Fight poverty by shopping at Wal-Mart?
Even without considering the $263 billion in consumer savings that Wal-Mart provides for low-income Americans, or the millions lifted out of poverty by Wal-Mart in other developing nations, it is unlikely that there is any single organization on the planet that alleviates poverty so effectively for so many people.
That's FLOW co-founder Michael Strong in TCS Daily, casting Wal-Mart as an unintentional development agency. I've always been stridently anti-Wal-Mart, but maybe it's time to recognize the positives. Yes, big box stores and chains of all sizes give suburban American a disturbingly homogenous feel and accelerate sprawl. At the same time, global brands compete on reputation - for their working conditions and environmental impact in every country - in a way that other firms do not. From Fortune: "a McKinsey & Co. study leaked to the press by walmartwatch.com found that up to 8% of shoppers had stopped patronizing the chain because of its reputation." So these chain stores face much greater incentives to exhibit socially responsible behavior.
If Wal-Mart follows through on plans for energy efficiency and organic cotton, I'll continue to soften my stance. If a vibrant union of Wal-Mart workers stateside emerges, I might even shop there. More from Strong's article:
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.
P.S. FLOW is kicking off a national series of Peace through Commerce events on September 30 in D.C.
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It seems to me that Michael Strong overstates his case. It might be true that Wal-Mart benifits consumers; why else would they choose to shop there? However, the short-term gain in monetary savings for these consumers is likely offset by other hidden costs, or externalities, that these same consumers incur. As you mentioned, one of these costs is big box stores and sprawl. But there are others. Two years ago, researchers at Berkeley found that Wal-Mart's low-wage jobs cost the taxpayers of California an estimated $86 million a year. This is because "the families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees."
Wal-Mart is subsidized in other ways; just think about the billions of dollars poured into the interstate highway system, which provides easy access to Wal-Mart's stores, for both producers and consumers.
On another note, it is true that Wal-Mart has suffered considerable setbacks for being the world's corporate punching bag. Part of its strategy has been to clean up its act, ie organic produce, a cleaner fleet of trucks, etc. This is, without question, a good thing. But Wal-Mart has also taken a more low-key stance so that it can avoid generating more negative publicity. To see what I mean check out a post of mine which talks about Wal-Mart's foray in the realm of financial services: http://www.nextbillion.net/blogs/2006/07/13/banking-on-wal-mart
Also, check out the Berkeley paper I mentioned here: http://www.dsausa.org/lowwage/walmart/2004/walmart%20study.pdf
Posted by: Ethan Arpi | Aug 31, 2006 11:45:00 AM
Why should it be a surprise that Wal-Mart provides real social benefits?
I expect the US is much like the EU in making businesses responsible for implementing various equality programs and hence, among other things, provide employment for disadvantaged groups. I expect even in the US they are also responsible for handing out various benefits such as paid maternity leave and tax rebates.
Though most people would agree this is a good thing, just as we expect politicians and others with authority to act responsibly, it is also a near universal truth that those with responsibility will naturally assume authority.
We gave Wal-Mart and the like the authority when we made them responsible.
Posted by: Michael Saunby | Aug 31, 2006 2:38:08 PM
Michael writes that, "...it is also a near universal truth that those with responsibility will naturally assume authority." Frankly, I'm not so sure he's correct. Anyone who has taken ethics 101 knows that might does not make right. Wal-Mart has might, but I'm not convinced that it has authority. I also don't agree with Michael when he writes that we gave Wal-Mart authority. I certainly didn't. Or maybe I just missed the vote.
Posted by: Ethan Arpi | Sep 1, 2006 2:40:33 PM
Ethan. You're correct to note that in some things I may be wrong.
You are also correct to observe that by authority I meant power rather than some signed document or government policy.
The relationship between power (authority) and responsibilty (duty) isn't the same as with might. I do not believe that it is the financial power of Wal-Mart that gives them social responsibility and hence authority, rather it is lazy government which places many social responsibilities on employers rather than society as a whole. Why do governments do this? Perhaps because it avoids collecting direct taxes.
Posted by: Michael Saunby | Sep 2, 2006 11:46:25 AM
See, the government puts the screws to big businesses because they can absorb the costs, to some degree. The medium-sized businesses and the startups get screwed. But that's fine, from a governmental perspective, because it reduces the number and kinds of businesses, leaving only big business and big government -- a bureaucrat's dream.
Posted by: InRussetShadows | Sep 2, 2006 12:43:51 PM
What about the poverty, or at least the lowering of standard of living caused by the loss of US manufacturing jobs?
Posted by: Anna | Sep 4, 2006 7:06:21 PM
Another Wal-Mart story here http://www.fastcompany.com/subscr/108/open_lightbulbs.html
"...In the next 12 months, starting with a major push this month, Wal-Mart wants to sell every one of its regular customers--100 million in all--one swirl bulb. In the process, Wal-Mart wants to change energy consumption in the United States, and energy consciousness, too. It also aims to change its own reputation, to use swirls to make clear how seriously Wal-Mart takes its new positioning as an environmental activist...."
Posted by: Michael Saunby | Sep 8, 2006 6:02:15 AM
Wal-Mart is becoming a government within itself. Where do we draw the line with a corporation? Once they form a militia?
Posted by: Brad Henry | Oct 13, 2006 2:58:39 PM