The Selling of America: Is Walmart Good For The USA?
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James P. Zaworski
The United States economic situation remains a little bit bleak in 2011. Two wars, financial crises, and a double dip recession have left millions of Americans unemployed. The causes and policies are many, and arguments about both cause and effect reflect political philosophies from both Democrats and Republicans. However, the bipartisan push in the 1990s that outsourced millions of American manufacturing jobs to China, spearheaded by Walmart (whose favorite slogan in the recession days of the 1980s was “made with pride in the USA”) appears to be a big, unexpected contributor to our economic woes of today.
Frontline, an investigative reporting program aired on PBS for the past thirty plus years, put out a wonderfully informative, and prophetic, program in 2003: Is Walmart Good For America?
The program is highly informative, and gives you the ‘background and inside’ story into the history of Walmart, and how it became the world’s retail giant by first breaking into the national market to defeat Kmart at its own game. By opening factories in the People’s Republic of China after Deng Xiao Peng opened the door to foreign investment and a market economy, Walmart spearheaded a ‘gold rush’ for China, and set up a cascade of other companies to do likewise. It also outsourced all of its production jobs to China and these jobs were effectively eliminated in the United States.
American consumers want low prices, and the vast, cheap labor in China provides that. Supply and demand economics rule the day, but the way that Walmart does business with its suppliers has effectively turned the negotiative powers of supplier cost on its head. In the past, the supplier would set the price, and be in a good position from which to do so. Walmart effectively has eliminated the suppliers ability to negotiate from this position. Walmart makes an offer, and the price is set, take it or leave it. The suppliers then have to outsource to China because they cannot meet the production prices that Walmart sets because that cost is always too low, and American labor is too costly for these manufacturers of everything from shower curtain hooks to televisions, DVD players, computers, and clothing.
In the Frontline program there are some wonderful and revealing interviews with some of these suppliers, one in particular is a large screen TV manufacturer from Georgia desperately trying to stay in business and keep the jobs in America. In the end, the plant had to close and the jobs had to be outsourced.
It doesn’t end with just manufacturing jobs being outsourced, as where a Walmart opens in a new location, it outcompetes smaller ma and pa brick and mortar shops, from bookstores to clothing shops.
Going into the history, there is a revealing section of the program that displays business people and politicians pushing for China’s entry into the WTO, World Trade Organization, and that it would be an opportunity for American companies to open up the huge market of over 1 billion customers to American products. It all sounded good on paper and made a convincing argument.
However, simple economics proved otherwise: American products are too expensive for most Chinese consumers. The trade deficits quoted in the program for 2003 are in the ballpark of $124 billion! In 2011, that deficit has risen to $270 billion! (http://www.guardian.co.uk/business/2011/feb/11/us-chinese-trade-gap-grows)
The US-China balance of trade is a touchy issue, and there are many accusations and finger pointing going on. Frontline approaches these topics from both sides, and uses Walmart and the issue of “dumping” cheaply produced goods onto the American market, and WTO rules of “fairness”, as fair and as balanced as possible.
What the program gets down to is for the viewer to answer that question himself. Is Walmart good for America? As an American who is living and working in China in depressed economic times back in the USA, my answer is a resounding “no”.
Walmart is good for Walmart and good for the Chinese economy. Walmart was a successful, multibillion dollar, profitable enterprise before outsourcing its jobs, and creating the ‘cascade effect’ of many other companies jumping on the bandwagon, and becoming superprofitable. But little foresight and planning resulting from a total lack of patriotism has been, in my opinion, a giant contribution to the economic troubles that we are facing today in the United States of America. I question the greed, the patriotism, and the whole American business community that are responsible for outsourcing jobs to foreign countries. In my opinions, higher taxes on these companies and special tariffs should be levied on them, and tax cuts and benefits should go to companies that retain jobs in the USA.
What happened to the days when American companies manufactured everything from televisions to automobiles, clothing to furniture? ‘Made in the USA’ is becoming an endangered species, and its about time that our business community and politicians take action before a second Great Depression is hard on the heels of a ‘double dip recession’. Wake up, America, and bring the jobs back home.
Frontline’s Website for this program is: http://www.pbs.org/wgbh/pages/frontline/shows/walmart/
The United States Census website chronicling US-China trade deficits:
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