There are lots of arguments about why Wal-Mart has been good for the American economy. Almost all are bunk.
The jobs it has created are worse than the jobs it killed off in the first place, and the wealth it has created is concentrated in far fewer hands than the wealth it destroyed.
The truth is, no single company is more responsible for the decline of the American middle class and manufacturing industry than Sam Walton’s pile ’em high, sell ’em cheap warehouse. And, in turn, nobody is more to blame than Americans themselves.
That the retail giant is stashing billions in offshore tax havens is no shock, even if the extent of its tax avoidance is shocking. A report by Citizens for Tax Justice, a liberal think-tank, claimed this week that Wal-Mart has 78 offshore subsidiaries, including 22 in Luxembourg alone. The assets held in the tiny EU state, real estate and cash, are worth $64bn (£40bn) and “generated” something like $1.3bn in profits just last year. Wal-Mart paid a tax bill there of only $13m, 1 per cent.
Needless to say, despite all of those assets and all of that profit, Wal-Mart doesn’t have a single store in Luxembourg. No wonder Luxembourg is so popular with American corporations, and no wonder the standard of living is so high there. Money for old rope.
It should be noted that Wal-Mart disputed the claims, albeit in an opaque manner that served only to fog the issue further. Tellingly, what it did not appear to dispute is that it has 78 offshore subsidiaries – all omitted from its Securities and Exchange Commission filings.
Tax avoidance, even on the grand scale it is done by modern corporations, is common and Wal-Mart is far from alone in its enthusiasm for creating incredibly profitable offshore subsidiaries. Stashing billions of dollars of assets and profits in countries where no other business is conducted might be pushing the ethical envelope but is not illegal. It should be, even if many Americans see avoiding tax and letting others carry the burden as the ultimate act of patriotism.
Meanwhile, EU member states like Luxembourg and the Netherlands (another popular tax haven) are, disgracefully, more than willing participants. The sooner the EU cracks down on this absurd situation, the better.
In spite of it all, Wal-Mart just does what it can get away with. Its employees cost American taxpayers billions in welfare – but that is no different from many companies that pay employees poverty wages. As The Wall Street Journal recently pointed out, the American welfare system acts independently of any employer and Wal-Mart’s wages are no worse than those paid by many other employers.
Opponents of Wal-Mart are mistaken if they think anything is going to change any time soon, and they are also mistaken if they believe it is the only company taking advantage of welfare in order to pay its employees less.
Until shopping habits change and better corporate citizenship is demanded by consumers, pile ’em high, sell ’em cheap and stash it abroad is going to remain a common corporate strategy. Wal-Mart might be lots of things, but a crook isn’t one of them.Kirk Kerkorian – a rare story worth telling, but never written
Writing obituaries for businessmen can be very dull. And even more so now after the death of Kirk Kerkorian. Companies are led by business school clones, almost none of them doing anything remotely interesting with their lives or even their money. Most modern executives who took an unorthodox route to the top did it by dropping out of college and starting businesses at a precociously young age. A lifetime spent behind a desk is a strange thing to aspire to.
People like Kerkorian, the veteran investor and deal maker who died this week aged 98, are as rare as hen’s teeth, and not just by virtue of his age. He knew what having nothing was like from an impoverished childhood in the Great Depression and, although he was a ruthless businessman, he took the rough as well as he took the smooth.
It is a great shame he was so publicity-shy (despite his legendary status in the investment world) and that many of his stories have died with him. A Kerkorian autobiography would have made an infinitely more interesting read than the self-serving ghosted hagiographies that most business leaders churn out, in their thousands.
It is fitting Kerkorian made his money in industries that attracted swashbucklers. Movies, casinos and cars were his thing – an Errol Flynn of the business world. We need more like that, not less.
The constitution isn’t healthy but this law should survive
The written constitution that Americans so revere is one of the more crazy ideas this country has had, up there with fake cheese and Donald Trump. Most sensible democracies have a living constitution, meaning that whoever wins the election gets to decide on the law of the land. Instead, this country relies on nine unelected ideologues to interpret decisions made by a democratically elected government in terms of what a gang of long-dead, slave-owning wig-wearers intended.
It’s not the government or the people that runs this country, it’s the Supreme Court.
At some point this month, it will announce a decision regarding the Affordable Care Act (ACA), better known as ObamaCare, and the constitutional legality of the federal government providing millions of Americans with subsidies to help pay for their insurance premiums. King v Barwell is a decision that could have an impact on the health insurance of millions.
Despite much wailing among the law’s supporters, the chances of the court in effect striking it down are long.
There is a very clear clue coming from Wall Street: consolidation in the health insurance sector. The market is rife with merger and acquisition chatter, not what you would expect if the industry was about to be thrown into complete chaos by a Supreme Court decision. There is no smoke without fire, and a mega-deal involving the biggest private insurance companies, such as Aetna, Cigna and Humana, is much more likely than not.
John Roberts, the Chief Justice, is a conservative in the political sense but he is also a conservative in the true sense. The ACA might not be perfect but it is working, and it is highly unlikely that Mr Roberts wants this decision to be his legacy. He will probably leave the crazy to the extreme conservatives on the Supreme Court, and leave the health insurance industry to consolidate.Reuse content