Wal-Mart and more L4

[Dan M]

> -----Original Message-----
> From: brin-l-bounces at mccmedia.com [mailto:brin-l-bounces at mccmedia.com] On
> Behalf Of Nick Arnett
> Sent: Thursday, February 21, 2008 11:19 AM
> To: Killer Bs (David Brin et al) Discussion
> Subject: Re: Wal-Mart and more L4
> 
> I'm interpreting everything your wrote about ethics as agreement that it
> isn't simply a cost-benefit analysis.  Right?

I agree it isn't simply a cost benefit analysis.  But, I also argue that
costs and benefits must both be considered.  The ends do not always justify
the means.  But, the ends sometimes justifies the means.


 
> >
> > Now, back to Wal-Mart.  Looking at the last 20 years of Wal-Mart.....the
> > company philosophy seems evident to me.  I've read a wide range of
> > analysis
> > of their techniques and the corporate culture of Wal-Mart was
> consistently
> > named as cutting prices by cutting costs. Corporations are all there to
> > make
> > money, certainly.  But, they have different ways of doing it.  Some are
> > the
> > tech leaders: high prices for the latest and the best.  Wal-Mart chose
> the
> > low price route to profit.  It's a low margin means, but can be very
> > successful.
> 
> 
>You're not speaking to the point.  If I had postulated that cost-cutting
>is bad, then your arguments would be appropriate.  Cost-cutting is not
>bad. Economic efficiency is not bad.  But bad methods can be used to cut
>costs and improve efficiency.  My objection is their aggressiveness in
>achieving their efficiency -- pushing wages too low too fast, paying women
>less than men, hiring illegals, cutting benefits, busting unions,
>abandoning vendors the moment somebody makes a cheaper version, etc.

OK, reduced pay is a bad thing, reduced prices are a good thing.  Increased
pay is a good thing, increased prices are a bad thing. Inflation gives us a
good way of seeing that.  If the CPI goes up 6% and my wages go up 3% that's
bad.  If the CPI goes down 6% and my wages go down 3%, that's a good thing.


To, me the question with WalMart is which predominates.  Quoting 

http://www.americanprogress.org/kf/walmart_progressive.pdf
<quote>
There is little dispute that Wal-Mart's price reductions have benefited 
the 120 million American workers employed outside of the retail sector.
Plausible estimates of the magnitude of the savings from Wal-Mart are
enormous - a total of $263 billion in 2004, or $2,329 per household.2 Even
if you grant that Wal-Mart hurts workers in the retail sector - and the
evidence for this is far from clear - the magnitude of any potential harm is
small in comparison. One study, for example, found that the "Wal-Mart
effect" lowered retail wages by $4.7 billion in 2000.3
<end quote>

We are talking about factors of 100 differences in benefits/harm.  This
analysis is similar to what I've seen elsewhere. 

Now, given the unfortunate politicization of economic analysis, it is fair
to wonder how biased is the study one is quoting.  I will argue that there
are failures on both the left and the right on this.  But, the author of the
long analysis I am quoting is not a dittohead, he has worked for Democrats.
So, he analysis of Wal-Mart should not be put in the same category as
Heritage Foundation position papers (many of which I can find the flaws
within 30 seconds....they're that bad).

Further, if you look at the main page of the website, 

http://www.americanprogress.org/


I think it's fair to say that the American Progressive is at the very least
a centrealist website.





 
> Perhaps all of this will add up to a better economy in the end, but
> where's the end and what about the effects of the transition?  

The argument is not that, if it were it would be suspect.  It's that the net
effects of Wal-Mart have been measured for the last 20 years (I remember
reading my first economic analysis of this in the NYT while I still lived in
CT, so that was at least 16 years ago.  In one analysis, Wal-Mart was
credited with half of the productivity improvement (productivity is not
increased BTW by lowering workers salaries) during the 1990s.  The
transformation of retail America during the '90s is considered by a number
of mainstream economists as a significant part of the productivity
improvement that Wal-Mart led.  

You argued before that you are a stats guy too.  I didn't realize it because
I didn't see number crunching in your posts...so I didn't understand that.
But, I'd be very happy with 


>Rapidly abandoning a
> vendor because there's a cheaper version available is certainly good
> economics, but it is not good for people.  

In stating that, you are stating something that directly flies in the face
of mainstream economics.  First, I'm not sure what rapidly means, but
contracts for a million of this or that don't turn on a dime.....the new
vender _has_ to have time to gear up for WalMart like demand.  Competition
on price is one of the foundations of a market economy.  Alternatives that
have been tried have almost always turned out to be costly for all but a
lucky few.


>May I simply call it heartless
>or is having a heart not acceptable in a discussion of business?  Where
>does the idea of treating people decently fit into this discussion?

Well, I really differ with you on that.  My main customer (consulting 140
hours/month with them) decided to terminate my contract six months early
because I completed a task ahead of the original schedule and they made
decisions about turning to another project far before I thought they would.
There were no questions about the quality of my work, the just decided to go
in a different direction and used the convenience clause in our contract to
cut it short by 6 months.

I had planned on those 6 months of work to set up a transition to the life
my wife and I would have when she had a call and I would move with her and
consult by long distance.  It is a scary challenge for me, I'll be
confessional in admitting it.

Yet, when I turn in my badge, key, and flash drives containing all the files
I've created working for them in today, I will shake the hands of the folks
involved and still consider them good Christians....even though the early
termination leaves my finances shaky (having kids and a wife in expensive
schools and expensive cities really contributes to that. I wouldn't think of
calling the Christian ethics of the person who made the decision to cut my
contract short into question.  I still have the same high personal opinion
of him that I had when I first discussed our mutual faith with him over a
year ago.

> 
> This clearly is debatable.  

OK, debate it, then....give me the numbers and a way to assign a probability
to their verisimilitude and I'd be happy to reconsider my understanding.
You've seen my biggest source, feel free to find others.  But, I would
suggest that I consider the anti-Wal-mart websites as having the same bias
problems as places like the Heritage Foundation.


>And it ignores Wal-Mart's objection to
> expansion of Medicaid, which is the only health care available to many of
its
> workers.  Research clearly shows that when Wal-Mart enters a market, more
> people end up on Medicaid, especially children.  That bit of economic
> efficiency is costing everybody money.  It certainly isn't free market
> economics when the state subsidizes a corporation.


My big source counters this....and says that the data are in the noise.
Further, even if this were true, if the economic benefits of Wal-Mart were
only a tithe of that given in his report, then Wal-Mart would still see a
net benefit.

I googled for other discussions that were not clearly biased and found a
few:

http://www.theatlantic.com/doc/200606/wal-mart

(I dismissed a WSJ article...it seemed slanted tome).
 
http://economistsview.typepad.com/economistsview/2008/01/the-wal-mart-ef.htm
l

There are plenty of analysis....I like the questions and the table in the
article I quoted at length....but I don't see the articles from sources that
aren't obviously biased as inconsistent with what I saw.



 
> I didn't respond to your Buckley reference about getting down in the mud
> with the little people, but now I will. 

It is obvious that I didn't convey my meaning properly there.  The getting
down in the mud with the regular folks was not an economic argument....it
was more a willingness to engage the other persons arguments....Personally,
I have pulled my hair out when you answer what I considered well crafted
ethical arguments with a story of your experience as a EMT (if I got the
acronym right) and the pronouncement that you had to experience something
like this to understand.

That pretty well eliminated anything that I could write in response.  So,
the conversation ended.  My kvetch was that it was as if you issued these
statements from on high...and I had nothing to grapple with.


> I started to write about my
> upbringing and everything I have done to stay connected with and respond
> to
> the least-served here and abroad... but it sounded too much like a brag
> sheet.  I'll just say this -- please stop painting yourself as down in the
> dirt with ordinary people and me as a rich snob.  It's way off base and
> has no place in this discussion.

The down-in-the-dirt idea is not a pronouncement of my far superior
understanding of what it's like to be poor.  I'm upper middle class, (well,
at least until today. :-) ), I have a very sellable skill set, and have
faith I can make probably make an income in the future that keeps me from
needing to shop at Wal-Mart to make ends meet. 

Let me give this example....you know Gautam has elite credentials up the
Wazoo...Soros Fellow, Harvard Graduate with high recs from some of the
greatest lights in the field of international relations (one who held a
diametrically opposite political view from Gautam), youngest project manager
at the JFK school of government, McKenzie analysist, and grad student in
international affairs at MIT with great prospects of publishing significant
papers in major journals.

Quite a brag sheet, huh?  The point of giving it is that I have always
considered him willing to get down in the mud and wrestle with me.  We
remain friends, even though we are lucky to see each other once a year, at
least partially because we enjoy the process of learning by wrestling with a
worthy opponent.  

So, my main kvetch is not that you don't know the poverty I know.
Personally, I haven't know poverty...my dad had a good working class job
when I was growing up and we were by no means poor.  

I am just blessed in that I get/got to live intimately with folks who are
among the working poor, who's homeland is desperately poor, and with folks
who couldn't afford a car to have ready for a baby's delivery.  If you have
been similarly blessed, that's wonderful....and I'd be more than happy to
listen to the lessons you have learned in the process...and to have you
relay what your views are.

The criticism that remains is my view that the Bay Area is a rich person's
area where I think it is easy to lose perspective there.  When I visit
there, the attitude blew me away.  My daughter has picked up on it....and I
know she feels that there is a smugness in SF that she has not seen up in
Wisconsin where she went to school. I think that is fair game for
discussion....just as I would think that criticism of Houston and Texas
viewpoints would be fair game.

Finally, I can see how you could read me as having accused you of being a
rich snob who wouldn't lower himself to hang with poor folks.  While that's
not and has not been my point, I can see how that could be an
interpretation....and I apologize for any hurt I may have caused by writing
in a manner that could be seen as insulting.  FWIW, I have often felt the
same way with your posts, that you are the real non-self righteous Christian
who's transcended all that nonsense and really loves other people.  I saw
that leaving me as, at best, supporting those who love money first and
worshiping efficiency ahead of God.  

What I would want as a next step is for us to argue out the facts that would
inform moral decisions concerning the role of Wal-Mart in society and to
realize that in such a moral discussion, we will both bring up points that
will sound to the other as statements of moral superiority.  It's clear we
differ....so it goes without saying that I think you are blind to some
things and you think I am blind to others.  My metaphor of wrestling in the
mud was an attempt to indicate a mutual acceptance of this limitation and a
proposed way of handling it. 

Dan M.