Stephen Karlson (shkarlson) wrote in 50bookchallenge,
Stephen Karlson
shkarlson
50bookchallenge

BABY HUEY GROWS UP.

I just can't get away from decline and fall and prole drift and the appeal of Wal-Mart.  It's successful, its political economy might be that of a monopsony, it's the Redneck Universalnya Magazin (or perhaps someplace you don't go to the day welfare checks come out), it's Railroad Salvage on a large scale.  For Book Review No. 3, Charles Fishman's The Wal-Mart Effect: How the World's Most Powerful Company Really Works -- and How It's Transforming the American Economy revisits familiar ground.  Mr Fishman's research includes interviews of workers, suppliers, potential suppliers who said no to the monopsony's terms, and members of senior management in Bentonville.  Two conclusions merit mention.  First, Mr Fishman suggests that the company's profitability is the consequence of a lot of small gains on very thin margins, albeit on great volume.  Thus, he concludes, the company has little opportunity to pay higher wages, or to be less vigorous about squeezing "continuous improvement" (read: outsource production to third world sweatshops) without becoming another unprofitable discounter.  That might not sit well with some of the company's critics. "Economists note that if Walmart paid its employees at least $25,000 a year, a million and a half workers would be lifted out of poverty. That would mean more money staying in communities to support local businesses, helping to create at least 100,000 new jobs." Doubtful.

Second, he suggests that the company's business model, which might have been helpful for a Railroad Salvage sort of dealer in remaindered goods, becomes destructive when it's being used to dictate terms to the likes of Procter and Gamble.  His metaphor: the adolescent still engaging in the behavior of a toddler.  Intriguing, and quite possibly true.  But to conclude by suggesting that senior management look outward, falls flat.  For all of Wal-Mart's success, it is possible for consumers to get on, year after year, without setting foot in one.  Perhaps not enough to get the company to change its behavior, not yet.  But lamenting Wal-Mart's symbiosis with the welfare state (selling cheap crap to welfare recipients while fobbing part of the payroll off on the social service agencies) or condemning the corporate culture riles people up to no effect.  Market tests have steeper grading curves.

(Cross-posted to Cold Spring Shops.)

Tags: business, economics, non-fiction
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