Category Archives: Public Policy and Governance

Walmart’s Real Business Plan

I see that Walmart threatened to move out of Washington, D.C. if the city raised its minimum wage to 12.50.

The D.C. council raised it anyway.

Bravo to D.C. for calling Walmart’s bluff. Let’s hope the Mayor signs the measure; evidently, he’s expressed some concerns, since Walmart was proposing to create jobs and to expand into neighborhoods currently underserved by retail.

Those neighborhoods deserve to be served, and jobs are important–but are they worth $6000 of taxpayer subsidy for each person Walmart employs? Because that’s what the research shows: for every job Walmart creates, taxpayers are filling the gap between the low wages being paid and what workers need to survive. Walmart employees are overwhelmingly dependent upon the social safety net for food, housing and medical care.

Walmart has a great business plan: Those of us who pay taxes subsidize Walmart’s costs of doing business. So long as they can get away with paying below-subsistence wages, our tax dollars will continue to fatten their bottom line.

Defenders of these rapacious business practices defend Walmart by pointing to the low prices of their merchandise. Low prices benefit consumers, particularly poorer consumers. But keeping prices low does not require paying poverty wages.

Look at Costco.

 The big box store most famous for its stockpiles of toilet paper and $1.50 hot dogs also has a reputation for paying its workers a higher wage than most of its competitors. The average Costco worker made about $45,000 per year, Fortune reports. By comparison, Walmart-owned Sam’s Club, a Costco competitor, pays its workers $17,486 per year, according to salary information site Glassdoor.com….Costco’s insistence on treating its workers well hasn’t come at the expense of the company’s bottom line. The retailer’s profit jumped 19 percent to $459 million last quarter, while Walmart’s sales suffered during the same period.

So that claim about helping low-income shoppers by offering bargain prices doesn’t fly–Costco manages to keep prices low (and profits high) without screwing over its employees. Or  picking the pocket of the taxpayers.

Washington, D.C. should take a leaf from my mother’s book. When I was a little girl and threatened to run away from home, she’d offer to make me sandwiches for the trip.

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This Blew My Mind

A former student–President of the Chamber of Commerce in his small Indiana town–sent me a link to this Ted Talk.

There are several “nits” one might pick, but it is a fascinating argument, and well worth the 20 minutes it takes to listen. At the very least, it’s a reproach to arrogant assumptions about the way others should live….

That said, it brings to mind an important point raised by Fareed Zakaria in his book The Future of Freedom: the issue is not democracy, it is liberty. Living under the tyranny of a majority is not appreciably different than living under the tyranny of an autocrat. There can be a wide variety of mechanisms for making decisions about governing. We should judge them not just by their effect on the material well-being of the governed, but by the degree to which they respect fundamental individual rights.

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Food Fights

Deconstructing the escalating battles over food is anything but simple.

We have critics and foodies like Michael Pollan counseling us to avoid eating anything our grandmothers wouldn’t have recognized as food. We have “food activists” insisting on labeling foods containing any ingredient that has been genetically modified. And we have Oscar-nominated films like “Food Inc.,” focusing upon the practices of the huge corporate farmers who have largely displaced the romanticized family farm. Those who have paid attention to the “natural food” movement (a cohort that would not include Paula Deen aficionados, or those cheering the return of the Twinkie) hardly know what they can safely eat.

I often quote my cousin the cardiologist, whose scientific expertise I respect. When Whole Foods announced that the company would be labeling genetically modified foods, he sent me an extensive tract, arguing that fear of GMs was ill-founded and the labeling movement dangerous. (You can read the whole thing here.)

As he pointed out, “genetic modifications” used to be called hybrids. Humans engaged in growing foods have spent generations selecting for desirable traits, and combining and propagating them. Historically, this has been a lengthy process. In many cases, genetic manipulation simply accelerates that process. (In other cases, however, the modifications may include the introduction of genes not native to that plant.)

He also points out that genetically modified plants promise to correct nutritional deficits in developing countries where the population depends primarily on a single foodstuff, like rice. Furthermore, the greater yields of modified crops keep many people in those countries from starvation. And it is true, as he notes, that foods derived from genetically modified crops have been consumed by hundreds of millions of people across the world for more than 15 years with no reported ill effects.

Or at least, ill effects that can be reliably connected to such crops.

It is probably obvious that I am less sanguine than my cousin; although I agree that most GM crops are no different from the hybrids farmers have long produced, I harbor some concerns–for which I admittedly have absolutely no evidence–about the long-term effects of those modifications that involve the introduction of “new” genes to a plant’s DNA. (Somehow, I don’t get a warm and fuzzy feeling when I hear that Montsano has modified seeds to withstand its pesticides….)

That said, I think the uproar about GMs distracts us from far more concrete dangers posed by factory farming.

For example, most of the beef produced in the United States has been fattened on corn, because corn is cheap, abundant, and allows cattle to come to the market in 12-14 months. In order for cattle to be raised on corn instead of grass, however,  the cows have to be given antibiotics in feed, feminizing hormones, and often protein that comes from other animal parts. Even if you overlook the inhumane conditions that have been amply documented, the large-scale production of chickens and pigs involve similarly unnatural processes. Unlike the situation with GMs, there is substantial evidence that these practices pose health risks for consumers.

Another legitimate cause for concern is the increased and often indiscriminate use of pesticides that linger in our food, and that run off into our water supplies.

Unfortunately, the “food fights” we are engaged in tend to conflate these different issues, confusing consumers and policymakers alike.

What is “natural”? Breeding crops to be disease-resistant, or more nutritious, allows us to meet human needs. We’ve done that for generations, and so long as we don’t get carried away–so long as we don’t create new and strange “Frankenfoods,” we probably don’t have much to worry about. Medicating livestock with hormones and antibiotics so that they can be fed foods they did not evolve to eat, in order to fatten them more and more quickly, is much more troubling.

As with so many of the issues people fight about these days, it’s complex, and most of us lack the scientific knowledge to make sound judgments.We used to trust the FDA to ensure food safety, but thanks to over a quarter-century of being told that government can’t do anything right, we no longer trust anybody.

Welcome to the food fight!

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Who Are We?

Today is Sunday. And Father’s Day.

Believers who celebrate Sabbath on Sunday will go to church and hear exhortations about living a good and moral life.  Depending upon the denomination, the focus will be on love and compassion, charity and social justice.

In most families, Fathers will receive sentimental greeting cards from their children thanking them for their patience and love and support. Some will get sweaters or ties or sporting gear; others will have a family dinner.

These Norman Rockwell experiences make us feel good about ourselves. We’re good people, family people, caring citizens.

So here is my question: how many Americans will go to work tomorrow for an employer who has cut his or her hours in order to avoid paying for health insurance? If we are to believe the media reports, it’s not an insignificant number.

At Indiana University, where I teach, there’s a new rule that Graduate Assistants–already poorly paid–cannot work more than 29 hours a week, because then they would be eligible for health insurance. The Indianapolis Star recently reported that several Indiana school districts were planning to cut back hours for many staff positions, so that they could avoid insuring the people in those positions. Private employers, of course, have been engaging in such practices for years, in order to avoid compliance with a number of regulations that apply only when employees work a certain number of hours.

This response to an effort–however flawed–to extend basic health services to people who currently can’t afford those services tells us something about our culture. And what it tells us isn’t consistent with that Norman Rockwell version of ourselves.

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Political Party Values

I got an email telling me that the Indiana Republican Party is holding a fundraiser to which I am invited. The featured speaker will be Wisconsin Governor Scott Walker, and whoever wrote the email clearly anticipated great excitement on the part of its recipients. Generally, when a political party highlights one of its own at such an event, it is because that person represents success as the party defines it.

So–how is Walker, who triggered some of the most acrimonious protests in Wisconsin history, performing?

Well, the latest data from the Federal Reserve Bank of Philadelphia paints a rather grim picture for Wisconsin under Governor Walker.

Not only is Wisconsin one of only five states whose economy is expected to contract over the next six months, but it’s 49th out of 50. Only Wyoming is worse. The state ranks 44th in private sector job growth, and 5th worst in wage erosion.

For a governor who bragged about stealing Illinois’ jobs after their the state to Wisconsin’s south raised taxes, it must be embarrassing that Illinois is far outpacing it economically. In fact, Illinois is projected to be in the top 10 over the next six months.  (On the other hand, I have the impression that  Scott Walker rarely allows reality to embarrass him–or even make contact.)

Interestingly, every state with a projected economic contraction in the study is headed by a Republican, and every one of the bottom 10 is GOP governed.

Given this level of performance, one might be forgiven for wondering why Walker was chosen to headline the Indiana GOP dinner. Might it be that today’s Republicans value sticking it to unions and public employees more than they value actual economic growth?

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