Wal-Mart has reversed 100 years of history where manufacturers were calling the shots relative to retailers. Now it is Wal-Mart calling many, many of the shots, and manufacturing companies are scared. Is Wal-Martization a good thing? Is it all good? Is it sustainable?
My answers are that in some ways Wal-Mart has been good – in particular in fine-tuning just-in-time manufacturing and inventory control. In some ways it has been bad, since Wal-Mart wields undue Monopsonistic (single-buyer of an industry's products) power and, in conjunction with unbalanced currency regimes in the world drive jobs to wherever hot money flow quickest. Most recently this is China, and claims that it will all balance out in the end are far from being realized, indeed may never be realized as the system may be staging for a very hard landing. Below find snips from a recent PBS Frontline special titled "Is Wal-Mart Good for America?"
I'm biased (who isn't?). But I agree with the conclusion drawn by Larry Mishel, Pres., Economic Policy Institute:
Well, if people were only consumers buying things, lower prices would be just good. But people also are workers who need to earn a decent standard of living. And the dynamics that create lower prices at Wal-Mart and other places are also undercutting the ability of many, many workers to earn decent wages and benefits and have a stable life.And I disagree strongly with Brink Lindsey, Economist, Cato Institute, who says:
I think it's impossible to say that we've lost a million jobs to China. Trade policy, or trade flows, one way or another, don't have an effect on overall employment numbers. They affect the kinds of jobs we have. And so some number of jobs have definitely been eliminated because of Chinese competition. Another– elsewhere in the economy, other jobs have been created because of Chinese competition. Because American consumers have saved at Wal-Mart buying Chinese goods, they've got more money in their pocket to buy something else, which creates business opportunities for those other business, which means they hire workers they would not have hired otherwise. The net effect, most economists think, is a wash.My response: Hogwash! It is not at all clear where all the jobs are to come from. It takes a leap of faith to agree with Lindsey. And yes, I've heard all the various arguments that say, based on recent history, that jobs always follow the creative destruction of older capitalistic structures. I simply remain doubtful this time around. I think we've set ourselves up for a Humpty-Dumpty type fall that will hit our middle and lower classes hard here in the USA and may usher-in a world wide depression.
This is not to say that I think those who have been propping up our American Empire (mainly from what some call "less developed countries") have not suffered mightily and unfairly. It is simply to say that we needed to approach Globalization with some care in terms of policy formulation that simply didn't happen due to lack of foresight, political infighting, individual greed (personal and/or corporate), or whatever. Another great opportunity squandered! Or maybe I'll be proven wrong. Time will tell!