Tuesday, August 17, 2010

Way Too Big To Fail

I got an e-mail last week from an acquaintance who used to be in the news business, and now in retirement is apparently a tea-party supporter. The e-mail lists 12 points about how big Wal-Mart is, and then suggests that since Wal-Mart is so big and successful, the people who run Wal-Mart ought to run the U.S. government.

The e-mail refers to our congress as “corrupt morons”, which in too many cases is an apt description.

Being the skeptic that I am, I checked out the claims made in the e-mail (no, I don’t even take stuff as gospel from people in the news biz) about how big Wal-Mart is, and surprisingly found that all the claims were true, and apparently taken straight from the Wal-Mart corporate fact sheet.

It says Americans spend 36 million bucks at Wal-Mart every hour of the day, and that the company (which operates on about a 3% margin) makes just under 21 grand every minute. Wal-Mart is bigger than Home Depot, Kroger, Target, Sears, CostCo, and K-Mart combined, and employs 2 million people worldwide, 1.4 million in the U.S. alone.

Based on gross revenue, Wal-Mart is the largest corporation in the history of the world. It sells more food than any other store in the world, and since Wal-Mart got into the grocery business 15 years ago, 31 big supermarket chains have gone bankrupt, and Wal-Mart now sells more food than Kroger and Safeway combined.

Wal-Mart has just shy of four thousand stores in the U.S., of which 1,906 are SuperCenters like the huge edifice at South Towne Drive and the Beltline. That’s a thousand more stores than it had five years ago. This year 7.2 billion purchasing transactions will occur at Wal-Mart stories. (The population of the earth is around 6.5 billion.)

More than half of the population of the U.S. lives within 5 miles of a Wal-Mart store; 90% of Americans live within 15 miles of a Wal-Mart; and 97% of Americans live within 25 miles of a Wal-Mart.

The e-mail then morphed into a rant about government “failures” (Postal Service, War on Poverty, Freddie Mac, et.al.) and suggested that the President and every member of congress should quit, and that we should just let Wal-Mart run the government, since they seem so good at running big things.

I’m far from convinced that Wal-Mart should run the government, but the people doing it now could stand some improvement.


  1. This silly run-it-like-a-business canard comes up every so often. Here in NYC, billionaire businessman-turned Mayor Michael Bloomberg actually gave it a try. The lesson he learned is instructive for all, because it is several orders of magnitude more relevant to the nation as a whole.

    What Mr. Bloomberg discovered is that City Hall (analogous to Congress) is not a board room and the city (analogous to Nation) is not a company.

    The city, he learned, is really a collection of neighborhoods, each with their own needs and agendas.

    Many times that puts communities in competition or at odds with their neighbors. Are there differences between Dyker Heights and Morrissania and Flushing and Bedford Stuyvesant and Williamsburg and Tottenville and SoHo. Fougeddaboudit!

    Mayor Mike quickly found that trying to impose one-size-fits-all policy solutions across the board was not just impractical, it was a nonstarter. Actually the citizens of NYC first found the idea outrageous, then, when the political pratfalls began, hilarious.

    Hand it to Moneybags Mike, it took him the better part of his first year in office, but he finally figured it out. There's been no more of that nonsense.

    It was not by simple fiscal prudence that the Big Box of Bentonville got that way. The company is a notorious and predatory bully when it comes to pricing. Suppliers who win a Wal-Mart contract are required to invest in capacity, to gear up to meet Wal-Mart's demand. Once that's done, the company can expect to be shaken down by the Arkansas retail mafia - or risk ruin by losing its contract and its investment.

    Wal-Mart sweeps through established communities like a monster trawler, leaving barren streets and boarded-up windows in its wake. It chisels employees on wages and benefits. At one point the company justified keeping its workers in penury by saying they were making sure the employees were eligible for food stamps.

    It's safe to say not every citizen of a nation run like that will find the practice delightful.

    There's one other "Be careful what you wish for" moment awaiting those - I'm thinking Tea Party noisemakers - who volubly detest "big government." A wide swath of these United States take home from Washington a whole lot more than they contribute in taxes. Arkansas is one of those pork-addicted client states. (Here's the list, if you are so inclined: http://bit.ly/bry2mz) Note which Midwestern state with Great Lakes on two of its borders is among the suckers.

    How long do you suppose this massive state welfare program would last under a government run like a business?

  2. Mayor Mike quickly found that trying to impose one-size-fits-all policy solutions across the board was not just impractical, it was a nonstarter.

    So, in retaliation, the D Congress imposes one-size-fits-all Education, Labor prices, EPA regs, and lightbulbs on the country.

    You are correct: Gummint is not "Business."

    But the lesson Mike learned (if he did) is one that the 10th Amendment was all about.

  3. Dad29 ... did anyone ever mention you have a gift for the non sequitur?

    I may be missing your point, but it doesn't register with me what national educational policy and environmental rules (which would seem to include that light bulb rule) have to do with "running the government like a business." I'm completely at a loss to explain how your reference to the 10th Amendment -- which as to do with federalism -- is even remotely on topic. If you want to discuss states' rights, you're in the wrong blog entry.

    Business principles and good public policy are oftentimes at odds. Cheaping out on teachers and schools, as a good businessman might, does not improve education.

    Businesses spend money to make money. Governments exist to deliver services (another word for that is overhead). Governments, by and large, do not have profit centers and, if things are working properly, shouldn't. I bet you know that. You have said yourself that obsessively cutting corners will not achieve long-term success. (Actually you said something along the lines of "Any fool can increase earnings by firing the help." It's only worse with government, so the statement makes my point nicely.)

    A government being run as a business would not ban incandescent light bulbs. It would require all branches of government to buy the cheapest bulbs, which would vastly expand the use of inefficient bulbs (probably mostly foreign-made, because they would be cheaper), and would preclude any possibility of bringing efficiencies to the electrical grid.

    Mike Bloomberg the Mayor achieved a measure of success attacking the three basic food groups (sugar, fat and salt). But when Mike the Billionaire Businessman tried to cut bus routes or eliminate fire department companies or bypassing the cumbersome contract process it, to greatly understate the case, did not go well. When he tried, with revenue in his eyes, to partner the city with various businesses, the result was always a steaming heap of failure. Instead of being the best deal on earth, his Snapple contract was a debacle for the ages.