Paul Krugman: The War Against Wages

Paul Krugman looks at one war that is being won, the war against wages:

The War Against Wages, by Paul Krugman, NY Times: Should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages. ...

[C]onsider the latest news from Wal-Mart. Wal-Mart already has a well-deserved reputation for paying low wages and offering few benefits...; last year, an internal Wal-Mart memo conceded that 46 percent of its workers’ children were either on Medicaid or lacked health insurance. Nonetheless, the memo expressed concern that wages and benefits were rising, in part “because we pay an associate more in salary and benefits as his or her tenure increases.”

The problem from the company’s point of view, then, is that its workers are too loyal; ... not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo suggested to deal with this problem was a shift to hiring more part-time workers...

And the strategy is being put into effect. ... Wal-Mart ... wants to transform its work force to 40 percent part-time from 20 percent.” Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won’t get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, “managers have suddenly barred older employees with back or leg problems from sitting on stools.”

It’s a brutal strategy. Once upon a time a company that treated its workers this badly would have made itself a prime target for union organizers. But Wal-Mart doesn’t have to worry about that, because it knows that these days the people who are supposed to enforce labor laws are on the side of the employers, not the workers.

Since 1935, U.S. workers considering whether to join a union have been protected by the National Labor Relations Act... For a long time the law was effective: workers were reasonably well protected against employer intimidation, and the union movement flourished.

In the 1970’s, however, employers began a successful campaign to roll back unions. ... thanks to America’s political shift to the right. And now that the shift to the right has gone even further, political appointees are seeking to remove whatever protection for workers’ rights that the labor relations law still provides.

The Republican majority on the National Labor Relations Board ... has just declared that millions of workers who thought they had the right to join unions don’t. You see, the act grants that right only to workers who aren’t supervisors. And the board, ruling on a case involving nurses, has declared that millions of workers who occasionally give other workers instructions can now be considered supervisors.

As the dissent from the Democrats on the board makes clear, the majority bent over backward, violating the spirit of the law, to reduce workers’ bargaining power.

So what’s keeping paychecks down? Major employers like Wal-Mart have decided that their interests are best served by treating workers as a disposable commodity, paid as little as possible and encouraged to leave after a year or two. And these employers don’t worry that angry workers will respond to their war on wages by forming unions, because they know that government officials, who are supposed to protect workers’ rights, will do everything they can to come down on the side of the wage-cutters.

_________________________
Previous (10/2) column: Paul Krugman: Things Fall Apart
Next (10/9) column: Paul Krugman: The Paranoid Style

Comments

[Bruce Wilder]

It may be an acquired taste, but I kind of like Sterling Newberry's "big picture" essays. Taking Care of Business, and Shirking Over Time is recent and an interesting counterpoint to Krugman's observations.

[david]

i've read and admired krugman for a long time. i've never understood, though, why he thinks the solution to increasing income polarization is encouraging and/or enabling collective bargaining by unions. it seems like we could achieve the same benefits through a more progressive tax system without the dead weight loss that results from artificially high salaries that result from collective bargaining.

[anne]

"I've read and admired krugman for a long time. I've never understood, though, why he thinks the solution to increasing income polarization is encouraging and/or enabling collective bargaining by unions. It seems like we could achieve the same benefits through a more progressive tax system without the dead weight loss that results from artificially high salaries that result from collective bargaining."

So, then, the less pay the better, the poorer benefits the better, the more difficult work conditions the better, because all will be fine after, say, taxes. There is actually a perfect argument for any improvement at all in labor bargaining power.

[Beel]

To try to adjust wages thru some sort of tax system is to assume a government that is neutral between labor and business. Why not just assume that management has the best interests of labor at heart. It is only the working people, collectively bargaining for themselves, who will represent their own interests. Yes, there will be times when the labor side of the equation distorts the underlying economic realities too. But I don't see how there's any short cut such as a government solution.

[Don Robertson]

Mr. Klugman's article is interesting, even provoking. He seems to be noting a trend toward the skewing of economic conditions loosely referred to as the "free" market. Note the emphasis upon "free" I make here.

The truth is every legislative body in a democratic system eventually degrades into selling its power to the highest bidder, and legislative bodies across the U.S. have for a very long time been selling the market unfree in every conceivable fashion possible, from certification requirements, to anti-unionization acts making U.S. markets ever more, well, less free is the only phrase adequate.

Popular movements espousing "deregulation" at some levels have arisen, though very few and with very little benefit towards freedom, since this is not the business in which legislative bodies engage. Legislative bodies generally enslave us.

For a long time it has seemed to me the government now must measure inflation by how much is being paid to the poor schlep who must drive his rusty old Ford to work at Walmart, or sundry other slave-wage retail and service industry sweat shops that provide job creation numbers the government can tout as being on the economic up-side.

The whole business of economic reporting, "skewing" seems a better word, has gone loopy. The very fact that Mr. Klugman points to the wholly fictious new "high" in the DOW as he starts his slide into his sweet spot, seems to demonstrate this fact.

Both the DOW and the NASDAQ indexes, or indices, whichever you prefer, are skewed numbers with no real relationship to any steady measure of gains or losses in this demonstrable pyramid scheme. In between 1999 and 2001 forty-trillion, (40,000,000,000) shares in U.S. coporations went to zero, ($.00) The indexes do not reflect this brutal economic fact.

In 1999 and 2000 the DOW and the NASDAQ volumes were both one to one and a half trillion shares traded every day. Now there are on average, one to one and a half billion shares traded on the DOW and the NASDAQ in a day's trading.

That's called "volume". And it's a very real measure of the "economic activity", gambling in another word, occurring in the "markets". The volumes on the DOW and the NASDAQ seem to indicate there is but one one-thousandth the economic activity in the markets today as there was then occurring in 1999 and 2000.

Another measure might be the successful floating of new stock upon the waters of "investors" in this Wall Street pyramid scheme where stock options are back-dated to skim off any potential gains the gamblers might realize. New stock offerings are pitiful today by the comparison to years gone past.

Yes, the government is corrupt. But what do we expect? It takes its queue from finance and industry which are themselves very corrupt. And, they're the ones crying, it's hard to find a good, well-trained employee who'll work his best.

Southerners once complained they couldn't exist without slavery too.

Don Robertson, Philosopher
Limestone, Maine

An Illustrated Philosophy Primer for Young Readers
Precious Life - Empirical Knowledge
The Grand Unifying Theory & The Theory of Time
http://www.geocities.com/donaldwrobertson/index.html
Art Auctions:
http://www.artbyus.com/auctions.php?a=6&b=4807

[anne]

http://www.nytimes.com/2006/10/02/business/02walmart.html?ex=1317441600&en=78fff88e79def631&ei=5090&partner=rssuserland&emc=rss

October 2, 2006

Wal-Mart to Add More Part-Timers and Wage Caps
By STEVEN GREENHOUSE and MICHAEL BARBARO

Wal-Mart, the nation's largest private employer, is pushing to create a cheaper, more flexible work force by capping wages, using more part-time workers and scheduling more workers on nights and weekends.

Wal-Mart executives say they have embraced new policies for a large number of their 1.3 million workers to better serve their customers, especially at busy shopping times — and point out that competitors like Sears and Target have made some of these moves, too.

But some Wal-Mart workers say the changes are further reducing their already modest incomes and putting a serious strain on their child-rearing and personal lives. Current and former Wal-Mart workers say some managers have insisted that they make themselves available around the clock, and assert that the company is making changes with an eye to forcing out longtime higher-wage workers to make way for lower-wage part-time employees.

Investment analysts and store managers say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent. Wal-Mart denies it has a goal of 40 percent part-time workers, although company officials say that part-timers now make up 25 percent to 30 percent of workers, up from 20 percent last October.

To some extent, Wal-Mart is simply doing what business strategists recommend: deploying workers more effectively to meet the peaks and valleys of business in their stores. Wall Street, which has put pressure on Wal-Mart to raise its stock price, has endorsed the strategy, with analysts praising the new approach to managing its workers. In the last three years, the stock price has fallen about 10 percent, closing at $49.32 a share on Friday.

"They need to be doing some of this," said Charles Grom, an analyst at J. P. Morgan Chase who covers Wal-Mart. It lets the company schedule employees "when they are generating most of their sales — at lunch, in the evening on the weekends."

But Sally Wright, 67, an $11-an-hour greeter at the Wal-Mart in Ponca City, Okla., said she quit in August after 22 years with the company when managers pressed her to make herself available to work any time, day or night. She requested staying on the day shift, but her manager reduced her schedule from 32 hours a week to 8 and refused her pleas for more hours, she said.

"They were trying to get rid of me," Ms. Wright said. "I think it was to save on health insurance and on the wages." ...

[save_the_rustbelt]

Pelosi announced her "100 hours " agenda this morning.

From a strategy standpoint, this is either brilliant or dumb, time will tell.

[slink/js paine]

we need to set up a licensing permit system
based on a viciuosly tricky comprehension test
so only licensed folks can go around
firing off that morbibly hyper- phrase
"dead weight loss"

------------------------
the S Newbury post
seems full of home canned strawberries

and how it ends

[crocop]

Implicit in Krugman's about-face on wage floors is the notion that labor demand has gotten more monopsonistic since the 1990s. I wonder if that notion stands up to empirical evidence--my guess is no.

[rougy]

"Artificially high wages" sounds suspicious to me. The only artificially high incomes that I'm aware of are those of CEO.

It all boils down to the propaganda war, and the little guy has basically lost.

Collective bargaining is the answer, but everybody has been conditioned to "do it for yourself, and fark the rest" so unions have become all but extinct.

There is no solution save for nihilism.

America is hosed.

[evagrius]

I think Wal-Mart should go all the way- "loan" employees enough money to buy a house,car, health care, education and other necessities as well as foods and goods, ( from Wal-Mart of course).
In return, the employee will for for free for Wal-Mart, at all hours, any time for a set number of years or for life, depending on the amount of the loan.

Oh...wait. Isn't that called peonage or (ahem), slavery?

[anne]

Actually, what it is is a renewal of the company towns that were built before unions and in which workers worked for scrip not dollars and the scrip was spent in the company town to buy company goods at company prices and workers came to be owned by the company. Unions, you understand, really did matter to American workers. Sort of like, say, unions for athletes or lawyers or physicians or actors still matter in differing ways. But, mention unions for teachers and many shudder.

[anne]

Notice, by the way, as I am continually reminded, how Republicans from the President to the Speaker of the House of Representatives are repeatedly using the term Joe McCarthy used, the "Democrat Party."

[Stormy]

I am far for an apologist for Walmart, but I find it amusing that Walmart lowly retail jobs are the best icon we have for what is happening.

What happened to all the Intel jobs, the Apple jobs, the Dell jobs, Delphi jobs, the pharmaceutical jobs? The list goes on and on.

Yet here Krugman pins the blame on lowly retail jobs.

If we are left fighting over is who gets to be greeter at Walmart, we are indeed hosed.

The descent is long and slow…and crushing. Welcome to the new America.

[calmo]

I'm not amused, atleast not in Stormy's fashion (nor in that regal "We are *not* amused."):
but I find it amusing that Walmart lowly retail jobs are the best icon we have [nb not "Krugman has"] for what is happening. so I wonder about that (non-amusing) [ok, down-right puzzling] leap (not quite right foot)Walmart lowly retail jobs are the best icon we have to this (definitely un-amusing, non-puzzling, provocative, quite wrong right foot)Yet here Krugman pins [no longer 'we pin'] the blame on lowly retail jobs.

Ok I (somewhat regal) see it now.
We are amused.

[camille roy]

Stirling Newberry:

On one hand the solution is not more protection, but less - remove the massive federal subsidies of housing, homeland security and housing, and capital will flow to manufacturing and export again. On the other hand, free trade needs to be about freedom. Free trade which frees up corporations, but restricts labor and agriculture isn't free trade, it is freeway robbery.

The problem with this solution is that it compounds the difficulty of political change within this country with a change in the international meaning of "free" trade and its associated treaties. The first is hard but not impossible. The second is not a viable suggestion. That leaves protectionism.

[camille roy]

On the subject of business bias, there was an interesting sacking over at Morgan Stanley. Andy Xie, who was part of their Global Economic Forum, ran afoul of the business logic that dominates the exchange of economic ideas when he criticized Singapore. Singapore’s success came mainly from being the money laundering center for corrupt Indonesian businessmen and government officials. Indonesia has no money. So Singapore isn’t doing well.

There was a reaction:

This got far enough to incite the wrath of Singapore and, typically, the bank went into full grovel mode. The Morgan Stanley management as usual put honest comment and matters of fact into second place behind its commercial need to pander to the whims of every state, however illiberal, however obnoxious, that could influence its bottom line.

I bring this up because I think that the information we get (pro-free trade, pro-globalization) needs to be taken with a grain of salt. It is filtered by institutions that are profiting by our economic demise. They are selling us our own decline, and they have a huge P.R. machine with which to do this.

[calmo]

Thanks for the salt, camille --I too noticed that Xie was jettisoned and with that, not only some honesty and integrity but real brain power. Surely a litmus test of Roach and a few grovelly? others at Morgan Stanley, yes?

[piglet]

""Artificially high wages" sounds suspicious to me. The only artificially high incomes that I'm aware of are those of CEO."

Thanks for reminding us rougy.

Have you read today's job report? While the Dow is on record high, payrolls rose by 51000 only. They are talking of a "soft landing". Sure, for the 10% of the population who benefited from the "boom", the landing may be soft. The other 90%? Even the wages of Wal-Mart greeters are deemed too high these days...

[Bruce Wilder]

camille roy: "That leaves protectionism."

In the passage you quoted from Stirling Newberry, I think Mr. Newberry has gotten carried away in poesy, responding not to the logical implications of his premises, but to riffing on "free". But, Newberry does point out -- correctly, in my view -- that protectionism would be a policy distraction.

We could reform our health care system, and an effective reform would significantly alter the burden of costs, as well, in time, the proportion of national resources devoted to that sector. It is not uncommon for analysts worrying about the imminent demise of General Motors to point out how that company would benefit from a national health care system, and how its deep problems are connected to the failure of health policy.

So, no we are not left with protectionism. Unless we particularly want to be foolish. Not that anyone would read the re-election of Bush in 2004 as anything else.

[anne]

There was a time when I read the Morgan Stanley analysis, then found that there was almost nothing to be learned from the analysis about economics or investing and moved on. I can say this having read Morgan Stanley, then listening to those I read privately who could be remarkably different. But, this is Morgan Stanley and why should I have been surprised?

Andy Xie is awfully sharp, but writing for Morgan Stanley is awfully tricky.

[t-bone]

"Implicit in Krugman's about-face on wage floors is the notion that labor demand has gotten more monopsonistic since the 1990s. I wonder if that notion stands up to empirical evidence--my guess is no."

I believe the more appropriate word is oligopsonistic, and I would wager that the empirical evidence would support this underlying notion of Professor Krugman's, consistent with the trend towards corporate buyouts and mergers that result in, for example, five gigantic conglomerates that control our media (as opposed to hundreds of smaller companies providing true diversity and competition that we had up until a few short years ago).

[georgist]

Mr. Newberry has gotten carried away in poesy, responding not to the logical implications of his premises, but to riffing on "free".

Flat wrong. Remember, the Physiocrats' motto was: "Clear the ways and let things alone!" Somehow that first part got lost, and all we got was corporatist "laissez faire".

[David]

I think we need to focus more on the root of the problem - a government run health care system in crisis. Most government solutions make the situation worse, lets be very careful!

[anne]

"Most government solutions make the situation worse, lets be very careful!"

Say, like Medicare, say, like Medicaid, say like the Veterans Administration Health Care system. Say, beyond health care, like Social Security. Say, like public college and universities. Say, like fire protection. Say, like public safety.

[anne]

"I think we need to focus more on the root of the problem - a government run health care system in crisis."

Huh??? What government run health care system would that be and where?

[Wimpy]

Yes (I was going to add before Anne beat me to it), what government doctor or hospital have you been to lately David?

[donna]

I think the problem lies in the fact that even here, there are those of us who consider a retail job "lowly".

If a job is expected to provide a living, it must provide a living wage. Until we value all our workers, nothing will change.

[calmo]

Don (bare assed) Professor of Philosphy turns in this performance/piece that is only a personal embarrassment to philosophy whose good name I feel compelled to rescue.
Nothing personal here Donald, I address the fictitous, Don Professor of Philosophy.
Allow me to state that just as it is a philosophical question 'What is Philosophy?', this comes at the price of foregoing any entitlement claims as to what exactly you are a professor of.
And if you must disclose your personal affectations, limiting them to 'reader of philosophy' or 'student' would be so much friendlier to those you wish to engage and so much more honest to that general field of study, philosophy, a study that has no bloody use for professors...only teachers and students.

Like this:

Mr. Klugman's article is interesting, even provoking. He seems to be noting a trend toward the skewing of economic conditions loosely referred to as the "free" market. Note the emphasis upon "free" I make here. [YOUR 'CAREFUL' OBSERVATIONS IGNORE THEMSELVES. PRUNE THIS PARAGRAPH IN ITS ENTIRETY. YOU WANT TO RESCUE YOUR READER WITH THAT ROPE, NOT BEAT HIM OVER THE HEAD WITH IT.]

The truth is [DON'T DO THIS WITHOUT COMEDY] every legislative body in a democratic system eventually degrades into selling its power to the highest bidder, and legislative bodies across the U.S. have for a very long time been selling the market unfree in every conceivable fashion possible, from certification requirements, to anti-unionization acts making U.S. markets ever more, well, less free is the only phrase adequate.[DO WE NEED A, WELL, WINDY ECAPSULATION OF YOUR ENCRUSTED IDEOLOGY? WE DON'T.]

Popular movements espousing "deregulation" [DON'T DO THIS ESPOUSING WITHOUT COMEDY EITHER] at some levels have arisen, though very few and with very little benefit towards freedom, since this is not the business in which legislative bodies engage. Legislative bodies generally enslave us. [ARE WE IN NEED OF A LIST OF GENERALIZATIONS? JUST GENERAL ENSLAVEMENT? DON'T PUNISH YOUR READER DON WHO ID HOPING FOR A DELIVERY...AT THIS POINT ANY MORSEL GIVEN THEIR SUNK COSTS SO FAR.]

For a long time it has seemed to me[DON'T INVITE YOUR READER INTO THINKING YOU MIGHT BE SLOW] the government now must measure inflation by how much is being paid [SOMETIMES IGNORANCE OF ECONOMICS AND cpi IS A BLESSING, EVEN IGNORANCE OF THE NEARLY UNIVERSALLY KNOWN STAGNANCY OF WAGES]to the poor schlep who must drive his rusty old Ford [THE SWITCH TO CASUAL/COLLOQUIAL FROM THE GENERAL THEORIZING STYLE DRAWS ATTENTION TO YOU, DON, NOT WHAT YOU ARE TRYING TO SAY] to work at Walmart, or sundry other slave-wage retail and service industry sweat shops that provide job creation numbers the government can tout as being on the economic up-side.[IE EMPLOYMENT NUMBERS RARELY DISTINGUISH GOOD JOBS FROM LOUSY JOBS, BUT MOST WRITERS DO AND READERS HERE CERTAINLY DO DON --DON'T INSULT US.]

The whole business of economic reporting, "skewing" seems a better word, has gone loopy.[JUST PRUNE IT] The very [CUT] fact that Mr.[CUT] Klugman points to the wholly fictious [THIS IS THE HIGH PT OF YOUR PIECE] new "high" in the DOW as he starts his slide into his sweet spot, seems to demonstrate this fact.[YOU DEMONSTRATE YOUR DEPTH OF READING HERE DON --NOT ENOUGH FOR MOSIQUITO LARVA TO HATCH IN.

Both the DOW and the NASDAQ indexes, or indices, whichever you prefer,'[CUT] are skewed numbers with no real relationship to any steady measure of gains or losses in this demonstrable pyramid scheme. In [CUT] between 1999 and 2001 forty-trillion, (40,000,000,000) shares in U.S. coporations went to zero, ($.00) The indexes do not reflect this brutal economic fact.[THERE ARE SO MANY BRUTAL FACTS HERE --NO, BLUDGEONED FACTS]

In 1999 and 2000 the DOW and the NASDAQ volumes were both one to one and a half trillion [DO BE CONSISTENT: EITHER 40T OR 40,000,000,000 OR FORTY TRILLION] shares traded every day. Now there are on average, one to one and a half billion shares traded on the DOW and the NASDAQ in a day's trading.

That's called "volume". And it's a very real measure of the "economic activity", gambling in another word, occurring in the "markets". [YOU ARE EXPOSING YOUR HAND NOW AND HOW EMPTY IT IS. READ THE LITERATURE AND PLAY DUMB WHILE YOU CATCH UP.] The volumes on the DOW and the NASDAQ seem to indicate there is but one one-thousandth the economic activity in the markets today as there was then occurring in 1999 and 2000.

Another measure might be the successful floating of new stock upon the waters of "investors" in this Wall Street pyramid scheme where stock options are back-dated to skim off any potential gains the gamblers might realize. New stock offerings are pitiful today by the comparison to years gone past.[NOT AS PITIFUL AS THIS COMMENTARY DON WHICH HAS LEFT KRUGMAN (REMEMBER HIM?) FAR BEHIND.]

Yes, the government is corrupt.[YOU ARE TALKING TO YOURSELF BECAUSE THE READER IS WITH KRUGMAN, WHO WANTS TO TELL US SOMETHING THAT WE MAY NOT ALREADY KNOW. HE WANTS TO MAKE SURE WE HAVE IT CLEAR AND DISTINCT --LIKE YOUR FRIEND DESCARTES. YOU?] But what do we expect? It takes its queue [CUE, DON AND ALTHOUGH HOMONIC SPELLING ERRORS ARE COMMON, THIS ONE TELLS MORE] from finance and industry which are themselves very corrupt. And, they're the ones crying, it's hard to find a good, well-trained employee who'll work his best. [USE QUOTATION MARKS SO WE DON'T THINK YOU'RE EXHAUSTED..LIKE US HAVING WASTED OUR PRECIOUS GOOD TIME!]

Southerners once complained they couldn't exist without slavery too. [AS IF IT IS A SOUTHERN PROBLEM? MORE LIKELY A WILD SHOT-IN-THE-DARK CLOSER. ANYTHING TO PUT US OUT OUR MISERY, PLEASE.]

Don Robertson, PISS POOR Philosopher WANNABE
Limestone, Maine

[funny]

Can any of you pro-free marketers name a single country in the last hundred years that has developed using free trade principles? Name a single current world power that did. I have a background in economics and I can tell you that every single world power developed (the US more than any other country) by employing “protectionist” measures. When you answer, use facts to back up your argument.

The financial markets are the graveyard of democracy. There are about a billion dollars worth of transactions a day on the financial markets. The amount of transactions and capital involved make it impossible for any country, even the US, to truly control their own economy. If a country actually tries to create a higher standard of living for its citizens (what a crazy concept) or make corporations do things like pay for the costs they creates (pollution for instance) it doesn't create a good "investment climate", investors react by pulling their "capital" (numbers on a computer screen really) out of the country and the developing economy collapses. Is that the type of incentives that ANY economic system is supposed to create? Any country to tries to improve the standard of living for its citizens or tries to properly internalize costs in penalized. So, in essence, democracy doesn't exist. NAFTA, CAFTA put the final nail in the coffin. The deals have NOTHING to do with free trade as taught in classrooms. The deals protect corporations from competition (making less developed countries "open up their markets" but still allowing the North to protect their industries), civil society and democracy itself. If a country does something to (like the US with MTBE) hinder a corporation's ability to make a profit, the corporation can sue the country, before a secret tribunal, where a re-imbursement can, and has been, rewarded, giving back some of the "profits" the corporations would have made if the country in question would just let them act like proper sociopaths.

You also have to think about power relations on economic development. Think about it now: There is a finite amount of resources in the world. If the developing countries are allowed to actually develop, they'll ask for more resources per capita, lowering the consumption of citizens in the North. They also won't be reliant on the North for the basic functioning of their economies. There's no incentive for the North, as it is, to allow the South and develop. So they don't, push off second rate propaganda and hope you don't question what you're told. The fact that the currently developed countries, operating in a international economic system set up to benefit them more than any others, are in charge of development of the third world is like the fox guarding the hen house.

Adam Smith had some interesting quotes on these matters:

"It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged."

"the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin. The interest of this third order, therefore . . . is always in some respects different from, and even opposite to, that of the public . . . to narrow the competition, is always the interest of the dealers . . . but to narrow the competition . . . can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

"It is not, however, difficult to foresee which of the two parties must . . . have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen."

The masters "never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen.

"We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject..."

"Masters too sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people."

"The policy of Europe, by obstructing the free circulation of labor and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality . . ."

[slink/js paine]

"That leaves protectionism "

and also we might consider currency exchange rate reform
ie
a dollar drop till our tade rebalances

as i repeat too often to be informative
we have between the treasury and the fed
all the power we need to perform thiss

and so its only a matter of political mobilization

and yet i can't escape the feeling
that both
the important and mechanics of impact
of this
is lost on my fellow jobbled majority

even leading thought elements
like.... my pal calmo

[anne]

Wal-Mart is America's largest private employer, possibly the world's. Why, as Donna suggests, should we think at all critically of the jobs that Wal-Mart might offer or the people who work at Wal-Mart, rather than wishing the jobs properly satisfying?

[cm]

donna: That's part of the picture somewhere, but how do you propose to translate your valuing retail employees into better working conditions for them (through "market mechanisms" that is), when as I contend the fundamental contributor to this is the phenomenon of (relatively) widely available skills, which engenders both low pay (competition, remember the thousands of applicants for Wal-Mart) and low regard ("anybody can do that job").

There are two things that can obtain minimum standards -- collective bargaining and legislation.

[Stormy]

LOL calmo,

Thanks for the stylistic analysis!

For those who cannot fathom what I am saying, here it is blunt style:

1. Corporations have moved to developing countries: Dell, Intel, Apple, Delphi…the list is lengthy.
2. We are left arguing over Walmart jobs, i.e., service jobs. I find that cynically amusing. We don’t argue the root cause; we argue over the crumbs that are left. Is Walmart being fair to its employees?

Krugman is out to lunch. Has he discussed the good paying jobs that have fled the country for cheaper labor overseas? Is he willing to discuss our trade policy and our policy towards our own corporations who are now elsewhere?

To those who say, “Well, that is just the way it works,” I say, “Well, crawl into a hole and suck your thumb.”

Massive profits are flowing to these corporations. Over 60% of China’s trade surplus is a direct result of foreign firms there. That means that at least sixty per cent of the profits go to those firms. We sit here and wonder why they are not sharing those profits with us.

If you think our esteem Secretary of the Treasury is about to push for revaluation, think again. K Street, corporate and financial players are making too much money off this arrangement. Economists, duped by the “free trade” mantra or already making hefty salaries with consulting contracts, are not about say anything that rocks the boat.

After all I can do is laugh at the inanity of what economists choose to discuss—or the little idols, like Krugman, whom they trundle forth and whose words we are supposed debate reverently. Krugman has never discuss how our trade policy and our policy towards corporate America has result in the rising disparity in wealth.

The joke’s on us. And, yes, I am cynically amused that most just don’t get it.

[calmo]

you are a dear, slink
and sometimes
I really do
need
my
dears.

do repeat
"do repeat
too often
to be informative"

your fellow
jobbled and
unjobbled
majority
insist
up
on
it.

shake our wits
o mighty slink
beat some
sense
in
to
us.

here's
my
stick.

[David]

"Say, like Medicare, say, like Medicaid, say like the Veterans Administration Health Care system. Say, beyond health care, like Social Security. Say, like public college and universities. Say, like fire protection. Say, like public safety."

Yes, you just made my point! All of those government entities are highly inefficient. I believe government should ONLY step in if a market based solution is impossible. I have worked in government and the private sector, and the difference is huge. With government, the employees have very little incentive to work hard. It is extremely difficult to get rid of bad employees. I realize we need some government, but before you let the "under performers" take over be careful.

[Jeffrey Miller]

You can go out and buy all of Wal-mart's shares and pay-off all of Wal-mart's debt for about 235 billion.
So you could own Wal-mart free and clear for 235 billion. For that 235 billion you'd receive an after tax
income of roughly 12 billion a year for an earnings yield of about 5%. That doesn't seem extra-ordinarily high to me, especially given that Wal-mart is a huge company and can't easily double in size.

So while it's true that the workers at Wal-mart are paid low wages (and seemingly will be paid lower ones) it's simply not true that the owners of Wal-mart's stock are earning inordinate returns on their capital because of this. In fact, while an investment in Wal-mart 30 or 40 years ago would have made you rich, the stock has gone no where in the last 7 years and given the size of the company I very much doubt that you'll earn more than 6-8% per year nominal returns if you invest in it now. 6-8% nominal returns per year isn't an unfairly high return. So the question is, if the shareholders aren't making money hand over fist from Wal-mart's anti-labor activities, who benefits from paying workers less? Since the shareholders are not making inordinate returns (and I'm not talking about now, not the growth phase of Wal-mart, when it's already a huge company and can't easily double in size) it must be to the customers who shop at Wal-mart.

Note. I'm not defending Wal-mart's anti-labor policies. I'm just saying that the current owners of Wal-mart's capital aren't getting wildly rich off this. So (it seems to me) that it must be consumers who are the primary beneficiaries.

[slink/js paine]

stormy ...right on target

neo liberal
international policy hegemony
is hard for a finely tuned academic
to free him/her self
from at one shot
or even after n shots
where n is less then or equal to
the value of your acclaim and reward

krug prolly has written something far better
on this
and
given his long traverse
from young reagonian
econcon adviser
to nowchampion of gray lady op ed truth telling
might we not expect
even further flowering
vide:
his robustly progressive
line on the health system

[Dilbert]

Jeffrey Miller, the biggest holders of shares of Wal Mart stock are the Waltons. They are all amongst the richest people in the country. There is a direct corralation between their wealth and the lack of wealth of their employees.

[johnchx]

anne wrote: Notice, by the way, as I am continually reminded, how Republicans from the President to the Speaker of the House of Representatives are repeatedly using the term Joe McCarthy used, the "Democrat Party."

Thank you! I'm glad to hear that I'm not the only one who can hear that particular high-pitched whine (and it makes me wince every time!). I actually didn't realize that this peculiar "tradition" had anything to do with McCarthy, but now that you mention it, it does have his signature bouquet of petty, thuggish illiteracy.

[Funny]

David, articulate a couple things: 1. What is efficient in your mind, define it to the best of your ability. 2. In what way is Medicare for instance (vs. a private, free market alternative) "inefficient".

When I ask for you to define these things, platitudes won't work. I don't need to hear how the free market works THEORETICALLY. Define efficiency and the efficiency of markets taking reality into account.

[slink/js paine]

oh ya

krug needs this focal point

the flint sit down that led to orging GM
was a winner before the wagner act though passed
actually kicked in

in fact union action by the cio
ORGED US STEEL B4 TOO

prolly beating "the walmart difference"
will require something beyond
a more "union neutral"
legal frame work
prolly it will require a willingness to
brake a lower law to win a higher justice
...massively

[Jeffrey Miller]

Dilbert,
Yes. I think I said as much. If you invested in Walmart
30 or 40 years ago, you'd be rich, like the Waltons are. But the question I asked is who is getting the most benefit from Wal-mart's cost cutting (via squeezing labor and suppliers) right NOW. And the answer isn't "the current owner's of Wal-mart
(including the Walton's)". The reason is that Wal-mart shareholders are only making modest returns on their capital. In other words, you probably aren't going to become as rich as a Walton by buying Wal-mart stock now.
So the idea that somehow the current owner's of Wal-mart's capital are sitting at home and piling up huge new fortunes at the expense of Wal'mart's employee's is false. These shareholders are earning modest returns (actually negative real returns over the last 7 years). It follows (it seems to me) that if Wal-mart is really good at cutting costs (which they seem to be), and if the current shareholder's of Wal-mart aren't making inordinate returns on their capital (which also seems to be the case), then the people who benefit most from the cost cutting must be the consumers who shop at Wal-mart - the savings are passed through.

If you think I'm wrong, and that Wal-mart's owners are making obscene profits on their capital, you're free to go out and buy some shares of Wal-mart. My guess is that such an investment will do OK over the long run, but you aren't going to make extraordinary returns. Something like 6-8% nominal per year, which as I said above doesn't strike me as excessive, given that you can get 5% with a T-Bill.

[evagrius]

"Say, like Medicare, say, like Medicaid, say like the Veterans Administration Health Care system. Say, beyond health care, like Social Security. Say, like public college and universities. Say, like fire protection. Say, like public safety."

#1 "Yes, you just made my point! All of those government entities are highly inefficient. I believe government should ONLY step in if a market based solution is impossible."
#2" I have worked in government and the private sector, and the difference is huge. With government, the employees have very little incentive to work hard. It is extremely difficult to get rid of bad employees. I realize we need some government, but before you let the "under performers" take over be careful."

Well....on #1, as asked before, please define "efficiency". Why does the health care system, as a whole, cost nearly twice as much in the U.S. as other countries with worse results? I've yet to see anyone explain how those other countries are more inefficient than the U.S. in providing health care to their population. As for other government services how would one measure their efficiency?

On #2. I too have worked in the private and public sector and find that ineffiency is rampant in both, depending on the employee and their supervision. The big difference is that as long as a company makes a "profit", it doesn't matter how inefficient it actually is. This was particularly so in the high-tech industries of Silicon Valley. "Under-performers" were the norm in that industry.

[calmo]

stormy who I can read (and Don who I cannot) forces me to use the Don link (since it could be stormy) and I am pleasantly surprised.
And didn't need the barf bags afterall.

Maybe philoosophy (the typo Gods have spoken! and who corrects the Gods? not me.) is merely style. [I admit, I liked most of the paintings in the 'illustration'. Certainly more than the text.] And there is a recent Western tradition of equating/reducing philosophy with/to lexical cartography (--a mere stone's throw from linguistic style?)

Beyond a trebuchet's reach, IMO.

But the fact is 'What is philosophy?' is a different question than 'What is oratory for the executive? (or What is lexical cartography?... What is linguistic analysis?... What is science?) which can be identified by putting your hands on a manual or literature that is recognized as filling you in. Philosophy has less respect for those hands, those manuals and that literature, no matter how empirical, lexical, or logical. (Philosophy is the dog that lifts its leg to mark the fire hydrants --the erectile professors.)
I expect disagreement here. I have failed (I can't tell you how disconnected I am from the ends/goals/outcomes here --Sisyphus is self-absorbed (his Hell) not task-aborbed (his salvation)) once again (ie "stylistic analysis" is my first failure to illustrate, however feebly, philosophical analysis) if you are knodding along.
You have your own version of what counts as philosophy and you can natter about whatever that is to your friends and enemies (as long as they can stand it and you, them).
So why should I be crushed by "stylistic analysis"?
Well, because this was a nattering remark that did not deserve the dignity of a reply. (kudos to Chevez whose dignity did, in fact, elicit a reply)[Also I'm in love with the ever-so-seductive translator working for the Chevez camp. The War on Terror is over if she is allowed to continue is all that needs to be said.]
Just sayin...I can't stand it any longer...

says...

"David, articulate a couple things: 1. What is efficient in your mind, define it to the best of your ability. 2. In what way is Medicare for instance (vs. a private, free market alternative) "inefficient".

When I ask for you to define these things, platitudes won't work. I don't need to hear how the free market works THEORETICALLY. Define efficiency and the efficiency of markets taking reality into account."

Better than a definition is an example. Walmart, Dell, Microsoft are efficient companies whereas Medicare, Social Security, etc… are not efficiently run. As a business owner, when something isn't working I replace it. If someone isn't working, I fire them. This is not theoretical, it is simply business. All processes are benchmarked and compared to competitors. Efficiencies are gained by eliminating inefficient workers/policies/processes. In government this is not easy. Businesses that behave inefficiently go away whereas highly inefficient government agencies survive for years. I have worked in government, private industry, and currently own my own business so I have seen all these in action.

I realize that government’s objectives aren’t like business objectives - to increase value. Government is suppose to execute public policy and has many hiring/firing/buying/selling constraints that do not exist in business. I am not saying we shouldn’t have any government, only that we need to be EXTREMELY careful before we create more.

[Funny]

Do orthodox free market economists ever try to "internalize" the costs that producers create? Do they make companies pay for pollution or taking resources from the environment at rates quicker than the environment can grow back (a cost, less resources available for future)? No, they're not interested. If they did, prices would go up, which would effect the poor and middle class more than the rich, leading to calls for more redistribution, a no no in free market circles. It's easier for them to create the costs, push them off on to the public and have the costs hidden from prices (well not TOTALLY hidden from prices, pollution causes big rises in healthcare costs, ecological destruction and collapse, amongst other things). Same goes for national indices, like GDP, or indices that would take into account the costs that corporations create. Since they're able to ignore the HUGE, HUGE costs they create, and since labor is treated like any other variable in production, corporations and the market are "efficient". What if CO2 emissions and economic growth cause the Amazon to become deforested, cities to become flooded, crops to be ruined, diseases to spread, what would internalizing the costs do to your opinion of the efficiency of the market and corporations?

It's like asking the health of a business and getting back one set of numbers: profits. Ok, what about costs? Shouldn’t I know the costs before I deem the entity “efficient”.

[Funny]

Are you being serious? Effeciency has to do with your ability to fire someone? That's it? Be honest, you have NO background in economics.

[camille roy]

For the record, it is the private health care providers who are inefficient. 30% of their cost is related to paperwork, not health care. Furthermore, the VA medical system delivers 40% better health care by standard public health measures than private insurance.

Our health care failure is a MARKET FAILURE. Hello!

says...

"Are you being serious? Effeciency has to do with your ability to fire someone? That's it? Be honest, you have NO background in economics."

Replacing someone “not working” with someone that “works” increases productivity. If you can't understand this you are in trouble! This is an inefficient use of my time. Good luck and have a good weekend!

[Dilbert]

Jeffrey Miller, the problem with your reasoning is the makeup of ownership in the US. In the US the top 1% own about 42% of all stocks, the top 10% own over 85% of all stocks. When a good hits the market, who gets the benefit of the sale of that good is important. If 99.9% of the value of that good is going to the "owner" of that product (again, a small group of very wealthy investors) the person who created it (the worker) is poorer, relative to the owner. There's always a fininte amount of resources and goods, wages are your power, your percentage of the total purchasing power for those goods. So when Wal Mart workers, and Chinese workers are paid wages that don't allow them to get ahead, you have to realize that that is because those people are becoming poorer and poorer, relative to the owners. When people are living by the means, any inrease in prices harms them more than the people that aren't living by the means. When there is a big difference in ownership, ie benefits from the market, what you see is the richer circles buying much more goods, raising prices, hitting you harder the poorer you are.

Think about it this way: If Wal-Mart does lower prices, as you say, but also lowers wages and leads to more wealth inequality (which it does), you are making the rich even richer. Now they have more purchasing power than before and can buy the same goods as you and I cheaper.

says...

No offense, but that isn't effeciency. It says nothing about the market vs. a non-market economy.

[Jeffrey Miller]

Dilbert,
What I think your position implies is that the 6-8% nominal annual return that you can expect (very roughly) to get from owning Wal-Mart stock IS excessive. Because the only benefit that Wal-mart owners get from their stock is a small dividend (about 1.5% a year) and whatever capital appreciation there is from retained earnings (I'd guess about 3.5% after the dividend is paid) plus growth, which I'd be surprised exceeds 3% a year for a company the size of Wal-mart. So say 8%, nominal, or after inflation more like 5% real returns, before taxes. But surely no one would buy Wal-mart shares if they expected to earn less than that, given that a riskless investment in a government bond yields about 5%. So I think what you're saying or at least implying is that investors who are risking their capital by buying Wal-mart stock are earning way too much with their 3% nominal, before tax, annual return premium over government bonds. I don't find that convincing. So I maintain my initial claim that if you invest in Wal-mart right now, your returns on your capital are unlikely to be excessive by any definition. If this is right, then the benefits from Walmart's drive to lower prices must flow mostly to Wal-mart's customers, not to their owners.

[Dilbert]

What I'm saying is, regardless as to how much each stock pays individually, the fact that such a small amount of individuals own the majority of Wal Mart (and other) stock, the per share take home isn't as relavent. It COULD be if the ownership or stock was relatively even (or if the workers themselves owned the majority of stock), it isn't.

Anyways, stocks like Wal-Mart aren't used to make large amounts of money, or quick returns. Safe stock are used as leverage for more risky and short term profitable ventures (like hedge funds) or to accumalate slowly over time, like a savings account.

The important thing is who benefits from the sale of goods that Wal Mart owns. Do the stock holders get the benefit or the employees? If so, what are the implications? Ask yourself that honestly.

[anne]

What then is the point of the argument?

[Mike]

Both benefit - the employees have jobs, and the stock holders own a potentially profitable company. What is your point?

[joan]

It is't just Wal Mart. It is most people that work including many of the much talked about "high tech" workers.The bottem 90% have been losing ground as a percentage share of GDP for the last 30 years. The fall was from about 42% of GDP, which had been constant from WWII to the mid 70's, to barely over 30% now. Look at graph at

http://www.visualizingeconomics.com/

The only reversal of the trend occured in the late 90's. Wheather it was due the Cliton policies of just an artifact of the dot com boom is not clear. What is clear if this continues we are on the road to becomming a "rich banana republic".

[Jeffrey Miller]

My honest opinion is that there are three sets of people who benefit from Wal-mart: 1. their many customers who get to buy stuff more cheaply than they otherwise would be able to do (and even if you don't shop at Wal-mart, you benefit from their low prices - witness the sharp decline in the stock price of CVS and other pharamacies when Wal-mart said last week that they are going to sell some generic drugs cheaply). 2. their employees, who, as far as I know, all choose to work there voluntarily, and 3. their shareholders who should reasonably hope to make a modest profit on their investment ("should hope" because "modest" is all that they are likely to get).

I agree that the excessive concentration of wealth is not healthy for society but am not persuaded that Wal-mart is responsible for this. It seems to me that the answer to that problem - the concentration of wealth - is a progressive tax structure and a big investment in high level education for all children.

[gordon]

The libertarians have one thing right - it would be nice to have a country where people could earn a decent living by working. In many countries this is now impossible for many, no matter how many hours they work. So transfer payments and subsidised Govt. services are necessary to prevent utter misery.

But libertarian rage against the "nanny state" misses the point that without a wage level which enables people to earn a decent living by working such Govt. intervention will always be necessary. Logically, libertarians should be foremost in campaigning for adequate wage levels, for only when that is achieved will their "minimalist State" be even remotely possible.

Mind you, I think they would cross this river only to find others in front of them, but those are other stories.

[anne]

No; there is something about the argument that loses me. This has the feel of a professional argument in defense of Wal-Mart. Something wrong, as before, when Wal-Mart and workers comes up on a post.

"My honest opinion is that there are three sets of people who benefit from Wal-mart: ... 2. their employees, who, as far as I know, all choose to work there voluntarily...."

This is not genuine argument, rather a deception.

[anne]

Rattling around in my distracted memory is an article in the New York times about Wal-Mart hiring a staff to [pose on blogs when Wal-Mart is pressured. My sense is that happened months back and is happening now. This stock talk, and I know stock, is simply distracting nonsense. Something wrong.

[Jeffrey Miller]

No. The opinions (for what they're worth) are my own. I don't work for Wal-mart (or anyone else for that matter).
The thing is, and what I was always taught, is that if you don't agree with an argument, if there is some flaw in the reasoning or the facts, then you should explain the flaw, not attack the person. The latter approach - to attack the person - while common and easy, is unlikely to lead you or anyone else toward a better understanding of the issue. The fact that you can't seem to make a coherent argument doesn't say much for your position (whatever it may be).

[anne]

No; I have no idea what you are arguing other than Wal-Mart is nice, Wal-Mart is good, Wal-Mart cares, buy Wal-Mart because prices are low which they are and so people do.

"My honest opinion is that there are three sets of people who benefit from Wal-Mart: ... 2. their employees, who, as far as I know, all choose to work there voluntarily...."

Something is wrong here. Am I attacking a person? I do not think so. The issue is about the needs of Wal-Mart workers and the comments have been made to mask this issue. No; this is covering for Wal-Mart doing everything possible, and Wal-Mart can do enough, to make sure there will be no union in any Wal-Mart store here. Low prices for consumers, pity for the struggling shareholders, workers work voluntarily. Something wrong. This is all deception.

[anne]

http://select.nytimes.com/2006/10/06/opinion/06krugman.html

October 6, 2006

The War Against Wages
By PAUL KRUGMAN

Wal-Mart already has a well-deserved reputation for paying low wages and offering few benefits to its employees; last year, an internal Wal-Mart memo conceded that 46 percent of its workers' children were either on Medicaid or lacked health insurance. Nonetheless, the memo expressed concern that wages and benefits were rising, in part "because we pay an associate more in salary and benefits as his or her tenure increases."

The problem from the company's point of view, then, is that its workers are too loyal; it wants cheap labor that doesn't hang around too long, but not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo suggested to deal with this problem was a shift to hiring more part-time workers, which "will lower Wal-Mart's health care enrollment."

And the strategy is being put into effect. "Investment analysts and store managers," reports The New York Times, "say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent." Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won't get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, "managers have suddenly barred older employees with back or leg problems from sitting on stools."

It's a brutal strategy. Once upon a time a company that treated its workers this badly would have made itself a prime target for union organizers. But Wal-Mart doesn't have to worry about that, because it knows that these days the people who are supposed to enforce labor laws are on the side of the employers, not the workers....

[anne]

Paul Krugman:

'And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, "managers have suddenly barred older employees with back or leg problems from sitting on stools." '

Say what?

"My honest opinion is that there are three sets of people who benefit from Wal-mart: ... 2. their employees, who, as far as I know, all choose to work there voluntarily...."

Duh.

[Bruce Wilder]

Jeffrey Miller: "I'm not defending Wal-mart's anti-labor policies. I'm just saying that the current owners of Wal-mart's capital aren't getting wildly rich off this. So (it seems to me) that it must be consumers who are the primary beneficiaries."

I appreciate your efforts to reason this out. Without casting aspersions on your character or intentions, I, nevertheless, think your "logic" is kind of slippery.

Just because the owners of Wal-Mart are already wildly rich doesn't mean that anything they do to screw employees isn't to remain so rich or even just to retard the inevitable erosion of their wealth.

If management diverts a $100 from each of a million employees and gives it to someone with $10 billion of Wal-Mart stock, that's only a 1% additional return for the billioinaire, but that doesn't mean it is chump change, or insignificant, even to the employees.

A giant bureaucratic institution like Wal-Mart is an emergent organization -- the logic of its business model is written into the corporate DNA, so to speak, and a certain amount of organizational inertia obtains. The organization just does what it does. Even when there was an Architect, like Mr. Sam, the Architect was partly designer and partly discoverer and partly just lucky; even his understanding of his own successful business model was probably imperfect. There's rationality behind what Wal-Mart does, but it is not a perfect rationality: that is, it is not necessarily a rationality of conscious intention by an individual with perfect knowledge. There's an element of evolutionary selection involved; Mr. Sam found some things that worked, recognized that they worked and set up the organization to do those things, and the organization just continues to do them, because of the roles assigned by the organization, the training received, the habitual imperatives of corporate culture, etc. On one level, a lot of rational thought goes into the corporation's activities, but on a higher, meta-level there's plenty of room to criticize; things that made a lot of sense when Wal-Mart was small and just one step beyond the world of a five and dime store may not make so much sense in the 99th iteration of bargaining with employees or suppliers by one of the largest business organizations on earth.

I am just sketching, here, what I think are some of the contextual premises, which some of the smarter Wal-Mart critics are bringing to bear. Your counter-premise, that a Wal-Mart shareholder today is not getting wildly richer from any of these practices, seems to me missing the mark. Wal-Mart is, today, huge and its market value is enormous. Its maturity and size are important factors in why its behavior is coming under criticism.

Back in the day, when Wal-Mart was creating an awesomely efficient distribution network, serving rural areas and small cities, which had been neglected by the distribution giants, the company earned huge rents. It was competing against much less efficient, but larger, rivals, like Sears and K-Mart. When Wal-Mart could pay the same wages and rent and come in and underprice K-Mart by 5 to 10% (a monumental cost advantage in retail), it was all good. Now, Wal-Mart is competing against itself, and not earning such great returns. It is paradoxical, but that's capitalism for you. (See Adam Smith, invisible hand and all that). But, the bureaucratic machine grinds on, year after year, trying to protect the tens of billions of capital value piled up, by continually grinding away, even as the company's own dominance undercuts his own ability to produce profits.

Wal-Mart may transform 20% of its already underpaid workers into part-timers, paying off Republican officials to neuter the Labor Department in the process, and driving down already depressed wage scales in many of the rural areas where it is a leading employer, just to retard the inevitable erosion in the company's market value. So, Wal-Mart takes $100 from each of a million employees and, no, it doesn't make any stockholder wildly richER, maybe it just retards the erosion of stockholder value, which is inevitable with a mature company, at the limits of growth and having eliminated the less efficient competitors, which once shielded its margins.

[anne]

The idea was to turn readers and conversation away from Paul Krugman's post. All pretense.

[georgist]

The libertarians have one thing right - it would be nice to have a country where people could earn a decent living by working. In many countries this is now impossible for many, no matter how many hours they work. So transfer payments and subsidised Govt. services are necessary to prevent utter misery.

But libertarian rage against the "nanny state" misses the point that without a wage level which enables people to earn a decent living by working such Govt. intervention will always be necessary. Logically, libertarians should be foremost in campaigning for adequate wage levels, for only when that is achieved will their "minimalist State" be even remotely possible.

You are thinking of faux Royal Libertarians, not Real Libertarians.

The two primary factors of production are land and labor. Each of them earns a separate income, i.e. rent and wage. Capital is just an intermediate product of labor; it earns interest, which is the price of time and risk.

While socialists imagine that capital is the oppressor of labor, much of this supposed oppression is the result of a scarcity of land. As more and more land is put into use, labor's margin of production steadily decreases, as land of inferior quality is resorted to, and more workers are employed on the same land. Land speculation compounds this problem by creating contrived scarcity, since landowners appropriate all locations, including these that are not in productive use. Adding insult to injury, the government taxes wages and interest heavily, and rent hardly at all. The tax revenue is then used for public works and services which increase the rent of land.

Classical liberals recognized that the unearned rent of land should be collected by the community. John Locke restricted the appropriation of land by the condition that there be ... still enough, and as good left; and more than the yet unprovided could use. So that, in effect, [he did] as good as take nothing at all.

If we got public revenues from rents instead of wages, workers would get the full marginal product of their labor, land speculation would go away, and the economy would grow faster, since investment and enterprise would no longer be punished as a public nuisance. Unfortunately, this classical liberal notion has been obscured by socialists, "royal" libertarians and neoclassical economists.

[anne]

"I'm not defending Wal-Mart's anti-labor policies. I'm just saying that the current owners of Wal-Mart's capital aren't getting wildly rich off this. So (it seems to me) that it must be consumers who are the primary beneficiaries."

Of course, this is precisely a Wal-Mart defense of Wal-Mart anti-labor policies. The argument from the beginning was a pretense as has happened before when Wal-Mart comes to criticism. Yes; Wal-Mart has been answering troublesome articles on blogs for a year or more. Meanwhile Wal-Mart continues attacking worker needs and rights, but the prices are low.

[anne]

Oh, by the way, 58% of shares of American corporations were held by 1% of households by 2004. Poor suffering Wal-Mart shareholders, all for everyday low prices. Duh.

[joan]

"Classical liberals recognized that the unearned rent of land should be collected by the community."
Ther is a new class of "rent seekers" who hover around Washington helping congress write laws and regulator write regulations. It is a big business and I assume the people who hire them are getting their moneys worth. One example of their effect is discribed here.

"NEW YORK � The price of the former Community Credit Union's stock has increased by 44% so far on its first day being traded, according to the NASDAQ stock exchange where the stock has been offered for sale.

The Dallas-based Community Credit Union became ViewPoint Bank on Jan. 1, 2006 and formed the ViewPoint Financial Group as part of the mutual holding company that offered the stock.

The stock increase has meant a boon for CU senior staff and directors. Based on the roughly 190,000 shares the group purchased, the run-up in the stock price has increased their collective wealth, on paper, by roughly $800,000."

The former members/share holders lost about $1000 equity each in the transaction and the investment bankers made huge commissions. This was made posible by pressure brought on NCUA, who tried to block it, by members of congress. Its defenders call it wealth creation, but then so is bank robbery. If you look at the break down of GDP grow over the last few decades, the fastest growing sector is not high tech or computors but financial services.

[Jeffrey Miller]

Anne,
"No; I have no idea what you are arguing other than [1.] Wal-Mart is nice, [2.] Wal-Mart is good, [3.] Wal-Mart cares, [4.] buy Wal-Mart because prices are low which they are and so people do."
I neither wrote nor do I believe statements 1,2,3, and 4. Sometimes less is more.

Bruce,
I agree with many of your points, but not all of them.
I'd guess that it's likely that you and most other people who read these economics blogs are owners of Wal-mart (for example, through an index fund in a retirement account) and I bet that most of us who do own these shares aren't wildly rich and further that we're not going to get wildly rich off our Wal-mart shares. Wal-mart, whatever they are doing to increase efficiencies by squeezing employees and suppliers and using more energy efficient light bulbs and buying more efficient trucks etc, cannot be passing on most of these gains to the current shareholders because then (it seems to me) our Wal-mart investments would have great returns and I'm pretty sure that in reality the returns won't be fantastic, they'll just be ordinary. So if the great savings aren't landing in the laps of the investors, I guessed that they're landing in the laps of the customers.

Your point is that this isn't necessarily so - that maybe all the squeezing - taking 100 million from the employees - just keeps the returns on the owners capital adequate, and little of this is passed on to the consumer. This is an empirical question, but as I mentionned above, given the swift reaction of CVS stock to Wal-mart's annoucement that they're going to sell some generic drugs cheaply, I'm pretty sure that Wal-mart is passing on a lot of the savings to the consumer (CVS shareholders realized that their margins are going to shrink).

[cm]

Jeffrey Miller: Without regard to the actual facts, and Wal-Mart in particular, you didn't enumerate all outlets to which operating income/profits can flow. Among what you did not name are executive/board compensation, fees paid to consultants/business services/partner firms, M&A purchases, operating bills, etc.

And that a particular party doesn't make out like bandits doesn't mean somebody else has to. Some businesses may not be as wildly profitable as imagined. And that in turn doesn't mean customers/clients pocket a lot of benefit.

That said, I'm quite confident those who run WMT (which is not retail and institutional shareholders) are making a good few bucks off it.

[cm]

" | Oct 6, 2006 1:38:04 PM" (David?):

Those are platitudes. You have evaded the question. The terms you were asked are not generally defined by example.

[Dave]

The median household income of Wal-Mart shoppers is under $40,000. Wal-Mart, the most prodigious job-creator in the history of the private sector in this galaxy, has almost as many employees (1.3 million) as the U.S. military has uniformed personnel. A McKinsey company study concluded that Wal-Mart accounted for 13 percent of the nation's productivity gains in the second half of the 1990s....Wal-Mart and its effects save shoppers more than $200 billion a year, dwarfing such government programs as food stamps ($28.6 billion) and the earned-income tax credit ($34.6 billion).

People who buy their groceries from Wal-Mart -- it has one-fifth of the nation's grocery business -- save at least 17 percent. But because unions are strong in many grocery stores trying to compete with Wal-Mart, unions are yanking on the Democratic Party's leash, demanding laws to force Wal-Mart to pay wages and benefits higher than those that already are high enough to attract 77 times as many applicants than there were jobs at this store.

[cm]

Dave: Aside from the rhetoric, how many applicants are other stores/outfits attracting? 77x doesn't sound awfully large. And what is the definition of an applicant? Somebody who submits a resume? As in "email your resume to jobs@corp.com or paste it into the form at corp.com/employment/"?

[Movie Guy]

Kruman's column misses the mark on the part-time issue in my opinion. I'll explain why. The second issue he raised is another matter, and is certainly worth noting.

Krugman vs. Wal Mart: Paul points out the direction that Wal Mart is undertaking - "Wal-Mart ... wants to transform its work force to 40 percent part-time from 20 percent." Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won’t get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, “managers have suddenly barred older employees with back or leg problems from sitting on stools.”

I assume that Krugman is basing part of his colum on the Oct 2 NY Times article, Wal-Mart to Add Wage Caps and Part-Timers, written by Steven Greenhouse and Michael Barbaro.

Krugman then steps off in the matter of unionization. All fine and good, but he overlooks the bigger issue. He doesn't bother discussing the changes in federal labor law from the early 1990s that allowed companies and corporations much more latitude in eliminating full time workers. No mention whatsoever.

If we want to put an end to the employers' games of ducking out of paying health and pension benefits, then we need to change the law. If all employers who employ over 15 employees and paid health and pension benefits to full time employees were required to offer health and pension benefits to all employees, and were not allowed to substitute temp hires to fulfill work normally accomplished by in-house employees, then corporations and companies wouldn't have notable incentives to screw over its workforce employees. Under such labor law, we would very likely note a rapid increase in full time employment as opposed to part-time employment as employers attempted to maximize labor output per employee to reduce its health and pension labor costs. It's the simple answer to a growing problem. Take the issue back to Congress and fix it.

Krugman vs. National Labor Relations Board Ruling: Krugman appears to be referring to the following NLRB case ruling.

National Labor Relations Board news release
NLRB ISSUES LEAD CASE ADDRESSING SUPERVISORY STATUS IN RESPONSE TO SUPREME COURT’S DECISION IN KENTUCKY RIVER
October 3, 2006
http://www.nlrb.gov/nlrb/press/releases/r2603.htm

Oakwood Healthcare, Inc. and International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), AFL–CIO. Case 7–RC–22141
29 Sep 2006
http://www.nlrb.gov/nlrb/shared_files/decisions/348/348-37.htm

Related case ruling:

Sprain Brook Manor Nursing Home, LLC and New York’s Health and Human Services Union 1199/SEIU. Case 2–CA–37787
29 Sep 2006
http://www.nlrb.gov/nlrb/shared_files/decisions/348/348-48.htm

I recommend a careful read of both NLRB case summaries. As the NLRB states, they will decide all future cases on such matters over supervisory status on a case-by-case basis. If so, it sounds like the NLRB may be busy for a while.

[anne]

There we have the professional Wal-Marters. These folks are simply professional Wal-Mart defenders. Suddenly they know everything about Wal-Mart, offering no references other than what they "know" as though they made a career of knowing Wal-Mart. Beware of Wal-Mart shares in your index fund leaving you forever poor because Wal-Mart were to treat workers decently. This is a Wal-Mart sham. These folks are professional Wal-Marters.

[anne]

http://www.nytimes.com/2006/10/07/opinion/07sat2.html

October 7, 2006

Kicked While Down

In a blow to labor unions, the National Labor Relations Board recently expanded the pool of workers exempted from union membership. Specifically, the labor board found that registered nurses who assigned others to some shifts or tasks were supervisors, and thus not eligible to join unions. It was a bad decision, not only because of the specifics of the case, but also in its broader ramifications.

There are good reasons to bar managers from unionizing. It is extremely difficult to run a large organization efficiently if the people at the top are unable to easily hold their managers accountable for overall success or failure. But responsibilities like making out a schedule do not amount to management. If they did, interns would be the only non- managers in many of today’s workplaces.

Companies facing unionization drives have long found it convenient to discover that employees who are basically rank-and-file workers are actually managers. That seems to be the case with the nurses. The board’s decision opens the door for possibly millions of health-care workers and other professionals to be disqualified from the option of union protection.

This is one more step curbing the power of organized labor since President Bush came to office. The administration’s philosophical vendetta against unions has come at a time when their power is already on the wane. Membership has fallen to 7.8 percent of the private work force in this country, from over a third in the 1950’s. Far from balancing the scales, the anti-union drive comes when workers are already at a historic low in bargaining strength. Despite a growing economy and rising productivity, hourly wages adjusted for inflation have declined 2 percent since 2003. Corporate profits, meanwhile, are at their highest share of gross domestic product since the 1960’s.

We are getting closer and closer to a work force with no benefits and no substantive protections....

[anne]

http://www.nytimes.com/2006/03/07/technology/07blog.html?ex=1299387600&en=d732c2af6bf280b8&ei=5090&partner=rssuserland&emc=rss

March 7, 2006

Wal-Mart Enlists Bloggers in Its Public Relations Campaign
By MICHAEL BARBARO

Brian Pickrell, a blogger, recently posted a note on his Web site attacking state legislation that would force Wal-Mart Stores to spend more on employee health insurance. "All across the country, newspaper editorial boards — no great friends of business — are ripping the bills," he wrote.

It was the kind of pro-Wal-Mart comment the giant retailer might write itself. And, in fact, it did.

Several sentences in Mr. Pickrell's Jan. 20 posting — and others from different days — are identical to those written by an employee at one of Wal-Mart's public relations firms and distributed by e-mail to bloggers.

Under assault as never before, Wal-Mart is increasingly looking beyond the mainstream media and working directly with bloggers, feeding them exclusive nuggets of news, suggesting topics for postings and even inviting them to visit its corporate headquarters.

But the strategy raises questions about what bloggers, who pride themselves on independence, should disclose to readers. Wal-Mart, the nation's largest private employer, has been forthright with bloggers about the origins of its communications, and the company and its public relations firm, Edelman, say they do not compensate the bloggers.

But some bloggers have posted information from Wal-Mart, at times word for word, without revealing where it came from....

Companies of all stripes are using blogs to help shape public opinion....

What is different about Wal-Mart's approach to blogging is that rather than promoting a product — something it does quite well, given its $300 billion in annual sales — it is trying to improve its battered image.

Wal-Mart, long criticized for low wages and its health benefits, began working with bloggers in late 2005 "as part of our overall effort to tell our story," said Mona Williams, a company spokeswoman....

[anne]

"The median household income of Wal-Mart shoppers is under $40,000. Wal-Mart, the most prodigious job-creator in the history of the private sector in this galaxy, has almost as many employees (1.3 million) as the U.S. military has uniformed personnel."

This is all Wal-Mart public relations for blogging. Military personnel, however, do have health care insurance. Be careful, because mentioning how Wal-Mart actually deals with employees could lower the price of the shares struggling along in your favorite index fund.

[evagrius]

"A McKinsey company study concluded that Wal-Mart accounted for 13 percent of the nation's productivity gains in the second half of the 1990s...."

I did not know that Wal-Mart "produced" anything. How could it have accounted for productivity gain?

Am I missing something. Can someone explain what "productivity gain" is in retail marketing? Can someone explain what "productivity" is?

[anne]

Remember that the post is professional flackery as can be easily understood in considering the language and data, but retailers have been remarkably productive for years. Think of the logistics problems in running even a small retailer, let alone the larger and largest. Think of inventory management alone, then to bar coding and there is a sense of what technology can do to increase worker productivity. Retailing which can be highly labor intensive, can account for a significant increase in technology supported productivity with improved technology and widespread use.

[anne]

The strange sister of mine who is an attorney, dictates all briefs and notes or professional articles directly to computer with Dragon NaturallySpeaking. Where then is productivity going?

[evagrius]

Anne- nice insights but can someone define productivity?

Is it mork "work" accomplished in less time or with less workers?

Is it more dollars "generated" than before?

After all, the term productivity seems related to product, i.e; an object or thing- roads, autos, refrigetors, books, clothes etc;

I suppose it could also be used to describe processing of paperwork, ( your lawyer sister).

But I'd really like to see a good introductory essay on the subject.

I have a feeling that the term has lost its original meaning. After all, the U.S. is held to have had the greatest productivity gains in comparison to other countries. I then read that French workers, working 4-6 weeks less than U.S. workers are more "productive".
So...what gives?

[Jeffrey Miller]

cm,
You're right, I didn't enumerate all outlets to which operating income/profits can flow. And I'm sure that Wal-mart executives are well paid.

But the impetus for my comment was Krugman's first paragraph, in which he asks
"should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages. ..." [Leave aside
that in real rather than nominal dollars, the Dow is considerably below - 16% if I recall correctly from a Dean Baker post - its previous high].

Krugman is implying that shareholders of Wal-mart and the other Dow companies are doing really well at the expense of workers. All I'm saying is that, contrary to what Krugman is suggesting, the shareholders at these big companies are not in fact doing really well these days (unless negative real returns over the past seven years counts as doing great) and that their future returns will probably be rather modest as well.

[anne]

Oh well, what is the argument? Stocks have been terrific whether from the beginning of the international bull market in October 2002 or over the last 10 years even through a severe bear market which simply amounted to a correction for wildly to highly overvalued growth stocks. Wal-Mart was highly overvalued in 2000, and valuation has since grown more reasonable. Corporate profits and savings have been at or near record levels since quickly recovering from the modest recession of 1991.

We are passing through as fine an international bull market in stocks as I know of, and stocks are reasonably valued. What is the problem?

[anne]

"Krugman is implying that shareholders of Wal-Mart and the other Dow companies are doing really well at the expense of workers."

No; Krugman is implying that management first and shareholders second of Wal-Mart and the other large companies are doing really well at the expense of workers. Precisely so. Corporate earnings are a larger portion of GDP than I would have guessed possible in 2000 when Warren Buffett and Charles Munger were arguing earning were as large as share as could be expected. They were wrong, as was I. Management incomes, counting options of course, have risen at a frantic pace and corporate earnings have risen as a share of GDP and corporate saving have been at or near record levels since 2002.

Wage and benefits however, well, there's the problem, and much of the problem is, say what, Wal-Mart.

[anne]

The flackery about Wal-Mart has it that consumers are the winners of everyday low prices, so the heck with workers for if workers were properly treated there would be no everyday low prices and the poor little Wal-Mart sharholders would suffer suffer suffer. Phooey.

[anne]

Again, by the way, 58% of American corporate shares were owned by 1%, yes, of households in 2004. Shareholders can fend for themselves nicely, nicely indeed. Workers at Wal-Mart, not so nicely.

[anne]

http://www.mscibarra.com/products/indices/us/performance.jsp
http://flagship2.vanguard.com/VGApp/hnw/FundsByName

Vanguard MS Fund Returns
9/30/96 to 9/30/06

Large Cap Index is 8.7
Large Cap Growth Index is 6.0
Large Cap Value Index is 11.1

Mid Cap Index is 11.9
Mid Cap Value Index is 14.8

Small Cap Index is 11.5
Small Cap Value Index is 13.9

Europe Index is 10.7
Europe Value Index is 13.8
Pacific Index is 1.9
Pacific Value Index is 3.9
Emerging Markets Index is 7.8

Energy is 16.8
Health Care is 16.9
Precious Metals is 12.0
REIT Index is 15.2

Long Term Bond Index is 8.1
Intermediate Term Bond Index is 6.7

[anne]

The severe bear market in stocks amounted to and amounts to severe overvaluation of selected American large cap growth stocks, including Wal-Mart. Now, if you liked Wal-Mart at a price earning ratio of 40, fine for you. Me; I thought otherwise. But, the point here is why Wal-Mart has such a terrible labor policy and the idea that Wal-Mart exploits workers for sake of consumers and otherwise non of us could afford to shop is bizarre. Phooey.

[anne]

"The median household income of Wal-Mart shoppers is under $40,000. Wal-Mart, the most prodigious job-creator in the history of the private sector in this galaxy, has almost as many employees (1.3 million) as the U.S. military has uniformed personnel."

There is Wal-Mart flackery. Yuch.

[save the rustbelt]

Krugman lacks credibility because he won't discuss the damage done to blue collar workers by increased trade.

If fact, Wal-Mart's low prices are a part of the economists answer to the destruction of blue collar jobs.

Paul can't have it both way now can he?

[Movie Guy]

anne - ...but retailers have been remarkably productive for years.

Nothing you described in your above post is evidence of greater "productivity" in recent years. That's old news for those familiar with retail and supporting logistical control systems. A few new changes have occurred at check-out stations, but that's about all.

The majority of the so-called "new productivity" among retailers is little more than reduction of retail employee manhours to dump them into the part-time, non-benefits category of employment, and outright elimination of employee positions. This is readily verifiable.

anne - There we have the professional Wal-Marters. These folks are simply professional Wal-Mart defenders. ...This is a Wal-Mart sham. These folks are professional Wal-Marters.

Can you prove your statements? I assume that you are attacking the posters, Dave and Jeffrey Miller. Neither has written anything that I would consider to be outside the norm of presenting both sides of an issue. Attacking these posters as you have done doesn't prove anything other than to show that you not only disagree with them, but are willing to smear them with boogyman bad guy labels. It's a cheapshot discrediting exercise.

Besides, it wasn't all that long ago that you didn't think that the Wal Mart campaign was a worthy political issue. As I recall, you originally denied it, and made an issue out of that point.

anne - Military personnel, however, do have health care insurance.

Really?

Active duty U.S. military personnel are not provided health insurance by the Department of Defense, unless you consider the Tri-Care system to fall within such consideration. And it's not health insurance. Not only do active duty military personnel not have employer provided health insurance, they don't need to purchase health insurance for themselves unless attempting to seek coverage of elective surgery not authorized by DoD.

Active duty U.S. military personnel have employer provided health care services and hospitalization, which is quite different from the realities of health care insurance whereby individuals have to receive approvals from insurance companies prior to seeking specific treatments from health care providers (hospitals and doctors) not already identified in health care insurance plans.

[anne]

http://www.nytimes.com/2006/01/29/national/29rich.html?ex=1296190800&en=784822e4b0735ee5&ei=5090&partner=rssuserland&emc=rss

January 29, 2006

Corporate Wealth Share Rises for Top-Income Americans
By DAVID CAY JOHNSTON

New government data indicate that the concentration of corporate wealth among the highest-income Americans grew significantly in 2003, as a trend that began in 1991 accelerated in the first year that President Bush and Congress cut taxes on capital.

In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data. The top group's share of corporate wealth has grown by half since 1991, when it was 38.7 percent.

In 2003, incomes in the top 1 percent of households ranged from $237,000 to several billion dollars.

For every group below the top 1 percent, shares of corporate wealth have declined since 1991. These declines ranged from 12.7 percent for those on the 96th to 99th rungs on the income ladder to 57 percent for the poorest fifth of Americans, who made less than $16,300 and together owned 0.6 percent of corporate wealth in 2003, down from 1.4 percent in 1991....

[anne]

Paul Krugman, of course, lacks no credibility but whenever the idea comes round that American workers might really really really have anything to gain from sympathetic domestic policy, there are the Republicans to make sure the idea is ridiculed and lost to history as Republicans continue to use policy to undermine workers. So, then, the answer to the problems at Wal-Mart is war with Mexico and I for one am ready to attack Mexico at any time. Interesting idea, say what, leave Iraq immediately and invade Mexico. Hopefully Mexicans would get the comedy of it.

[anne]

"Wal-Mart and its effects save shoppers more than $200 billion a year, dwarfing such government programs as food stamps ($28.6 billion) and the earned-income tax credit ($34.6 billion)."

Professional Wal-Mart flackery.

[anne]

http://www.nytimes.com/2005/11/01/business/01walmart.ready.html?ex=1288501200&en=ac9edfbdf2f9a81f&ei=5090&partner=rssuserland&emc=rss

November 1, 2005

A New Weapon for Wal-Mart: A War Room
By MICHAEL BARBARO

BENTONVILLE, Ark. - Inside a stuffy, windowless room here, veterans of the 2004 Bush and Kerry presidential campaigns sit, stand and pace around six plastic folding tables. Open containers of pistachio nuts and tropical trail mix compete for space with laptops and BlackBerries. CNN flickers on a television in the corner.

The phone rings, and a 20-something woman answers. "Turn on Fox," she yells, running up to the TV with a notepad. "This could be important."

A scene from a campaign war room? Well, sort of. It is a war room inside the headquarters of Wal-Mart, the giant discount retailer that hopes to sell a new, improved image to reluctant consumers.

Wal-Mart is taking a page from the modern political playbook. Under fire from well-organized opponents who have hammered the retailer with criticisms of its wages, health insurance and treatment of workers, Wal-Mart has quietly recruited former presidential advisers, including Michael K. Deaver, who was Ronald Reagan's image-meister, and Leslie Dach, one of Bill Clinton's media consultants, to set up a rapid-response public relations team in Arkansas.

When small-business owners or union officials - also employing political operatives from past campaigns - criticize the company, the war room swings into action with press releases, phone calls to reporters and instant Web postings....

[anne]

Anyway, I do think I have finally stumbled on the answer. We must leave Iraq immediately, and invade Mexico. Heck we could swashbuckle through Baja with no one even knowing. There is a plan to rescue American workers, who needs unions? Gabriel Garcia Marquez alone could write the script.