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Don't Blame Wal-Mart
Old 02-28-2005, 05:02 AM   #1
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Don't Blame Wal-Mart

http://www.nytimes.com/2005/02/28/op...?th&oref=login

Robert Reich article in the NY Times. Here's a portion:

By ROBERT B. REICH

Berkeley, Calif. — 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 you and I aren't just consumers. We're also workers and citizens. How do we strike the right balance? To claim that people shouldn't have access to Wal-Mart or to cut-rate airfares or services from India or to Internet shopping, because these somehow reduce their quality of life, is paternalistic tripe. No one is a better judge of what people want than they themselves.
unquote

I like that last paragraph. But, Mr. Reich doesn't stop there. He wants us to be forced, by law, to be good citizens and worry about the workers.

Here's his solution. "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."

Note to Mr. Reich. If you wanna make social choices when you shop, by all means do so. But, no laws, please. You did notice that he calls consumers' desires for low prices "sins". Maybe he's devoutly religious, after all.

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Re: Don't Blame Wal-Mart
Old 02-28-2005, 06:15 AM   #2
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Re: Don't Blame Wal-Mart

FrontLine did a documentary on Walmart last fall. An interesting look at the company. You can watch the show on the web here - http://www.pbs.org/wgbh/pages/frontline/shows/walmart/
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 06:48 AM   #3
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Re: Don't Blame Wal-Mart

I don't know about the rest of you, but I try hard to deal with companies that don't simply rely on squeezing their suppliers to death and brutalizing their workers. Accordingly, I buy power from Green Mountain Energy, coffee from Green Mountain Coffee, outerwear from Filson's, "mega-shop" at Costco instead of Sam's Club, etc. I also avoid certain companies that have a particularly egregious record (Wal-Mart, McDonald's, anything remotely connected with tobacco, etc.). I also try to invest accordingly where I can.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 08:13 AM   #4
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Re: Don't Blame Wal-Mart

Life is complicated enough without worrying about Polital Correctness every time I need to buy a quart of milk or a pair of socks.

I tend to buy the best quality at the lowest price and let the government plus abundant liberal watch groups anguish about creating a perfect world.

Save the whales and rain forests? I'm all for it!

Trying to lobby or legislate all the economic inequality out of the world?

Relax, it ain't gonna happen, and if it did no one would be talking about ER.

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Re: Don't Blame Wal-Mart
Old 02-28-2005, 08:24 AM   #5
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Re: Don't Blame Wal-Mart

I'd love to buy from the smaller local businesses.

The local small hardware store frequently has about 2/3 of their shelves stocked and fails to carry exotic items like sprinkler heads and galvanized ducting. The two kids that work there during the day couldnt answer any questions if their life depended on it. So I end up biting the bullet and going to home depot.

The local small feed store charges me 10-15% more for bags of dog and cat food than petsmart. They close at 5:00 and are only open a few hours on saturday and not at all on sunday. They also dont have anywhere near the variety of stuff I want to shop for, so I end up going to petsmart.

Walmart and Samsclub next are the closest retail outlets to my house. They carry a wide range of goods at the lowest price available. They're open every day from early till late.

I'd love to see the local businesses offset pricing and selection disadvantages with better service, better hours or better product lines not available at the big box stores. Instead, I'm offered lesser selection at higher prices with reduced convenience and no service to speak of.

When I see that walmart is grabbing people off the streets and forcing them to labor in chains in the stores, and surrounding their suppliers factories with tanks...I'll behave differently. Right now people who work for them and sell to them do so by their own choice. I cant fault walmart for being a better capitalist than people who have it within their means to be better competitors and are too lazy to do anything but whip out the lawyers when they're threatened.

A new superstore is about to be built even closer than the existing walmart...about 2 miles away from my house. Frankly, I'm excited.

Wow...in one stroke I dispell rumors of my liberalism AND make John Galt proud...before I even finished my first cup of coffee!
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 08:30 AM   #6
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Re: Don't Blame Wal-Mart

Quote:
Life is complicated enough without worrying about Polital Correctness every time I need to buy a quart of milk or a pair of socks.

I tend to buy the best quality at the lowest price and let the government plus abundant liberal watch groups anguish about creating a perfect world. * *

Save the whales and rain forests? I'm all for it!

Trying to lobby or legislate all the economic inequality out of the world?

Relax, it ain't gonna happen, and if it did no one would be talking about ER. *
Its clear that economic inequality won't go away. What increasingly concerns me is that the gap between to top and the bottom has been steadily increasing in the US. If the administration succeeds in gutting Medicare, SS and other safety net programs, that gap will become a yawning chasm.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 08:31 AM   #7
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Re: Don't Blame Wal-Mart

This is a tough one and a real conundrum. I've historically been one of those people who refused to shop at WalMart, but while trying to furnish a rental condo in Arizona and having only three days to do it I gave into temptation and went to the local Green Valley WalMart (one of the few places in town that carried a wide variety of household goods and much less expensive than the competition).

In theory I'd rather shop at Costco but the one in Tucson didn't have the wide range of goods I needed and everything under one roof. I figured that by shopping at WalMart I saved at least $300 over the more expensive local stores for the same items.

It's a matter of degree. Spending a total of $30 or $40 more for the same stuff when you're buying a lot is fine if it ends up supporting local, mom-and-pop merchants, but when the difference is hundreds of dollars, it's hard to resist the significant savings of a place like WalMart.

One decision we did make to help support the locals is buying paint for the new Sedona house at the local Ace Hardware store. It'll cost us about $100 more than going to Home Depot, but Ace is much more convenient since the nearest "box" hardware store is in Flagstaff, about thirty miles away. If Ace was to cost us more than, say, $150-$200 for the same thing, we'd make the run up the hill to Flagstaff.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 08:45 AM   #8
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Re: Don't Blame Wal-Mart

Quote:
What increasingly concerns me is that the gap between to top and the bottom has been steadily increasing in the US.
Business Week has been "discovering" for years that the rich get richer and the poor get poorer.

Should we be surprised to learn that? It's almost as if the rich know how to raise their net worth while the poor... don't.

If it was the same people every year then I'd be more concerned. But, alarmist reporting notwithstanding, the vast majority of those starting out "poor" will eventually learn how to raise their economic status.

I have the consumer loyalty of a weasel and I expect the industry to respect that. If merchants are breaking laws then throw the miscreants in jail. But if their only crime is leveraging their size to crush their competitors (there's that warrior analogy again, JG) then that's what capitalism is all about.

But Wal-Mart needs to look at how much their employee turnover is costing their bottom line. If they adopted CostCo's employee policies and achieved the same low turnover numbers then Wal-Mart's stock might be 20% higher.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 09:48 AM   #9
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Re: Don't Blame Wal-Mart

Quote:
Its clear that economic inequality won't go away. *What increasingly concerns me is that the gap between to top and the bottom has been steadily increasing in the US. *If the administration succeeds in gutting Medicare, SS and other safety net programs, that gap will become a yawning chasm.
It's a question of immediate obvious benefit (cheaper purchase price of goods) versus longer term nebulous costs (disappearance of "good" jobs, "feudal"-like economic structure). If you can save some money now then it makes immediate sense for a lot of people but are they helping to bring about a society that has few jobs for any but the talented (design jobs may remain in the US) and the very well educated?

What's the answer? That's a difficult question. Tariff or other legislative barriers (modern day Smoot-Hawley) won't work. The US is part of the WTO and barriers in the US would be responded to with other barriers. While the US does import more than it exports the barriers would hurt the US because the goods exported would have to be cut back (fewer customers) and the pain of reallocating those resources (factories, workers, etc.) to the goods no longer imported would be high and there is no guarantee that it would be efficient.

Education might be an answer but there are problems there too. Not everybody has the "intellectual horsepower" to master finance or engineering. The costs of an education in the US are rising faster than inflation putting it further beyond the reach of those with the "horsepower" who have a less than a middle class family. Also, for some reason graduate school is being shunned by US citizens with half of all graduate degrees in the US going to non-US residents (IIRC). The ratios are probably even worse for subjects like math, science, engineering, etc.

Even if the education issue was "solved" what is to hold most of those jobs in the US? Many of them being knowledge work can be easily exported and the results imported using advancing technology. Is the US destined to become feudalized? Will there be an upper crust of approximately 5% of the population doing better than ever with the bulk of the populace working at Wal-Mart wages?
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 10:07 AM   #10
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Re: Don't Blame Wal-Mart

Quote:
But, alarmist reporting notwithstanding, the vast majority of those starting out "poor" will eventually learn how to raise their economic status.
The studies that I've seen don't support that argument. The correlation of income between generations (fathers to sons) and between siblings is increasing in the US - i.e. you are more likely to be rich if your father is rich and more likely to be poor if your father is poor. Speculation is that the rising cost of higher education is the root cause.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 10:25 AM   #11
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Re: Don't Blame Wal-Mart

Can you point out some of those studies? A lot of what I've seen showed poor correlation between generations and wealth.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 11:19 AM   #12
 
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Re: Don't Blame Wal-Mart

Hyper,

To comment on the tangent - you are so right about graduate degrees in engineering - I'm an Anglo US born female and have a graduate degree in engineering - there were very few women graduating then and a large percentage of my profs were non-American. In fact, they were mainly Asian.

I spoke with a colleague of mine who had a PhD in chemical engineering from CalTech - she said most of her fellow students were Asian and that they were willing to work 24 hours a day to stay in the US.....so she really had to work extra hard to stay in the program.

As for the main thread---very interesting. I just returned from Europe and frankly, almost everything I see for sale is made in China. It's a bit disconcerting to pick up something that looks Italian and then see it's made in China. And even the price isn't cheap, either. I know that Walmart has made huge inroads into China for not only manufacturing but also for marketing. It will be interesting to see how the Chinese like having Walmarts around.....

I'm more inclined to agree with Nords and TH--with the expectations in the US for 24 hour availability with your job/etc, having the convenience of one place to go and hours amenable to many schedules trumps some of the other issues.

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Re: Don't Blame Wal-Mart
Old 02-28-2005, 11:54 AM   #13
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Re: Don't Blame Wal-Mart

Quote:
Can you point out some of those studies? *A lot of what I've seen showed poor correlation between generations and wealth.
The study that I would most like to read I haven't been able to find on the net - it's one by Wright, Wysong, and Perrucci. I'll probably have to track it down at the local university library. I ran across a reference to it in the Economist at the end of last year. Here's the article from the Economist with some discussion of their results - http://www.economist.com/world/na/di...ory_id=3518560

Another source of some info on this paper is - http://webs.wichita.edu/dt/newsletter/show/?NID=1379
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 03:59 PM   #14
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Re: Don't Blame Wal-Mart

My son has worked for a couple of the local mom and pop stores. He did not make anywhere near $9.68 per hour. He did not have health insurance, dental insurance, vacation or sick pay from these local employers. Working at Wal-Mart would be a step up from the local jobs where he has been employed.

I have a Wal-Mart near where I work and I can not remember the last time that I had a list of items that I needed and that they did not have everything on the list. They are well- stocked and I don't have to worry about the prices. I like Wal-Mart and Sam's Clubs.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 03:59 PM   #15
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Re: Don't Blame Wal-Mart

Quote:
Can you point out some of those studies? *A lot of what I've seen showed poor correlation between generations and wealth.
I couldn't find it anywhere on line but I did find a copy of their book The new class society : goodbye American dream? by Robert Perrucci and Earl Wysong available through interlibrary loan. I've ordered it and I'll see what it's like when it gets here. You should be able to do the same up by you in the Sacramento area if you want.
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Re: Don't Blame Wal-Mart
Old 02-28-2005, 04:02 PM   #16
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Re: Don't Blame Wal-Mart

Quote:
Working at Wal-Mart would be a step up from the local jobs where he has been employed.
Sure, that's entirely possible but the issue in a lot of this is that by squeezing their suppliers so hard that Wal-Mart has basically squeezed the manufacturing jobs out of the US. *What fraction of the populace can be employed selling Chinese made goods to each other?
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Re: Don't Blame Wal-Mart
Old 03-01-2005, 02:27 AM   #17
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Re: Don't Blame Wal-Mart

While Walmart pays their store workers peanuts, the corporate officers are doing quite well.
Code:
This table shows the compensation paid during each of the Company"s last three
fiscal years to Wal-Mart"s CEO and the four other most highly compensated
executive officers, based on compensation earned during the fiscal year ended
January 31, 2004.
 
    
 
             Annual compensation          Long-term compensation
 Name and   Fiscal  Salary  Incentive  Other   Restricted Number of  All other
 position   year   ($)(1)        annual         Shares  compensation
        ended       payment compensation  stock  underlying
       Jan. 31,       ($)(2)         awards         ($)(6)
                        ($)(3)   ($)(4)  options
                                   granted
                                    (5)
H. Lee Scott,   2004 1,192,308 4,200,000    82,861 6,700,026  630,413   269,595
Jr.        2003 1,142,308 3,162,500    85,834 13,134,437  605,327   167,604
President and   2002 1,123,077 1,784,750    94,682 5,000,000  521,634   133,328
CEO
Thomas M.     2004  983,894 2,879,565    54,584 2,000,001  279,355   252,082
Coughlin      2003  907,308 2,287,500    40,801 4,211,461  261,832   157,010
Vice Chairman   2002  885,769  935,929    45,410  875,000  220,175   152,193
of the Board
John B.      2004  816,538 1,856,249      0 1,749,981  225,403   267,013
Menzer       2003  759,231 1,540,000      0 2,605,747  211,865   169,679
Executive     2002  717,308  838,927      0 1,000,000  179,212    72,928
Vice
President and
President and
CEO,
International
Division
Thomas M.     2004  610,384  984,000      0  999,974  119,779    87,324
Schoewe      2003  579,615  819,000      0 1,995,190  114,242    55,385
Executive     2002  561,539  499,730      0  900,000  102,407    45,047
Vice
President and
Chief
Financial
Officer
Michael T.     2004  603,029  852,342      0  999,974  374,050   114,165
Duke        2003  530,385  749,000      0 1,829,341  110,335    77,085
Executive     2002  519,616  458,843      0  750,000  102,407    64,428
Vice
President and
President and
CEO, Wal-Mart
Stores
Division
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Re: Don't Blame Wal-Mart
Old 03-01-2005, 04:56 AM   #18
 
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Re: Don't Blame Wal-Mart

" Walmart pays their store workers peanuts......the corporate officers are doing quite well"

What the Hell is wrong with that? It's free enterprise.
If the Walmart "workers" don't like it they can go elsewhere. And BTW, those overpaid officers are partly
compensated on how much they can get done for the
least expense. That includes payroll. Or perhaps mainly payroll which has to be a huge number. If I was
running Walmart and wanted to cut costs (a very
necessary activity if you are running a company)
payroll related costs is probably the first place I would look. It's called capitalism folks. Maybe you have heard of it.

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Re: Don't Blame Wal-Mart
Old 03-01-2005, 08:42 AM   #19
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Re: Don't Blame Wal-Mart

Quote:
If the Walmart "workers" don't like it they can go elsewhere. And BTW, those overpaid officers are partly compensated on how much they can get done for the least expense. That includes payroll. Or perhaps mainly payroll which has to be a huge number. If I was running Walmart and wanted to cut costs (a very necessary activity if you are running a company) payroll related costs is probably the first place I would look. It's called capitalism folks. Maybe you have heard of it.
Let's see if I got this right JG.

Let's cut payroll expenses by paying our "lowly peon" employees less and give ourselfs a deserved salary increase and a bonus for saving that money. Why not, what decent, patriotic Ameeerican can live comfortably with only 4, 30 room houses on only a 1000 acres each. Besides what's wrong with eating day old white bread, peanut butter and jelly (for the masses). They can always get food stamp from the government (as long as we don't contribute any taxes for it).

Nothing like compassionate neocons.

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Re: Don't Blame Wal-Mart
Old 03-01-2005, 09:26 AM   #20
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Re: Don't Blame Wal-Mart

Quote:
...What the Hell is wrong with that? *It's free enterprise...If I was
running Walmart and wanted to cut costs (a very
necessary activity if you are running a company)
payroll related costs is probably the first place I would look. *It's called capitalism folks. *Maybe you have heard of it. *JG
Sorry, John, but any monkey can slash payroll costs. Doesn't mean they have any type of strategic aptitude and sure as hell doesn't justify 6+ figure salaries and stock...
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