Politics from the Palouse to Puget Sound

Tuesday, March 18, 2008

"What Wal-Mart Gets and the Candidates Don't"

Terrific op-ed from the Washington Post from Sunday a week ago. Warren Brown, self-admitted union man, explains it to the elitists like Obama, Clinton, and the PARDners. It's not about globalism, offshoring, or union-busting. The average person doesn't think about politics when they shop. I made this point last week. It's about being able to buy quality goods at the lowest price. Period.
I wish to say at the outset that I hold no grudges against Wal-Mart. In fact, my family and I are rather fond of that giant retail chain, where we often find the best prices, especially on pharmaceuticals.

It is an odd thing to admit. Many in our clan, including yours truly, hold union memberships. Politically, with me being the sore-thumb exception, we run from left to leftist. Yet, regardless of politics or union affiliation, when it comes to searching for the best quality at the most reasonable prices, Wal-Mart is one of the places we look first.

As I said, this is odd, almost embarrassing. Wal-Mart is no friend of unions. Wal-Mart is one of those American retailers keeping foreign factories humming and foreign workers employed. Viewed from that perspective and in context with the current political debate on international trade, Wal-Mart is something of a bad actor, one of those companies supposedly putting people out of jobs in places such as Ohio.

Poor Ohio. It has become one of the rustiest parts of the Rust Belt. It has lost tens of thousands of jobs, largely in the automotive and related industries, and it has shed nearly 200,000 residents over the past couple of decades.

In last week's titanic Democratic presidential primary battle, Ohio, one of the most unionized states in the nation, was made the prime example of what happens in America when international trade supposedly runs amok.

Sen. Hillary Rodham Clinton (D-N.Y.), the victor in that contest, rose to electoral glory on promises that she would fix what is wrong with international trade, that she would somehow find a way to reverse job losses allegedly caused by contracts such as the North American Free Trade Agreement.

Sen. Barack Obama (D-Ill.), who was made to look a bit wishy-washy on the free trade issue, largely lost Ohio as a result.

But here's suggesting that none of us should take seriously anything that politicians, Democrat or Republican, liberal or conservative, have to say against NAFTA in particular or international trade in general. The reason is simple: They neither understand Wal-Mart nor do they routinely shop there.

Consider Ohio: Wal-Mart is one of the largest employers and biggest taxpayers in the state. As of March 2007, there were 99 Wal-Mart Supercenter stores in the Ohio, 38 Wal-Mart discount stores, 30 Wal-Mart Sam's Clubs and five Wal-Mart regional distribution centers.

In Ohio state sales taxes alone, the company paid $410.2 million in 2007. In other state and local taxes, it paid $82.4 million.

All of those Wal-Mart facilities and the money they generated were supported by one phenomenon: consumers, union and nonunion, employed by and laid off by domestic car companies and other manufacturing entities, seeking the highest quality products at the very best prices.

If Wal-Mart could not meet that essential consumer demand, it would not exist in Ohio or anywhere else. It certainly would not be the formidable retailer it is today.

What does that mean for the current political debate on international trade? Simply this: As long as politicians continue to ignore the Wal-Mart phenomenon, the consumer-driven reality of international trade, they are being dishonest. They are blowing smoke.

The truth is as simple as it is harsh. Automotive and other industrial jobs lost in Ohio are not coming back, certainly not the way they were, because the same consumers who shop at Wal-Mart stores in Ohio and everywhere else there is a Wal-Mart store are not willing to pay for those jobs and the products they represent.

Look at it this way: If I buy enough Honda cars made at the lower cost, nonunion Honda plant in Marysville, Ohio, I'm putting pressure on my union buddies at the higher-cost General Motors, Ford and Chrysler plants to offer me equal or better products at prices equal to or better than those offered by Honda.

I might drink with my union buddies. I might tailgate with them. I might even join them in shouting "hooray" for Clinton or Obama. But if they can't give me the car I want at the price I demand, I'm buying that nonunion Honda. If that means GM, Ford and Chrysler plants close, I'm sorry about that and all that means for my friends who will lose their jobs.

But they should have found a way to give me what I was willing to pay for. They should have understood why so many of us shop at Wal-Mart.
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Nic said...

he had me intrigued until he mentioned "... the highest quality products..." Give me a break. If you want affordable, go to Wal-Mart, if you want the highest quality, you will most likely not find it at Wal-Mart. Anyone who say otherwise either doesn't know high quality, or is just being foolish.

Tom Forbes said...

You're right. I'm sure a Dell desktop purchased at Wal-Mart is not the same quality as one purchased at a store more palatable to your taste.

And I'm sure a Sony LCD television purchased at Wal-Mart is not the same quality as one purchased at a store more palatable to your taste, either.

And I'm sure a Canon digital camera purchased at Wal-Mart is not the same quality one purchased at a store more palatable to your taste, either.

And I'm sure a PlayStation 3 purchased at Wal-Mart is not the same quality one purchased at a store more palatable to your taste, either.

You had me intrigued until you used the old wives' tale about everything at Wal-Mart being off-brand Chinese crap. Have you actually been in a Wal-Mart Supercenter lately? (and I'm not talking about the tiny old one in Moscow)

Nic said...

Does Wal-Mart sell the Dell XPS line of laptops? No, only the lower end Inspiron. Does Wal-Mart sell the XBR line of Sony? No. Does Wal-Mart sell the Cannon EOS-1D DSLR? No. These all represent the top end, and Wal-Mart doesn't carry them. Wal-Mart carries name brands, but the only carry the low end lines of the brands. Hence, if you want affordability, go to Wal-Mart. If you want the high-end, you have to shop elsewhere. They don't carry quality items, they carry affordable items. Which is fine, but it's a little disingenuous to claim that they sell the highest quality items.

Tom Forbes said...

Sorry, nic, I completely disagree. By your logic, the only "quality" cars would be Ferarri, Mercedes, Lexus, BMW, et. al..

It is a well-known fact that "affordable" and "quality" are not mutually-exclusive terms. In the column I cited, Warren Brown mentioned that he would purchase a Honda versus a GM, Ford, and Chrysler if the rpice was right. He did not say he would purchase a Porsche. Hondas are renown for their quality AND affordability. That's the point of the whole column and you missed it completely. International manufacturers have managed to provide well-made items at a low cost and as long as they do so, Americans will buy them at Wal-Mart.

Nic said...

Comparing Honda to it's competition always leads to Honda being bested by the competition in the price category... They are quality, I agree, I own one, but they are always higher priced than the alternatives.

Take clothes, take furniture, take just about anything and you will probably never find the highest quality of that particular item for sale at Wal-Mart. I've bought t-shirts from Wal-Mart... and bought them again from Banana Republic (not to say that BR is the best quality, either) after they fell apart. I've bought linens from Wal-Mart... and bought them again from Pottery Barn after those fell apart... and the list goes on, until I realized that you actually do get what you pay for. Wal-Mart is great for what it is... a discount retailer that stocks everything you could possibly need for your home and day to day living. And, if people chose to buy the exact same item at some other store and pay more, then they are just foolish. But, saying that the quality of the items that Wal-Mart stocks is the same or better than you could find anywhere else is just wrong.

Tom Forbes said...

Again, you have totally misconstrued the column and are using a straw man argument.

Brown said that "consumers seek the highest quality products at the very best prices," NOT "consumers seek the highest quality products regardless of price." OF COURSE, there are higher-end versions of virtually any product that are only available at the most exclusive of outlets. But obviously that is not indicative of consumer behavior. There are far more Wal-Marts in the U.S. than Tiffanys or Saks Fifth Avenues.

People want what will satisfy their needs (quality) at the best price (affordability.) "High end" and "quality" are not synonomous. What may satisfy my needs may be totally different than what satisfies your needs. Quality is very subjective.

That is the problem with the Wal-Mart haters, as they attempt to parse their tastes upon the rest of society.

Barenjager said...

Thanks for clearing things up for us. Your message seems to be that if one can't afford top of the line merchandise, one should just do without. Is that correct?

Paul E. Zimmerman, M.A. said...

Yeah, nic, never bother with the question of what it is that the individual buying the product needs it to do.

I'm sure that since you're landing toasters on the moon and whatnot that you'll need more than the offerings at Walmart that us mere mortals use to run Quicken, surf the internet, etc. Your objections enjoy wide-spread appeal based on experience, certainly.