Wal-Mart, Part III: Capitalism at its Best

By Uncle Bill Warner

Wal-Mart definitely sells for less, which is the secret of their phenomenal success. They stock what people want, are efficient in keeping track of their inventory, which keeps the costs lower and gives better customer service. It is, according to CEO Lee Scott, unfairly attacked merely because it is so big. The 5,000 lawsuits pending against Wal-Mart would not seem nearly so many if you take into account that it is the largest company in the world.

Wal-Mart points out the fact that their sex-discrimination policies that keep women proportionally fewer in management positions are no worse than other companies. Scott points out that Wal-Mart provides entry-level jobs for many people who would not have been able to find employment elsewhere, and offers opportunities for people to rise from a cart handler to management. 9,000 "associates" were promoted to management last year.

They are fighting the image that they are slave drivers by doing things like having computers shut down cash registers during an employee's break time so they cannot be forced to work through it. Many of the problems involving "forced" overtime are, claims Scott, the result of over-zealous young managers who are under pressure to produce and sometimes can be expected to make wrong decisions. He blames it on the individual rather than the company policy to get more work for less money.

The battle for low prices which has led the company to seeking the lowest possible prices from their suppliers, and which has led them to China, has opened up a new venue for sales in that country. There are now 39 Wal-Marts in China, and the prospect of many more coming soon as the standard of living rises there. American suppliers to Wal-Mart either turn to China themselves or go bankrupt. This affects small companies who supply them--a sort of trickle down poverty.

Any way you slice it, more jobs for the Chinese at low wages means fewer jobs for Americans at high wages. Who, you may ask, is going to have any money one day with which to buy things at Wal-Mart here in America? Perhaps that is why the company is expanding into the Chinese consumer market.

A good example of this was with the Pillow-Tex company that formerly sold to Wal-Mart. Despite the fact that they were the world's largest handler of textiles, Wal-Mart's pressure on them to take less for their products eventually drove them into bankruptcy, putting 14,000 employees on the street. Unemployed people find it hard to buy things, even when they are made in China.

One of the beliefs Wal-Mart has about itself is that it is tough but fair. One wonders where all those 5,000 lawsuits came from if the company is so fair, especially the millions of dollars they were forced to pay employees who were cheated out of overtime pay. The company was dragged kicking and screaming to the bank to withdraw a wee bit of their billions to be "fair."

Wal-Mart's drive for success without regard for workers is a near-perfect example of capitalism. Low prices mean success and profits. Wal-Mart says that if they pay their workers more, then they will have to raise prices, and people will start shopping at K-Mart or Target, which will mean layoffs at Wal-Mart.

Wal-Mart makes much of the fact that they are serving minority communities where no one else has been willing to build stores. The issue becomes one of filling a void, they say. If there are no businesses providing the things Wal-Mart sells, obviously this is not the same as it mom-and-pop businesses are being plowed under.

Is Wal-Mart a blessing or a curse? Probably both. Less than half of their workers can afford the Wal-Mart health care plan, but then over 40 million of their fellow Americans can't afford health care, either. So, what power, other than lawsuits, do we have over our Wal-Marts? Some unions are advising their members to use the partial boycott, since they know they can't afford to stop shopping at Wal-Mart completely. A letter to the store manager that you are going to only shop at Wal-Mart 6 days a week, or why you are going to buy your dog food somewhere else until they stop locking their employees in at night, or until they start paying for "off-the-books" overtime might make a difference. Wal-Mart operates on a very low profit margin, and any dent in their profits is going to get their attention. In any case, the consumer is boss. Your dollars have made Wal-Mart the giant it is today, and how you spend them will determine how responsibly the company acts in the future.

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