Think of this as Volume 16, Number 49 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.
Following any political realignment there is often a re-evaluation of a major sector in American business. It's not the heart of the losing side that's attacked, it's usually something on the periphery that represents something larger.
In the 1970s this was Detroit. GM and Chrysler and Ford were all symbols of the manufacturing era, the post-War boom in which factories were where wealth came from. The attacks that began with Ralph Nader in the 1960s accelerated during this period until the industry became symbolic of what was obsolete about America. The movement of production, first to Japan, then to Korea, and eventually back to the American South, was also symbolic of the “Rust Belt – Sun Belt” attitude that was so much a part of the Nixon era.
I think the labor troubles at Wal-Mart are emblematic of something much deeper, and something that started some time ago. Books like “How Wal-Mart is Destroying America” and “The Wal-Mart Effect” were less about Wal-Mart itself but the business system and consumer society that had created it.
What these books, and the labor strife that has followed, ask is simply this. Is Wal-Mart good for America? And as with GM a generation ago, the question itself is also deeper, and aimed squarely back at the people asking it.
If the GM question was being asked of the manufacturing sector that was the heart of prosperity in the Roosevelt Era, so the Wal-Mart question is being asked of the service and consumer sectors that have been at the heart of the prosperity in the Nixon era. And the answer to the Wal-Mart question is, increasingly, no.
I saw how deep it ran recently when Wal-Mart decided to build a new retail palace near Decatur, Georgia. Decatur is thriving, thanks to the laboratory economy around Emory University. It's filled with people who make big money working there, or at the CDC, or at other campuses like Georgia Tech and Georgia State. The area fairly bristled with yard signs opposing the new store, and while Wal-Mart eventually won the battle, it led to the city moving to annex the area in question. This ain't over.
To many in the Creative Class, Wal-Mart is shorthand for shoddy goods, for shoddy treatment of both employees and customers, for everything that is wrong with the old suburban cul de sac culture. And it's these people who are leading the lower-income people who work for Wal-Mart (and who benefit from its pricing policies) against it.
Whether Wal-Mart acknowledges it or not, the company is becoming politically polarizing, and that's never a good place for a business to be. You think anyone who reads DailyKos is going in one? I don't. And while Wal-Mart can live without that business today, GM could live without those who were protesting it in 1972.
Sam Walton himself was a great story. Back in the 1980s the papers were filled with glowing tales about how personally frugal he was, and about how he called his employees “associates,” plying them with stock options until many became millionaires. The idea was that they were all in this together, a great crusade to bring the bargains of the city to the people in the countryside.
To get there Wal-Mart took advantage of all the new capabilities that came about in the last third of the century. They were way ahead of the game in logistics, in sourcing from China, in using computers to keep the shelves well-stocked and to anticipate consumer demand. But something went wrong along the way.
For one thing, Sam died. And his kids thought that, because they started life on third base, they had all hit home runs. They have been overly privileged nags to the rest of society, nothing like their old man. As with GM a generation ago, Wal-Mart management has also become more insular, more convinced of its righteousness.
How else do you explain what's happening now? It's not like Wal-Mart can't afford to treat its employees well. Costco does, and Costco makes a lot of money. Instead we read stories about Wal-Mart employees being on food stamps, about the company deliberately cutting hours so workers won't qualify for health insurance, about average wages of $8.81/hour that, in effect, prevent other retailers from raising their employees' pay. Quite a distance from making associates into millionaires through stock sales.
There's also something annoying about what the company has done to Black Friday. For Macy's the start of the holiday season was a time of Santa Claus, and "Miracle on 34th Street" could have been written by the company's PR department. What Wal-Mart has done has to turn it into a near-riot, a rush for "bargains" that celebrates the worst of American culture, the most selfish angels in our nature. It's as though Wal-Mart management had nothing but contempt for the people shopping there.
Wal-Mart has become the bete noire of the Obama coalition just as GM became the bete noire of the Nixon coalition. It's an unsustainable path. But just as it was with GM a generation ago, no one at the company sees it.
When they do, it may be too late.