Latest Liberal Crusade - Why Wal-Mart Should Pay More

RealClearPolitics ^ | May 10, 2005 | Thomas Sowell

[JBW]

The latest liberal crusade is against the Wal-Mart stores.

A big headline on a long article in The New York Times asks "Can't A Retail Behemoth Pay More?"

Of course they can pay more. The New York Times could pay its own employees more. We could all pay more for whatever we buy or rent. Don't tell me you couldn't have paid a dime more for this newspaper. But why should any of us pay more than we have to?

According to The New York Times, there is a book "by a group of scholars" due to be published this fall, arguing that Wal-Mart has an "obligation" to "treat its employees better."

This can hardly be called news. Nothing is easier than to find a group of academics -- "scholars" if you agree with them -- to advocate virtually anything on any subject. Nor is this notion of an "obligation" new.

For decades, there has been lofty talk about the "social responsibility" of businesses or about a "social contract" between the generations when it comes to Social Security. Do you remember signing any such contract? I don't.

***

It would be devastating to the egos of the intelligentsia to realize, much less admit, that businesses have done more to reduce poverty than all the intellectuals put together. Ultimately it is only wealth that can reduce poverty and most of the intelligentsia have no interest whatever in finding out what actions and policies increase the national wealth.

They certainly don't feel any "obligation" to learn economics, out of a sense of "social responsibility," much less because of any "social contract" requiring them to know what they are talking about before spouting off with self-righteous rhetoric.

[Alberta's Child]

That's a great book. Now that you've finished that one, I'd recommend moving on to his "sequel" -- Applied Economics: Thinking Beyond Stage One.

[American Vet Repairman]

"And did that person also own two cars, a suburban home, and a pleasure boat? "


Many do. And have benefits out the wazoo. Yet they still bitch. I stopped complaining in life after a jungle trip in Belize. These people were so poor, if they robbed me I would not have begrudged it. America has the fattest richest poor people I have ever seen.

[conservatism_IS_compassion]

Wal-Mart did a lot of work to find it's suppliers. we would get stuck paying that cost if we went hunting ourselves.

I was echoing Physicist, and his point was that we go to WalMart to get things, not to give money to WalMart's employees or anyone else.

Anyone who thinks that a WalMart employee should have more money can remedy that situation by the simple expedient of reaching in their wallets and giving him the money they think he should have.

[evad]

What a shame that thinkers like Sowell represent such a small percentage of the population. Period.

Well said..
Ditto!

[Alberta's Child]

Most people don't recognize the irony of all this "we're losing our middle class!" agonizing we hear so often. The loss of our middle class is primarily driven by an increase in the size of our upper class, not an increase in the size of our lower class.

[nonliberal]

America has the fattest richest poor people I have ever seen.

Tell me about it. Every time I go to a grocery store, there is some fat tub of lard on welfare buying STILL MORE food! Many of us can bareley make ends meet but to see these lardasses buying t-bone steaks while I am stuck with frozen pizza and ramen frys my @$$.

[.cnI redruM]

Very true. However, we tend to think most corporations have a bottomless money pit somewhere that churns out stock options on demand. They never seem to realize otherwise until it's too late and an airline pension fund crashes and burns.

[PMCarey]

That's a great book. Now that you've finished that one, I'd recommend moving on to his "sequel"

Just started reading it today as a matter of fact.

[conservatism_IS_compassion]

However, [people] tend to think most corporations have a bottomless money pit somewhere that churns out stock options on demand. They never seem to realize otherwise until it's too late and an airline pension fund crashes and burns.

People don't appreciate that profit or loss is a small difference of large numbers. A "small" increase in expense can turn profit into loss - and businessmen know it all too painfully. They also know that they can be portrayed as skinflints because they do not cavalierly allow their costs to increase.

[Sam's Army]

"but neither is it acceptable to create a new "elite" class of wealthy businessmen while the middle-class is reduced to serfdom..."

Excellent choice of words there, comrade.

[.cnI redruM]

>>>>it is the responsibility of business to maintain a strong middle-class.

Manure. It is the responsibility of the average American to maintain himself.

[kpp_kpp]

you mentioned "obey the law" several times.

U.S. "free-trade" agreements with 3rd-world-like countries are a way for U.S. business to subvert U.S. labor and environmental laws. it is not an even playing field.

even w/o free trade agreements the cheap labor and lack of laws to "obey" make places like China so agreeable to U.S. businesses.

i have nothing against walmart, big businesses, or the upper class but i can still see the obvious. if all of the products walmart sold had to be manufactured (etc.) in accordance with U.S. laws and regulations there would be no walmart.

[JBW]

An interesting point. Not all nations have the same laws and, to the extent that free trade allows U.S. companies to outsource the production of goods to companies with looser or non-existent laws, free trade policies allow U.S. companies to skirt around restrictive U.S. laws.

If your point is that the U.S. should pay closer attention to the labor and environmental laws of the companies with whom it develops free trade agreements, I think you're right. We shouldn't subsidize human exploitation or environmental recklessness through trade.

But, on the other hand, we can't require every country in the world to match the U.S. law-for-law and restriction-for-restriction.

If U.S. companies were able to hire U.S. residents at fifty cents an hour it would be a travesty. That's why the Fair Labor Standards Act imposes a minimum wage.

In Bangladesh, however, 50 cents an hour is a princely sum and the population there is happy to work in a U.S.-owned factory for that rate. Encouraging trade to developing companies with lower rates is a good thing, not exploitation.

Does it sometimes hurt U.S. workers when jobs move overseas? Sometimes, but in the long run the U.S. is better off even if some individual U.S. workers are harmed.

The $10 radio you buy in Wal-Mart (because it was manufactured in Bangladesh by the $0.50/hour worker) would cost $100 if it was manufactured in Ames, Iowa by U.S. workers making the minimum wage. The factory workers in Ames may lose some wages as they re-train for other jobs elsewhere, but in the mean time everyone in American who buys the $10 Wal-Mart radio saves $90 on the purchase.

[Mase]

We shouldn't subsidize human exploitation or environmental recklessness through trade

There are working conditions so bad in certain countries that some people's initial reaction is to support a ban on products from those places. Many people also think it wise to demand certain standards on wages, environmental protection and worker health and safety.

This thinking is hard to argue with until one remembers just how bad working conditions were in the U.S, at one time, and the damage that was done to our environment during our rapid industrialization.

If we had insisted on these same standards for our own economy while we were becoming affluent we never would have made it.

But, on the other hand, we can't require every country in the world to match the U.S. law-for-law and restriction-for-restriction.

Agreed. Insisting on additional regulations in other countries, under threat of tariffs or other sanctions, that improve wages, working conditions or the environment will deliver the undesirable effect of eliminating many of those jobs.

Denying a country the ability to take advantage of their poverty, when that's what they have the greatest supply of, would be unfortunate and is no way to develop future markets for our products and services.

Encouraging trade to developing [countries] with lower rates is a good thing, not exploitation.

Too many people see low wages as exploitative but can never answer why it isn't better for a man to take the work available to him and provide the basics for survival than it is not have work at all and starve.

[JBW]

I think we agree on more than we disagree.

[kpp_kpp]

ok, i am not in disagreement with what you are saying...

and this is not my argument, but for argument sake, how do you counter it:

everything that anyone does in the U.S. can be done cheaper elsewhere (manufacturing, information technology, services industries, etc.). how does one balance the desire to spread the wealth by moving industries, and now information, to poverty stricken countries without bankrupting yourself by eliminating the market?

is it a valid long term goal for the U.S. to be purely a consumer oriented services industry? there certainly must be cons to that.

[Mase]

how does one balance the desire to spread the wealth by moving industries, and now information, to poverty stricken countries without bankrupting yourself by eliminating the market?

Our continuous increases in productivity should have a great deal to do with it. Manufacturing jobs have declined worldwide while manufacturing output rises.

ISM Manufacturing Output expands for 23rd Consecutive Month

Ten Myths About Jobs and Outsourcing

Let the lower-cost, lower-skilled work move to the countries who have the comparative advantage while we continue to develop the technologies and services that will maintain our position as the world's innovator.

If I remember correctly, our economy produces 5 service jobs for every manufacturing job. What do you think pays more, low-skilled manufacturing jobs or professional services?

is it a valid long term goal for the U.S. to be purely a consumer oriented services industry? there certainly must be cons to that.

We manufacture more goods now than at any other time in our history.

[kpp_kpp]

again, nothing to disagree with there.

i think people used to think that as long as they weren't a "low-skilled" factory worker their career choice was safe.

but as a professional in the IT industry i've found over the past 15 years how quickly things change. the global information age makes professional services just as transportable overseas as manufacturing jobs.

(and regarding the myths, i'm not trying to say that america is "losing jobs" overseas but even without elminiating my job, my hourly rate has been cut in half. again, not saying the market isn't working properly, it is, i'm moving out of that career into something else -- but there is just something nagging me about the big picture long term. CEOs and management could careless about anything but costs until stockholders figure out that companies themselves can be managed for a much lower cost overseas.)

i don't disagree with you but it is not limited to low-cost, low-skill work.

[Mase]

but as a professional in the IT industry i've found over the past 15 years how quickly things change. the global information age makes professional services just as transportable overseas as manufacturing jobs

From what I remember, IT had a great run in the 90's but took a big hit after Y2K. I thought they had recovered since then, not only in the availability of jobs, but also with earnings. I'm surprised.

I'm probably a little older than you are and I have had to continuously update my skill sets and education. In the 12 years I've been with my current company, we've doubled our sales volume but have cut the number of employees by one-third.

The guys who didn't survive lost their positions because they didn't have the skills necessary to continue to create value for the company. They have also had a hard time finding new positions paying what they used to earn.

I don't think they fully understood just how competitive the world has become. The bottom line though is that our unemployment rate is lower than the averages of the past three decades, real incomes continue to rise, home ownership is at an all time high, household net worth is at an all time high, interest rates remain low and the economy continues to hum along.

There is more opportunity now in this country than at any other time in my life. I only wish I was 20 years younger.

[kpp_kpp]

keeping up to date on my skillset is the only reason i've made it this far, i stay on the bleeding edge of technology as a way to keep my rate up. but since y2k i would venture to guess you'd be surprised at the number of projects that have been lost to $5-10/hr india developers. back in 2001 everyone thought it would be unmanagable fad but the fad isn't over yet.

(regardless it is a rat race and the problems being solved today are the same problems that were being solved 20-30 years ago, just "improved" technology. it doesn't seem many in the (enterprise) IT field learn from the past so i fully understand why business leaders are happy to send projects to india.)

based on the current trends and the amount of effort i have to put into "updating" my skillset, at this rate i certainly won't be able to carry through to retirement.

but that is the great thing about america right? the ability to reinvent yourself.