Politics from the Palouse to Puget Sound

Saturday, January 06, 2007

Criticism Where Criticism's Due: How to Help PARD be More Philosophically Consistent

Just for fun, I decided to take a look at the total annual revenue of Walmart, then their actual profit, and then determine what percentage of total revenues those profits represent. This would give one a rough idea of how much money Walmart really makes from its operations in terms of investment (costs) versus returns. The data I used came from here:


Dividing net profit by total revenue for the last three reported years results in...

2006: 3.55%
2005: 3.56%
2004: 3.5%

This fits what I've read before about the real nature of Walmart's profits. Expressed in terms of profit on each dollar spent, Walmart makes just 3 to 4 cents per dollar in return.

Walmart's critics always go straight to the net profit line and wave around big numbers, like the 2006 profit of $11.2 billion, claiming that this "greedy" company could pay its workers vastly more money, health benefits to the skies, etc. etc. They take the net profit figure out of context and thereby distort the total, true picture.

Many still argue that Walmart can pay its workers more and provide more benefits, which these profits perhaps do leave room for. The local Walmart critics are certainly amongst those who will endorse this line of reasoning.

And that's where this gets fun!

Following the same simple procedure as above, here are Target's numbers (source: http://finance.yahoo.com/q/is?s=TGT&annual )

2006: 4.57% (larger!)
2005: 6.82% (nearly double!)
2004: 3.82% (larger still!)

Walmart's critics, who frequently double as Target's supporters, no doubt compare the net profits of the two companies and, finding that Walmart's net profits are larger, then demand that the former pay its workers more while the latter gets their stamp of approval and preference.

But looking at the real picture, how much the profits represent of the total income, we find that Walmart's costs of doing business exceed that of Target's, and that Target makes more per dollar than Walmart does.

Therefore, if the critics of Walmart are to remain consistent in their demands of big business, and big retail in particular, then they must demand that Target lead the way in giving its employees everything that they demand Walmart give its employees, as Target is making more money from its operations than Walmart does while not providing any better wages and benefits to its employees. Additionally, should a Target attempt to locate here, they must resist it just as vigorously as they do Walmart's attempt to locate here.

But will they? No. The Walmart critics will not, because this isn't really about the workers, social justice, etc. etc. The critics of Walmart only use those issues as covers for what's really behind their actions: their personal aesthetic preferences. It's style over substance with them, and they want the rest of us to foot the bill for their tastes.

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