11/21/2005 12:02 pm ET Updated May 25, 2011

Wal-Mart: A 'Company Store' for the GOP's 'Company Town' America

Wal-Mart may be the ideal partner for the new America the Republicans are creating. A population deprived of once-promised opportunities - for income, job security, and benefits - can only afford the least expensive items to make ends meet. Wal-Mart lowers your living standards, then sells you the cheap goods that are all you can afford. Oh, and one other thing - it's destroying real American businesses and the free market, too.

Defenders like Paul Jacobs in don't get it - of course. "No one should be forced at gunpoint to shop at Wal-Mart," writes Jacob, "or to work there." Of course, nobody was forced to shop at the company stores in the mining towns of old, either. There simply weren't any other options. Like those company stores, debt-ridden and underemployed Americans owe their soul to it.

In the case of the mining towns, no other retailers were allowed to come in and do business in the community. The company store also had the unique advantage of being able to extend credit against the miners' future wages. Credit is, of course, widely available now. In fact, as income disparities have spread again under the Republicans the level of American personal debt has soared to unprecedented levels,. This rise has been further fueled by the housing bubble and years of sagging employment and underemployment.

So Wal-Mart sets up shop across the country, using its enormous wealth and influence to get political favors wherever it goes. It gets price concessions like the goliath it is - sometimes crushing other American businesses in the process - but it pays people the same or less than a mom-and-pop shop. The result? Nobody can afford to pay anything more than Wal-Mart prices in those little towns struck by unemployment and underemployment - and the Paul Jacobses of the world just don't get it.

Don't believe me? Let's look at the facts and the numbers - something Jacobs and his fellow travelers doesn't bother to do. How big is Wal-Mart? As Fast Company put it, "Wal-Mart is not just the world's largest retailer. It's the world's largest company - bigger than ExxonMobil, General Motors, and General Electric."

According to the Center for a Changing Workforce, less than 40% of Wal-Mart employees were covered in 2003 in 2005, and the company acknowledges its coverage is "expensive," average 30% of income for a typical worker with a family of four.

A Wal-Mart associate on the "Family Plan" would need to spend between 74% and 150% of household income before insurance takes over completely. As the study puts it, "Wal-Mart leads the nation in employers who are subsidized by taxpayers through their employees use of Medicaid and similar programs."

The Fast Company article tells the tale of how Wal-Mart underpriced pickles as a marketing concept and nearly drove Vlasic out of business (something that happened later, apparently for reasons unrelated to Wal-Mart). They describe suppliers terrified to speak candidly of their relationship with Wal-Mart, the bullying way Wal-Mart handles its vendors, even this description of their business practices:

"It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its martins are too high and must be cut. And the smaller the supplier, one academic study shows, the greater the likelihood that it wi9ll be forced into damaging concessions."

Sounds more like a government agency run amok, doesn't it? Maybe more suppliers would complain, but then as one says: "If Wal-Mart takes something the wrong way, it's like Saddam Hussein. You just don't want to piss them off."

The Fast Company author, Charles Fishman, raises the specter of the Great Atlantic and Pacific Tea Co. (A&P), the grocery store chain whose dominance of the market in the 1920's and 30's led to many of today's anti-predatory pricing laws. Could we need a new set of such laws? That would require study, and thought, something that Jacobs and other Wal-Mart defenders don't seem prepared to undertake. "Wal-Mart's basic business model continues to win in the marketplace," writes Jacob - but then, so did the business model of the evil coal miners in all those flickering silent movie thrillers of the 1920's.

What do these guys have to do next - tie Little Nell to the railroad track?

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