Criticism of Wal-Mart
Encyclopedia : C : CR : CRI : Criticism of Wal-Mart
| The [Neutral point of view>neutrality] of this article is [NPOV disputedisputed]. Please see the discussion on the [This article or section needs a complete rewrite for }}}.
Critics, such as trade unions and environmental groups, state that Wal-Mart derives from business practices harmful to employees, local communities, the economy and the environment.
Contents
Store opening controversyWhen opening new store locations, Wal-Mart often faces criticism from the affected communities. Local critics that oppose new Wal-Mart store openings cite concerns such as traffic problems, environment problems, public safety, absentee landlordism, bad public relations,[News article detailing Chicago Mayor sympathizing Wal-Mart for poor PR] and [follow-up] low wages and benefits, and predatory pricing.[Arkansas Supreme Court opinion] re: Wal-Mart Stores, Inc. v. American aDrugs, Inc., et al.[Wal-Mart Settles Predatory Pricing Charge] in The Hometown Advantage, October 1, 2001.[Wall-Mart(sic) accused of stealing] Knight Ridder News article published in The Billings Gazette on June 15, 2005.[News article about Mexican antitrust agency investigating Wal-Mart for monopolistic practices][News article about German High Court's ruling against Wal-Mart for violating antitrust laws] Critics that defend Wal-Mart cite consumer choice, economic studies,[Has Wal-Mart Buried Mom and Pop?: The Impact of Wal-Mart on Self Employment and Small Establishments in the United States] by Russell S. Sobel and Andrea M. Dean, Department of Economics & Entrepreneurship Center, West Virginia University underlying political response, and the proposed store's effect on the poor population by forcing local competitors to lower grocery prices.Mallaby, Sabastian [Progressive Wal-Mart. Really.] Washington Post. November 28, 2005; Page A21 Opposition may include rejections for developer applications from city councils and protest marches formed by activists and unions.[News article detailing Inglewood, California City Council rejecting developer application for a Wal-Mart supercenter][News article detailing Guelph, Ontario, Canada City Council and Ontario Municipal Board accepting previously rejected developer application for a Wal-Mart store] and [unsuccessful attempts to appeal][News article detailing marches of about 40 people protesting for better working conditions from Wal-Mart stores][News article detailing union-paid workers protesting for better working conditions inside Wal-Mart stores] In some instances, activists have demonstrated opposition by causing property damage to store buildings or by creating bomb scares.[News article detailing property damage to Wal-Mart Supercenter construction site in Asheville, North Carolina][News article detailing home-made bomb found outside of Wal-Mart store in Ithaca, New York] and [update]
One such criticized store location was a Wal-Mart Superstore that opened in 2004 in Mexico, 1.9 miles away from the historic Teotihuacán Pyramid of the Moon and archaeological excavation site. The store proposal received much international media attention. Critics that opposed the Wal-Mart store opening included the local community resistance, as well as environmental groups and anti-globalist policy groups, which protested the store opening.http://www.signonsandiego.com/news/mexico/20041104-1407-mexico-wal-mart-ruins.html Homero Aridjis, one of the store's lead opponents in the community characterized the opening as being "supremely symbolic" and "…like planting the staff of globalization in the heart of ancient Mexico".http://www.democracynow.org/article.pl?sid=04/11/08/1513234 Other critics compared the store opening to Hernan Cortés and the Spanish conquest of Mexico. Wal-Mart claimed that they "are not building "next to" the pyramids at Teotihuacán, but miles away. …Our construction is in an area designated for commercial buildings and residences, and hundreds are currently located there. The only opposition to our store has come from a small group of merchants who find competition unwelcome and are seeking to misrepresent our plans for their own interests."http://www.sprawl-busters.com/search.php?readstory=1566 Supporters also included Mexico's national anthropology institute, the United Nations and the Paris-based International Council on Monuments and Sites.http://www.freerepublic.com/focus/f-news/1273938/posts During construction, a 3 feet square ancient altar was uncovered 1 foot beneath the grade of where the store's parking lot is now located. It was preserved in situ.http://www.washingtonpost.com/wp-dyn/articles/A14351-2004Sep11_2.html Economic studiesWal-Mart, through research done by Global Insight, claims it saves working families more than $2,300 a year, while creating more than 210,000 part time, minimum wage jobs in the U.S. (10% of the jobs created).http://www.walmartfacts.com/impact/nov2005_conference_press_release.pdf There has been much debate about the effects of Wal-Mart in the community, with some organizations calculating that taxpayers pick up the tab for Wal-Mart employees who cannot get health care through their employer, thus relying state and federal health care supplemental programs which are paid for by American taxpayers, at an average cost of $2,300 per Wal-Mart employee per year.http://www.wakeupwalmart.com/factsWal-Mart's entry into local grocery markets has been claimed to lower prices by an average of 14%. If true, this would represent an increase in consumers' real incomes in the local economy. It has also been argued that as a result, local competitors are forced to lower prices, so consumers benefit from declining prices whether or not they shop at Wal-Mart. However, it has been argued that those who do shop there experience an additional increase in real income; it has been estimated that Wal-Mart's prices on groceries are 15-30% lower than rivals. Washington Post columnist Sabastian Mallaby claims that the "the average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's "every day low prices" make the biggest difference to the poor…"Mallaby, Sabastian [Progressive Wal-Mart. Really.] Washington Post. November 28, 2005; Page A21 Political responseBobby Calder, professor of marketing at Northwestern University's Kellogg School of Management, said: "The merchants in the community as a whole know they're going to suffer (because it is impossible to sell the same items at the same price as Wal-Mart and be competitive) and so they react, of course, with publicity of their own, and word-of-mouth of their own, to paint a negative picture of what Wal-Mart does to the community." Calder added: "So that you've got more of a political process going on than [with] anyone else. … You have a special reaction to Wal-Mart that you wouldn't get to a Costco or Walgreens."http://www.kellogg.northwestern.edu/news/hits/050317ct.htmPredatory pricingWal-Mart has been prosecuted several times for predatory pricing behavior, which is defined as the practice of temporarily lowering prices in order to drive competitors out of business so that prices may be raised afterwards in a competition-free environment (a monopoly).In the United States, Wal-Mart has faced several accusations of predatory pricing but there has been no successful federal or state actions to sanction Wal-Mart:
Employee/labor relationsAs with many US retailers, Wal-Mart experiences a high rate of employee turnover (approximately 50% of employees leave every year, according to the company)[[Citing sources citation needed]]. Although they average nearly double the federal minimum wage,[Do You Know from Wal-Mart Facts...][U.S. Department of Labor...] wages at Wal-Mart are about 20% less than at other retail stores[[Citing sources citation needed]]. Founder Sam Walton once argued that his company should be exempt from the minimum wage. (Palast, 121). Wal-Mart has also been known to use union supression tactics on its employees in order to stop a union from entering its stores. Some critics also claim that the store that closed in Jonquiere, Quebec was because of a successful union certification, although Wal-Mart claimed that the store was not making any money. Supplier relations
SlottingWal-Mart differs from its competitors by charging no fees to suppliers. Wal-Mart pays the supplier only for the actual cost of the goods themselves, and the supplier pays no fees to Wal-Mart.The World According to Sam, Gourmet. June, 2005In contrast, most grocers charge several fees in order to carry a supplier's product. A slotting fee is charged for placing a product on the shelf. These fees easily approach $150,000 for a single product in high-demand markets. In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees. According to an FTC study, the practice is "widespread" in the supermarket industry. Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers. According to retailers, fees serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition. Vendors charge that slotting fees are a move by the grocery industry to profit at their suppliers' expense.http://truckandbarter.com/mt/archives/000496.html Imports and globalizationSee Imports and globalization of Wal-MartProduct controversySee main article Wal-Mart product controversyWal-Mart's product selection is a controversial subject, and is often right leaning. Examples of items that Wal-Mart does not sell are certain men's magazines such as Maxim, and emergency contraception pills. Critics point out apparent hypocrisy in that Wal-Mart sells other controversial items such as rifles and shotguns, R-rated movies, and violent video games — although Wal-Mart, along with most other retailers, did remove the video game from its shelves due to an allegedly sexually explicit scene accessible by modifying the game's code via a software patch. Also, as Bethesda Software was working on the M-rated , Wal-Mart informed Bethesda that unless it created a T-rated version of Oblvion for Wal-Mart, it would never stock another Bethesda game again. Currently, Wal-Mart unlawfully enforces the ratings of the ESRB for video games. Critics point out that the ratings system for games is meant to serve an advisory role, and was never intended to be put into effect as law. Philanthropic effortsAn article in The Nation criticized Wal-Mart's philanthropic efforts,http://www.thenation.com/doc/20051121/featherstone noting their increase in political contibutions in recent years. Walmart's company political action committee, the second largest corporate investor to the GOP, gave away $2.1 million in 2004, compared to $100,000 in 1994. Also in 2004, Alice Walton donated $2.6 million to the Progress for America PAC, which supported the Swift Vets and POWs for Truth. From 1998 through 2003, the WFF contributed $25,000 to the Heritage Foundation, $15,000 to the Cato Institute, $125,000 to the Hudson Institute, $155,000 to the Goldwater Institute, $70,000 to the National Right to Work Legal Defense Foundation, $300,000 to the Mackinac Center for Public Policy, $185,000 to the Pacific Research Institute for Public Policy, and $350,000 to the Evergreen Freedom Foundation. The WFF has also donated to advocacy groups promoting school privatization, such as a $3 million donation in 2003 to the .Indeed, while the Waltons contributed over $1.1 billion between 2001 and 2005, BusinessWeek noted that they donated a total of $250 million between 1962 and 2000.http://www.businessweek.com/magazine/content/05_48/b3961603.htm Some criticize the article for not adjusting for corporate growth and inflation to make a more meaningful comparison. TaxesUntil the mid-1990s, Wal-Mart took out corporate-owned life insurance policies on low level employees, such as janitors, cashiers, cart pushers, and stockers. This type of insurance is usually purchased to cover a company against financial loss when an executive or other high ranking employee dies. In this case it is usually known as "Key Man Insurance", but the policies that Wal-Mart took out on its rank-and-file workers were derided as "Dead Peasants Insurance" or "Janitor Insurance". Critics (such as the U.S. Internal Revenue Service) charge that the company was trying to profit from the deaths of its employees, and take advantage of a loophole in a tax law which allowed them to deduct the premiums. The practice was stopped in the mid-1990s when the federal government, which had previously called the financing scheme "tax arbitrage," closed the tax loophole and began to pursue Wal-Mart for back taxes.http://fsnews.findlaw.com/articles/andrews/bf/dcl/20050908/20050908walmart.htmlPublished criticism of criticsA number of editorials, paraphrased below, have been published in political media outlets asserting that Wal-Mart's success was legitimately earned in the free market and implying that it is therefore beyond reproach. One such editorial (Nordlinger's, paraphrased below) speculates that critics are anti-capitalist and anti-success, and another (Bandow's) demonstrates ad hominem tu quoque by implying that critics are hypocrites if they don't object to all businesses that achieved success in the way that the author asserts Wal-Mart did.In a 1996 editorial, David Boaz of the Cato Institute, a libertarian think tank, wrote that Wal-Mart is a success in the system of free enterprise because it sells products at low prices that people want to buy, and the profits they earn are the result of satisfying customer's needs.http://www.cato.org/dailys/11-08-96.html In a 1997 editorial, Doug Bandow of the Cato Institute wrote, in reference to government intervention: "The objection to Wal-Mart is simple: It charges lower prices, drawing customers away from established businesses, hurting 'the community.' The problem is not really Wal-Mart, however. Rather, it is economy-minded customers who desire increased choice and lower prices. Thus, instead of barring Wal-Mart, honest critics should favor arresting anyone who shops at any discounter—even by mail. This is the logical, if nonsensical, consequence of the anti-Wal-Mart worldview."[link] In 2005, Bandow resigned after admitting to being paid to write, beginning in the mid-1990s, a number of op-ed pieces favorable to clients of lobbyist Jack Abramoff,http://www.businessweek.com/bwdaily/dnflash/dec2005/nf20051216_1037_db016.htm although to date, no evidence has been presented that Wal-Mart was one of those clients. In a 2004 editorial, columnist Jay Nordlinger of the conservative and libertarian magazine National Review indicated he believes that Wal-Mart simply represents the success of capitalism, and that critics attack it as the biggest representative of capitalism because they favor socialist or communist alternatives. Nordlinger compares the attacks against Wal-Mart to the attacks against Hummer SUVs, which ignored the pollution created by many more vehicles on the road, including older cars, which are often the only choice available to low-income households. Thus, as he sees it, the attacks have more to do with success and the success of capitalism than any legitimate complaint.http://www.nationalreview.com/nordlinger/nordlinger200404050842.asp In June 2006, an article by Paul Kirklin appeared on the economics website Mises.org called [The Ultimate pro-WalMart Article] that presents an extensive analysis of the economic effects of Wal-Mart. The article argues that these effects are overwhelmingly positive, and that all of the fundamental complaints of Wal-Mart's critics are based on profound ignorance of Wal-Mart's actual economic significance. ReferencesExternal links
See also
From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating. |