Ah, that liberal intelligentsia
The title of Robert Reich’s op ed piece in the NYT yesterday is emblematic of the problem facing the liberal wing of the political elite: it is a rare medical condition called “not having a spine.” The title is “Don’t blame Wal Mart.” The liberal response to the power grab by the capitalist oligarchy in the last twenty years (a grab that has an exact metric – the relation between the average pay of the CEO and the average pay of the workers at his company) has been exactly this – to adopt a scolding, moral tone towards the ‘consumer’, i.e. those who make up the vast, underpaid bulk of the population, while suggesting self help ways we can make put the smiley face on the current neo-robber baron regime. Since Wal Mart has just been union busting in Canada, one would think Reich, a former labor secretary, might mention that. Don’t hold your breath – mentioning unions is so New Deal. The quicker you shoot them, the more we can open up the country to the ownership society – in which the owners own us. Or, slavery is freedom and I feel fine.
Here’s how Reich sees the problem:
“…Wal-Mart has lured customers with low prices. "We expect our suppliers to drive the costs out of the supply chain," a spokeswoman for Wal-Mart said. "It's good for us and good for them."
"Wal-Mart may have perfected this technique, but you can find it almost everywhere these days. Corporations are in fierce competition to get and keep customers, so they pass the bulk of their cost cuts through to consumers as lower prices. Products are manufactured in China at a fraction of the cost of making them here, and American consumers get great deals. Back-office work, along with computer programming and data crunching, is "offshored" to India, so our dollars go even further.”
This nicely mislocates the source of the great deals – the source is homegrown. It is called the Walmart work force. The Walmart strategy has been to deliberately and grossly underpay and overwork its work force, creating the kind of the productivity gains once seen by French sugar cane planters in Haiti. As employee compensation plummets to new depths, upper management rewards itself like a pirate at an orgy.
This is from an article in the NYRB about Walmart by Simon Head, 7 Dec. 2004:
“… Wal-Mart's ability to keep prices low depends not just on its productivity but also on
its ability to contain, or even reduce, costs, above all labor costs. As Sam
Walton wrote in his memoirs:
You see: no matter how you slice it in the retail business, payroll is one
of the most important parts of overhead, and overhead is one of the most
crucial things you have to fight to maintain your profit margin.
One of the ways to win this particular fight is to make sure that the growth
of labor's productivity well exceeds the growth of its wages and benefits,
which has in fact been the dominant pattern for US corporations during the
>From a corporate perspective, this is a rosy outcome. When the productivity
of labor rises and its compensation stagnates, then, other things being
equal, the cost of labor per unit of output will fall and profit margins
will rise. Wal-Mart has carried this strategy to extremes. While its
workforce has one of the best productivity records of any US corporation, it
has kept the compensation of its rank-and-file workers at or barely above
the poverty line. As of last spring, the average pay of a sales clerk at
Wal-Mart was $8.50 an hour, or about $14,000 a year, $1,000 below the
government's definition of the poverty level for a family of three.
Despite the implied claims of Wal-Mart's current TV advertising campaign,
fewer than half- between 41 and 46 percent-of Wal-Mart employees can afford
even the least-expensive health care benefits offered by the company. To
keep the growth of productivity and real wages far apart, Wal-Mart has
reached back beyond the New Deal to the harsh, abrasive capitalism of the
Walmart is simply the poster boy for the deep and abiding inequalities produced by cutting up the Social Welfare state of the sixties and seventies and feeding it to the sharks – the state of the country, post-Reagan. The U.S., already burdened with a political elite that resembles those common to a Latin American NSS, has the kind of inequality that indicates that, in this republic, a new experiment is being hatched: can a democracy generate a feudal system?
You betcha. And the serfs have voted for it. So they will get it. The asset stripping of their Social Security, the Bankruptcy bill that targets those who go under paying that 20 percent interest (while, of course, the system nurses,with utmost gentleness, the bankruptcies of such as WorldCom – can ‘t let the sharks suffer from their bad behavior, can we), the cuts in medical benefits, veterans benefits, and the locking in of tax cuts that have reduced the tax burden on corporations, for instance, to pre 1929 levels. But the serfs did get creationism in their classrooms and the prevention of the ultimate horror -- uppity gays looking to replace “Eve” with “Steve” at the altar. Be Happy!