Walmart: A sufficiently advanced capitalism is indistinguishable from socialism

I came across a blog a while back that argued that Walmart’s size and distribution has put them in a state-like position vis-a-vis their workers, the communities in which their stores are based, and the regulation of their distributors. When you think about it, there’s a strong congruity between communist architecture and Sam’s Club chic. Can’t find the blog now, but I’m interested in the parallels.

1. Many of the objections that people have to Walmart are actually objections that we would levy at states. For instance, when Walmart won’t sell a book or cd for ideological reasons, we call it censorship. No one calls it censorship when a mom-and-pop bookstore won’t sell politically or sexually-charged media.

2. Walmart is really quite big: 1.4 million employees in the US alone. So they’re hell-bent on restricting worker unionization, of course. (In much the same way that the Soviet Union dissolved all independent worker’s councils….) Much like the classically totalitarian models of socialism, Walmart imposes burdensome restrictions from their workers, or even extorts labor from them.

3. Like all powerful institutions, Walmart seems to be more agnostic than evil. Without any guiding principles but profit and growth, its power is used both to enslave and to free. The size of its labor base and its distribution across the country means that their treatment of laborers almost automatically becomes the national standard. Why join the army, for instance, if you can make the same money working for Walmart? That’s also why the minimum wage arguments are mostly fluff: Walmart already pays almost twice the national minimum. In addition, Walmart takes significant losses when even their poor health coverage is taxed by rising health care costs. Because of this, they seem to be advocating nationalized health care, at least for the nation’s poor (i.e. their workers.) They’ll fight tirelessly to externalize their costs… but that means sharing the burden of poverty with the rest of the country… not such a bad thing.

4. Because of their marketshare, Walmart can regulate industries singlehandedly, by setting contractual standards for its distributors. Take Chilean salmon:

“Wal-Mart buys so much salmon that if it imposed and enforced a set of standards on how salmon was to be raised, and how salmon workers were to be treated, salmon farming and processing companies would need to comply, either to keep Wal-Mart’s business or to stay competitive. And because the volume of purchasing is so high, and because Chile is driving to further expand the supply of farmed salmon, the improved conditions for both the salmon and the people would not cause much of an increase in the price of a pound of salmon in the seafood case.”

They did just that. In February 2006. they made a small change to their supply chain. Now, they won’t buy any salmon uncertified by the Marine Stewardship Council. (MSC site)

5. Walmart can jumpstart an industry, if it chooses. Take solar panels and wind power. By making a substantial purchase of solar panels for all its facilities, Walmart could break through the economy of scale problem and finally bring sustainable power into the reach of the average consumer. As Joel Makower puts it,

“If they follow through, it will be profound and will have a long-lasting impact on the global solar industry.”

On the other hand, they’re not going to stick with technologies that aren’t ready for the marketplace. So with wind turbines, there might not be much feasability at this level:

Now it’s testing wind power in the Colorado store. So far, it’s been a failure. “It might be our familiarity with the equipment,” admits Mosley. “When they break, they break pretty good before we realize it.” The company hasn’t abandoned wind power yet but isn’t blown away by it, either.

The bottom line is that they see themselves “as an aggregator of carbon.” Where there’s profit to be made in going green, they’ll do it.

6. By the way, in researching this entry, I came across a number of proposals from the American National Socialist Worker’s Party, who advocate:

“the nationalization of Walmart…[and] all companies who have betrayed the United States and its white working class.”

Yikes. You’ll get no linkage from me, but I thought it was a bit disappointing to discover these results already out there, discrediting the meme with racist hate.

My point is just the opposite: there’s no reason to nationalize a greedy corporation like this, because they’re actually nationalizing themselves, willingly. Sure, eventually they’re going to need to unionize, and more oversight and regulation at the government level is always better when it comes to safety, labor, consumer protection, and environmental practices. But as Walmart get its hooks further into the American economy, its success becomes inextricable from the success of the country. If Walmart devalues the dollar, its own profits become less valuable. If it drives us into a recession by slowing the growth of wages, it’ll sell less and make less profits. As goes the American Dream, so goes Walmart… and as tough and mean and cunning as these bastards are, they’re not bad allies. I’d rather have them with us than against us.

Cost-benefit analysis of drug policy

Here is why I love the economic analysis of policy. It’s an article by Mark A. R. Kleiman, detailing some simple rule changes and common sense redistributions of law enforcement budgets in order to maximize the efficiency and fairness of our drug enforcement policy. Imagine if we asked the DEA, the FBI, and the Army units assigned to Plan Colombia to detail the ‘market failures’ that have lead to the need for burgeoning prison populations, paramilitary SWAT teams invading American homes, or military participation in Colombia’s civil war: clearly, the supply of drugs has recently outstripped the supply by a large margin, since “prices of cocaine and heroin have fallen by more than 80 percent [since 1980.]”

There is much evidence to suggest that this is due to the ‘balloon effect‘: prices fall when enforcement increases because the demand from hard-core drug users is inelastic: they’ll want roughly the same quantity at a wide range of prices, but this willingness to pay more encourages more suppliers to enter the market. Squeeze in Colombia, and supply increases in Afghanistan… while suppliers in the US and other places with tough enforcement policies innovate desperately to get back into the market, coming up with new business models, new production methods, and escalating the violence they’ll endure to increase their market share. All this desperation leads to increased capacity, which drives prices down, and so we’re left with drug dealers making less than minimum wage!

So forget market failure… as I pointed out yesterday, it’s an absurd prerequisite for regulation. Perhaps we’d simply like to reduce the social ills attendant to drug use and drug dealing. If so, Kleiman has some great suggestions, summarized below the cut.

Continue reading Cost-benefit analysis of drug policy

Is charity a good indicator of civic virtue?

Arthur C. Brooks is a professor of public administration at Syracuse University. His recent book Who Really Cares: The Surprising Truth About Compassionate Conservatism, develops a number of data sets to show that conservatives give a larger percentage of their income than liberals. There’s a review here, but it doesn’t answer some of the most important questions.

1. How was ‘liberality’ determined? Is this about party affiliation? What about unregistered voters? Does the income/party correlation effect this?

2. How much of so-called philanthropy is really charitable? Presumably political donations are being excluded, which may account for some of the difference. There’s also a difference between redistributive giving and ostentatious donations which have clear social benefits, and can sometimes serve as advertising or to buy access to particular venues and clients. To my mind, the latter has no civic value, just as donations to museums or social clubs are more about conspicuous consumption than the public or communal good.

The article notes that the gap between political affiliations closes sharply when religious giving is removed from consideration, and tithing in most churches is not a charitable act: it goes to pay for the operating expenses of the church, and is a very public procedure by which your fellow community members evaluate your standing and value. Just because some churches are -also- the hubs of volunteerism does not automatically make all religious donations charitable. We might just as well call union dues charity, since the rates are determined democratically and the membership uses them to achieve redistributive results in the welfare system.

Brooks is trying to argue against government redistributive schemes, like taxation for services, since this “crowds out” private giving. On my view, non-profits that serve disadvantaged populations are better off with public funding than private giving, since private funding comes with more varied and demanding strings attached. Individual philanthropists are constantly trying to import various management and business models into the non-profit world, and chasing the philanthropic dollar usually requires charitable organizations to spend money on salaries and personnel to placate these moody givers. I’ve seen organizations cast adrift by the competing, mercurial demands of givers, while the government’s admittedly bureaucratic demands are at least steady and transparent. This goes double for government services administered by the government: for all its flaws, the welfare state does better, fairer job than private givers ever could.

The ultimate question, though, is whether liberals (whoever they are) have less civic virtue because they give less. As Gose summarizes Brooks point: “Liberals should be wary of the idea that government offers the best solution to social issues, since such a viewpoint may weaken one’s own resolve to take action or give away money.” This notion that we become participants in our community by writing personal checks strikes me as fundamentally wrong-headed. Taking action is good, it ought to be encouraged and, in my opinion, it’s the core of civic virtue. Indeed, some aspects of the administrative state discourage such action, and that’s a problem. Signing checks and dropping benjamins in the tithing basket? I don’t see the connection to civic virtue, though of course these actions have another value: they support organizations that the givers like. When I tip my barista, I do the same thing, but I don’t pretend it’s charity.