Tuesday, October 17, 2006

The Maroon Hearts Wal-Mart (The Hidden Tierney)

Wow. I'm pretty speechless at John Tierney's Tuesday column for the NYTimes, Shopping for a Nobel (fully available to Times Select subscribers):
I don’t want to begrudge the Nobel Peace Prize won last week by the Grameen Bank and its founder, Muhammad Yunus. They deserve it. The Grameen Bank has done more than the World Bank to help the poor, and Yunus has done more than Jimmy Carter or Bono or any philanthropist.

But has he done more good than someone who never got the prize: Sam Walton? Has any organization in the world lifted more people out of poverty than Wal-Mart?

No, this isn't The Onion. It's the NYTimes opinion page. I'll let Tierney continue:
But there’s a limit to how much money villagers can make selling eggs to one another — a thatched ceiling, as Michael Strong calls it. Strong, the head of Flow, a nonprofit group promoting entrepreneurship abroad, is a fan of the Grameen Bank, but he figures that villagers can lift themselves out of poverty much faster by getting a job in a factory.

The best way for third world villagers to tap “the vast pipeline of wealth from the developed world,” he argued in a recent TCSDaily.com article, is to sell their products to the world’s largest retailer, Wal-Mart. Strong challenged anyone to name an organization that is doing more to alleviate third world poverty than Wal-Mart.

So far he’s gotten a lot of angry responses from Wal-Mart’s critics, but nobody has come up with a convincing nomination for a more effective antipoverty organization. And certainly none that saves money for Americans at the same time it’s helping foreigners.


In America, the economic debate on Wal-Mart mostly concerns its effect on American workers. The best evidence is that, while Wal-Mart’s competition might (or might not) depress the wages of some workers, on balance Americans come out well ahead because they save so much money by shopping there.

Some critics, particularly ones allied with American labor unions, argue that the consumer savings don’t justify the social dislocations caused by Wal-Mart’s relentless cost-cutting. They’d rather see Wal-Mart and other retailers paying higher wages to their employees, and selling more products made by Americans instead of foreigners.

But this argument makes moral sense only if your overriding concern is saving the jobs and protecting the salaries of American workers who are already far better off than most of the planet’s population. If you’re committed to Bono’s vision of “making poverty history,” shouldn’t you take a less parochial view? Shouldn’t you be more worried about villagers overseas subsisting on a dollar a day?

Here's Steve Gilliard's response:
Wal-Mart doesn't alliviate poverty, it spreads it like a virus.

How? In China and the developing world, it demands greater and greater price savings on factory owners, who have to use repressive methods to keep their employees. It's so bad, the Chinese government has allowed Wal Mart workers to unionize.

In the US, Wal Mart' s predatory pricing forced Rubbermaid to close, and forces other suppliers to ship work overseas to meet Wal Mart's pricing demands.

Every contract, Wal Mart demands greater savings from producers, demanding cost cutting. Most of the brand names sold in Wal Mart are substandard products with the same brand name. Snapper refused to sell to Wal Mart because of that practice.

Wal Mart's low wage policy is the worst in the retail industy, they spend more on commercials than actual health care for their workers. Certainly people in Chicago and Maryland didn't feel that Wal Mart was lifting people out of poverty, having passed bills concerning health care and wages.

Then there are the lawsuits. Just two days ago, a Pennslyvania jury demanded Wal Mart pay $78m to workers in overtime pay and back wages.

Wal Mart, unlike Target and Costco, places the burden of health care on the employee, which means the state. Even when Wal Mart employees have health care, it's substandard insurance. Which only burdens an already overburdened health care system.

The problem isn't making goods for the West, it's making goods for Wal Mart. Because wages will decline and so will working conditions because of the price cutting demands of Wal Mart.


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