and I'll happily let the colossus stamp out America's mom and pop stores if that's what the market demands. Unfair subsidies are, of course, unfair and should be opposed, but WalMart is hardly unique in seeking such things for itself and, indeed, management would be irresponsible to behave otherwise. Lest such a quasi-defense of WalMart open me up to attacks from the left, let me quote Nathan Newman:

Wal-Mart is no doubt here to stay as part of the fabric of our economy. But just as the anti-union auto corporations of the 1920s were forced to improve job conditions for their workers in the 1930s and 1940s by a combination of legislation and union organizing, so too must we work to force Wal-Mart to become a responsible employer that is a net contributor to labor standards, and not a drain on our public resources.
I think that analogy is just right. It would have done nobody any good to try and shut down the auto industry in the 1920s. Instead, it's considerable economic power was harnessed for the broader public good essentially through unionization. The industry prospered in the following decades and so did the United States. WalMart is a very successful companies, and it's an excellent thing for America that we have such a dynamic and productive retail sector, thanks in no small part to some very clever managers at WalMart. But workers are getting a raw deal out of it, and that should be stopped. But give the workers a bigger slice of the pie and then let the pie grow, grow, grow.

February 25, 2005 | Permalink

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» Wal-Mart: The Debate from Freiheit und Wissen
The blog-o-sphere is alive and buzzing today with attacks on Wal-Mart, a very favorite topic of mine... [Read More]

Tracked on Feb 25, 2005 3:09:42 PM

» BAINBRIDGE
GOES NATIVE
from MaxSpeak, You Listen!
Here is a splendid critique of the Walmart collossus from the very conservative Prof Bainbridge. At the same time, my pal Nathan Newman, or as I prefer to call him, NEWMAN!, has been waging jihad against Walmart. What's interesting his... [Read More]

Tracked on Feb 25, 2005 3:26:04 PM

» Wal-Mart Not Evil? from CasdraBlog
Well let's not get carried away. I don't shop there for a variety of reasons but clearly a lot of people do. If people want to shop like that, fine. Matthew Yglesias has an interesting take on the real problem:The problem with WalMart begins with ... [Read More]

Tracked on Mar 9, 2005 2:10:43 AM

Comments

Don't forget the rampant sex discrimination.

Posted by: travis | Feb 25, 2005 12:42:22 PM

All I know is: if my mom and pop owned a store, I wouldn't shop there.

Posted by: JP | Feb 25, 2005 12:45:09 PM

Right on, Matt. Those who oppose Walmart beyond its substandard labor practices tend to be upper middle class elitists. I don't know whether Walmart will end up unionized or not, but the struggle to unionize it, in and of itself, will probably force it to become a more responsible employer.

John

Posted by: John | Feb 25, 2005 12:45:42 PM

Having worked in an auto plant some 30 years ago, I can say that there are definitely some places where the workers need protection from their employers. Wal-mart strikes me as one of those places, but I have never worked there.

It's an interesting circle. Walmart pays low wages and that's a bad thing. But WalMart offers the low prices that lower income consumers need and that's a good thing.

I can afford to support a neighborhood store's higher prices just as a form of community support and because I like the business. (I'm thinking of a local hardware store that competes with Home Depot.)Not everyone can do that.

I'd agree with Matt on this one. I think that if Walmart employees at one store unionize, then either the company changes its policies, or unionization sweeps the WalMart system. It's getting this one store that's going to be hard.

Posted by: Dave S. | Feb 25, 2005 12:46:24 PM

I tend to agree with you and Kevin on this.

But, at the same time, I realize that Walmart's effort against workers extends beyond those who are directly employed by Walmart. For instance, consider Walmart's effort to constantly push down the prices demanded by its suppliers, often resulting in suppliers depressing the wages of their underpaid workers. How exactly are these problems solved? I suppose unionization could work here as well on a broader and more global scale....

Posted by: seank | Feb 25, 2005 12:47:22 PM

The problem doesn't end there. Have you read this Fast Company Article?

Posted by: B | Feb 25, 2005 12:48:08 PM

"It's an interesting circle. Walmart pays low wages and that's a bad thing. But WalMart offers the low prices that lower income consumers need and that's a good thing."

It's not necessarily a given that you can't have low prices without treating your workers right. CostCo have been kicking Sam's Club butt in the warehouse store catagory, yet their starting wage is $10.

Posted by: battlepanda | Feb 25, 2005 12:51:42 PM

how does WalMart fit into W's rhetoric for an "ownership society" (if WM is stomping out small businesses around the country, fewer people own their own businesses) and to his oft-mentioned concern for small businesses ?

Posted by: cleek | Feb 25, 2005 12:53:40 PM

Dave S. wrote

I think that if Walmart employees at one store unionize

Isn't the American left supposed to be less blinkered by borders than the American right?

One Wal-mart store has been unionized. In Jonqiére, Quebec, by the UFCW. Walmart is shutting down the store. Quebec is in a bit of an uproar, and the leader of the opposition has called for a province-wide boycott of walmart.

Given Québec union-friendly laws, the UFCW will keep trying to organize Quebec walmarts.

Posted by: Ikram | Feb 25, 2005 12:54:30 PM

I agree w/ MY mostly. Though there are the environmental concerns that some communities have used to prevent the opening of a Walmart. But this isn't just Wal-mart. This is a larger issue, about sprawl and lack of good city planning / mass transit.

Some communities hare also fighting to create living wage standards, which would force Walmart to pay decent wages/benefits. and we need to create international labor and environmental standards to regulate this beast. Wal-mart has monopoly purchasing power (watch the Frontline episode) to dictate the price and basically require the use of really cheap labor. Almost singlehandedly they've changed the industry and forced manufacturers to go abroad in search of cheap labor.

Posted by: Phil | Feb 25, 2005 1:02:12 PM

Ikram- "Isn't the American left supposed to be less blinkered by borders than the American right?"

I'm not even sure what this is supposed to mean, but FYI, my political leanings are hardly left. Why does it always have to come down to a left vs. right issue? My thought was not that the "American left" would be somehow moved to action by the unionization of one store, but the company's management and/ or its workforce.

Posted by: Dave S. | Feb 25, 2005 1:03:33 PM

There's almost certainly something to the view that, even if Wal-Mart succeeds in its plan to crush the competition by opening up many more stores than are necessary and then closing the surplus stores once the competition is gone, it won't last forever, because some new chain will eventually break through. Even as Wal-Mart expands, we have K-Mart, Kohl's, and Target, all somewhat similar in nature. Still, how long would this take, and what would be the ramifications in the meantime? This seems to be another case where those who say "leave it up to the market" may not be necessarily wrong but may be breezing over the difficult transition period, sort of like what happens with trade (and I say this as a free trader). I'm not even advocating some sort of regulation. I am just curious about what that transition period would be like.

Posted by: Brian | Feb 25, 2005 1:05:26 PM

Those who oppose Walmart beyond its substandard labor practices tend to be upper middle class elitists.

I have no way of knowing how try that is but when I lived in Montana for a bit the Walmart they were building got burned down and there was this conversation at a complete redneck barn talking about how that makes four times now and everyone was laughing.

From other conversations (this was in 1998) I'd guess that most of the people I was drinking with voted Bush.

Posted by: Ed Marshall | Feb 25, 2005 1:11:33 PM

Those who oppose Walmart beyond its substandard labor practices tend to be upper middle class elitists.

I've never heard of anyone who opposed Wal*Mart other than because of its substandard labor practices; the other ills that are often cited are examples of results of those practices.

Posted by: cmdicely | Feb 25, 2005 1:13:21 PM

I think people are missing a major point in this argument: Unions are an existential threat to Walmart, and therefore cannot be allowed. A Walmart with a unionized workforce really could not exist (there might be some symbolic concessions on this point as a means of getting a toehold in Western Europe) -- their business plan requires a low-paid, docile workforce, every bit as much as it requires Chinese suppliers for its inventory.

Posted by: DukeJ | Feb 25, 2005 1:15:09 PM

"I've never heard of anyone who opposed Wal*Mart other than because of its substandard labor practices; the other ills that are often cited are examples of results of those practices."

Many communities oppose Wal-Mart for what it does to local businesses. They view it as a predatory competitor. That argument does have its merits as most mom and pop businesses can't compete head to head against it.

Posted by: DC Loser | Feb 25, 2005 1:16:22 PM

A Walmart with a unionized workforce really could not exist (there might be some symbolic concessions on this point as a means of getting a toehold in Western Europe) -- their business plan requires a low-paid, docile workforce, every bit as much as it requires Chinese suppliers for its inventory.

No, Costco does the same thing with a unionized, well-paid workforce and frequently beats the crap out of Walmart in terms of profits.

The odd thing is that no matter how much they beat the crap out of Walmart their stock never does as well because people believe exactly what you just said.

Posted by: Ed Marshall | Feb 25, 2005 1:22:07 PM

People oppose Wal*Mart also as a dingy, unholy atmosphere that does not provide a good shopping experience that is definitely class related, but oppose in the sense of choosing not to shop there, or complaining if they do, not in the sense of arguing that laws should be enacted to change those things about the store.

Posted by: theCoach | Feb 25, 2005 1:23:09 PM

Many also oppose Wal-Mart because they demand that the government provide them with zhoning changes, tax abatements handouts, and infrastructure construction in order to build their stores-- and then sue when the government doesn't cough it up. One could claim that this sort of opposition is more opposition to local governments practices than to Wal-Mart, but it's a perfectly valid reason to loath Wal-Mart.

Posted by: Constantine | Feb 25, 2005 1:24:52 PM

"...as most mom and pop businesses can't compete head to head against it."

This is the heart of it: the smaller stores offer better service but higher prices. So, if they can't compete in the marketplace, it's because the marketplace places a higher value on price than service. So the ones really responsible for the low wages paid by Wal-Mart are the Wal-Mart shoppers. Their desire for low prices forces Wal-Mart to lower their cost structure. Since wages are the largest variable cost on Wal-Mart's P&L, they are forced to pay low wages.

Posted by: Dave S. | Feb 25, 2005 1:29:17 PM

Since wages are the largest variable cost on Wal-Mart's P&L, they are forced to pay low wages.

Walmart actually pays out the ass in productivity because it is always fielding a rotating workforce of poorly trained, hostile, inexperienced employees.

Walmart's greatest asset is peoples belief that the most competitive business model is squeezing every cent out of employee's and customers.

Posted by: Ed Marshall | Feb 25, 2005 1:35:37 PM

No, Costco does the same thing with a unionized, well-paid workforce and frequently beats the crap out of Walmart in terms of profits.

Costco does the same thing as Sam's Club, but not the same thing as Wal*Mart.

Posted by: cmdicely | Feb 25, 2005 1:38:43 PM

Walmart does not enslave its employees. If you don't like working at Walmart, go work somewhere else.

Posted by: ostap | Feb 25, 2005 1:39:53 PM

Ah...

Why do you think it wouldn't work at WalMart?

Posted by: Ed Marshall | Feb 25, 2005 1:40:13 PM

...by a combination of legislation and union organizing...

By union organizing. Legislation is merely a symbol, admission of crony capitalism's defeat and unions' victory.

Posted by: abb1 | Feb 25, 2005 1:44:17 PM

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