WHY WAL-MART MATTERS....

WHY WAL-MART MATTERS. I'm of the opinion that how to handle Wal-Mart is among the two or three most important issues facing the country. The conversation hasn't caught up to it, and the arguments being had mostly miss the mark and collapse in their own short-sightedness, but the mega-retailer's impact on the economy, ubiquity across the country, and aggressiveness in using its size will eventually force a reckoning proportionate to its power. Which is why it's such a disappointment to see Jonah Goldberg's sneering, superficial treatment of the subject in today's LA Times.

Goldberg's column decries WMDS -- his acronym for (I'm serious here) "Wal-Mart derangement syndrome," and his argument goes like this: 127 million people shop at Wal-Mart every week, so attacking the store is "electoral asininity." In addition, Hillary Clinton was on their board of directors when the company was fighting for survival in the late 80's and Teresa Heinz Kerry owns stock in corporation. Meanwhile, Wal-Mart does indeed have low prices. So, all the liberal whinging over the company's policies make for "horrific politics, silly public policy -- but a joy to watch." QED.

At no point in the column does Goldberg actually state the progressive critique of Wal-Mart. A casual reader would have no clue why liberals worry about Wal-Mart (save that they're "deranged"). But in case you are interested, it goes something like this: Wal-Mart pays wages barely above the minimum and significantly below the average large retailer. Compared to Costco, or Target, Wal-Mart's salaries, benefits, and worker relations are atrocious. The question is not "Wal-Mart, yes or no?" but whether Wal-Mart can do better on all these metrics. Obviously, they can. Various analyses have found that raising the price of each product by a penny would allow for far better worker compensation packages.

But that radically understates the actual problem. What's worrisome about Wal-Mart is that, like GM and Ford once did, they are setting the norms for the coming (or current?) economy. One in every five retail sales is done at their cash registers; they're larger than the next five retailers combined. Indeed, for major producers, Wal-Mart is just about the only market that matters, which allows them to dictate the production methods, employee relations, and business strategies all the way up the food chain. In action and effect, Wal-Mart is an active monopsony -- a seller able to dictate the price to its producers. They've forced Coke to change their secret recipe, Kraft to lay off thousands of employees, and Vlasic to declare bankruptcy. And because Wal-Mart so obsessively pursues the lowest possible prices, they're not only depriving their own workers of generous benefits and compensation, they're making it literally impossible for their producers to do so, as Wal-Mart won't abide by the minor cost differences that on-shore production and respectable benefits demand. It's a real problem, and it should be discussed in a serious way (as Barry Lynn did, in the best magazine article published in the last year). Goldberg, by chortling over the political downsides faced by Democrats, isn't helping matters.

--Ezra Klein

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.
Advertisement