Wednesday, November 16, 2005

The High Cost of A Low Price

Prices, Wages, and Corporate America: Deconstructing The High Cost of a Low Price

My response to Robert Greenwald’s new Wal-Mart film can be summed up in two words: So what? At least when Michael Moore went look for General Motors CEO Roger Ailes in Roger and Me, he made it clear just whom he was going after. Moore was going after the system- the man if you will. General Motors shutting down their Flint Michigan plant was a symptom of greater social ills, or at least that was the theory if you bought into Michael Moore.

The High Cost of a Low Price takes a different tact. This is corporate demonizing of the worst sort, last seen in the mainstream cinema when Morgan Spurlock dragged McDonald’s through the mud in Supersize Me. Watching the film you are left with the inevitable conclusion that Wal-Mart is evil. Bad wages, bad employment practices, bad environmental practices. Heck, Wal-Mart is even responsible for violent crime.

By the way, notice I use the word film, and not documentary. It’s almost funny how the nature of the documentary film has been completely twisted around. I half expect to be seeing on the Discovery Channel sometime soon: “Lion: King of the Jungle or Terror to the Animal World?” Or maybe Leni Riefenstahl is going to be given the documentary nod at next year’s Oscars.

I could go on, but let’s get on to some of the problems with the movie. There were probably others, but after one viewing, this is what stood out:

1) The Wal-Mart destroys small town America argument.

Cry me a river. Invoking the human element is just fine, but not in the name of something that makes no sense. Maybe after we see how sad it is for the local hardware store to go out of business we can go and cry about what’s become of the local butcher, baker, and candlestick maker. Obviously large corporations tend to put small businesses providing the same services out of business. This is because of simple economics. Larger chains have a greater distributive capacity, and thus can provide goods to consumers at lower prices. Most people find this efficiency to be a good thing. Obviously on a very personal level, it’s sad when people lose their livelihood, but without economic dislocation we’d all still be farming 14 hours a day. And what about the butcher, the baker, and the candlestick maker? Well they’ve either gone out of business or adopted into a role of providing overpriced luxury items.

2) The Wal-Mart pays low wages and has poor healthcare benefits argument.

The most damning aspect of the film is the failure to make any meaningful comparisons to other retail giants. What does Target do for instance? Are the practices of Wal-Mart outside the industry norms? The movie doesn’t tell us, which makes me suspect that Wal-Mart is not unusual amongst its peers.

The movie also cites Wal-Mart as essentially creating a class of citizens dependant on government. The numbers the movie cites are deceiving. Once again, how does Wal-Mart stack up in terms of other similar corporations? Obviously, as the king of the hill, Wal-Mart is going to have more employees on the corporate dole than any other comparable corporation. But the real question is how the percentage of Wal-Mart employees compares with the percentage of employees in other major retail corporations? Once again, the movie doesn’t answer this question. The same questions exist for the healthcare issues raised.

It just seems ingenuous to tell Wal-Mart to raise wages while not making any similar demands on Target, McDonalds, or “insert name of other large national chain with low paying jobs here.”

3) The environmental complaint.

This was perhaps the most disturbing aspect of the movie. Thousands upon thousands of Wal-Mart stores and the biggest environmental violation they could come up with in a movie critical of Wal-Mart was a minor complaint about the storage of fertilizers and pesticides? Now I don’t know the specific regulations, but they can be deduced from what was mentioned in the film. The problem was the storage of these items, not as a general matter (we’ve all seen stacks of these things in parking lots before) but only because in this specific instance there was a stream on the property and they were concerned about the run off from the pesticides and fertilizers in the case of rain.

Of course, there is not one mention of any actual contamination or pollution. If there was any testing done on that river, there certainly wasn’t anything wrong with it. The aspect that reflects most adversely on Wal-Mart is their slow response. Of course, anyone who has ever dealt with any large organizational bureaucracy before, be it big business or big government, will tell you how difficultly agonizing such an experience it can be. In this case, Wal-Mart didn’t respond quickly, but that’s hardly enough to make me want to stop shopping there. Especially when they didn’t even pollute.

4) I thought the complaint about Wal-Mart using immigrant labor was funny. If you don’t realize that big corporations, small corporations, and individual entrepreneurs make use of illegal immigrant labor then you’re blind. Again, should we blame Wal-Mart for this?

5) The same goes for the use of Chinese and 3rd World laborers for manufacturing.

6) The issue of part time employment.

This is a tricky one, but one you hear often: Wal-Mart only looks to hire people part-time, to avoid paying benefits. The problem is, if you need a full-time job, should we blame Wal-Mart when you go out and get a part-time job? Additionally, even if this was a problem, how would it ever be measured or dealt with? Many part-time workers are students, older people, or working second jobs. Should Wal-Mart just extend all part-time employees to full-time provided they want to work full-time? That just doesn’t seem reasonable. Maybe I have some sympathy for this issue, but I have no solutions.

7) Anti-Union Behavior & Discrimination Lawsuits.

Once again, my questions about other industries apply. Are other retail stores in the United States unionized? And discrimination lawsuits are filed all the time- but the larger the corporation, the bigger the news item it is.

8) The Wal-Mart brings down real estate values argument.

Maybe there is some truth to this argument, although the statistics the movies cite make the actual effects unclear. Maybe some of the real estate values of property zoned for business will decline when Wal-Mart moves in. But the specific effects on residential real estate values (the concern of most people) are less obvious. Of course, I’d find it hard to believe that Wal-Mart coming in to a depressed urban area will bring down any real estate values. This is probably an interesting economic issue, not just about Wal-Mart, but about retail development in general, but the film gives us very little to go on.

9) “Keep Wal-Mart out of My Town!” cried the affluent suburbanite.

These are my favorite Wal-Mart protesters. Affluent (usually white) suburbanites who protest Wal-Mart coming into their community. After all, why should they care? It’s big, ugly, and they can afford to shop in more expensive stores. But try telling that to the poor, to whom Wal-Mart is a Godsend, giving them access to consumer goods they otherwise might not have access too.

10) And finally, no eminent domain???

Noticeably absent from the movie was Wal-Mart’s abuse of the power of eminent domain. There have been a number of cases across the country where Wal-Mart has attempted to use the power of eminent domain to seize private property in order to build new stores in prime locations. Given the recent Kelo decision, this is a disturbing trend. Given that the victims of such blatant property seizures are poor, with little political clout, this seems like an issue worthy of mention. Of course, it’s not mentioned in the film, not once.

Watching the entire film it’s unclear whether the problems addressed are societal, or are specific to Wal-Mart. Common sense and personal experience tells us that these problems are systemic of corporate America in general, not just Wal-Mart. And of course, some of the problems cited may or may not be real problems.

Take the issue of wages and health care costs for one. Wal-Mart as a general rule pays above the minimum wage. Sometimes arguments are made for not just a minimum wage, but a “living wage.” The problem with any such plan is in the logistics. It seems silly to force corporations like Wal-Mart to pay a living wage to a high school student from a well-off family who’s working an after-school job. And of course, a living wage for a single mother of two might be two times the living wage for someone without any kids. We’d like to assume there are easy answers to these questions, but there aren’t.

The whole concept behind The High Cost of a Low Price seems contrary to common sense and basic economics. The history of consumer goods in general is that over time, goods get cheaper and cheaper, and people have been able to buy more and more. And portraying Wal-Mart as a force in opposition to that historical trend seems to fly in the face of logic.