Wall Street Journal - October 18, 2006
The Wal-Mart Posse October 18, 2006; Page A20 Wal-Mart may be expanding in the People's Republic of China, but here in capitalist America the low-price retailer has become the Democratic Party's favorite pinata. The media like to portray this as a populist uprising against heartless big business. But what they don't bother to disclose is that this entire get-Wal-Mart campaign is a political operation led and funded by organized labor.
We've done a little digging into the two most prominent anti-Wal-Mart groups, and they might as well operate out of AFL-CIO headquarters. An outfit called Wal-Mart Watch was created by the Service Employees International Union (SEIU), probably the most powerful union in America after the National Education Association. Wal-Mart Watch is backed by Five Stones, a 501(c)3 organization that received $2,775,000 in 2005 from the SEIU, or 56% of its $5 million budget. According to financial records, SEIU also gave Five Stones $1 million in 2004 to launch the anti-Wal-Mart group, and SEIU president Andy Stern is the Wal-Mart Watch chairman.
A second group, Wake Up Wal-Mart, is more or less a subsidiary of the United Food and Commercial Workers Union (UFCW). Wake Up Wal-Mart refuses to divulge its funding sources, but here is what we do know: The group was founded by the UFCW, is housed at UFCW headquarters, and its campaign director's $135,000 salary is paid by the UFCW.
Wake Up Wal-Mart also has close ties to the Democratic Party. Its union-funded campaign director is Paul Blank, who was political director of Howard Dean's failed Presidential campaign. The group sponsored a 19 state, 35-day bus tour across the U.S. earlier this year, staging anti-Wal-Mart rallies. Nearly every major Democratic Presidential hopeful has joined in the Wal-Mart-bashing, including Senators Joe Biden and Evan Bayh, New Mexico Governor Bill Richardson, and trial lawyer-turned-man-of the-people John Edwards. They all seem to believe they have to take this line to pass union muster for 2008.
Even Hillary Rodham Clinton has joined in the political fun. Never mind that she served six years on the Wal-Mart board during her time in Beltway exile as an Arkansas lawyer and, according to the Arkansas Democrat-Gazette, was paid $18,000 per year plus $1,500 for every meeting near the end of her tenure. Most recently, Mrs. Clinton returned a $5,000 campaign contribution from Wal-Mart to protest its allegedly inadequate health care benefits. Maybe someone should ask her if she's returned her director's pay, with interest.
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Most of the local protests against Wal-Mart are organized through the left-wing activist group ACORN, an acronym for the Association of Community Organizations for Reform Now. ACORN is the group that put the squeeze on the Chicago City Council to pass an ordinance this summer to require Wal-Mart, Target and other big-box stores to pay a minimum $10 an hour wage and $3 an hour in benefits by 2010. (Democratic Mayor Richard Daley vetoed the bill.) ACORN also pretends it is a locally organized and funded voice of the downtrodden masses. But guess where ACORN gets much of its money? Last year the SEIU chipped in $2,125,229 and the UFCW $165,692.
Then there are the anti-Wal-Mart "think tanks," if that's the right word for these political shops -- notably, the Economic Policy Institute (EPI) and the University of California at Berkeley Labor Center. The job of these two outfits is to publish papers backing the economic claims of Wal-Mart critics. The UC Berkeley group recently asserted that Wal-Mart "reduces total take-home pay for retail workers."
The UC Berkeley Labor Center has received at least $43,550 from SEIU. The Economic Policy Institute received $100,000 from the SEIU and $40,000 from the UFCW in 2005 and has published several anti-Wal-Mart studies, particularly on the benefits of the Chicago ordinance. By the way, Andy Stern also sits on the EPI board. He's a busy guy.
Now, we're not predisposed to be pro- or anti-Wal-Mart. We've criticized Wal-Mart lobbying on policy grounds -- for example, when the company supported a minimum wage increase to court some nice publicity while also knowing this would harm any lower-priced competitors. However, it is simply fallacious to argue that Wal-Mart has harmed low-income families.
More than one study has shown that the real "Wal-Mart effect" has been to increase the purchasing power of working families by lowering prices for groceries, prescription drugs, electronic equipment and many other products that have become modern household necessities. One study, by the economic consulting firm Global Insight, calculates that Wal-Mart saves American households an average of $2,300 a year through lower prices, or a $263 billion reduction in the cost of living. That compares with $33 billion savings for low-income families from the federal food stamp program.
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Alas, what's good for working families isn't always good news for unions and their bosses. They hate Wal-Mart because its blue-coated workforce is strictly non-union -- a policy that dates back to the day founder Sam Walton opened his first store. Today the company employs 1.3 million American workers, and its recent push into groceries has made life miserable for Safeway and other grocery chains organized by the service workers or the UFCW.
Wal-Mart pays an average of $10 an hour, which is more than many of its unionized competitors offer. And typically when a new Wal-Mart store opens in a poor area, it receives thousands of job applications for a few hundred openings. So Wal-Mart's retail jobs of $7 to $12 an hour, which the unions deride as "poverty wages," are actually in high demand.
But as we say, this campaign isn't about "working families," or any of the other rhapsody-for-the-common-man union slogans. If Wal-Mart were suddenly unionized, Big Labor's membership would double overnight and union leaders would collect an estimated $300 million in additional dues each year to sway more politicians. Short of that, their goal is to keep Wal-Mart out of cities so their union shops have less competition. That's what the war against Wal-Mart is truly about.
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New York Times - October 17, 2006
Shopping for a Nobel By JOHN TIERNEY
I don't want to begrudge the Nobel Peace Prize won last week by the Grameen Bank and its founder, Muhammad Yunus. They deserve it. The Grameen Bank has done more than the World Bank to help the poor, and Yunus has done more than Jimmy Carter or Bono or any philanthropist.
But has he done more good than someone who never got the prize: Sam Walton? Has any organization in the world lifted more people out of poverty than Wal-Mart?
The Grameen Bank is both an inspiration and a lesson in limits. Compared with other development programs, it's remarkable for its large scale. Since it was started three decades ago in Bangladesh, it has expanded to more than 2,000 branches. Its micro-loans, typically less than $150, have helped millions of villagers start small businesses, like peddling incense or handicrafts at the local market, or selling milk and eggs.
The economist William Easterly, who was afraid Bono was going to get this year's Nobel, calls the bank's prize "a victory for the one-step- at-a-time homegrown bottom-up approach" to development. That approach is a welcome contrast to the grandiose foreign-aid schemes that do more harm than good, as Easterly documents in his book, "The White Man's Burden."
But there's a limit to how much money villagers can make selling eggs to one another — a thatched ceiling, as Michael Strong calls it. Strong, the head of Flow, a nonprofit group promoting entrepreneurship abroad, is a fan of the Grameen Bank, but he figures that villagers can lift themselves out of poverty much faster by getting a job in a factory.
The best way for third world villagers to tap "the vast pipeline of wealth from the developed world," he argued in a recent TCSDaily.com article, is to sell their products to the world's largest retailer, Wal-Mart. Strong challenged anyone to name an organization that is doing more to alleviate third world poverty than Wal-Mart.
So far he's gotten a lot of angry responses from Wal-Mart's critics, but nobody has come up with a convincing nomination for a more effective antipoverty organization. And certainly none that saves money for Americans at the same time it's helping foreigners.
Making toys or shoes for Wal-Mart in a Chinese or Latin American factory may sound like hell to American college students — and some factories should treat their workers much better, as Strong readily concedes. But there are good reasons that villagers will move hundreds of miles for a job.
Most "sweatshop" jobs — even ones paying just $2 per day — provide enough to lift a worker above the poverty level, and often far above it, according to a study of 10 Asian and Latin American countries by Benjamin Powell and David Skarbek. In Honduras, the economists note, the average apparel worker makes $13 a day, while nearly half the population makes less than $2 a day.
In America, the economic debate on Wal-Mart mostly concerns its effect on American workers. The best evidence is that, while Wal- Mart's competition might (or might not) depress the wages of some workers, on balance Americans come out well ahead because they save so much money by shopping there.
Some critics, particularly ones allied with American labor unions, argue that the consumer savings don't justify the social dislocations caused by Wal-Mart's relentless cost-cutting. They'd rather see Wal- Mart and other retailers paying higher wages to their employees, and selling more products made by Americans instead of foreigners.
But this argument makes moral sense only if your overriding concern is saving the jobs and protecting the salaries of American workers who are already far better off than most of the planet's population. If you're committed to Bono's vision of "making poverty history," shouldn't you take a less parochial view? Shouldn't you be more worried about villagers overseas subsisting on a dollar a day?
Some of them prefer to keep farming or to run small local businesses, and they're lucky to get loans from the Grameen Bank and its many emulators. But other villagers would prefer to make more money by working in a factory. If you want to help them, remember the new social justice slogan proposed by Strong: "Act locally, think globally: Shop Wal-Mart."