Monday, August 18, 2008

Wal-Mart's short-sited political thinking

In discussing Wal-Mart's political strategy (typically very pro-Republican because Wal-Mart thinks the Republican's will support its anti-union policy), Daniel Gross makes a very good point.
Instead of asking whether a particular candidate or political party will be favorable to Wal-Mart's labor-relations policies, the executives in Bentonville, Ark., should be asking whether the candidate or party will be good for Wal-Mart's customers.
Here are the two paragraphs that precede this one.
Wal-Mart's brass plainly believes—no, know—that a Republican president would be good for Wal-Mart, while a Democrat would be bad. Despite Clinton's Arkansas roots, most Wal-Mart executives probably opposed Clinton in both his successful campaigns. But during his presidency, Wal-Mart's stock more than tripled. By contrast, Wal-Mart executives polled in 2000 would have been exultant at the prospect of two George W. Bush terms, especially if they were to be coupled with mostly Republican control of the House and Senate. And yet this decade has been a lost one for Wal-Mart shareholders: In the Bush years, the stock hasn't budged at all.

Yes, politics matters. But in the end, the macroeconomic climate matters a lot more. Wal-Mart's success ultimately depends on whether the lower-income and middle-income customers on whom it depends are doing well or getting eaten up by stagnant incomes and rising costs for health care and gas. Here, again, the last two decades offer a pretty good contrast. In the 1990s, when a Democrat was in the White House, the rising economic tide lifted all boats (though not all boats equally), and Wal-Mart benefited. In this decade, the rising tide lifted only the yachts. The Bush years have been something of an economic disaster for people on the lower rungs of the income ladders. Census data show that household income in 2006 was below its 1999 peak and that the uninsured rate has steadily risen throughout the decade. Layer on soaring energy prices in the past couple of years, and you've got trouble. It's not all the fault of Bush or congressional Republicans, of course. But it's pretty clear that the dominant fiscal and economic policies of the past eight years—massive tax cuts for the wealthy, economic royalism, hostility to labor, and neglect on health care—haven't made things better for Wal-Mart customers.

1 comment:

Anonymous said...

People go to Wal-Mart because they sell for less than other stores.Sam Walton worked his ass off starting Wal-Mart. The old mom and pop stores did not pay good wages, They did not have good benefits nor security.

You may wish that they get destroyed so that the people have no longer a place to work nor shop with inexpensive items.
See Kmart for high prices and Target for the same.
Unions will ruin Wal-Mart. If they are so great why don't you join them? My family is full of union members, so I know what unions can do and not do.