Sunday, February 26, 2006

The Devil Is Me And All Along I Was So Sure It Was Wal-Mart Part 3

“Capitalism is being strangled with the slow inexorability of a boa constrictor.” --Charles Fishman

Finally, I will try to explain why I think the devil is I or at the very least, I am part of the equation. When I learned that Wal-Mart asks all its traveling employees to bring back the pens from their hotel rooms in order to stock home office, I suddenly realized that Wal-Mart and I have a lot in common, only Wal-Mart is the beach and I am only a particle of sand.

I, too bring home the pens in the hotel rooms when I go away. I assume the hotels put them there for our taking, possibly for advertising purposes. I also assume Dunkin Donuts, McDonalds, Burger King, wants us to take extra napkins to advertise their obscure, little businesses. The bottom line is I am all about the bottom line. I LOVE to find good deals even if it means that I have to go way out of my way to get that deal. I don’t know whether I can be arrested or not for taking a few extra napkins, sugar, or sweet ‘n low packets etc. but I am willing to take that chance just for the low price of free.

Wal-Mart would not succeed without people just like me. Wal-Mart is made up of people who obviously think like me in many ways…I was shocked to hear about the pens. I love the feeling of getting more for my money even if the “more” ends up in the trash or never gets used.

As I have said before, Wal-Mart is certainly not all bad, but like anything, too much of one thing is usually not a good thing and this is what Wal-Mart has become in relation to our economy.

We should always ask the question, “at what cost” before making a decision whether something is really a good price or whether there the hidden cost is not worth the price.
As Charles Fishman said, “Do we gain enough from the efficiencies of Wal-Mart, that we are comfortable with the disruptions of Wal-Mart, and in all ways that Wal-Mart is efficient, are we comfortable with?”

For example, Wal-Mart does not include the true cost in the price they charge for an item. The grocery store may charge $5 for a large box of cornflakes, which is more than what Wal-Mart charges, but included in the $5 price the grocery store sells the item for, are the health benefits, wages, and true cost of where the item was manufactured, whereas Wal-Mart does not pay clerks health benefits or cost of living wages, and many times will use its size to coerce its suppliers into selling at a lower cost.

Another example, Wal-Mart sells salmon for the cheapest price around, $4.84/pound. Once again, the true cost of the item is not reflected in the price of the item. The salmon appears to be a great deal and Wal-Mart is the largest seller of salmon, however, all the salmon comes from Chile where there is no pollution or labor rules so the way those salmon farms and processing plants operate, they would be illegal in the USA.

We should also ask ourselves if Wal-Mart should be given a competitive advantage by having their employees receive their health benefits from the government through federal and local assistance programs. Tens of thousands of people who work for Wal-Mart in every state, mostly women and children, are on public assistance. Some employees are impoverished, working full-time with no health insurance, because a family of three making the salary of a Wal-Mart clerk is at the poverty line.

Low wages make it impossible for Wal-Mart clerks to opt for health insurance because they need every penny to survive ( of course we are not talking about the teenagers who work there to get them through school).

One could say that the market determines the wages and since Wal-Mart clerks are required to have little skill, the wages are fair. That is not true because there is nothing inherent in the particular job itself that makes these jobs low paying. The fact is, Wal-Mart drives the wages down when it comes into an area; it is not only the Wal-Mart employees that are affected, it is the whole community of low-wage workers. Wal-Mart will drive those wages down because other stores are forced to lower benefits to the employees to stay competitive, so the wages are set by Wal-Mart (artificially) not by the market.

Wal-Mart is a big burden on our tax structure in many ways. I already pointed out that many of their employees are on public assistance and that Wal-Mart may cause non Wal-Mart employees in the same area to require public assistance as well. The other way Wal-Mart becomes more of a tax burden is the way in which it negotiates with the communities beforehand, for an economic development plan or for tax benefits with all sorts of tax credits and tax forgiveness plans.

It’s incredible how much Wal-Mart’s decisions influence us in so many areas. Wal-Mart also imposes it moral values by censoring products which, of course, they have every right, but the sheer size of Wal-Mart alone makes this a real problem. Some people will edit work to be acceptable for Wal-Mart because without Wal-Mart’s business they are much less likely to be successful. Wal-Mart chooses to come down hard on sex, violence, and disrespect of political leaders; however, Wal-Mart is the # 1 seller of tobacco products and guns in America.

As Charles Fishman pointed out, we have created Wal-Mart therefore we have the right and responsibility to demand the information necessary to understand the impact Wal-Mart has, and then we have the right and responsibility to manage the negative impact. Wal-Mart exists because of the rules we have created in society therefore, we are obligated to make sure the rules are capable to regulate an economic super-power like Wal-Mart.

Wal-Mart is not a monopoly because they are not a supplier, they do not control the supply of a raw material. They are what you call a monopsony, which is a market situation in which only one buyer seeks the product or service of several sellers.

One hundred years ago, we changed the rules because of big companies such as US Steel and Standard Oil. Wal-Mart is such a large company that we need to reexamine the rules under which it and other companies operates to make sure fair play is still happening.

I don't know if it's fair to say that buying cheap boxes of cornflakes and jars of pickles might result in the collapse of our market economy, but it might be something to consider the next time you run out of cereal or pickles.

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