Thursday, June 15, 2006

Wal-Mart: Being Corrupted By Its Enemies?

The current issue of The American Enterprise has the title “The Attack of the Snobs,” and what could be more appropriate than an analysis of the leftist campaign against Wal-Mart.
But “sensible, positive, and productive” are not words that describe many of the activists now militating against suburbia, against “Big Box” retailers, against roadbuilding. “I got mine, now pull up the ladder” snobs are a dime a dozen in these movements, and much of the leadership is supplied by fanatical ideologues who rail against the very idea of single-family homes, private cars, an energy-based economy, and even green lawns.

A prime example of what we are calling The Attack of the Snobs is today’s effort to paint Wal-Mart as a diabolical plague. This is not some spontaneous popular wildfire . . . but rather a coordinated agitation ginned up in war rooms by professional partisans. It is the most expensive campaign ever waged against a corporation, with more than $25 million having been sunk so far (mostly by unions) to turn public opinion against multiple aspects of the formula that created the world’s most efficient retailer.

I quickly count more than a dozen Web sites that beat on Wal-Mart full time. It’s a regular terrarium of screamers: hel-mart.com, walmartvswomen.com, sprawl-busters.com, wakeupwalmart.com. The heaviest is Wal-Mart Watch — with 36 employees in Washington, D.C. and a fat budget — a prize project of the Service Employees International Union. It’s run by a clutch of political hacks, including John Kerry’s 2004 campaign manager and other Kerry and Democratic National Committee strategists. And the other biggest attack squad, WakeUpWalMart, is steered by the political adviser to Howard Dean’s 2004 campaign. So give Wal-Mart credit for creating lots of high-paying jobs for otherwise unemployable individuals.

Hillary Clinton knows which way the wind blows. She served proudly and profitably on Wal-Mart’s board for seven years, without any recorded objection or complaint. But as soon as the unions and anti-sprawlers went after the firm she flipped, returning a $5,000 contribution from Wal-Mart’s political action committee “because of serious differences” with company practices. As is now de rigueur in any culture skirmish, a Michael Moore-style film has been produced, accusing Wal-Mart of every sin imaginable (except profligacy). Its Washington, D.C. premiere was hosted by the honorable pot stirrers George Miller (D-CA) and Ted Kennedy (D-MA).
Being Corrupted By Its Enemies?

So far so good, and this makes us free-marketeers side with Wal-Mart against its leftist enemies.

But the unfortunate part of the story is the way in which the entire culture of the corporation is being corrupted by the need to respond to the attacks.
It’s apparent that the recent attacks against Wal-Mart have seriously distracted the firm from its central task of becoming a more productive company. After powering upward for decades, the company’s stock has fallen since the opposition campaign began (as I write, it’s down 21 percent in two years). Instead of making the tough, gimlet-eyed decisions that cause a business to bloom, Wal-Mart’s CEO now spends much of his time on PR sideshows, touting the introduction of organic carrots and other environmental sops, endorsing a minimum wage hike (irrelevant, since Wal-Mart’s average starting wage is already almost twice the national minimum), and otherwise talking up motherhood and apple pie in an attempt to counteract bad media.

Wal-Mart has also had to set up a fat D.C. lobbying and public relations octopus to defend against the war rooms being run by the Kerry and Dean assassins and union activists. Until recently, Wal-Mart’s lobbying budget was zero. Even after it finally hired its first D.C. representative, he was instructed to take lawmakers out to breakfast instead of dinner to minimize expenses. Now Wal-Mart has resorted to standard defensive lobbying and campaign contributions, and is throwing money at Michael Deaver and other malodorous “image consultants.”

All of this is completely antithetical to the company’s core philosophy of not wasting its customers’ money on frou-frou. For reasons of thrift, company execs, including the CEO, have always shared hotel rooms when they travel. Wood-panelled offices and such are verboten, allowing the firm to spend less than half the industry average on administrative costs. Super Bowl tickets and free dinners from suppliers are always turned down — because such costs would ultimately work their way back into the price of goods. Alas, today’s attack dogs are forcing Wal-Mart to become a more conventional company and unraveling some of the delightful idiosyncrasies that not only brought landmark economic success but also kept the firm close to its customers culturally.
This sort of thing is hardly new to American capitalism. Indeed, Wal-Mart is rather a laggard at paying the political protection money that leftist activists demand.

It’s quite obvious what kinds of protection money are being demanded: “diversity” campaigns run by expensive “diversity” consultants and administered by affirmative action employees. Funding for liberal activist groups. “Outreach” campaigns to fashionable groups. Politically correct political positions on issues that don’t directly affect the profits of a particular business.

(On those issues that do, business will usually stick up for its interests.)

We can’t really blame business executives for paying the protection so that can get on with making money. But in the case of Wal-Mart, it doesn’t seem to be helping them.

We think they should resign themselves to being hated by the leftist snobs, and move ahead with their business.

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