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Posts Tagged ‘Walmart’

I’ve hinted at this in an earlier post, but I’ve never made the explicit jump into economics.  Whether a particular American likes it or not, America is primarily possesses a maket-based economy.  The consumer plays a vital role in the market-based economy.  For example, in such a way as to keep a business “ethical,” the consumer has the option of not purchasing via boycott.  This will either put the “unethical” party out of business or pressure them to change their practice.  I mention these extremely basic principles to eventually point to one of my favorite topics: Major League Baseball.

Now, where I would criticize capitalism is that it is very common that once the public is aware of “unethical” behavior, say, on a corporate level, the damage has been done.  If Walmart moves into town and is doing something unethical, it is very likely that the public will not be informed of this until the small businesses have already been obliterated – if the public finds out at all.  And even if the public found out before the “damage was done,” so to speak, they may not desire to fork over the extra cash to pay for something domestic and/or from a small business when cheap imported goods are so readily available.  The same will go for the agricultural industry.  Thanks to shoving innumerable cows into inhumane stalls that are far too small for their bodies and injecting cows with hormones while feeding them God-knows-what, the impoverished family is much closer to affording beef.  There are more humane/ethical options with regard to purchasing/eating beef (though some might thing there are no grounds for consuming meat at all), but those aren’t exactly options when the steroid beef is but a small fraction of the price.  I believe there is a solution to this problem, but I’m not going to get into that now.  Instead, I will let my mention of “steroid” two sentences ago segue into my main point regarding baseball.

After the 2000 season, Alex Rodriguez, a free agent, signed to the Texas Rangers for a record $252 million 10 year contract.  Eventually he was traded to the New York Yankees and was eventually signed to the Yanks for $275 million (2008-2018).  I did the math just now, and accounting for leap years (2008, 2012, 2016) A-Rod makes $.79 a second.  Every second, awake or asleep, playing baseball or cheating on his wife (now ex-wife), etc., the man makes $.79.  “That’s despicable!” some might cry out.  But this is where my love affair with capitalism actually takes place.

You see, the consumer may find out the salaries of these athletes before they even set foot on the field.  Whatever is unethical about the salaries of athletes is already quite visible to the consumer.  The consumer can choose to boycott baseball.  I may consider it the best sport in the world, but I’m not talking about food, shelter, or clothing.  I’m talking about recreation.  Though I would consider recreation essential to living, baseball itself is not.  Who’s to say they shouldn’t be making so much?  WE pay their paychecks! As I’ve said before, we can choose to turn off the television.  We can choose not to buy their products.  It’s not as if taxes are being distributed from the federal government to these players.  We, in our greed, are in fact jealous at A-Rod makes more in a day than the average American will make in a year (in under three hours he makes more than the average person will make in a year, globally).  In this way capitalism shows, at least in baseball, that the sickness is not in the system itself, but the people in the system – even and maybe even especially the consumer – are responsible for this sickness.

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Just wanted to draw your attention to a conference, or “charrette” (an intense design period), that is taking place in Colorado right now for the trucking industry and is focusing on fuel efficiency.  The Rocky Mountain Institute is putting it on, and it’s stated goal is to double efficiency.  As their website says:

…RMI shows that doubling the efficiency of an average Class 8 tractor-trailer from 6.5 miles per gallon to 12.3 mpg across the U.S. fleet (half a million trucks) is possible with currently available technology like auxiliary power units, more efficient widebase tires, and improved aerodynamic mechanisms, such as trailer side skirts.

truck-fleet1I’ve mentioned before, about Walmart’s work with RMI and the $500 million in annual savings they are projecting for trucking fleet by enacting some of these technologies.  This is good news for businesses, consumers, and the environment.

Since the height of oil prices last summer many changes in behavior by individuals and businesses have combined to decrease fuel consumption.  Along with the reduced demand from a weakened global economy this has led to a reduction in prices by almost two-thirds from the high of $147/barrel last July.  As you know, lower prices may reduce the incentive to reduce consumption further, or pursue less harmful energy sources.  RMI wisely considers that in it’s computations by figuring on $2 a gallon diesel price to come up with it’s estimated “efficiency gains of 3.8 billion gallons of diesel saved and $7.6 billion gained [retained revenue]”.  So even with lower prices projected a significant savings is available.

RMI|Move, a subsidiary of RMI, has a great website about all the innovation they are pushing for mobility + vehicle efficiency (where the Move moniker comes from) – and it deals with auto, trucking, aviation, freight and more.  I encourage you to check it out… it is encouraging and inspiring.  While you are there check out this interactive map which tracks the amount of money spent and where the fuel was imported since 1973.  Pretty interesting.

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You may wish to read this short “muckraking” piece, if you will, written by former Wired journalist Charles Pratt, who went undercover as a Walmart employee.  This is an interesting follow-up to my earlier post, A Dialogue On Walmart.

He also has a take on union pressure that I hadn’t thought of… namely the interest they have in increasing THEIR bottom-line.

Walmartwatch.com, for instance, is partnered with the Service Employees International Union; Wakeupwalmart.com is entirely owned by United Food and Commercial Workers International Union. For years, now, they’ve campaigned against Wal-Mart, for reasons that may have more to do with money than compassion for the working poor. If more than one million Wal-Mart employees in the United States could be induced to join a union, by my calculation they’d be compelled to pay more than half-billion dollars each year in dues.

(HT: Powerline)

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If you regularly read CAI then you need no introduction to the fact that I am a fierce believer in capitalism and the free market as the best means to manage economies.  This will oftentimes lead those who disagree to battle cries of greed, corruption, scandal, more greed, callousness, materialism, greed again, etc.  I have tried my best to be completely honest and say, “Yes, this can exist within this framework.”  I then try to make a convincing case that the alternative is actually worse, and best to try and work within the most complete and realistic of economic policies, in my opinion free-market capitalism, then to embrace the alternative.

One of the shining examples of both the best and worst of this very arrangement is a company like Walmart.  Many people have a visceral reaction to Walmart, and actually hate it as an entity and I believe that is an irrational viewpoint.  I support Walmart and their business acumen, and at the same time I can easily acknowledge their shortcomings in matters of integrity and corporate values.  I believe that good and successful businesses will make good and honest choices as far as how they treat both their customers and their employees.  But that is not a prerequisite of forming a business, and nor should it be forced upon companies.  In general I believe organizations should be able to fall or succeed based on their practices and how consumers respond to them, not on forced requirements.

WalmartOne of the more popular diatribes against the company is the 2005 film Wal-Mart: The High Cost of Low Price.  If you have not seen this, then I highly recommend you do.  While this film is so incredibly biased as to frustrate anyone truly interested in objectivity, it is still interesting to see, especially for it’s testimony from former Walmart employees.  Their testimony definitely shows the underbelly of this company, and some of the demons they have.  This film is hardly a documentary though, more like propaganda, as there is not even an attempt at telling two sides of a story.  For instance, one section of the film comments on the size of subsidies that governments will hand out to Walmart to get them to set up shop in their cities or states.  Subsidies as high as $2.1 million, which is “money that could have saved the 3 schools that we had to close this year,” as one local citizen lamented  A counterpoint that the film could have made is to point out that subsidies are not cash.  The city or state did not give Walmart 2 million dollars that it could have spent on schools, but rather did not require Walmart to pay 2 million dollars in various starting taxes.  A second point could have been to show how much tax revenue Walmart brings in to a city or state.  This article from 2002 talks about Walmart moving a store from Rocklin, CA to nearby Roseville, thus releaving Rocklin of $650,000 in annual tax revenue, 10% of their combined revenue.  So you could see a city being justified in trying to lure Walmart to it’s town when any subsidies they allow could be replenished in a few years, and then have enormous positive generation for years to come.

Here are some other areas where I think Walmart gets shortchanged, or misrepresented.

(more…)

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