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The Wal-Mart Effect By Charles Fishman
The best and worst of globalisation told in the story of a supermarket
Tuesday 16 May 2006
Few companies provoke as much anger in activists as Wal-Mart. Yet none has done more to slash prices, making a bountiful lifestyle affordable for America's poor (and here, it owns Asda). It did a far better job providing aid to Hurricane Katrina victims than the US government or NGOs.
Charles Fishman has written an intriguing yet passionate account of the company that personifies the best and worst of globalisation. There are so many facts that you may feel lost in the aisles of Wal-Mart. And while Fishman raises profound questions, he leaves them unanswered.
That is not a bad thing: ultimately Wal-Mart is, as Fishman writes, a mirror of Americans. In a democracy, "ambivalence about such a concentration of economic power, even when that power is on our side, is a signal". Unless America confronts the moral dilemmas Wal-Mart poses, it will have surrendered control over its destiny to the corporation in Bentonville.
Fishman says the dark bargain of the international economy is that while the products you want arrive at stable, even dropping, prices, the way they are made is "more remote, and less acceptable". Anti-Wal-Mart campaigners are accurate about many assertions - but there are nuances. It pays its staff poorly (a single mother takes home $290 a week) because it can't afford more if it is to maintain "everyday low prices". An American household, on average, spends $2,076 a year at Wal-Mart; Wal-Mart's profit is $75.
Wal-Mart doesn't want unions because they would demand wage increases and better conditions, which would add costs. By focusing on costs without emotion, it has seen businesses close, factories collapse, and communities devastated. According to one study, 25 of 29 major retail bankruptcies can be attributed to Wal-Mart.
Wal-Mart acts cheap: it will pass costs to suppliers and drop them if they say no. The price does not reflect the cost, because someone else bears it. It has driven prices down, helping America tame inflation. It added 480,000 jobs between 1997 and 2004, but during that time US manufacturing lost 3.1 million jobs. How many were because Wal-Mart squeezed out domestic production by insisting on low prices?
Yet 7.2 billion people shop at Wal-Mart annually because it does keep consumers' interests at heart. To change its behaviour, Fishman suggests, its consumers will have to change first.
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