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Defending Wal-Mart
Jon Lebkowsky, 4 Sep 06

Michael Strong of Flow says "Forget the World Bank, Try Wal-Mart." He argues that Wal-Mart, despite its bad rep, provides significant consumer savings in the USA and alleviates poverty in countries outside the U.S. where its factories are located. Strong says "An unreflective passion for social justice may be one of the biggest obstacles to creating peace and prosperity in the 21st century. While there are most certainly factory owners in China whom we would rightly regard as criminal in their treatment of their workers, it is very important not to confuse these incidents with the phenomenon of globalization. It is a good thing that Wal-Mart is encouraging more humane standards in its supplier's factories. And yet it is also important to remember that Wal-Mart's 'vast pipeline that gives non-U.S. companies direct access to the American market' is a vast pipeline of prosperity for the hundreds of millions of rural Chinese whose lives are more difficult than we can imagine." [Link]

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Comments

I don't know enough about Wal-Mart's operations to comment on the specifics, but his generalisation seems a bit loopy, even as generalisations go. An unreflective passion for social justice is perhaps a problem; but I see precious little of that around compared to unreflective ignorance or dismissal of social justice.


Posted by: Gyrus on 5 Sep 06

I don't think I will read this webpage anymore.


Posted by: Ben Wendt on 5 Sep 06

An unreflective belief in free-market capitalism is much worse than what this apologist is warning us about. Luckily, Walmart's model is so unsustainable--what with the continuing devaluation of the dollar leading to the end of dirt-cheap Chinese imports, the ever-growing cost of transport, and the diminishing returns visible in Walmart's profits nowadays--that we won't have to worry about it in another 15 years.

Walmart found a niche, inadvertently helped some folks out of poverty (and their traditional lifestyles) and into the bottom rung of the industrial machine, made some Waltons billions, abused some workers and gave some old folks greeter jobs over here, and killed a bunch of small US businesses. Another variety of capitalist evolution came, has possibly peaked, and will pass.

While it's a fine idea to discuss Walmart's impact on this blog, it'd be nicer if the link was a little more thoughtful than this article.


Posted by: Dave Cutler on 5 Sep 06

I don't think I will read this webpage anymore.

Right. Because balanced commentary that goes against my preconcieved notions is evil. Heaven forbid I might have to rething my assumptions.

But I kid because I love. I read stuff all the damned time because it does conflict with my opinions and beliefs. That is how you learn and grow.

Or did I read too much into your comment, Ben?


Posted by: Brian Dunbar on 5 Sep 06

and killed a bunch of small US businesses.

That bit, at least, is not true where I live.

There are now more shops in that area than before. The local hardware stores are still better bargains than Wal-Mart, and have diversified into lines and niches not covered by Wal-Mart.

The local downtown shopping district was dead dead dead befoe Wal-Mart showed up. It's arrival spurred the merchants and the city government to create a downtown association and pay attention. Net result? Downtown is now filled with niche shops and markets.

The stores that compete with Wal-Mart? They're in business, still and may have more traffic.

The arrival of Wal-Mart seems to have created wealth, at least here. YMMV. This may be an isolated case and specific to small-town Wisconsin.


Posted by: Brian Dunbar on 5 Sep 06

Of course some places Walmart had worse effects than others. On average, though, it takes money out of local economies. See for background:
www.ourfuture.org/docUploads/WM_Local_Economy_Cost_report.pdf


Posted by: Dave Cutler on 5 Sep 06

The article do have some merit. Global trading, with Walmart among them, helps development in China and in other countries. After all that's what trading is all about, you get something, we get something. Both parties should be better off than before.

But that doesn't mean all trading is equally good for all. Yes it is better for a worker to get a meager wage than being dirt poor. But is a meager wage good enough? Can it get any better? Do unorganize workers and small manufacturers have any leverage against a multi-national gaint to gain a better deal?

Wal-Mart might well be single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year.

I think his cheerleading goes too far. The fact is improving China's economy is not a goal of Walmart nor do they take it as their responsibility. Walmart wants cheap manufacturing goods, period. If China is not offering that, they will go elsewhere. The poverty of China never get on the chairman's agenda.

The article ends with a slogan:

Act locally, think globally: Shop Wal-Mart.

That's the tackiest thing I have heard in a while. Spend your money wise, shop fair-trade.


Posted by: Wai Yip Tung on 6 Sep 06

Jon, thanks for a thought-provoking piece, one that you must have known would generate heat and light. Mr. Strong might make one or two good, though specious, points, within a world view that has become increasingly peculiar. The central assumption, the elephant in the living room, concerns systems like Wal-Mart, organized around the goal of continuous exponential growth. That's the central organizing principle of our political economy, and the single most important change we must make in our thinking. Everything else is technique. In a world that works, there will be no Wal-Mart's as we currently conceive them, because their raison d'etre will be recognized as disastrous.


Posted by: David Foley on 7 Sep 06

Life doesn't get any better than a cold Coca Cola and a trip to Wal-Mart Heaven.


Posted by: Lamar Cole on 8 Sep 06

Mm, pretty typical American view on 'social justice' which, as always, confuses things: if the side-effects of some egoistic ego-tripping walk-over-bodies action are beneficial, then we must support that action, and let's even forget about the negative effects; let's forget about concepts as human dignity or justice; let's abuse "reality" and "pragmatism".

Let's make a protestant-bookkeeper calculus of benefits versus negatives, and derive social justice from this.

Typically American stuff. This way you can legitimize many freak behaviors and institutions. And many Americans have done so. They have even written that a black slave in the USA was better off than a black man in Africa; so let's encourage slavery! An American who wrote this even got a Nobel prize.

Many psychos legitimize prostitution this way, war, you can even legitimize terror this way, etc...

Ah, it's nothing new, read any American utilitarian or any American shallow 'moralist' philosopher (like Rawls), and you get the point.

The brute fact is that Wal-Mart's is a money making machine, that spews out a few jobs as a side-effect; if it could make more money using less labor, it would do so; if it could make more money using worse labor conditions, it will do so.

Wal-Mart turns life into monotony, wants to turn all goods into commodities (persons included), destroys concepts as human dignity and value, it destroys human rights and justice, and legitimizes all this with some simple-minded appeal to pragmatism. (Like the 19th century boss who says that if the laborer is not satisfied with the conditions under which he works, he can go die on the street instead, etc...)

Nothing new, Americana. Thank god, there's a huge counter-movement of people striving towards justice and sanity. And they bring jobs to people too. Just like in the 19th century, the union brought dignity and security to the common man. If it were up to Wal-Mart and the laissez-faire bosses, nothing of the kind would exist.

I have to agree with Ben Wendt, Worldchanging is often pretty extremely right-wing, churning out extremist ultra-conservative views. It's sad that they do not take any different views into account. There are so many creative and real people out there. For a group that wants to change the world, one had expected a little openness towards new ideas (new as in: since the end of the 19th century, laissez-faire capitalism and its worldview have been contested successfully.) But no, Worldchanging consistently gets stuck in the past. I'm so disappointed.


Posted by: Lorenzo on 9 Sep 06

Worldchanging is often pretty extremely right-wing, churning out extremist ultra-conservative views. It's sad that they do not take any different views into account.

This had me laughing, then I realized I should challenge you to point to "extremist ultra-conservative views" at WorldChanging.

By posting a pointer to Michael Strong's WalMart piece, I was in fact "taking different views into account," because my own view of WalMart has been rather negative, for all the usual reasons. However I was willing to hear an argument in WalMart's favor. (Incidentally, you assume this means that I agree with Strong, but that's a non sequitur).

I suggest it's you, Lorenzo, who appears unwilling to hear and consider views contrary to your own. Since you disagree with Strong, perhaps you'd like to post the factual basis for your disagreement here. Show us that your various statements (e.g. "if it could make more money using less labor, it would do so; if it could make more money using worse labor conditions, it will do so") are supported by actual facts, and not just conjecture on your part.


Posted by: Jon Lebkowsky on 9 Sep 06

Social psychologists have created experiments in which a deck of cards with, say, a red jack of clubs is mixed into the deck. As they show subjects the cards slowly, one at a time, and ask the subjects to identify the cards, almost invariably the subjects report seeing a jack of diamonds or hearts rather than the red jack of clubs. Our existing conceptual categories quite literally determine what we see.

The situation is even worse in those circumstances in which political tribalisms come into play. Political scientists have shown that when a member of one's own political tribe contradicts him or herself, the contradiction is invisible, but when a member of the opposing tribe contradicts him or herself, the contradiction provokes an eager attack. Moreover, brain scans of subjects in such situations show that the emotional part of the brain, rather than the rational part of the brain, is what is activated.

I believe the Golden Rule requires us to devote our lives to helping those less fortunate than ourselves. If one mother has a starving or hurt child, then helping that mother to care for her child should take moral precedence over any of our needs. Although none of us live this way, it is healthy to work towards a world in which we all devote more attention, time, and resources to making the world a better place. This includes supporting a wide range of humanitarian causes.

At the same time, I believe that increasing economic freedom in the developing world is arguably the most urgent humanitarian cause on the planet. 250 years ago essentially everyone on earth was poor and hungry, plagues and famines killed large numbers of people routinely, and life was more brutal and unpleasant than most of us can imagine (I have often thought that anyone who believes the Industrial Revolution was bad for humanity should be required to wear the same pair of woolen underwear and go without dental care the rest of their lives; for more realism half of their children should die before the age of ten).

It seems to be impossible for many people to perceive that one could quite authentically be a humanitarian liberal while simultaneously supporting free enterprise; as invisible as a red jack of clubs.

Economic growth, which is the result of entrepreneurial free enterprise within the context of the rule of law and stable property rights, has brought more people out of poverty than any other phenomenon in history. There were indeed ugly aspects then and now, and we should indeed work to reduce the ugliness. At no point have I ever suggested that we should not work to reduce the ugliness. We should all support constructive actions that improve the consistency with which free enterprise has positive outcomes, as well as recognize the currently existing positive outcomes.

A few relevant facts:

1. Under laissez-faire capitalism the working class standard of living steadily increased. It is simply false that "the rich got richer and the poor got poorer." While there is some ambiguity concerning this prior to 1830 or 1840, certainly by 1840 it was unambiguosly true. The earlier ambiguity is largely due to the massive debt and destruction of the Napoleonic Wars, debts from which hobbled Britain well into the 1820s. This is not controversial among economic historians; see Brad DeLong, among others.

2. Scandinavia, although often described as "socialist," is in fact more free market than the entire developing world (Chile, Costa Rica, and Oman beat out Sweden and Norway, but Denmark, Finland, and Iceland bring the Scandinavian average above all developing nations based on the Fraser Economic Freedom Index, which uses objective economic data). Make the developing world as free market as Scandinavia!

3. Hernando De Soto, a winner of the Milton Friedman prize whose Institute for Liberty and Democracy is described by Clinton as "the most promising anti-poverty initiative in the world," has documented that throughout most of the developing world it takes more than 100 steps to open a legal business. This ridiculous over-regulation directly benefits the wealthy and established businesses, that either already have their licenses or have the money and influence to get around the process, and directly harms the marginalized.

But people who are hostile to this perspective will continue to be angry with those who point out the authentic benefits of free enterprise.

Meanwhile, Estonia and Ireland have taken off through market-based reforms, and Macedonia recently elected a free market government that, if successful, may eliminate conflict in the Balkans. Gurcharan Das' India Unbound is pure poetry, a beautiful, tragic tale of the poverty created by the socialism of Nehru and Indira Ghandi, and the incredible growth in well-being resulting from the free market reforms of the 80s and 90s: a billion people will be brought out of poverty 250 years faster through free market reforms than they would have been through Nehruvian socialism. And I'm "right-wing" because I think this is a good thing?

Regarding human dignity and value, I have spent most of my adult life as an educator working to create far more humane and compassionate forms of education, and discovered that it is not possible to sustain, grow, and deepen such forms of education in government-managed schools. This issue has nothing to do with funding; School funding has more than doubled in the past forty years while adolescent well-being has steadily declined. Timken High School was given a $10 million grant, and the only result was an increased teenage pregnancy rate.

"School" as experienced by many (most?) teen agers is more humiliating, degrading, and boring than a Wal-Mart job. Many major urban school districts have drop out rates above 50%; most students find school insufferably dull and meaningless. I have worked to change this and would again if it became legal for me to do so. See my writings on education, http://www.flowproject.org/michael.html, for how to legalize markets in happiness and well-being.

It is possible to be for generosity, humanity, compassion, environmental stewardship, and any number of other liberal values while also clearly recognizing the positive benefits of economic freedom and free enterprise. There are indeed many problems with the existing system, and I'm very concerned with practical solutions to global tragedy of the commons problems in particular. But concern for the flaws of currently existing free enterprise does not blind me to the authentic benefits.

For those who are first and foremost Democratic Party partisans, the Democratic Strategist has a compelling article on why economic doom and gloom is a sure fire losing strategy for Democrats:

"$23,700. That is the household income level at which a white person became more likely to vote for a Republican over a Democrat in congressional races in 2004. That's $5,000 above the poverty line for a family of four, less than half the median income of the typical voting household of all races, and an emphatic repudiation of all things Democratic among the white middle class. Obtaining a sustainable Democratic majority in either house will be impossible unless there is a significant change in this economic tipping point.

To solve this problem, Democrats must first realize that they have a problem - no, actually a crisis - with the middle class. Democrats - the self-described party of the middle class - have not won the middle class vote in at least a decade. Among all voters with $30,000 to $75,000 in household income, Bush bested Kerry by six-points and congressional Republicans won by four-points. Democrats continued to win nine of ten black voters of all income levels, but Hispanic margins have decreased as their economic situation has improved. And as noted above, we got slaughtered among the white middle class.1

The second step is to admit that our deficit is as much due to economic disconnects as cultural and national security disconnects. That may be harder for Democrats to swallow."

http://www.thedemocraticstrategist.org/0609/kimRT.php

An article very much worth reading; abundant evidence that the American middle class, down to remarkably low income levels, is far more optimistic about the economy than are many mainstream Democratic voices.

I would be delighted to hear evidence of a specific global anti-poverty initiative that brought more people out of poverty more quickly than Wal-Mart. I have no attachment to Wal-Mart whatsoever, and if someone can show that Ashoka or Oxfam or the World Bank or Hugo Chavez or anyone else is making more progress more quickly, I'd love to see the evidence. But despite all of the vitriolic responses to this article I've seen, no one has provided evidence that another organization brings more people out of poverty more quickly than Wal-Mart.

Michael Strong
www.flowidealism.org


Posted by: Michael Strong on 9 Sep 06

Well Michael Strong, maybe you could read the New Economics Foundation's report which will show you that the "economic growth" myth is actually the worst strategy to fight poverty:

"Growth isn't working: the uneven distribution of benefits and costs from economic growth"

http://www.neweconomics.org/gen/12345news_growthisntworking.aspx

But I'm sure that if you scan the brains of the economists of the NEF, you'll find another condescending argument to debunk their research.


Posted by: Lorenzo on 10 Sep 06

This had me laughing, then I realized I should challenge you to point to "extremist ultra-conservative views" at WorldChanging.

Well, I and many other people have often said that WorldChanging could maybe focus on ideas instead of gadgets. This website has never published a single article addressing questions about structural change. Not one. We do get lots of cute inventions (like a $100 laptop for children), we get cute maps, we get news about cute organisations who have opened a shop in Nigeria somewhere selling hip recycled toys over the internet, and so on ad nauseam.

I don't have to prove that Worldchanging is ultra-conservative, the website in its entirety shows it. Can you point me to a single article that addresses questions of structural global economic reform or strategies to enhance social justice and freedom? Just reporting about mappers and inventions simply won't do. It's not Worldchanging, it's the ultimate Status Quo.


Posted by: Lorenzo on 10 Sep 06

I don't have to prove that Worldchanging is ultra-conservative, the website in its entirety shows it. Can you point me to a single article that addresses questions of structural global economic reform or strategies to enhance social justice and freedom? Just reporting about mappers and inventions simply won't do. It's not Worldchanging, it's the ultimate Status Quo.

Lorenzo, that's assertion, not evidence. There have been numerous posts on WorldChanging about social justice, although few of them have fit into the mold of your views. In the past, I've found many of your comments interesting and helpful, precisely because you've urged us to look deeper into the underlying systemic rules and structures we operate within. But in recent months, your comments and tone have become increasingly strident and attacking. That's neither helpful nor constructive, and it wins you no allies.

To be blunt, yours are the second most inane comments in this posting. Mr. Strong's are first. But you resemble one another more than you differ, because for each of you, defending your preconceptions matters more than dialogue, learning or constructive action.


Posted by: David Foley on 11 Sep 06



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