Positive Talk About Wal*Mart
Since I am so frequently critical of Wal*Mart, I figured I should direct people to a fairly balanced and thoughtful set of points that are positive about the Bentonville behemoth. Take a peek at Chris MacDonald’s Business Ethics Blog : Saying Nice Things About Wal-Mart
While I would counter most of the points he makes, I would like to add one to support his analysis of Wal*Mart’s healthcare dilemma. While listening to the Hollender/Vogel debate, the point was made that if Wal*Mart did step up and provide health care to all of its employees (it may be all of its eligible employees — I do not remember exactly), that they company would lose all profitability.
…that’s not to say that they shouldn’t try to figure out a way to make it happen, or that they haven’t done some pretty shady things in the health care arena…
TAGS: This entry was posted on Wednesday, March 29th, 2006 at 4:42 pm and is filed under Business Ethics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 31st, 2006 at 9:51 am
I agree, I could counter every one of the points in praising wal-mart. The most annoying to me is this supposition that wal mart shoppers save up to thousands of dollars each year by shopping there. However, that doesn’t seem to be relevant considering the U.S. saving rate is negative. The money being saved is being spent, so I don’t buy that argument. But I digress…
The anti-Wal Mart movement, in my opinion, is about so much more than their shady personnel policies and attempts at keeping prices low. Wal Mart, to me is the pinnacle of the homogenization of America and turning small towns with character into the same small town 1500 miles away with the same choices for various goods and services. call me old fashioned, but when I go somewhere new, I don’t want to feel like I’m in a video game where the town has a different name, but everything remains the same.
Wal-Mart to me is an “earn-a-profit-at-any-cost” behemoth that bullies its way into communities, where clearly there is a significant portion of which clearly wants them to keep their super-mega-huge stores. At least, limit my town to one wal-mart and not two, and also a mega store.
Back when I read Fast Food Nation for the first time, it wasn’t the meat packing plant that shocked me, nor was it the method used to make my food. It was the shocking revelation that the nuisances and incatracies that differentiate one town from another are being eliminated by Corporate America. I guess in the end, I have nobody to blame but my fellow citizens. Some care, but most don’t and Wal Mart’s success is a clear indication that I’m in the minority.
April 1st, 2006 at 8:28 am
Peter:
Thanks for linking to my commentary on Wal-Mart.
You say that you can counter each of the points I make. I don’t really want to start a debate (especially since my ‘defence’ of Wal-Mart is a limited one) but if you care to go ahead & counter my points on your blog, I’ll happily update my comments with a link to your own.
Cheers,
Chris.
p.s. to Mr. Korfhage: the US savings rate being negative is mostly besides the point. The point is that the working poor can buy what they need to at Wal-Mart cheaper than they can anywhere else, which means more money left over for things like healthcare for their kids.
April 1st, 2006 at 10:32 am
The working poor are poor because of the way corporations like and including Wal-Mart artificially depress real wages in the labor market. It’s not new and Wal-Mart isn’t totally to blame, but saying Wal-Mart is good for the working poor is ridiculous on its face.
April 1st, 2006 at 10:47 am
John:
Not so clear at all.
There are data showing that Wal-Mart reduces cost-of-living by MORE than it reduces incomes. So, there is a net benefit for the working poor.
This isn’t the sort of thing we should guess at, when actual data are available.
The studies cited here have some useful facts:
http://www.businessethics.ca/blog/2006/03/saying-nice-things-about-wal-mart.html
April 1st, 2006 at 11:01 am
Chris: As a quick follow-up, can you point us to any resources that show the income/cost of living figures? I agree and disagree with your point but acknowledge that most of the contention lies with what statistics you use. If the statistics are aggregate (I have not looked at hard figures specific to this issue in quite some time), it is possible that the cost of living reduction is greater than the reduction in income. However, and again, I have not looked at hard data recently, on a community-specific level, I have a feeling that the data might present a different reality.
Additionally, data aside, some of this issue depends on your long-term economic perspective. At a moment in time, statistics might show that the cost of living/income relationship favors the consumer, but over the long haul, projecting the overall effect Wal*Mart has on communities might show a very different reality.
On a personal note, I have seen data and arguments that promote both a pro and anti-Wal*Mart stance quite well (though I tend to agree with the anti-Wal*Mart stance the majority of the time, I will acknowledge when the other camp has a valid point). Additionally, I recognize that you are not necessarily presenting a pro-Wal*Mart stance, rather, a perspective based on a set of data. Either way, I appreciate the info and the debate it has created.
I’m working on a response to your original blog post and appreciate the offer of a link. As an aside, I’d love to be able to comment directly on your blog though I understand if you keep comments turned off.
April 1st, 2006 at 11:02 am
Ha ha! I think I’m a bit distracted this morning — I just saw the link back to your original post with supporting data. I’ll recheck those.
Thanks,
Peter
April 1st, 2006 at 11:16 am
Brian: I agree with you that the anti-Wal*Mart movement is about far more than business practices, much like the organic movement is about far more than food grown without pesticides. In the past 15 years or so I’ve seen a number of communities lose a lot of their personality with the influx of sterile big box and chain stores. Regardless of the positive or negative impact such stores have on the community, the emotional and cultural impact is huge. I, for one, can’t stand to see small business replaced by chains (or even supplemented by chains). I also own a small business, so I might be a bit biased, but I find it hard to believe that the majority only care about cost and breadth of offering.
I also agree that consumers have a very large part in the advance and success of Wal*Mart and similar companies. Patronage on the level to generate the $300+ billion (2006 est.) would certainly indicate that there is more than enough support out there to keep them in business, and that low prices trump culture and historical preservation.
I haven’t read Fast Food Nation but have heard that it is quite good. I’ll try to pick it up this weekend.
John: I agree with you, but a lot of the debate boils down to what set of data you cite and how long or broad your perspective of analysis is. Wal*Mart has had a huge positive (economic) impact on Bentonville, but perhaps not on Smalltown, USA where there was once a thriving small business community. I’m working on a response to Chris’ original blog post (if my son allows me!) and hope to have it up in a few hours.
Any more news about schools?
April 1st, 2006 at 11:49 am
No more word on schools. I sent an email to Davis on Thrusday to check on the status. Hopefully we’ll find out soon.
As far as Data is concerned, we (the collective ‘we’) can argue until we’re blue in the face about how much of a positive or negative impact Wal Mart has had on the countries economy as a whole, or even on a region by region basis. But the fact of the matter is, when Wal Mart comes into an area, they often pay less than the prevailing wage of that area. In addition, what about the actual Wal Mart workers? Since they get paid less, it lowers the cost of living for other working poor families? That sounds a whole lot like robbing Peter to pay Paul.
Wal Mart can no way be held responsible for the broken system, but they take advantage of it as well or better than nearly any other company.
I can’t throw too many stones at the moment as I haven’t done a comprehensive check on the origin of all the clothes I’m wearing now (though none of them came from Wal Mart), but our society supports labor pracitces in other countries that see pre-teens and adolecents working 10 or 12 hour shifts to make our cheap goods. Regardless of whether they are making a good living, it’s still a sick situation.
The usual rebuttal of “it’s part of the cultural norm of their country, and besides, they are better off with the work than without it” is a farce.
Chris- I don’t know your background, and I haven’t read your posts, but sentiment about Wal Mart is not only driven by data.
April 1st, 2006 at 12:20 pm
I was composing a more detailed response when I had computer issues. So this will be more brief than originally intended. Chris, I read your post.
“It’s important to keep separate our moral evaluation of some of the bad business practices that have been observed at Wal-Mart (forced overtime, discriminatory hiring & promotion, etc.), on one hand, and our moral evaluation of Wal-Mart’s business model and its large-scale impact. The former are indefensible, and must be changed. The latter are at least worthy of debate.”
Why is it so important to keep these things seperate? Wal Marts business model includes the “indefensible” practices you cite. Their low prices and their “indefensible” practices are parts of the same whole. The board, and by extension, the shareholders are responsible for that business model and all decisions made within it. It is dangerous to parse the practices of any corporation to the level where we allow reprehensible actions to occur because the corporation is “not all bad”.
“Wal-Mart has been criticized for its anti-union stance. But we have to remember that while unions may typically benefit employees, they typically hurt consumers. Unionization would mean Wal-Mart’s costs would go up; and in a retail environment in which even a successful company like Wal-Mart has only a 3.5% profit margin, that can only mean that prices would have to rise (which, of course, would hurt the working poor).”
This is circular. Workers are consumers. If the working poor were organized then their situation would improve. Organization and cooperation can benefit any group. Consumers can organize as well. Prices aren’t what hurt the working poor. Low wages are. Wage issues can be addressed, by anyone willing, through organization.
The problem here is that the debate is being framed at the level of the individual. The price the individual pays is not the most important variable. History warns us that we must consider the welfare of the many over the benefit of the few. If we don’t, ours, like all other hegemonic societies of the past, will fall.
April 1st, 2006 at 12:22 pm
Good luck with Davis, and the others as well — I know what the wait is like.
I’m right there with you regarding the broader points about Wal*Mart and large businesses in general. Also, I really like that you mentioned the issue about the origin of the clothes you wear. I’ve often wondered the same thing and acknowledge that it is quite hypocritical for me to speak up about child labor when I could be wearing a pair of pants made by a 12 year old.
Life is just a bit too complicated — living completely off the grid and in a self-sustaining environment is a bit of a stretch for me, but continuing to care about environmental issues, human rights, and other societal concerns can cause my head to swell up a bit when I realize that it is impossible to avoid hypocrisy with my current consumption habits (or potential consumption habits as a “regular” member of society).
Check out Chris’ blog sometime — he writes from a very even and what I would consider “academic” perspective and always has data to substantiate his perspective. That isn’t to say I always agree with his posts, obviously, but his blog is definitely one I follow and would recommend to others. He has a pretty funny April Fools post up today. As a side note, here is a clip from a speech that Ken Lay made in 1999 (and no, this is not a joke):
Wild.
April 1st, 2006 at 1:16 pm
I wont’ go into to much detail, but just respond to one point.
It *does* make sense to keep separate discussion of business model vs. discussion of specific practices. Wal-Mart was built on low prices, achieved through excellent supply-chain management and resistance to unions. The reasons for their success have nothing to do with racism, or with sexist hiring practices. Those must be stopped immediately, and doing so will have absolutely no negative effect on Wal-Mart’s overall success.
(Someone asked about my background: I’m a philosopher — as in, that’s what my Ph.D. is in, and I teach philosophy, including business ethics, at a university).
Regards
Chris.
April 1st, 2006 at 3:27 pm
I respectfully disagree. I believe the specific practices that Wal Mart engages in that are so reprehensible are the end result of the overall business model which they have adopted. Such an egregious breach of ethics as utilization of child labor indicates a blind devotion to profit that I simply cannot support. That is if it in fact is blind. If it’s not, then the offense is even more inexcusable.
April 2nd, 2006 at 6:09 am
I think there are 2 issues here.
1) Are Wal-Mart’s specific practices (or the practices of some managers, or whatever) so bad that they make us reject Wal-Mart overall, regardless of the chain’s other merits? I think it *reasonable*, at least, to say yes.
2) Is there a connection of some sort between their nasty practices and their success? Some practices — e.g., anything involving racism — do not raise profits (indeed, any economist will tell you that hiring or promotion based on anything other than talent tends to *reduce* profits). Other practices — e.g., badgering people into unpaid overtime, using child labour — clearly have some effect on profit, though I suspect it’s a very small effect. Yes, there’s a sense in which behaviour like that is a result of their business model; but it’s an extreme, and illegal, result, one which clearly CAN be eliminated, without Wal-Mart changing its overall business model. Wal-Mart is so much better at all the LEGAL parts of the business than its competitors are, that it doesn’t need the illegal stuff.
April 2nd, 2006 at 4:12 pm
Chris: I finished my formal response and welcome your comments!
April 2nd, 2006 at 7:54 pm
“the US savings rate being negative is mostly besides the point. The point is that the working poor can buy what they need to at Wal-Mart cheaper than they can anywhere else, which means more money left over for things like healthcare for their kids.”
Health care for a thousand bucks a year? Sign me up!
In all seriousness, I disagree. I think the negative US savings rate is a serious concern. The depression era picture of poor families scrapping to save every penny is nice, but I would argue that it is all too rare. Bankruptcy was at an all time high prior to recent legislative changes, and now, it seems that the changes have possibly made the situation even worse for the banks that aggressively sought them. That’s another argument, but my point is that unless one has a phenomenal job, health care is damn near impossible to afford and if you are shopping at Wal Mart, chances are you don’t have real health care.
I would love to see working poor in the US saving the extra cash they retain by shopping at Wal Mart and putting it towards something incredibly beneficial, but I think to assume all the people who shop at Wal Mart are keeping track of the money saved and using it for things like health care is myopic. The pull of consumer goods and non-necessary items has an alluring pull in a country where we all try to keep up with the joneses, even for those who lack the disposable income to attain such things, and interestingly, with a variety of items and their impressive cheapness being advertised at Wal Mart, chances are, the money they are saving by shopping at Wal Mart is being spent at Wal Mart too.