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This diary originated as a comment within JR Monsterfodder's diary, Yet Another Message for Wal-Mart-Shopping Liberals, which scrolled off of the page at the speed of light.

I made my comment after the diary had already scrolled off of the page. I thought this would make a decent diary, I think this issue is important, and so posted my comment as a diary.

I hope I have not broken any rules.
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First off, let me say that I have never been in a WalMart, and I will never go in a WalMart. I totally hate this company. But we will blame WalMart for what is a larger systemic issue in this country at our own peril.

The larger problem is the conflation of the term 'labor arbitrage' with the term 'free trade'. We are being forced through trade agreements, made by both Republican and Democratic administrations, to compete on wage rates. We simply cannot compete on this basis.

Real wages are being attacked from both the top and the bottom of the scale. If WalMart had a lot fewer workers to choose from they would be, by the market, forced to pay a better wage. They are not, because there is a large supply of labor out there willing to work at WalMart wages. Many of what are now WalMart employees got laid off from the PillowTex's of what is now the great American manufacturing wasteland.

'Americans can compete with any worker in the world' is a great slogan, but that is all it is, a slogan, 'kinda like 'Democrats are the party for people who work for a living'. It is simply not intelectually honest in this day and age to make these kinds of statements. Americans can not compete with eleven cent an hour labor, and what we as Democrats stand for hasn't been really reflected by the leaders of our party since Harry Truman. Make no mistake, Democrats in Washington are selling you down the river just as fast as Republicans.

So shop at WalMart or don't, the problem remains, and the effects will be the same, 'cause whether you buy at WalMart or buy it somewhere else, it all comes from the same place.

Global Trade: Blame China, blame us

Start with Wal-Mart. That company's well-known business model is to squeeze its suppliers for lower prices, always. According to a recent "Frontline" report on PBS, "Is Wal-Mart good for America?" that means pressure for those vendors to "abandon their factories in the American Midwest, as well as transfer production from their factories in Mexico and Taiwan to China."

The result, "Frontline" says, is "massive Chinese conglomerates, such as the television manufacturer TCL, will dominate more and more of the market." And it's not just Wal-Mart.

Last week The New York Times reported that the auto industry sees China as the next big exporter. Companies ranging from DaimlerChrysler to Delphi auto parts are looking for projects. It won't be long before Chinese-built parts -- and then small cars -- show up in U.S. showrooms.

The driving force: Chinese auto workers are paid about $1.96 an hour for wages and benefits. Detroit's tally for the same workers is $36.55 an hour. Revaluing the yuan won't fix that imbalance.

The question of blame comes down to this: Do we want cheaper products or are we consumers willing to pay more for American-built goods? So far the answer has been clear.

Originally posted to superscalar on Tue Apr 26, 2005 at 05:28 PM PDT.

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Comment Preferences

  •  Your question seems to be a no brainer (none)
    Why should  people purchase  expensive goods instead of  cheap? Has this ever worked  before?
    •  RE: Your question seems to be a no brainer (none)
      Why should  people purchase  expensive goods instead of  cheap

      I will answer your question with a question. Why should a nation be forced to compete with other nations with one tenth the labor costs and nowhere near the same evironmental standards, rule of law, etc.

      Has this ever worked before? The question is in fact rhetorical because one cannot appy Ricardian theory to what is now occurring. That is to say it has never been tried before.

      China, India, Taiwan, etc. force a home bias on some of their products. To protect their markets. Just google 'China tariffs. We have done almost none of this. Instead we opt for what we now call 'free trade'.

      At what point do we draw the line in our quest for 'cheap'? When there is nothing but low wage service jobs left in the U.S.? How do we buy cheap stuff when, at some point, we too are making eleven cents an hour?

      thunder's just the noise boys, lightnin' does the work - Chad Brock

      by superscalar on Tue Apr 26, 2005 at 05:46:24 PM PDT

      [ Parent ]

  •  Part of the problem (none)
    A big part of the problem is the "easy credit" in the US. If people were not able to borrow as much, they would not be buying as much useless junk. I am not against people buying whatever they want, as long as they can afford it. At the moment the US is importing $2billion A DAY more than it exports. I think maybe, just maybe, America is buying more than it can afford.

    Just because you can doesn't mean you should!

    by taonow on Tue Apr 26, 2005 at 05:34:55 PM PDT

  •  I don't disagree with your diary (none)
    It's the basic premise of the whole fair trade movement, after all.

    But I wonder if external forces may help solve this problem.

    As far as attacking Wal-Mart, when you're up against a gang of thugs, you always try to take out the biggest, baddest one first. I think the unions and others are right on target, there. (So to speak.)

    My country, right or wrong; if right, to be kept right; and if wrong, to be set right. Sen Carl Schurz

    by Bill Rehm on Tue Apr 26, 2005 at 05:38:20 PM PDT

  •  The solution is not really less shopping... (none)
    The solution has to be political changes that permit the working people of the world to form trade unions and negotiate for a larger share of the profits than they presently receive.

    I personally avoid Walmart entirely. I buy New Balance shoes that say "assembled in the USA". I look for products from countries with a strong labor movement. Those things help. But we really need to organize politically as well and pressure our government about labor rights (or Human Rights having to do with Labor)

    Labor laws already on the books, and international covenants already ratified by many countries not named USA -- if they were really enforced -- would go a long way to helping stop the downward spiral where many jobs don't pay a living wage.

    Aside: The US and China are the only countries in the UN security council not yet ratifying the UN Covenant on Economic, Social, and Cultural Rights (which guarantees the right to form a union AND wages sufficient to support a minimum standard of living!)

    •  The solution is not really less shopping... (none)
      I look for products from countries with a strong labor movement.

      Indeed, this helps.

      But we really need to organize politically as well and pressure our government about labor rights (or Human Rights having to do with Labor)

      The problem here in the U.S. is simply supply and demand. The unions cannot bargain from a position of strength because the supply of labor is too large.

      At the rate things are going that supply of labor will only grow larger, and the strength of any remaining union will only diminish.

      The US and China are the only countries in the UN security council not yet ratifying

      This is a very good point and one which I was not aware of.

      thunder's just the noise boys, lightnin' does the work - Chad Brock

      by superscalar on Tue Apr 26, 2005 at 06:30:01 PM PDT

      [ Parent ]

  •  We cannot compete on wages (none)
    China produces an unknown number of goods in prisons, and will not allow anyone into its prisons to check. Also, many investigations reported in the New York Times found that factory managers lied grossly about the number of days and hours worked by their employees; when foreigners came to visit, some employees were told in advance to go home or to recite the corporate line. It is impossible to compete in such conditions.

    By buying cheap goods, we are driving ourselves toward throwaway, no-rights labor. Even Adam Smith recognized that competition was unfair when one crossed borders because the cost of labor was different.

    It seems to me that we need some kind of tariff, or a universal minimum wage like Gephardt put forth. We need government to help us from ourselves; sounds socialistic, but do we prefer the current course?

    •  The problem is this I think (none)
      About three years ago now Rep. Donald Manzullo was holding hearings about the loss of manufacturing in the U.S. Manzullo was very upset because apparently Illinois (used to) manufacture a lot of machine tools, and this manufacturing was rapidly dissappearing.

      I sent Rep. Manzullo a letter in which I likened what is now occurring to what Henry Ford did with the introduction of the Model T in 1921.

      Henry Ford set up an industry and then paid his workers five dollars a day to work in it, not because Ford wanted to pay them five dollars a day, but because by paying such a high wage he created a market for his cars.

      The population of India is about 1,065,070,607 people.
      The population of China is about 1,298,847,624 people.

      When companies like GE, Lucent, Microsoft, etc. go to these countries they can continue to profit, at least temporarily, because the products they create there are primarily shipped back to the U.S. (and no tariff is imposed because these are still American companies).

      All the while these companies are creating a potentially huge new market for their products. A market which dwarfs the American consumer market by comparison.

      At the point they have created this new market in these countries, they basically do not need the American market anymore. All they then need is the protections of American law for their corporate headquarters.

      thunder's just the noise boys, lightnin' does the work - Chad Brock

      by superscalar on Tue Apr 26, 2005 at 06:57:17 PM PDT

      [ Parent ]

  •  It may be worse than you think (none)
    I have been doing research into this - really a developing story - and only today have the largest fragments of the iceberg floated into the same frame at a forum of the reality-based community. So before the moment passes - I want to add two aspects showing the international scope of the Wal-Mart problem (and K-Mart and all the rest, same thing). I will append a rant originally posted at New European Times, a spinoff blog begun by Keith Barratt (known to you as Welshman). It asks for information about specific Wal-Mart products. Why I want this information will appear below.
    Also, to put you in the frame as far as the deeper importance of all this, I would refer you to stories that appeared in the NYT and on the BBC World Service during April 14-16, concerning the "Chinese riot village". It appears that the anti-Japanese riots (well-covered)were a sort of smokescreen that effectively concealed a pitched battle between tens of thousands of Chinese peasants and farmers in South China and 3000 police.
    The cause of the riots was an epidemic of cancers, human stillbirths, and animal deaths caused by water pollution, pollution linked to American supplier factories. (The BBC also ran a photo series on rampant pollution in China.) The peasants drove off the police, but they are certain to pay a high price. They tried to play fair: they had pooled their money for two years to send representatives to Beijing to plead their case.
    A recent National Geographic special demonstrated how pollution generated in South China is carried by prevailing winds toward Alaska and North America. A scientist interviewed on that special said that we had wasted our chance to exert any leverage on the Chinese, and that now it was unlikely that anyone now living would ever see a clear night sky.
    We allowed our industrial sector to be exported to China, along with all its attendant problems of pollution and environmental destruction. And since China is a dictatorship in which the rich profit from the struggles of the poor, they ate it up.
    And let us not forget the geo-political implications. China today is ratcheting up the pressure on Taiwan. The Bush will not publicly say that Taiwan is a free, independent, and democratic nation. Even Clinton won't say that. But it's a hell of a sight more democratic than Iraq will ever be. Addicted to Chinese goods as we are, how could we ever stand up to defend Taiwan? Answer: we can't and we won't.
    Here's the N.E.T. post.
    "I really can't afford not to buy things at Wal-Mart sometimes...and buying at Wal-Mart means buying Chinese - if I have this right - 70-80% of the time. And if you think about it - Wal-Mart sells food and plant nursery items, and those are certainly not imported from China, so...assume that everything at Wal-Mart is from China and you won't be far off. And K-Mart, same thing.
    What I'm interested in finding out: assuming most of us have shopped/do shop at Wal-Mart or K-Mart, have you noticed a decline in the quality of even the cheap stuff over the last five, the last ten years? Have you noticed that certain items which have always been around have undergone fairly profound changes in the way they are made or dressed up? And have you noticed emphasis on certain items or categories which were practically nothing before, but now seem to be the locus of major spending? Here are some typical examples: blue jeans and khakis. Five years ago they wore better and were better made. Now the khakis tear, and the blue jeans won't come clean unless you pre-treat stains (also fabric seems thinner). Kids' clothes and toys have undergone a major transformation. Not just that the skateboard aesthetic has triumphed, but design elements from Asian comix have triumphed (as well as much flimsier fabric). I'm not saying there's anything wrong per se with your kid, instead of wearing khaki short pants and heavyweight cotton tee shirts, wearing light nylon stuff with dragons on it. But it's something to notice. As for toys - the 'transformer' aesthetic is ties in to cartoons and comix - but is it a toy for learning? Finally, all you pet lovers! I bet that five or ten years ago you bought your pets food. You built them doghouses. Now, good lord! the pet aisle at Wal-Mart has hundreds of kinds of dog and cat toys, beds, foods, gew-gaws - and the profit margins on these worthless things must be enormous, about as much as the profit margin on the right-wingers' magnetic ribbons (winter has apparently caused most of these to fall off, I'm relieved to see)!
    I am not affiliated with the official opposition walmartwatch.com...yet... but I am trying to understand exactly what happened in the transformation of Wal-Mart from redneck 'Buy American' discounter to the world's biggest company and the driving force behind Chinese industrialization. At some point a bunch of people from Arkansas went to China. And they basically said, we put up the money for the factory, you make this stuff just like we tell you to, and we will pay you so much for it.
    And then of course both sides shook hands, and secretly planned to do each other dirty, first thing. I don't need anybody to tell me that this happened. I want someone to tell me how.
    The troubles of the American economy might drive the dollar down, and they might burst the housing bubble - but they won't make Chinese goods more expensive. The Chinese currency pegged to the dollar and the ability to sell Americans worthless stuff assure that.
    There is a sociological theory called conflict theory - not psychological conflict, but global conflict. And one version of it says that a rising culture does not have to invade or attack a sinking culture. In fact, cultures that invest heavily in military power now may be making a mistake. The rising culture gets the sinking culture out of the way by giving its citizens everything they want - feeding them cheap goods until their overstuffed garages have a heart attack. Meanwhile the people of the rising culture fight to study physics and engineering - in the US if possible. And their families work in sweatshops to send them. They make everything for us. The cheapest plastic drinking glass - cheaper to make it there and ship it to the US. They even make our rhinestone-encrusted statues of Jesus. Good grief. What they must think of us. "Why do the Americans want this shit??"
    OK, I'm making Wal-Mart a metaphor for things it has not done all by itself. But the first task is to understand.
    •  RE: It may be worse than you think (none)
      about as much as the profit margin on the right-wingers' magnetic ribbons (winter has apparently caused most of these to fall off, I'm relieved to see)

      One of my favorite subjects.

      Meanwhile the people of the rising culture fight to study physics and engineering - in the US if possible

      This is one of the things that makes me so angry. I studied physics and engineering and now my government is telling me, after ten years of college, that I am just too stupid and need to go back to school.

      thunder's just the noise boys, lightnin' does the work - Chad Brock

      by superscalar on Tue Apr 26, 2005 at 07:20:45 PM PDT

      [ Parent ]

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