Posted on 03/28/2008 5:26:14 AM PDT by Clive
In Wal-Mart We Trust
Who did the most to help victims of Hurricane Katrina? According to a new study, it was the company everyone loves to hate
Shortly before Hurricane Katrina made landfall on the U.S. Gulf Coast on the morning of Aug. 29, 2005, the chief executive officer of Wal-Mart, Lee Scott, gathered his subordinates and ordered a memorandum sent to every single regional and store manager in the imperiled area. His words were not especially exalted, but they ought to be mounted and framed on the wall of every chain retailer -- and remembered as American business's answer to the pre-battle oratory of George S. Patton or Henry V.
"A lot of you are going to have to make decisions above your level," was Scott's message to his people. "Make the best decision that you can with the information that's available to you at the time, and above all, do the right thing."
This extraordinary delegation of authority -- essentially promising unlimited support for the decision-making of employees who were earning, in many cases, less than $100,000 a year -- saved countless lives in the ensuing chaos. The results are recounted in a new paper on the disaster written by Steven Horwitz, an Austrian-school economist at St. Lawrence University in New York. While the Federal Emergency Management Agency fumbled about, doing almost as much to prevent essential supplies from reaching Louisiana and Mississippi as it could to facilitate it, Wal-Mart managers performed feats of heroism. In Kenner, La., an employee crashed a forklift through a warehouse door to get water for a nursing home. A Marrero, La., store served as a barracks for cops whose homes had been submerged. In Waveland, Miss., an assistant manager who could not reach her superiors had a bulldozer driven through the store to retrieve disaster necessities for community use, and broke into a locked pharmacy closet to obtain medicine for the local hospital.
Meanwhile, Wal-Mart trucks pre-loaded with emergency supplies at regional depots were among the first on the scene wherever refugees were being gathered by officialdom. Their main challenge, in many cases, was running a gauntlet of FEMA officials who didn't want to let them through. As the president of the brutalized Jefferson Parish put it in a Sept. 4 Meet the Press interview, speaking at the height of nationwide despair over FEMA's confused response: "If [the U.S.] government would have responded like Wal-Mart has responded, we wouldn't be in this crisis."
This benevolent improvisation contradicts everything we have been taught about Wal-Mart by labour unions and the "small-is-beautiful" left. We are told that the company thinks of its store management as a collection of cheap, brainwash-able replacement parts; that its homogenizing culture makes it incapable of serving local communities; that a sparrow cannot fall in Wal-Mart parking lot without orders from Arkansas; that the chain puts profits over people. The actual view of the company, verifiable from its disaster-response procedures, is that you can't make profits without people living in healthy communities. And it's not alone: As Horwitz points out, other big-box companies such as Home Depot and Lowe's set aside the short-term balance sheet when Katrina hit and acted to save homes and lives, handing out millions of dollars' worth of inventory for free.
No one who is familiar with economic thought since the Second World War will be surprised at this. Scholars such as F. A. von Hayek, James Buchanan and Gordon Tullock have taught us that it is really nothing more than a terminological error to label governments "public" and corporations "private" when it is the latter that often have the strongest incentives to respond to social needs. A company that alienates a community will soon be forced to retreat from it, but the government is always there. Companies must, to survive, create economic value one way or another; government employees can increase their budgets and their personal power by destroying or wasting wealth, and most may do little else. Companies have price signals to guide their productive efforts; governments obfuscate those signals.
Aside from the public vs. private issue, Horwitz suggests, decentralized disaster relief is likely to be more timely and appropriate than the centralized kind, which explains why the U.S. Coast Guard performed so much better during the disaster than FEMA. The Coast Guard, like all marine forces, necessarily leaves a great deal of authority in the hands of individual commanders, and like Wal-Mart, it benefited during and after the hurricane from having plenty of personnel who were familiar with the Gulf Coast geography and economy.
There is no substitute for local knowledge -- an ancient lesson of which Katrina merely provided the latest reminder.
ColbyCosh@gmail.com
Ping to the good Wally World
Wal-Mart does advertise their dirt cheap prices, and those dirt cheap prices do a lot to advertise themselves.
However, Wal-Mart is facing a dedicated and well organized smear campaign by labor unions, and they do need to take steps to counter it.
The liberals in both the federal and state legislatures have proposed and even passed a number of laws that were specifically designed to hurt Wal-Mart so that unionized companies could be more competitive.
Wal-Mart does need public support to keep the government in line, so they can compete in an honest market.
I hear ya. I think it goes back to what I was saying about people in general being dumb. Since we hang out on forums generally populated by people of above-average intelligence, it's easy to forget this. I see those stupid union ads all the time and could never dream of my buying power being affected by them one way or the other. But, there must be people mindless enough to lap 'em up, otherwise they wouldn't spend the money to do so.
The ones I really can't stand are the tobacco companies putting out these politically-correct, self-congratulatory ads about how horrible it is for children to smoke and how you can go to their web site for tips on smoking cessation. I'm a smoker and I would totally switch brands if a company balled up and put out advertisements calling out the anti-smoking idiots.
bump for later read
Wal Mart headquarters= Bentonville, Arkansas.
I rarely go to Wal-Mart, but appreciate that they show a genuine concern when difficulties occur in the communities they serve.
Proves the inadequacy of FEMA... why are they still around?
Oh yeah...
Explain that to the lady they're suing to recoup health care expenses. She may have a problem believing it.
I’m not a big fan of Wal-Mart, but I do shop there periodically. The reason why I’m not a big fan is strictly service related: I’ve never been in any other store where any time you go there, you can be guaranteed to wait in line for a significant time to check out. The stores also trend towards to the dirty, and the staff is usually hopeless. But the prices are great.
I wish that Wal-Mart would further empower their local managers to provide something approaching decent customer service. A survey from the University of Michigan I heard recently rated the *worst* company for customer service (retailer and grocer categories) to be Wal-Mart.
I guess you get what you pay for. If Target were to ever get it’s prices down to where Wal-Marts are on a consistent basis, they’d give them a real run for the money.
I've noticed that about ours, and it's commendable. Some of the, what I would call "better motivated" employees there seem to move on to Home Depot, down the street- and I seem to recall that Home Depot sent a lot of aid, as well.
Capitalism has its faults and excesses, but unlike the government, your participation with it is voluntary-- you can always choose another business if you don't like the one you are dealing with.
Write that mistake to driving 14 hours yesterday. I passed a lot of the Wal-Mart vehicles. Thanks for the correction.
I read it as a contract dispute. I don’t hear anyone complaining about the lawyer getting his half. What about complaining abut his lack of charity. His half came as a result of a contract.
Yes let's discuss this as a contract. If I agree to purchase health insurance through my company and I pay premiums for that coverage then I expect my medical expenses to be paid under the terms of that agreement. And if Wal-Mart is now suing for the recovery of those expenses I paid insurance to cover the shouldn't my premiums be refunded? Since I paid for services that Wal-Mart is now refusing to pay? Or if I pay premiums for the year and don't make a single claim then should those premiums be refunded to me?
It looks to me like Wal-Mart wants it's cake and to eat it to. It expects it's employees to pay for insurance out of their crap wages and then pay for medical expenses as well. No wonder it's making all that money.
I read that one of the conditions to the contract was that if any monies are obtained from a lawsuit relating to the reason for the medical care that the insurance carrier would be repaid. I don’t like it but the courts ruled on the contracts terms which the employee agreed to. If the atty. didn’t take such a big share then the employee would have a lot left over. I see the atty. in the same light as you see WM.
Nobody is denying that what Wal-Mart did was legal. It's just a cheap shot that screws their employees. The company charges them health insurance premiums and then makes the employee still pay the bills, so in effect the company makes out twice. I work with HR people at all levels and I've asked a few of them about this clause and except for one individual none had ever heard of the like. That sole exception knew that Wal-Mart did it, and also said that Wal-Mart was the only company they had heard of with such a clause.
If the atty. didn’t take such a big share then the employee would have a lot left over. I see the atty. in the same light as you see WM.
If there was more left over then that would mean there was more for Wal-Mart to seize, right?
At least it would be spread around to the shareholders not some “Edwards” wannabe.
And in the end the poor woman still get's screwed. By Wal-Mart. By the attorney. Nobody seems to care about her. I'll bet when she all those smiling, happy employee faces on the Wal-Mart commercial she actually believed it.
Oh, and when Wal-Mart has taken all her money the woman will still need long term care. So Medicaid and the U.S. taxpayers will foot that bill. But that's OK. Wal-Mart has their money, they have her insurance premiums, they make out like a bandit. The attorney will have his money. The woman will still be screwed, and so will the taxpayers.
“And in the end the poor woman still get’s screwed. By Wal-Mart”
On that we agree. I see the problem this way. Your damned if you do and damned if you don’t. If Wal-Mart gives her a bye then every atty in the country will be suing them because they didn’t do it for their client. This poor lady just happens to get screwed. If I was Wal-Mart I would make an anonymous donation to her care, but I be their lawyers are against something like that as well.
You see evil corporations and I see evil lawyers. Different viewpoints with a common cause. Lawyers!
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