A couple of readers have requested a play-by-play of Saturday’s Wal-Mart debate, so here goes. Ted makes some brief comments and links to a Daily Bruin article here.
When I arrived at the UCLA campus, I saw numerous “Wal-Mart Conference” signs with arrows pointing to the venue. On every single sign, someone had written “Stop” above “Wal-Mart.” As Ted later said in the debate, one could mistakenly have read the signs as saying, “Stop, Wal-Mart Conference.” But alas, that comma was missing, and so the signs pointed to the “Stop Wal-Mart Conference.”
That might have been a more accurate name for the event, given the general perspective of most attendees and presenters. I had expected to find very few Wal-Mart supporters, and I was not disappointed. Still, in all fairness, most participants were very welcoming to both me and Ted. The organizers seemed genuinely interested in having the pro-Wal-Mart position represented, and they thanked us repeatedly for our bravery (their word!) in showing up.
After arriving, I sat in on a presentation about the evils of Wal-Mart around the world – in Canada, Mexico, China, etc. Most of the speakers were union reps, and I can say without hyperbole that the event played like a union rally.
The speaker from Mexico told a story that nicely illustrated how different the same facts can look when viewed through divergent lenses. He held up a Mexican Wal-Mart employee’s pay stub and pointed out the shockingly low (by American standards) wages. Then he observed that the pay period was only 12 days long. Why only 12, when the standard pay period is 14 or 15 days long? Because, he said, under Mexican law a worker becomes a “permanent employee” after 28 days of work. So Wal-Mart officially fires people after 26 or 27 days, and then rehires them a couple of days later under a new contract. To my astonishment, this was presented as evidence of the perfidy of Wal-Mart, rather than the stupidity of Mexican labor law! (I plan to incorporate this little story into my lectures on why incentives matter.)
The debate itself went very well. I think the audience was 300 to 400 people, but I’m lousy at estimating crowd sizes. A handful of people jeered and hissed a couple of times, but the rest of the audience was very respectful and gave us a fair hearing, and we even got our share of laughter and applause. So overall, we were quite pleased.
To our surprise, our opponents didn’t make the “killing the Mom & Pop stores” argument. I was less surprised than Ted, since Nelson Lichtenstein (the first speaker for the other side) had told me earlier that he was unsympathetic to that argument – he appreciates the efficiencies that come with big-box economies of scale. His main focus was on getting Wal-Mart to raise wages and benefits and to allow unionized workers.
In response, Ted argued that Wal-Mart’s low prices raise the effective incomes of low- and middle-class people by raising their purchasing power. Ted’s back-of-the-envelope calculations showed that a typical L.A. family would save around $800/year by buying groceries at Wal-Mart instead of Ralphs or Vons. He also emphasized that money saved on groceries, soap, paper goods, etc., will be spent on other goods and services, leading to expansion of other sectors of the economy. Anything that tends to raise Wal-Mart’s cost of business – including forcing them to pay higher wages and compensation – will squeeze out these gains, as well as induce Wal-Mart to restrict its hiring. (Both of us continued to hammer these points for the remainder of the debate.)
Lichtenstein’s debate partner, Jonathan Tasini, echoed Lichtenstein’s points in more dramatic form, beating the drum about a “social compact” in which working people get full health coverage, enough compensation to support their entire families, etc. As I said in my next speech, this is a fantasy world. Wouldn’t it be nice to have Wal-Mart’s low prices, with lots of well-paid jobs, full health coverage for everyone, rainbows and lollipops, and a free puppy for every child? Sadly, any attempt to mandate these things creates perverse incentives. For instance, I said, what if we passed a law requiring Wal-Mart to provide every employee high enough wages to cover his entire family’s cost of living? (A big cheer rose from the audience when I suggested this.) Well, it sounds great – until you realize the incentive it would give Wal-Mart to only hire single people, because the workers with families are too darn expensive. (The cheering died down considerably.)
Tasini also made a big deal about Wal-Mart’s buying much of its merchandise from China. He emphasized China’s repressive labor policies, which hold down the wages paid to its workers. In response, I fully agreed that repression is terrible and slavery worse; but has Wal-Mart contributed to them? On the contrary, Wal-Mart and its suppliers’ presence in China is indicative of how much less repressive China is now than it was 30+ years ago. Chinese workers who once could only work for the state now have the opportunity to work for private firms connected to the world economy, and they are better off as a result.
So those were the main lines of argument. I’ll pick up the odds and ends in Part 2.