McGroarty sends in a short article by John Semmens of Capitalism Magazine. The skinny: the basic principles of economics vindicate Wal-Mart:
Wal-Mart’s "lowest price" policy is stimulating its suppliers and competitors to be more efficient, which requires higher productivity.Higher productivity, in turn, is the key to prosperity. By encouraging international trade between the U.S. and less_developed countries, Wal-Mart is helping put these countries on the path to higher standards of living as well.
Wal-Mart is doing all these good things with a profit margin of less than 4 percent. To call Wal-Mart a "corporate criminal," as an article in the January 3 issue of The Nation does, is libel. Wal-Mart is a model of success that should be emulated, not reviled.
Posted by Kevin on April, 4 2005 at 10:19 AM
Brandon Weber wrote:"Higher productivity, in turn, is the key to prosperity"
For whom? Certainly the owners and upper management.
Definitely not for the workers.
But of course, considering the source (Capitalism Magazine), that's all that matters to them.
-- April 4, 2005 09:38 PM ∞
Kevin Brancato wrote:Brandon,
Are you arguing that higher productivity makes workers no better off, or that most of the increase in productivity does not find its way back to wages? I find the both positions untenable in anything but the really short run.
-- April 4, 2005 10:02 PM ∞
brandon weber wrote:"higher productivity makes workers no better off, or that most of the increase in productivity does not find its way back to wages?"
I think it depends on the company, but particularly when talking about Wal-Mart, both are true.It applies to other companies as well; when robotics and other changes in the workforce made auto workers much more productive, the cost of the vehicles remained the same or went higher, but wages didn't see a dramatic increase.
Similarly, when jobs are moved to Mexico or China, the product that the company makes stays the same in price or goes up; the workers certainly don't receive the benefits of those cost savings and productvity increases.
-- April 4, 2005 11:55 PM ∞
Ted Benedict wrote:Robotics doesn't have anything to do with the type of efficiency Wal-Mart is talking about. They're talking about wage efficiency -- paying people the same or less to work more hours.
I'm all in favor of efficiency. If it only takes 2 people to a shirt instead of 4 because the factory owner figured out a better way to do it, that's fine. But Wal-Mart's suppliers don't do that. They just find new ways to get people to work longer and not pay them extra.
That's nothing to be proud of.
-- April 5, 2005 08:14 AM ∞
Kevin Brancato wrote:Ted,
There's no evidence that salaried WM employees are working longer than they used to. (Yes, many do work like dogs). There's also no evidence that hourly employees are working more off-the-clock then they used to. (Yes, some do work off he clock, miss breaks, etc.) So that's not the productivity enhancements we're talking about.
Brandon,
As many WM opponents are fond of pointing out: we're not just all consumers, we're employees too.
With that in mind, I think that you're looking at a very narrow set of workers. You will certainly agree that Wal-Mart's productivity enhancements (whatever they be) have led to lower prices WM and elsewhere; these lower prices enhance the real wages of non-Wal-Mart workers as well as Wal-Mart associates.
It's not that the productivity increases doesn't go into wages, it's that it goes into lowering prices, which increase real wages of everyone. Hence, Wal-Mart is at a natural disadvantage in arguing about wages with its opponents.
Certainly Wal-Mart's productivity enhancements have made some people worse off -- particularly unionized employees of grocers that WM competes with (not so much former mom and pop employees). Wal-Mart's shifting of production to China has exported jobs. But the lower prices this has given to Americans has made a lot of them much better off, and created jobs...
And I think, though cannot argue convincingly in a comment, that balancing out the winners and losers, Wal-Mart has been a boon to the American, Canadian, and Chinese economies. I gather that you think the costs have been greater than the benefits, to put it mildly.
-- April 5, 2005 09:07 AM ∞
