Wal-Mart

Wal-Mart has been in the news lately for both business and political reasons. Business wise it had its first drop in profits in ten years. In Germany Wal-Mart decided to cease the operation of it 84 stores because it could not compete. One senior official at Wal-Mart was recently charged with embezzling funds from the company. Politically, it has been criticizing it for its low wages, poor health benefits, employing illegals and forcing American manufactures to go to other countries to remain competitive. The man it hired to head its Public Relations department to improve its image, Andrew Young, recently resigned because of racial slurs he made. Chicago city council said that Wal-mart will have to pay employees more and improve health coverage if it wants to operate in the Chicago area. And in China, a union is trying to organize employees, something Wal-Mart is very much against because that increases costs.

I remember a drive to unionize was successful in a store in Quebec, Canada. But that store was closed down because of Wal-Mart detests unions. It would rather lose a store than unionize. Wal-Mart has a lot of clout because of its size. A lot of communities are afraid to challenge it because its big stores can bring much needed employment and tax revenues. However, a backlash has been growing to keep stores out of some communities because of the destabilizing effect they have. Now Wal-Mart is thinking of creating more intimate stores which can be located in downtown areas.

During Hurricane Katrina Wal-Mart was a savior for many. When the government wasn't there to help and assist those who had been devastated by the Hurricane, Wal-Mart was there distributing essentials and supplying power generators. Many of its stores in the area were badly damaged by the storm but Wal-Mart, with its vast network and expertise, recovered quickly so it could assist the community. It gained many brownie points for that effort.

Wal-Mart is the largest corporation in America (in the world) with sales of more than $220 billion dollars. I remember when GM was number one (now #3). I guess the new mantra in business now is , What is good for Wal-Mart is good for America. That saying was coined in the fifties and used to belonged to GM. The only thing is, that new mantra includes a sad turn, the dumbing-down of American business practices. They include no unions, the downsizing or elimination of employees' pension plans, smaller or no health coverage and low, low wages. Wal-Mart has also destroyed many small-town business areas and many state side manufacturing jobs in its ruthless quest for cutting prices. Many mom and pop store have vanished because of Wal-Mart's competition.

Wal-Mart has helped feed and cloth the poorer people of America by keeping prices down, and has kept inflation down by reducing prices. This is very commendable and democratic. But it has also contributed to the widening gap between rich and poor by creating a ripple effect throughout the nation of cost cutting and the elimination of pensions and health plans. All this has created a greater burden for the middle class, which seems to be losing ground.

Wal-Mart has probably done more for the developing world than it has done for America, by creating manufacturing jobs and raising salaries elsewhere. However, I think there is a positive aspect to this. By creating jobs abroad, Wal-Mart has prevented a possible greater hoard of illegal aliens clambering to get into America due to them not having employment at home. Wal-Mart, thus, has made the world saver for America, by helping to level the playing field, increasing living standards and creating manufacturing jobs abroad, making the world more in America's image.

Perhaps a dose of Wal-Martism has been good for America. It has shaken-up the business community. And business communities need shaking up now and then in order to remain viable, so they don't grow stale and atrophy. Wal-Mart has introduced new management techniques and more efficient ways to produce goods and distribute them. By shaking up things it has kept American business competitive. In being so frugal with medical and pension plans it has force competitors and other corporation to reexamine and restructure their bloated medical and pension schemes. One of GM's biggest business problems, one of the main reason for it constantly losing money and market share, is that over the years it has became saddled with very expensive medical and pension programs. Its cars cost more to manufacture because of those expenses. One reasons for Wal-Mart extraordinary success is that it is leaner and meaner than most. Nevertheless, maybe some day in the future Wal-Mart will also loose its vaulted position and be challenged to do better for similar reasons, because it too became top heavy and out of touch.