Economics for the 99% Up against the Wal(mart)

November 16, 2013
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By John Weeks.

[My new book comes out in January, The Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy (Anthem Press)]

Walmart workers take it into the streets, October 2013.

 

In case you haven’t noticed, let me clue you in on the class war raging in America.  We find two major battles currently in progress, one  between the largest US employer and its miserably paid workers, and the other in the Supreme Court, which threatens to increase yet further the barriers for working people to organize themselves.

The first of these, America’s richest family versus the American worker, involves an ongoing struggle of some of the worst paid employees in any sector of the economy.  Worth an estimated $100 billion, the family that owns America’s largest employer has used every trick fair and foul to prevent any hint of worker self-organization.  The family-owned Walmart is also part of the rogues gallery of mega-corporations that uses every trick fair or foul to avoid paying taxes – think Google and Amazon.*

These mega-corporations have several things in common in addition to their relentless opposition to workers receiving decent pay, regular hours and safe conditions.  Most important of these is that they do nothing productive.  Walmart is dedicated to using its power as bulk buyer to pay less than other retailers for the shabby merchandise none of which it produces.  Amazon can justifiably claim to have wiped out other book sellers by the hundreds (if not thousands) without ever having published any reading matter other than its advertisements for books to show you how to use it as a vanity press.  And if Google produces anything I am not aware of it.

If not in the vanguard, these mega-corporations have certainly done their share to undermine the productive base of the US economy.  In 1981, over 17 million people worked in the manufacturing sector producing everything from television sets to chocolate bars, accounting for almost a quarter of US national income (check the chart below).  Thirty years later that 17 million was down to barely ten, and the production contribution to the economy at a very unlucky 13 percent.

To make the obvious link to de-industrialization of the United States, note that less than five percent of Walmart’s half-trillion dollar annual sales comes from the USofA.  Once the world’s workshop, the United States is now the world’s importer of what other countries produce.  I might sum-up Walmart’s  patriotic approach to business as “keep the workers unorganized inside the company and destroy the US manufacturing where other workers are organized”.

But, hey – the stuff is cheap, right?  We cannot expect people, especially poor people, to pay more, can we?  I read a bit of  Walmart propaganda that made this argument, “if Walmart workers were paid more, the prices of Walmart goods would go up, and along with everyone else the Walmart worker would have to pay higher prices”.**  Think about that for a moment, and ask, wouldn’t that work in reverse?  Charge more, pay better wages to everyone, which raises consumer demand and stimulates the economy.  Once that was the ideology in the United States, not rock-bottom wages for rock-bottom prices on rock-bottom quality.

 

US Manufacturing, employment in millions and value added as share of national income

1981-2011

Source: Economic Report of the President 2013.

 

 

And what about the other battle, in the Halls of Justice?  Check out the much-cited and invariably ignored document titled “the Constitution of the United States”.  The first amendment prohibits Congress from passing any law limiting the right of people to assemble, which has repeatedly been interpreted to include “freedom of association”, defined as “coming together with other individuals to collectively express, promote, pursue and defend common interests”.

If you think that includes the right to organize a group to promote common interests in your workplace, wrong you are.  Unless several Supreme Court judges have an epiphany that results in conversion to common decency, defending workplace rights will become even more difficult.

The back story:  The mid-term election of 1946 brought the Republican Party control of Congress.  In one of its first moves, this new, right-wing majority passed the Taft-Harley Act, which imposed several major restrictions on union rights.  President Harry Truman vetoed the Act.  Congress re-passed it over his veto, which required a sufficient number of Democrats to join the union bashing to reach the constitutionally-required two-thirds majority (most of said Democrats were from the South).  One part of the law prohibited corruption, including that arising from collusion between union leaders and management.

For sixty years federal courts have repeatedly ruled that a mutual agreement between labor and management to allow enroll new workers does not to violate the corruption clauses of Taft-Hartley Act (so-called neutrality agreements).  As late as this year two federal appeals courts endorsed this long-standing interpretation.  But somewhere in the decentralized US court system a judge always sits waiting to pander to the anti-union zeal of the 1%.  In the case of Unite Here Local 355 v. Mulhall, the forces of  reaction found their compliant judge in the 11th Circuit, the appeals court covering (no prize for guessing it right) Florida, Georgia and Alabama.

With the Circuit courts in disagreement, the case goes to the Supreme Court, where an anti-union, far-right 5-4 majority eagerly awaits the opportunity to drive the last nails into the coffin of the right to free association in the workplace.  Even the Bloomberg corporate newsletter expresses shock that the reactionary Five Judges will strike down this basic union right (http://www.bloomberg.com/news/2013-11-12/supreme-court-enters-the-union-battles.html).

What can we do?  For starters, if your workplace has a union, join it.  If you are a member, get active.

 

Back to the future: Soon a sweat shop can be in your town, too (if it isn’t already, or it does not move to China and leave locals unemployed or working at Walmart for poverty wages).

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*Find the details in a source close to the pulse of the 1%: http://www.bloomberg.com/news/2013-09-12/how-wal-mart-s-waltons-maintain-their-billionaire-fortune-taxes.html.

**Another pro-1% source tells gives the details on Walmart’s miserable wages: http://www.businessinsider.com/walmart-employees-pay.  With friends in high places Walmart need not fear the democratic process restricting its ability to exploit its workers.  In September the mayor of our nation’s capital vetoed a law that would have required large retailers ot pay workers decently:

Related Bios

John Weeks

John Weeks is Professor Emeritus and Senior Researcher at the Centre for Development Policy and Research, and Research on Money and Finance Group at the School of Oriental & African Studies at the University of London.