Democrats are not about to talk to Wal-Mart shoppers because most of them don't vote, and many of the ones who do vote don't vote in Democratic Party primaries.

Critical to understanding American politics today is understanding how the dynamics of low-turnout elections differ from those of high-turnout elections. Wal-Mart as an issue for most eligible voters nationally (admittedly this is an important qualifier -- in local elections an institution as big as Wal-Mart is bound to become controversial from time to time for any number of reasons) has no legs; for unions, historically one of the organized interest groups that dominate the Democratic Party, the situation is entirely different. A unionized Wal-Mart workforce would restore much of organized labor's lost relevance in the private economy, and represents a specific agenda item that organized labor can rally around. Where the unions are rallying, so are Democratic politicians.

I expect Democratic politicians to be banging away at Wal-Mart for years. In particular, every Democratic candidate for President in 2008 is going to spend some time ragging on Wal-Mart. It will be what each Democratic candidate (or at least the consultants who run Democratic campaigns) will think he needs to do to show labor that he is on labor's side -- something useful in a general election, but much more important in primary elections when only a fraction of registered Democrats vote.

You know, I'm for Wal-Mart. George Orwell would be if he were here: he noted the arrival of large discount department stores with approval, because he thought small shopkeepers were tyrants and price-gougers (he insisted tobacconists were all fascists).

While the Donks go on about minimum wage and health care benefits, they only give a damn about the wrongs of Wal-Mart - the cold-blooded calculations universities make about staff never seem to rate much comment (not to toss rocks at Tufts, which struck me as relatively humane. TAs were well paid, as I can attest). Same thing with global warming: people who travel in private jets complain about SUV emissions? Please.

I suspect that the reason for this is really not economic, just as a lot of the global warming complaints aren't really ecological. The American Left is much more interested in aesthetics than anything else, and Wal-Mart allows poorer people to indulge themselves in ways that are both unfashionable and that remind a poorly paid assistant professor at a provincial university that an electrician who shops at WalMart probably has a greater earning power, and a better shot at satisfying his desires.

Dan,

Stop thinking about general elections and consider only Democratic primary elections. Then it will make sense.

“My problem with Wal-Mart is that I don’t see any indication that they care about the fate of middle-class people,” Mr. Biden said, standing on the sweltering rooftop of the State Historical Society building here. “They talk about paying them $10 an hour. That’s true. How can you live a middle-class life on that?”

Did anyone else find this statement extremely odd? Wal-Mart employees are some of the lowest skilled employees in the job market. Even if Biden is correct that Wal-Mart should pay more, does anyone really think they should be middle class? If Wal-Mart employees are middle class, where is the lower class going to work?

If Wal-Mart employees are middle class, where is the lower class going to work?

The food-service industry.

> Stop thinking about general elections
> and consider only Democratic primary
> elections. Then it will make sense.

Interesting how Radical Republican thought processes are now permeating our entire political economy. The idea that someone, even a *gasp* /Democratic politician/ might have an overall concern for the future direction of the entire US economy, both rich and poor, is immediately dismissed by 4 of the first 5 posters. Naw, must be partisan Democratic machine politics at work.

OK, smart guys: with the oil having run out in 1970 and our technology industry having moved to China over the last 10 years, what exactly is the US economy going to _do_ between now and 2050? Build McMansions for one another?

Gilded Age II, here we come.

Cranky

There was a pretty good article in the Atlantic recently on the organized anti-Wal Mart forces. They have no interest in forcing Wal Mart to give it all its employees healthcare because they no it cant ( and continue to be a successful business). They are trying to force Wal Mart to stand up publicly and say the US needs nationalized healthcare.

By the way, since when does Wal Mart have any sort of obligation to the middle class or any class for that matter? There only obligation is to their share-holders.

But the lighting in Tarzhay is so much nicer.

Tom,

I agree with you on this. Wal-mart is all about primary elections. I suspect most of the Walmart bashing will come from Dem Senators running for President. The Senators (Biden, Clinton, Kerry et al) are at a structural disadvantage on domestic issues vis a vis governors, so they will hop on the Wal-mart bashing bandwagon to try to connect to base voters.

That said, a little bit of Walmart bashing is probably a good thing if it promotes a debate about health care and suburban sprawl.

“My problem with Wal-Mart is that I don’t see any indication that they care about the fate of middle-class people,” Mr. Biden said, standing on the sweltering rooftop of the State Historical Society building here. “They talk about paying them $10 an hour. That’s true. How can you live a middle-class life on that?”

>Did anyone else find this statement extremely
>odd? Wal-Mart employees are some of the lowest
>skilled employees in the job market. Even if
>Biden is correct that Wal-Mart should pay more,
>does anyone really think they should be middle
>class?

I suspect Biden's comment refers to poorly paid Wal-Mart employees getting stuck in a "poverty trap" with little room for social advancement...
---
One of the biggest myths concerning American society is the notion that poor but hardworking people have a bigger chance of becoming rich than their counterparts in class-obsessed Europe. However, the following study indicates sons of the poorest fathers in the U.S. are in fact more likely to remain in the lowest earnings quintile than their counterparts in Britain and Scandinavia in particular, where the state actively helps poor people to join the ranks of the middle class ---

http://doku.iab.de/externe/2006/k060124f13.pdf

I think there are fundamentally different ways of looking at the Wal-Mart problem. The Republicans thinks all voters are primarily consumers/customers whereas Democrats (and Europeans) tend to think the more important thing is the majority of voters are employees.

MARCU$

If we didn't have our stupid employer-based health insurance system, I wouldn't have much to gripe at Wal-Mart about.

And if the Dems become the Party of Anti-Wal-Mart, they will keep on losing. Repub commercial: "Wal-Mart is a great American success story, bringing lower prices to poor Americans nationwide. Of COURSE the Democrats hate it. *They* all shop at Target!"

> I think there are fundamentally different
> ways of looking at the Wal-Mart problem. The
> Republicans thinks all voters are primarily
> consumers/customers whereas Democrats (and
> Europeans) tend to think the more important
> thing is the majority of voters are employees.

Funny how the word "Citizen" doesn't appear in either of those descriptions.

Are peopele even aware anymore that this is pure Grover Norquist framing, or has it become internalized to the point where we not only don't see it but can't talk about it?

Cranky

It's convenient to beat up on Walmart because no one has constructive solutions to the real problem. We have replaced most of the manufacturing jobs in the US with retail sales jobs. I think you economists call this "comparative advantage." Am I being facetious? You bet! No one seriously thinks that a Walmart clerk should earn as much as a welder or machine operator. It's not Walmart's fault that it's clerks are fully capable of assembling a Chevy or a home appliance, but Chevys and home appliances are now assembled in Asia. Most of them are happy to have any job at all, even though they're underemployed. The real problem is figuring out how to make US workers competitive with the Asians.

"OK, smart guys: with the oil having run out in 1970 and our technology industry having moved to China over the last 10 years, what exactly is the US economy going to _do_ between now and 2050? Build McMansions for one another?"

Well, I'm making money hand over fist on railroad dividend payments. Seen BNSF earnings for the last quarter? They're shipping coal from the Powder River and containers from China (which contain a lot of molded plastic stuff you can buy at Target, rather than "technology").

And they're shipping oil from the fields off Los Angeles, which seem to be producing an astonishing number of carloadings for an industry that went dry in 1970.

As all too often my party is missing the point. The biggest issues with Wal-Mart are broad issues that affect all of retailing and while one of the two issues I will mention is more of a Wal-Mart issue than anything else, it isn't helpful to create bogeymen when that results in one missing the broader point.

1. The minimum wage is too low -- it ought to be above the federal poverty line at least. This becomes an issue at just about every box retailer I can think of except Home Depot, which actually pays its staff a living wage.

2. Anti-trust legislation isn't being enforced. This issue is a bit more particular to Wal-Mart than the pay one. In Wal-Mart's case this is hugely important for its suppliers, who WM forces to sell to them below cost (something they can do because of their size) and in this way drives outsourcing -- I.e. outsourcing in the manufacturing of general merchandise is being driven not by the market as a whole but by one company's unhealthy and anti-competitive domination of it.

The power of Wal-Mart to make or break suppliers in general merchandise should not be underestimated. Our trade deficit narrowed dramatically in the early to mid 1990s when WM was pushing "Made in the USA". It has ballooned in recent years with the switch in WM's management to the current extreme squeezing of suppliers. To take one example, light manufacturing all over the Midwest -- which survived multiple previous downtowns -- is getting shunted wholesale to China under cost pressure from box retailers, and I don't see the price benefits as a consumer; I do see multitudes of middle Americans no longer able to afford to buy the products they once made.

This is all so sad. It's indicative of a political class that simply cannot articulate a positive agenda. They cannot operate without enemies and they risk becomming a party motivated soley by enmity and resentment.

Meritocracy is failing.

> To take one example, light manufacturing all
> over the Midwest -- which survived multiple
> previous downtowns -- is getting shunted
> wholesale to China under cost pressure from box
> retailers, and I don't see the price benefits as
> a consumer; I do see multitudes of middle
> Americans no longer able to afford to buy the
> products they once made.

Having been involved in several such situations, I must agree. The problem of course isn't the entry-level cheap plastics molding jobs. It is that once those are moved to China the skilled maintenance jobs go right away. The industrial engineering jobs follow in about a year. Tool and die in three years. Machine tools in five years. Product engineering in 4-6 years. Right now the claim is that "high-value" product design will remain in the United States, but I am a loss to see why that would be so. And in any case it is the jobs that are going that build a prosperous, stable middle class.

The funny thing is that the US universities I am in contact with have experienced a drop in enrollment of foreign students of 40% or more since 9/11 due to visa and security hassles, and general perception of unwantedness. So another supposed high-value service is being sent elsewhere (presumably to Germany, but perhaps to India, Russia, and ?) right under the academey's nose. When the econ professors start to feel the bite in 5 more years or so we might get some more realistic analysis.

Cranky

SteveVT,

I opposed the Wal-Mart superstore opening in my town, signed a petition against it, wrote a letter to the City Council opposing it and, when Wal-Mart sued my city's government, recused myself from reviewing Wal-Mart's petition for writ of mandate so it went to my court's other research attorney.

Wal-Mart lost the appeal too, and the ruling was published.

Dan,

This isn't about Wal-Mart. It's about campaign fund-raising and posturing inside the Democratic party. The attacks on Wal-Mart you relate are not intended to have any effect on Wal-Mart.

WHY I REALLY HATE WAL-MART:

My darling daughter sent me to Wal-Mart (which I hate) to buy baby formula for my cutest-on-earth grandson.

At the checkout I needed to write a check. I asked the cashier for a pen, and we fumbled the tranfer, so we had to dig the pen out of some equipment.

Me: "I'm glad we got that, your boss would have had to get you a new pen."

Clerk: "No he wouldn't, I have to buy my own pens."

Cheap, lousy SOBs, that is why we still need unions.

On another note:

This spring there was some reporting to the effect that Wal-Mart had a sweetheart deal with the DOL to get prior notice before any survey or enforcement activity (say, auditing overtime compliance). None of my clients ever received sweetheart deals from the government. How does one go about buying a presidential administration (rhetorical question of course).

According to Kristin Forbes of MIT (and formerly of the CEA 2003 - 2005) Americans shouldn't worry so much about their lagging wages and outsourced jobs because we can buy "cheap sneakers" at big box stores.

I guess a PhD in econ isn't what it used to be.

Tom-
I have a question-and its not snarky-I genuinely want to know. Why did you sue to have Walmart stopped-why do you care?
I live in a big city (not Los Angeles big, but Minneapolis big). If I drew a circle three miles from my house, I'd probably encompass 5,000 businesses. Three or four or five of them would be Wal-Marts. I really don't get the animosity for those five, and the indifference to the other 4,995.
I also really don't get the small town opposition to WalMart. I compare it to bookstores; Barnes and Noble and Borders have killed off the small bookstores that I grew up with (Walden books in the mall)-but that's a good thing! Big bookstores are better than those little Walden books!). I have always shopped for stuff at bigger places (whether Sears or B&N or supermarkets) rather than small places, because the selection is so much better.
So what's the source of the animosity towards WalMart that Sears and Target and giant supermarkets and any of the other businesses, large or small, don't have? And if you say a policy causing the animosity (unionization, health care, wage level, whatever), tell me that you also know the policies of Sears and Target and B&N and all the other 4,995 stores, and know them to be better than Walmart's. Otherwise, its just an excuse. I see this animosity in friends, I see it in blogs like this, and it really baffles me.

Steve

Walmart is not a very profitable company. It's margins are very small, resulting in just $6000 of profit per employee. Increasing pay by $3 per hour almost completely erodes Walmart's profitability.

Walmart employees, like most other retail employees receive low wages because their labor is not very productive. This was even more true of the retail jobs that jobs at Walmart have replaced. Using discriminatory legislation to tear down Walmart does nothing to upskill American workers. It serves only to create greater unemployment while failing to address difficulties faced by the working poor. And for a number of reasons, most Walmart employees are not poor.

It appears to be all about the Unions here in Chicago (i.e. the "big box" wage ordinance). Which in turn is mostly about Dem primaries, but also about having an organization to draw on for general elections.

As to your questions:

A) I don't believe that W-M will lose the battle, but I don't know that they will win either. I doubt that Dem pressure, as currently applied, will cause W-M to change significantly. However, if, as suggested above, either (i)this is really about pressuring W-M to support universal health care in some form or (ii) the Dems change their attacks to be about W-M's driving their suppliers to offshore jobs, then the Dem politicians might win; and if it's actually (i), then both W-M and the Dems can win.

B) As a registered Dem, unless this is really about either (i) or (ii) above, I REALLY hope that the Dems lose. If this is merely a union-building exercise, or a cynical poitical strategy of bashing the unpopular big guy, I have to put aside my distaste for W-M and support W-M.

On the Chicago big box wage ordinance, I am flabberghasted by the lunatic assessment that differential minimum wages for comparable jobs will have no substantial impact on W-M, Target, and other big box retailer decision to locate stores in Chicago. Everyone just says "Chicago is a big market, of course they will open stores in a market this size". Idiots.

Steve,

My city's government denied a WalMart application to open a superstore here. Various reasons were given for the denial, including a real good one (to my professional eye) about unmitigated traffic impacts) and I didn't track the lawsuit about it save to note who won.

WalMart sued my city's government in my court (where I am a research attorney) to overturn the denial of its superstore application. The judge here denied WalMart's petition for a writ. WalMart appealed and the appellate court upheld my court.

I personally dislike WalMart's personnel policies for the usual reasons. My wife loathes WalMart for the same reasons, but I don't.

My major reason for opposing the superstore in my city is that its lower prices, made possible by the exceptionally low labor expenses created by its personnel policies, will pretty much eliminate the ability of many couples I know who work in local supermarkets to raise families based on two incomes. I view WalMart's personnel practices as anti-family.

My city's planning commission and City Council were IMO absolutely correct, though, about the unmitigated traffic impacts/congestion the superstore would create at the location WalMart chose.

I have considerable private practice experience representing developers and sued my city's government often enough representing developers to know which arguments fly, which don't, and what a traffic disaster this particular superstore in that particular location would have been. I didn't track the lawsuit but suspect the trial judge and appellate court focused on the traffic issue.

WalMart might well build a superstore in my city if it chooses a different location where road access is easier, or pays mitigation fees to expand the roads in a new location.

I'd still oppose such a superstore but my city's government might not.

Interesting-
There was a WalMart that was going to go into an area of my town, that was defeated, for many of the same reasons (traffic, as far as I know). What I found odd about the case, though, was that the WalMart was trying to locate in an abandoned, out of business shopping mall. It baffled me that people would rather live across the street from blight (empty shopping mall) than across the street from a viable business (that happened to be WalMart).
As to 'the usual personnel reasons' for opposing WalMart-that's what I don't know: what are they? And are they really different from Taco Bell, Sears, Target, the Dollar Store, etc etc? I feel like I'm surrounded by store clerks all day long, selling me clothes, prepared food, groceries, books, computers, you name it. Somehow WalMart Clerks (but not Taco Bell clerks, or bookstore cash register operators, or waitresses at the steak house, or Hobby Lobby shelf stockers, etc) deserve a middle class wage?

Steve

Let's put aside the traffic issues if we can. This is supposed to be about whether WM treats its employees fairly. Whatever happened to the idea that market forces determine wages? Why is this the business of city govt? Why are we not concerned about creating jobs? I thought the idea of a planned economy was debunked.

OpenBorderMan,

Because this is America. All politics is local. I know people who would be hurt by a WalMart superstore in my city.

Politics is not about logic. Law is., but not politics.

The worst thing that could happen to Wal-Mart would be for a Democratic President to realign the NLRB so it isn't completely one-sided in favor of management.

Tom H,
My point is that WM is the symptom of a globalized economy where US workers cannot compete. WM did not cause this problem. You cannot fix the problem by legislating higher wages. The only "logic" in this political gambit is that ignorant voters will be distracted from the real issues.

The jobs Wal Mart creates pay more than the ones it displaces. Because Wal Mart is more productive than its competitors.

And then there are those low prices.

Democrats have always used big business as a boogieman.

There's something to the argument that this is about aesthetics and the likely voter. It's amazing how many upper middle class Democrats I encounter who hate Wal Mart for what it is, and don't see what it has done for those on low incomes.

There's something to the argument that this is about unions, and milking them for campaign contributions.

There's something to the argument making Wal Mart a target works in the primaries, but fades into oblivion in the general election.

If this is a big issue for Democrats, the Republicans still have a chance of retaining power. Pathetic.

The commenter raising antitrust issues needs to go back to Eco 101 and figure what part of this he didn't get. Wal Mart has made its suppliers more competitive, and its market share has grown because its prices are low, not high.

Wal Mart will win. Sanity in economic policy usually eventually prevails in the U.S.

The notion that a nontrivial number of American workers are competing for jobs with people from very poor countries like India and China is laughable.

Every single "econ 101" texbook discussion of comparative advantage ends with a paragraph along the lines of "employment and wealth dislocations caused by [this process] that are judged socially undesirable can be adjusted with politically-determined transfer payments".

Yet whenever anyone actually starts using the political process to determine the scope and magnitude of those transfer payments the economists (or more accurately the hangers-on of the extreme free-market economists) pile on, calling such efforts "idiocy", "insane", and worse. Ditto to any atttempts to review the morality sections of Adam Smith's work.

Funny dat.

Cranky

The jobs Wal Mart creates pay more than the ones it displaces. Because Wal Mart is more productive than its competitors.

Blatantly wrong. It is wrong in economic theory generally, and wrong on the specific facts.

Wages are set based on supply and demand. They have nothing to do with productivity at a company level.

Walmart is more productive because of supply chain management and logistics. That doesn't translate to higher wages, that translates to higher profits.

Steve & OpenBorderMan,

The non-WalMart examples you cite are simply not comparable for a simple reason - each involves significantly smaller stores which, in any given town, simply do not impact existing employment in supermarkets.

Tell us how many people raise families with careers in fast food, or in bookstores, relative to those employed in supermarkets. Supermarkets in towns and small cities together employ a non-trivial proportion of people in a single, identifiable industry who raise families.

You guys just don't get it that families are the issue here. You keep trying to broaden the subject beyond families, and thereby so diffuse the subject that it becomes a non-issue. That inability to focus, and neglect of local family economic issues, is why Democratic candidates are such losers these days.

I used to be a Democrat. I grew up with politicians constantly underfoot. I crept out of bed as a kid and huddled in the hallway listening to politicians plot in a smoke-filled room (my father's study). I know how to count. I even managed campaigns.

I know how to win. Too few Democrats do these days and it shows.

I have no love loss for Wal-Mart. The one thing I consistently hear in support of Wal-Mart is that the company lowers prices for consumers. This is absolutely true. But the price of patio furniture, underwear, a CD - isn't that important to me. It seems like "middle class" is interchangable with "ravenous consumerism." I'm far more concerned with the human beings in the blue vests than I am with the marginal price difference that results from the getting screwed.

Tom H,
I am not saying that families are unimportant. I am saying that WM is a symtom; not a cause. If the only jobs available are low-paying retail sales jobs, that is a failure of the US to adapt to the new world economy. You cannot legislate locally higher wages without unintended side-effects (like the loss of even more jobs). The laws of economics are more powerful than all the lawyers in DC.

Whereever the US leads, will the UK follow? At the moment this isn't a big electoral issue here.

Now that Wal-Mart has crossed the Atlantic and bought Asda, we're having an interesting tussle for supermarket supremacy in the UK between Tesco, Sainsburys and Asda. Tesco are currently winning easily, with about 30 % merket share, followed by Asda on 16 %.

I'm mostly interested in Tom Holsinger's experience in opposing a Wal-Mart in his town. In the last year I've had the fascinating experience of Asda trying to build a store on land that had been designated as a 'neighbourhood centre' in the area I represent as a district councillor.

Twice they've tried to get planning permission, each time I've moved refusal (for good planning reasons) and won the vote. I don't know how party politics affects this kind of decision in the states, but here I'm one of only 4 Lib Dems on a council with 34 Conservatives and 1 independent, and I usually get a very fair hearing from the 'other side'.

> Now that Wal-Mart has crossed the
> Atlantic and bought Asda, we're having an
> interesting tussle for supermarket supremacy
> in the UK [...]

Note that Wal-Mart just got run right out of Germany, where oddly enough store clerks are paid a decent wage and have access to single-payer health care ;-)

Cranky

Walmart is more productive because of supply chain management and logistics. That doesn't translate to higher wages, that translates to higher profits.

How many Wal-Mart employees would be employed if they weren't working at Wal-Mart?

How 'bout that other retail phenomenon that's metastasized across the American landscape at a much more rapid rate than Wal Mart and has actively fought unionization?

Oh, but the cultural connotations of Starbucks are treasured by the entitled Democratic (fund-raising) base.

And the kid with the earring in his nose who snarls when you don't tip him? So much cooler than the peppy, 60-something greeter...

I suppose those crazy Dems just don't get it: Wal*Mart is cheaper, and Americans (particularly economists) don't care about how that happens or what the consequences are. More power to them, I say: More Wal*Mart jobs = more Americans who can only afford to shop at Wal*Mart. Sounds like a good deal to me!

Andy Young (paid spokesman for Walmart) had this perspective on the effect of Walmart:

In an interview published in Thursday's Los Angeles Sentinel, Young was asked to comment on whether he is concerned that Wal-Mart causes mom-and-pop stores to close.

"Well, I think they should; they ran the 'mom and pop' stores out of my neighborhood," the Sentinel, a newspaper serving the African-American community, reported. "But you see, those are the people who have been overcharging us — selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they've ripped off our communities enough.

I have omitted a series of racial slurs that followed this quote that caused Young's resignation from the WalMart support group he belonged to. But I think it is important to remember that other members of the Democratic coalition have a different opinion of those Mom and Pop stores remembered so nostalgically by Democratic politicians seeking a vote.

> I say: More Wal*Mart jobs = more Americans
> who can only afford to shop at Wal*Mart.
> Sounds like a good deal to me!

I agree.

Wen Jiabao

Andy Young speaks only for a subgroup of Dems known as "racist antisemites posing as civil rights leaders who get away with the charade because nobody thinks a black person can be racist". He apparently does not mind his black neighbors being exploited by other ethnic groups, so long as they're stockholders of a large corporation, and not small entreprenuers.

Jim is wrong about relative wages--in the long run, they are set by marginal productivity when firms face strong competitive pressure (modulo smaller effects relating to turnover costs and effort observability). If wages are above marginal productivity, then the firm is losing money on those last few workers and needs to fire them. If wages are below marginal productivity, then the firm increases its profits by hiring more workers.

I am appalled by the know-nothing economic nationalists posting on these threads. Low prices are not some sort of yuppie fringe benefit. Low prices are the same thing as higher wages. Wal*Mart has tremendously raised the standard of living of all the people who shop there and all the people who shop at their competitors' stores, too. The beneficiaries are primarily low-to-middle income families. Trying to drive up Wal*Mart's costs and prices is the same as imposing a regressive tax on the incomes of the working and middle classes.

The cranks and rust savers also completely misundersand why manufacturing jobs are declining. It's because labor productivity in manufacturing continues to grow more rapidly than in non-manufacturing jobs (Wal*Mart has mitigated this trend a bit). That's why China has lost manufacturing jobs as well as the US. That's why the same amount of steel can be produced with a fraction of the man-hours needed in 1980.

Economic growth and progress, by definition, implies getting more output per input. "More output" doesn't mean necessarily more physical units of the same stuff, but a more-valuable bundle of stuff, where value is determined by demand. The only way this growth can occur, and historically has occurred, is if jobs are destroyed, i.e. if the division of labor evolves over time. If people are doing exactly the same thing they were doing before, then their output is the same and there is no growth in per-capita output.

What will the jobs of the future look like? If I knew that for sure, I'd be able to get rich. But the idea of a planned economy with politicians and bureaucrats, instead of decentralized market search, deciding on what jobs we should have is a recipe for stagnation. Too much rust on the cranks.

> The cranks and rust savers also
> completely misundersand why manufacturing
> jobs are declining. It's because labor
> productivity in manufacturing continues to
> grow more rapidly than in non-manufacturing
> jobs (Wal*Mart has mitigated this trend a bit).

First of all, I have sat in 200-300 planning, budgeting, and wage-setting meetings in the last 20 years and I have yet to see anyone pull out a marginal productivity graph and try to relate it to this year's raises, cuts, or layoffs. The overall concept has some validity but when you have a real firm in a real market with all its complexities and hidden information I would defy you to link the skilled machinist being cut back to $7/hr, the industrial engineer being kept at $45,000/year, and the marketing dude with the goatee who hasn't produced anything this year being given a $50k bonus to anyone's marginal productivity anywhere in the world. And I don't believe for a minute that Japanese or Indian firms are really any different in the long run. Not in any firm with more than 50 people.

Second, the reason manufacturing is declining in the United States since 1990 (not since 1960, which is another story involving WWII and complancency) is that the financing boom of the 1990s, topped off with the dotcom boom, let loose once again the utterly pernicious idea that every profit-making entity can, should, will, and must maintain 60% gross profit margins and 30% annual growth _compounded_ forever. Simple arithmetic and/or petri dish experiments shows that this isn't possible, but ever 40-50 years Wall Street tries to wish it so with results that have been predictiable since at least 1600 AD if not before.

The problem is that this time the damage done to the US may be irreversible due to natural resource and other international factors.

Cranky

Look up the comparison of Walmart and Costco. Both are discount stores yet Costco pays a good wage and provides health and retirement benefits. The thinking at Costco is that they get more productivity and lower turnover from their better compensated employees.

When WM comes in other stores close, the tax base goes down and liabilities go up as lower compensated workers require more city services.

We've had good success keeping WM out of California. For my part I'll add my voice to those who continue this fight.