Sunday, May 08, 2011

Welcome to Wal-Mart America: Low-Wage Utopia

A few years ago, author Thomas Frank interviewed Kansas Republican state Senator Kay O'Connor as part of what would become the best book of the decade on politics, What's the Matter with Kansas?. O'Connor offered some very interesting ideas on solving America's problems. First and foremost, we should start funneling public money into sending children to parochial rather than public schools. Then, "these better schools will produce good workers, that will become attractive to more businesses, that will move in to get these good workers, who will work for lower wages because [they're] from poverty families. They aren't expecting eighty thousand a year. They're content to work for six, eight, ten dollars an hour."

Are Kay O'Connor's views typical of conservatives? Well, some of her ideas proved a little far out even for Kansas Republicans. For example, in 2001 O'Connor suggested that it was a bad idea to give women the right to vote. But for confirmation that O'Connor's philosophy of America as a place where workers should neither need or desire decent wages, we need look no farther than America's largest employer, Wal-Mart Corporation.

In recent years, a full-time sales clerk as Wal-Mart was paid about a $1,000 less than the federal poverty line for a family of three. Founder Sam Walton was never one to mince words when describing how his business operates, "I pay low wages. I can take advantage of that. We're going to be successful, but the basis is a very low-wage, low-benefit model of employment."

A recent article on suggests what might be some of the problems with the Wal-Mart model of, "work full-time, but don't get paid enough to live on." The article, entitled, Wal-Mart: Our shoppers are 'running out of money' by Parija Kavilanz suggests that the more than one out of every three Americans who shop at Wal-Mart every week are struggling to make ends meet because of rising gasoline prices.

"We're seeing core consumers under a lot of pressure," (Wal-Mart CEO Mike) Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact." Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in."

There are two points I'd like to make in regards to the Wal-Mart philosophy. The first is economic in nature. There's a very old doctrine in this country of keeping wages at rock-bottom even when corporate profits are booming. The responsibility of a manager is to make money for the stock holders, not to worry about the country's standard of living. I know there's no hope of getting people like Mike Duke to care, from a moral standpoint, that the people who work for him live in poverty.

But suppose on the other hand, it's Wal-Mart's bottom-line that's being threatened? Has Mr. Duke ever asked himself, "Hmm, we sell consumer goods. Maybe if we paid people a little more, they wouldn't be so devastated by economic downturns and spikes of inflation, and then they could buy more stuff at Wal-Mart. Then we'd make more money and not have to worry so much about recessions either!"

Put it another way. When profits are high, but wages low, most people will be untouched by "economic booms" and continue to eke out a life on the edge of bankruptcy. Investors will then funnel their high profits into speculation rather than expanding production of consumer goods. This will cause investment vehicles to become overvalued. Eventually, investors become uneasy and start cashing in, causing markets to plummet, businesses to fold, massive job losses and a general economic crash. In the 1930s, it was the stock market that was overvalued, and when it crashed, we called it, "The Great Depression." In the 2000s, it was primarily real-estate that was overvalued, and when speculation in "the housing bubble" crashed, we called it, "The Great Recession."

As long as we allow unregulated free-markets, otherwise known as, "letting a handful of people get super rich while screwing everyone else," the boom and bust cycles will continue. But here's the second point I want to make about the Wal-Mart way of doing business and the falling standard of living in America. It's only happening because Americans are letting it happen.

Returning to What's the Matter with Kansas, Thomas Frank wrote quite eloquently about how the response to tough economic times has changed in America over the years.

"The blue-collar, heavily unionized city of Wichita used to be one of the few Democratic strongholds in the state; in the nineties it became one of the most consistently conservative places of them all, a mighty fortress in the wars over abortion, evolution, loose interpretation of the Constitution, and water fluoridation.

Not too long ago, Kansas would have responded to the current situation by making the bastards pay. This would have been a political certainty, as predictable as what happens when you touch a match to a puddle of gasoline. When business screwed the farmers and the workers—when it implemented monopoly strategies invasive beyond the Populists’ furthest imaginings—when it ripped off shareholders and casually tossed thousands out of work—you could be damned sure about what would follow.

Not these days. Out here the gravity of discontent pulls in only one direction: to the right, to the right, farther to the right. Strip today’s Kansans of their job security, and they head out to become registered Republicans. Push them off their land, and next thing you know they’re protesting in front of abortion clinics. Squander their life savings on manicures for the CEO, and there’s a good chance they’ll join the John Birch Society. But ask them about the remedies their ancestors proposed (unions, antitrust, public ownership), and you might as well be referring to the days when knighthood was in flower."

In other words, once upon a time, American workers were ready to fight for their economic rights. Today, Americans are storming the palaces of the rich, shouting, "We will cut your taxes."

Roger Ebert discussed these same issues recently in a great article entitled, The One-Percenters.The article notes that Wall Street has been duping investors and wrecking the economy, all while voting itself record bonuses. And the public's response?

"What puzzles me is why there isn't more indignation. The Tea Party is the most indignant domestic political movement since Norman Thomas's Socialist Party, but its wrath is turned in the wrong direction. It favors policies that are favorable to corporations and unfavorable to individuals. Its opposition to Obamacare is a textbook example. Insurance companies and the health care industry finance a "populist" movement that is manipulated to oppose its own interests. The billionaire Koch brothers payroll right wing front organizations that oppose labor unions and financial reform. The patriots wave their flags and don't realize they're being duped.

Consider taxes. Do you know we could eliminate half the predicted shortfall in the national budget by simply failing to renew the Bush tax cuts? Do you know that if corporations were taxed at a fair rate, much of the rest could be found? General Electric recently reported it paid no current taxes. Why do you think that was? Why do middle and lower class Tea Party members not understand that they bear an unfair burden of taxes that should be more fairly distributed? Why do they support those who campaign against unions and a higher minimum wage? What do they think is in it for them?"

There's no doubt about it. Even as corporate profits have continued to rise and wages fall, and even as we've watched executives pay far less in taxes while their compensation skyrockets as they busy themselves wrecking the economy, millions of American workers have bought into a philosophy that enlists them into fighting against their own interests. So how did it happen? Well, it's no surprise that our corporate-owned media is relentlessly pushing pro-corporate viewpoints. Another reason, I believe, is that the work people do today doesn't create worker solidarity. There's something about the factory work of the 20th century that brought people together in a way that the cubicle-based data-entry work of the 21st century does not.

The battle for workers' rights in America seems to be over at least for now. The workers have surrendered and gone over to the other side. Our best hope seems to be in the country's changing population demographics. There's a lot of people coming to America, and a lot of recent arrivals who are raising a lot of kids. And for the most part, those immigrants come from places that believe in something besides corporate profit.