Thursday, April 28, 2005

Damn Wal-Mart Commies

Thanks to Ampersand and Prometheus 6, I found the article Wal-Mart's Free Market Fallacy by Jonathan Tasini. If you can get past the author's anti-market tone, you'll find that he has some good points. [emphasis added below]

Putting aside the morality of forcing people to work in slave-like conditions, the so-called free market does not exist in China when it comes to wages. China artificially suppresses wages by anywhere from 47 to 85 percent below what they should be,according to the AFL-CIO's complaint about China's labor policies filed with the United States Trade Representative last year. With Wal-Mart as its willing customer, an authoritarian regime ruthlessly warps the market for wages by enforcing a system that controls where people can work and imprisons and tortures people who attempt to organize real unions or strike. Maybe the rock-bottom labor costs are really behind Wal-Mart’s slogan “always low prices,” but the company is certainly not an example of how to win in a free market economy.

It’s easy to see why Wal-Mart and its conservative defenders discard ideology: money. By ignoring free market principles, the left-wing Harvard Business School estimates that Wal-Mart reduces its procurement costs by 10-20 percent, primarily by taking advantage of the artificially suppressed labor market in China. One can’t help note the delicious irony that Wal-Mart’s “free market” leadership is powered by an authoritarian regime that still refers to itself as communist.


Truth is, Wal-Mart could not survive in a real free market: It would, for example, have to pay Chinese workers more (which would ruin its low-wage business model) and spurn any offers of government subsidies. Indeed, it’s fitting that Wal-Mart, the business model fawned over by free-marketeers, exposes the so-called “free market” as a lie, no more than a crude—albeit effective—marketing phrase. By offering the seductive promise of prosperity through something “free,” we’re told we have to hand over control of our communities to some mystical “market” force. But that’s just an illusion conjured up to hide from us real-life actors who exploit the sweat of our brows, deplete our natural resources to make huge profits and take handouts funded by our hard-earned incomes.

Again, Tasini has an obvious bias against markets. But he's got some things right. Here's a cleaned-up version of what I said on Alas, A Blog:

I have always argued for true free market economics, and Wal-mart ain’t it. I’m not talking about its U.S. business practices (although those are surely unethical, and sometimes anti-market). I’m talking about its practices abroad.

Republicans argue against free trade with Canada for prescription drugs because Canada’s price controls would be imposed on us. That’s a valid capitalist argument. But the same argument then works with all kinds of free trade — for example, China is imposing its Communism on us.

“Free market” doesn’t mean that an employer can do whatever he wants. In a free market economy, all contracts must be voluntary, and physical coercion is not allowed. And although a company is not legally required to accept unions, it also cannot legally murder employees who try to unionize.

The same is true for China’s wage-fixing. Think of it as having a maximum wage instead of a minimum wage. How, exactly, does that go along with free market ideology? It doesn't. (And no, neither does a minimum wage.)

Of course, many companies use anti-market labor, not just Wal-Mart. Res Ipsa asks, "Is it really an American company’s responsibility to thwart Communism when 1 billion people seem content enough about it that they haven’t revolted?" Not really. Few companies can compete without utilizing communist labor practices. Once one company does it, they all “have” to do it.

So whose responsibility is it to thwart these practices? That’s hard to say, since we're dealing with governments that refuse to protect their citizens. My initial reaction is to blame all the so-called “pro-lifers” who are perfectly fine with companies murdering employees for trying to unionize. We, as consumers, have some responsibility. Definitely. But our options are surely limited. It’s nearly impossible to know what products come from ethical labor practices.

Then again, what is our government’s role? In my opinion, it should have a limited role, but it should protect us against murder and physical abuse. So then I have to ask myself if it should protect citizens of other countries from those things. In general, no, it shouldn’t. But should we allow American companies to participate in murder and abuse? And should we allow those who murder and abuse to trade with us? Those are deeper questions.

So for my part, I don’t shop at Wal-mart. Put in economic terms, it reduces my “utility” to do so. It is worth it for me to pay a little more. Still, I’m sure I buy sweatshop products. But I make an effort to avoid it as much as possible. And if everyone did that — if we all adhered to Adam Smith's theory of enlightened self-interest — then sweatshops would not exist. Ahh, but most people don’t really care, and I can’t make them care.

Sorry, but you're gonna have to cite some evidence of these communist "slave-labor" practices other than the AFL-CIO in order to sound credible. I think your understanding of the living conditions in these third world countries prior to Wal-Mart's arrival is probably innacurate.
Is the above commentor seriously suggesting that a communist government is more credible than a labor union in a free country? Damn those leftists who believe unions over, um, communists...

Of course, as a free market leftist I would LOVE to make snarky comments about how the largest communist government in the world is the best place on earth for multinational corporations to exploit workers. But China is probably as good of an example of communism in action as Wal Mart is of the free market in action.
Wasn't Wal-Mart busted in the U.S. for giving cleaning contracts to companies they knew were using cheap illegal alien labor?

I can see how one can get so weary by the non-stop exploitation that one gives up trying to make ethical choices - there don't seem to be any around. There's no Wal-Mart near me so I have to frequent some other exploitative store.

"Sorry, but you're gonna have to cite some evidence of these communist "slave-labor" practices other than the AFL-CIO in order to sound credible. I think your understanding of the living conditions in these third world countries prior to Wal-Mart's arrival is probably innacurate."

When the allegations are made, do we not err on the side of humanity? That's why I said in another post that I oppose fetal-stage abortions. If there's a CHANCE that abortion is murder, shouldn't we try to avoid it?

I once worked a factory job where labor was outsourced to Mexico. Now, keep in mind that Mexico is allegedly better than China with regard to human rights. Anyway, serveral of my CONSERVATIVE Christian engineer friends had to go to Mexico and visit these new plants. They came back with horror stories of extremely poor and unsafe working conditions. And supervisors were indeed allowed to use physical force.

There are other things that helped me form my opinions. I attended the Bangladesh Workers' Tour and other lectures at school, for example. So I've heard workers tell their stories firsthand. Are they lying? It's possible. But I can't dismiss their stories that easily.

I also heard a moving edition of "The Connection" on NPR entiled "Made in China", which included firsthand accounts from a former worker in China. If interested, you can listen to it at

But to clarify, I do not think Wal-Mart is solely responsible! This stuff was happening before Wal-Mart came to town.
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