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Walmart Part of Chamber Campaign to Weaken Corruption Laws it Violated

May 2, 2012 by staff

By Tom Hamburger , Brady Dennis and Jia Lynn Yang
Published by the Washington Post, April 24, 2012

Wal-Mart, the giant retailer now under fire over allegations of foreign bribery in Mexico, has participated in an aggressive and high-priced lobbying campaign to amend the long-standing U.S. anti-bribery law that the company might have violated.

The push to revisit how federal authorities enforce the statute has been centered at a little-known but well-funded arm of the U.S. Chamber of Commerce where a top executive of Wal-Mart has sat on the board of directors for nearly a decade.

The effort has intensified in the past two years, drawing on the backing of several large companies and trade groups such as the Retail Industry Leaders Association, where one of Wal-Mart’s top executives serves as a director. It also has involved high-powered lobbyists, including former attorney general Michael B. Mukasey.

The 1977 law, known as the Foreign Corrupt Practices Act, prohibits U.S. companies from offering fees or gifts to foreign officials to advance corporate interests.

There is no evidence that suggests Wal-Mart participated in the Chamber’s efforts because of its problems in Mexico. But even as the company has pledged zero tolerance for corruption around the globe, it has been a party to an effort that, some advocacy groups argue, would eviscerate the Watergate-era anti-corruption statute.

The Justice Department launched an investigation into Wal-Mart’s Mexican subsidiary in December over payments of more than $24 million in bribes to win construction permits there .

A company whistleblower told top corporate officials about the alleged bribes in 2005, The New York Times reported recently . The company launched but then shut down an internal inquiry and then failed to notify the Justice Department or the Securities and Exchange Commission of the allegations as required by law.

Wal-Mart’s corporate secretary and top ethics officer, Thomas D. Hyde, who stepped down from his job at Wal-Mart in 2010, was among the company executives who received initial reports of the bribes in 2005, the Times reported.

Between 2003 and 2010, public records show, Hyde sat on the 40-member board of the Institute of Legal Reform, a division of the U.S. Chamber that has led the way in criticizing parts of the law and talking about the need to change it.

Wal-Mart is one of more than 20 companies represented on the ILR’s board, according to the most recent tax filings from the Chamber group. Other companies include General Electric, ExxonMobil and Dow Chemical.

The retailer did not respond to questions about its participation in the Chamber’s campaign. But a person familiar with the effort, who spoke on the condition of anonymity because the board’s deliberations are private, said Wal-Mart was “not particularly active” on the board or in the FCPA lobbying effort.

Wal-Mart issued a statement on Tuesday, saying that it had instituted new protocols to make sure that FCPA investigations are “managed consistently and independently” and that it had created a new role for a global FCPA compliance officer. “We are taking a deep look at our policies and procedures in every country in which we operate,” said company spokesman David Tovar.

Mukasey was at the Justice Department during the latter years of the George W. Bush administration, when enforcement of the anti-bribery law escalated after the Sept. 11, 2001, terrorist attacks.

Over the past two years, the former attorney general’s law firm has received more than $200,000 in fees from the Chamber to work on clarifying the way in which the law is enforced. Although the lobbying campaign has remained largely out of the public spotlight, it has triggered a vigorous debate in the Justice Department and on Capitol Hill, where a handful of lawmakers have considered introducing legislation to amend parts of the law.

“I am bothered by the Chamber’s effort to gut this law,” said Stanley Sporkin, former enforcement director of the SEC who helped write several parts of the statute. “This law has made an important contribution in the world. The Justice Department has been aggressive in enforcing [it], and it has produced good results.”

The debate over the FCPA has intensified in recent years, in part because of the increase in federal enforcement.

In 2004, Justice pursued two cases under the FCPA. By 2008, there were 20 actions. The tough enforcement has continued under President Obama. In 2010, Justice worked on a record 48 cases, including one that resulted in an $800 million fine against German conglomerate Siemens.

Paul Pelletier, a former supervisor for the unit at Justice charged with enforcing the FCPA, said two prosecutors were dedicated to the issue when he began in 2002. By the time he left in 2011, there were 15, as well as additional units at the FBI and the SEC.

“The more we lifted up rocks, the more we saw of it,” said Pelletier of the bribery, adding that cases turned up as companies aggressively globalized their operations.

Last fall, assistant U.S. attorney general Lanny A. Breuer said officials were planning during 2012 to release “detailed new guidance” about how the FCPA should be enforced. Still, he made clear that he had little intention of scaling back the decades-old anti-corruption law.

“This is precisely the wrong moment in history to weaken the FCPA,” Breuer said then. “There is no argument for becoming more permissive when it comes to corruption.”

Breuer’s comments came as several business groups boosted efforts to rework parts of the law. The Chamber’s Institute for Legal Reform released a 28-page policy paper detailing a wish list of FCPA reforms. Among them: Measures limiting a company’s liability for the actions of its subsidiaries and a clearer definition of who qualifies as a “foreign official.”

That push has continued this year, as Justice and SEC officials have met with a wide range of industry and advocacy groups regarding the guidance the agencies plan to issue in coming months.

In February, the Chamber enlisted a disparate collection of other groups, including the American Gaming Association, the Faulkner County Farm Bureau in Arkansas and the Retail Industry Leaders Association, to sign onto an 11-page letter publicly advocating tjat federal officials clarify the statute. The letter argues that vague language in the law and the way in which investigators have enforced it have resulted in “a chilling effect on legitimate business activity.”

Those groups and others have said that they are merely looking for a measure of certainty and clear-cut guidelines from federal authorities.

Mukasey also rejected any suggestion that the Chamber effort is undermining the bribery statute, saying the proposals could ultimately strengthen the effort to fight corruption. “The clarity we are seeking will strengthen incentives for compliance,” he said, adding that the criticism of the Chamber campaign is off base. “I understand why people use that rhetoric. But I don’t see it as accurate.”

The requests by Chamber and its allies for adjustments and clarifications to the law have provoked strong criticisms from some government officials and a coalition of human rights and corporate governance groups.

In a speech last month, Secretary of State Hillary Rodham Clinton reiterated that the Obama administration has no intention of allowing a scaled-down FCPA.

“We are unequivocally opposed to weakening the Foreign Corrupt Practices Act,” Clinton said. “We don’t need to lower our standards. We need to work with other countries to raise theirs. I actually think a race to the bottom would probably disadvantage us.”

Harvard law professor David Kennedy co-wrote a report last year on the FCPA called “Busting Bribery,” which was published by the Open Society Foundation, backed in part by liberal philanthropist George Soros. The paper denounced proposed amendments to the law.

“In the guise of clarifying,” Kennedy said, “they are gutting the law.”

© 2012 Washington Post

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Filed Under: Walmart

Montana’s Rejection of Citizens United as Precedent Goes to U.S. Supreme Court

February 10, 2012 by staff

Today Justice Kennedy granted a stay (suspending the Montana Supreme Court ruling and Montana’s ban on corporate electioneering) sought by the plaintiffs, pending the filing an appeal by the American Tradition Partnership. This commentary by election law expert Rick Hasen nicely summarizes the meaning and consequences of this action.

On February 10, the James Madison Center asked the U.S. Supreme Court for a stay of the Montana Supreme Court ruling that upheld the state’s Corrupt Practices Act, which bans direct corporate electioneering in state elections. The Montana ruling was the first instance of a state successfully defending a ban on corporate electoral spending (see this op-ed on that tremendous victory in December) since the 2010 Citizens United v FEC ruling. The SCOTUS Blog reports Justice Anthony Kennedy asked for a response from Montana in just one week.

The American Tradition Partnership and other corporations challenging Montana’s law filed the stay application, which would block the Montana Supreme Court ruling and allow corporations to spend freely in Montana elections this year, pending a petition for certiorari (review) to be filed with the U.S. Supreme Court by the plaintiffs. The stay application also asks that the Montana Supreme Court decision be summarily reversed (i.e. without any hearing or opportunity for Montana to argue its case).

One way or another, this case will be a pivotal one for the Democracy Movement. We urge you to do all you can to express your disgust with the idea of allowing corporations to claim the political rights of citizens and support the right of citizens to protect the integrity of their state elections. For further background on the Western Tradition Partnership v Montana case, see:

  • Montana Supreme Court Rejects Argument that Citizens United Voids State Law
  • 10 Ways Citizens United Endangers Democracy
  • Top Ten Nelson Take-downs of Citizens United

Notably, both of Montana’s U.S. Senators have stated support for amending the Constitution to protect elections from being corrupted by corporate electioneering. Senator Jon Tester opined recently in the Billings Gazette and Max Baucus drafted his own Amendment last year specifically to authorize regulation of corporate election spending. Neither has indicated willingness to directly confront the Supreme Court’s invention of applying constitutional rights to corporations.

Both Senators are mainstream Democrats and among the leading recipients of corporate-connected campaign contributions (Baucus from health care and health insurance interests and Tester from credit card companies and large banks).

See our tips on writing effective letters to the editor. Please contact us for help with any writing or outreach you might undertake and consider donating to help us make the most of this opportunity.

Filed Under: Corporate Personhood

Walmart Systematically Using Ballot Initiatives to Crush Local Opposition

December 2, 2011 by staff

By Will Evans
First published by the San Francisco Chronicle, Nov. 24, 2011

In a push to expand across California without interference, Walmart is increasingly taking advantage of the state’s initiative system to threaten elected officials with costly special elections and to avoid environmental lawsuits.

The Arkansas-based retailer has hired paid signature gatherers to circulate petitions to build new superstores or repeal local restrictions on big-box stores. Once 15 percent of eligible voters sign the petitions, state election law puts cash-strapped cities in a bind: City councils must either approve the Walmart-drafted measure without changes or put it to a special election.

As local officials grapple with whether to spend tens of thousands or even millions of taxpayer dollars on such an election, Walmart urges cities to approve the petition outright rather than send it to voters.

While most development projects don’t attract much controversy, Walmart has become controversial across California. Backers of organized labor have demonized the company for opposing unions and paying low wages, while other critics say its superstores cripple local businesses and increase sprawl.

Walmart’s use of the initiative process has angered elected officials who say the company’s political strategy effectively holds them hostage.

“They circumvented the system and blackmailed the town,” said Rick Roelle, a councilman in Apple Valley (San Bernardino County), where Walmart pushed through a superstore proposal in April. “We’ve had controversial projects, but we were never bullied like Walmart.”

Walmart and its supporters argue that the strategy helps speed up development that can boost employment and tax revenue as well as low-price shopping. The initiative process, according to the company, pressures cities only because it shows the strong community support for Walmart.

“The initiative process was an opportunity that allowed voters to voice their support for the benefits that Walmart would bring their community, including jobs, affordable groceries, increased tax revenue, and infrastructure improvements,” Walmart spokeswoman Delia Garcia said in a statement.

The company has employed the same well-honed strategy across the state, from the Central Valley agricultural community of Kerman (Fresno County) to the Silicon Valley suburb of Milpitas to Apple Valley, where the main street has a special crosswalk button for horse riders.

Ramping up

Walmart has ramped up the campaign in the last year, pushing through four new superstore projects and fighting big-box regulations in San Diego. The company spent $2 million on the effort, paying election lawyers, campaign consultants and public relations firms.

Walmart often rallies a crowd of supporters at city council meetings to back up its position. Pastor Ray Smith, president of a group called Pastors on Point, asked his followers to support Walmart in San Diego. He spoke passionately against an ordinance imposing new regulations on superstores, saying other stores don’t hire enough African Americans.

At one city meeting, he called on a group of young people to stand and told the City Council, “You want to stop the violence? We need jobs.”

Walmart paid Smith’s church to bus supporters to council meetings and shuttle young people who gathered signatures for a ballot initiative petition against the regulations. Walmart’s local political committee also reported paying $13,400 in salary and consultant payments to Smith directly, in addition to $5,500 labeled “van/bus rental.”

Smith said the campaign filings were incorrect. “They did rent our buses … but I was never a consultant for them,” he said.

Walmart uses the ballot initiative process in part to shield its superstores from lawsuits under the California Environmental Quality Act. The landmark 1970 law requires state and local agencies to review and mitigate the environmental and traffic impacts of development projects. Lawyers often sue Walmart, contending that the review didn’t go far enough.

The company has found a loophole: Once it switches to a ballot initiative, the law doesn’t apply.

Other companies occasionally pursue ballot initiatives on development projects. But Walmart is the main player, and California is the main battleground.

Walmart’s successful strategy raises questions about whether California’s communities – dogged by economic woes – can afford an aggressive use of the state’s system of direct democracy. Other interest groups could use the same strategy to pressure elected officials, as medical marijuana advocates recently did to defeat pot-club regulations in San Diego.

This year, four cities approved Walmart’s initiative petition without an election. One of them, San Diego, repealed its own superstore regulations in the face of an election that could have cost $3.4 million. Only Menifee in Riverside County held a special election, costing taxpayers $79,000. Walmart spent nearly $400,000 there – and won handily.

Opponents’ stance

The strategy violates the spirit, if not the letter, of state environmental law, said Richard Frank, former California chief deputy attorney general for legal affairs.

“It is disturbing because it appears to be a fairly overt circumvention of the CEQA process,” said Frank, now director of the California Environmental Law & Policy Center at the UC Davis School of Law.

Walmart argues that it closely adheres to California’s extensive regulations. The strategy is necessary, it says, to avoid spurious lawsuits targeting the company for political reasons. The retailer points out that it goes much of the way through a lengthy planning process, allowing for an environmental impact report and public input, before heading to the ballot box.

“In many places around the state,” Garcia said, “we often obtain store approvals but are subjected to special interests that attempt to use political and legal challenges to unfairly delay a store’s construction.”

Since the 1990s, activists also have used ballot initiatives to block Walmart stores.

Walmart turned that strategy on its head when it began proposing its own initiatives. The company suffered a sobering, nationally publicized loss in Inglewood in 2004. The company spent more than $1 million on a ballot measure to open a superstore there. Unions fought back, and voters shot it down.

But Walmart hasn’t lost in California since.

In 2007, Walmart used the initiative process to force Long Beach to repeal an ordinance banning certain superstores that sell groceries. The council, facing tough budgetary times, decided the city couldn’t afford an election, giving in to the company. In 2009, Walmart defeated a big-box ban in Salinas the same way.

Last year, city councils approved Walmart superstore initiatives without an election in the small Gold Country city of Sonora and the Mojave Desert military base community of Ridgecrest. This year, with five victories, has been Walmart’s busiest.

Walmart continues to see a big opportunity for growth in California. The company already has 212 stores and employs 67,525 people in the state.

Sometimes, council members ask Walmart to pay for the election. This year in Pittsburg, for example, another developer offered to pay for the election costs of its ballot initiative. But Walmart always declines.

“We are not embarrassed by our decision to move to an initiative and to allow the electorate to overwhelmingly weigh in, but we are not prepared to cover any costs for an election,” Walmart spokesman Aaron Rios said at an Apple Valley Town Council meeting in April.

California Watch, the state’s largest investigative reporting team, is part of the independent, nonprofit Center for Investigative Reporting. For more, visit www.californiawatch.org. This article appeared on page C2 of the San Francisco Chronicle

© 2011 Hearst Communications Inc.

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Filed Under: Walmart

Will Walmart Become the Largest Medical Care Provider?

November 22, 2011 by staff

By Julie Appleby and Sarah Varney
First published by Kaiser Health News, November 9, 2011

Walmart — the nation’s largest retailer and biggest private employer — now wants to dominate a growing part of the health care market, offering a range of medical services from basic prevention to management of chronic conditions like diabetes and heart disease, according to a document obtained by NPR and Kaiser Health News.

In the same week in late October that Walmart announced it would stop offering health insurance benefits to new part-time employees, the retailer sent out a request for information seeking partners to help it “dramatically … lower the cost of healthcare … by becoming the largest provider of primary healthcare services in the nation.”

On Tuesday, Walmart spokeswoman Tara Raddohl confirmed the proposal but declined to elaborate on specifics, calling it simply an effort to determine “strategic next steps.”

But by midafternoon Wednesday, the retailer issued a statement saying its own request for information was “overwritten and incorrect.” The firm is “not building a national, integrated low-cost primary health care platform,” says the statement by Dr. John Agwunobi, a senior vice president.

The information request begins with the exact wording that Agwunobi says is incorrect, saying Walmart “intends to build a national, integrated, low-cost primary care healthcare platform.” The request goes on to ask firms to spell out their expertise in a wide variety of areas, including managing and monitoring patients with chronic, costly health conditions. The goal it says is for Walmart to become “the largest provider of primary healthcare services in the nation.”

The document spells out a tight timeline. It was issued to an unknown number of “strategic partners” on October 21 and final vendor selection is set to take place on January 13.

Analysts said Walmart is likely positioning itself to boost store traffic — possibly by expanding the number of, and services offered by, its in-store medical clinics. The move would also capitalize on growing demand for primary care in 2014, when the federal health law fully kicks in and millions more Americans are expected to have government or private health insurance.

“We have a massive primary care problem that will be made worse by health reform,” says Ian Morrison, a Menlo Park, Calif-based health-care consultant. “Anyone who has a plausible idea on how to solve this should be allowed to play.”

In-store medical clinics, such as those offered by Walmart and other retailers, could also be players in another effort in the health law: encouraging collaborations of doctors and hospitals who want to win financial rewards for streamlining care and lowering costs. Such collaborations, known as “accountable care organizations,” might contract with in-store medical clinics, says Paul Howard, a senior fellow with the Manhattan Institute for Policy Research. He has studied retail clinics, some of which have recently expanded to offer services beyond simple tests and vaccinations, such as helping monitor patients with diabetes or high blood pressure.

Walmart’s request goes even further, asking possible partners to provide information on how they would oversee patients with complicated chronic conditions, including asthma, HIV, arthritis, depression and sleep apnea.

While Walmart’s efforts to partner with others on health care could help lower costs for some patients and increase access to primary care services, health policy experts also say it raises questions.

Will expansion of in-store clinics, for example, further fragment care in the U.S. by drawing patients away from their established primary care doctors? Would patients who need specialists fall through the cracks? Will patients seen by nurses or physician assistants at in-store clinics have just as good outcomes as those seen by doctors in more traditional practices?

“Maybe Walmart can deliver a lot of this stuff more cheaply because it is an expert at doing this with other types of widgets, but health care is not a widget and managing individual human beings is not nearly as simple as selling commercial products to consumers,” says Ann O’Malley, a physician and senior health researcher at the Center for Studying Health System Change, a nonpartisan Washington think tank.

And will it save money? Because primary care services are not the main driver of health care costs in this country, “I would be surprised if this were a model that could truly attack cost problems,” says O’Malley.

Whatever it does to health costs, it may also be a way to boost foot traffic and sales in Walmart stores, says Colin McGranahan, a retail analyst for Sanford C. Bernstein & Co.

“Their traffic has been declining for over two years and they’ve been losing market share,” McGranahan says. “If you get someone in the door, you can also sell them milk and a shotgun.”

CVS/Caremark, Walgreen’s, Kroger, Target and others have recently reinvigorated efforts to open in-store medical clinics. The first such in-store clinics opened in 2000, but growth took off later in the decade.

Until recently, Walmart was the nation’s leader in opening such clinics, but has dropped to third place with about 140 such clinics, well behind industry leader CVS Caremark’s nearly 550 Minute Clinics and Walgreen’s 355 Take Care clinics, according to data tracked by Tom Charland, CEO of Merchant Medicine, a Minnesota-based research and consulting firm. About 1,300 store-based clinics are open nationwide, he says.

They have different business models. Walmart leases space to independent vendors, for example, while CVS owns and staffs its Minute Clinics. While a few centers operated by retailers have doctors on site, most hire nurse practitioners or physician assistants to provide the care. In 2007, Walmart CEO Lee Scott announced the firm would open 400 clinics by 2010.

But early efforts backed by venture capital money faltered and the firm failed to reach that number, says Charland. Walmart then switched strategies and began leasing to hospital systems primarily and it began to grow again. Still, last month, the firm appeared to be struggling: Walmart opened three in-store clinics, but closed 10, says Charland.

“This is an industry where people haven’t figured out how to make money,” he says. Hiring nurses isn’t cheap – and business can be seasonal: more people come in during the cold winter months and business can slow to a crawl in the summer. “My guess is the whole purpose of [Walmart’s] request for information is to find someone to help them because they’ve not been able to pull it off.”

CVS, which has run Minute Clinics since 2006, expects to break even for the first time this year, says Helena Foulkes, a CVS executive vice president in charge of strategy and marketing. It plans to keep opening clinics and is doing so at a clip of about 10 a month.

“We think the market will evolve so this will become a more important model,” says Foulkes.

Kristian Foden-Vencil of Oregon Public Broadcasting, and Chris Weaver, Sarah Barr, and Christian Torres of Kaiser Health News contributed to this story.

©2011 Kaiser Health news 

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Filed Under: Walmart

How Walmart Drives Down Product Quality and Durability

November 18, 2011 by staff

By Stacy Mitchell
First published by Grist magazine, November 11, 2011

My friend Tony’s closet is as good a place as any to begin an investigation of Walmart’s environmental impact. Tony has a pair of Levi’s that date back to high school more than 20 years ago. They still fit him and they’re still in rotation. The fabric has a smooth patina that hints at its age, but, compared to another pair of Levi’s he bought only a couple of years ago, this pair actually looks far less worn. The denim is sturdier, the seams more substantial, the rivets bigger.

Tony’s old pair of Levi’s may well have been made in the U.S, and they likely cost more than his new pair. The new ones were manufactured abroad — Levi’s closed its last U.S. factory in 2003 — and, though Tony didn’t buy them at Walmart, their shoddy construction can be blamed at least in part on the giant retailer and the way it’s reshaping manufacturing around the world.

Since 1994, the consumer price of apparel, in real terms, has fallen by 39 percent. “It is now possible to buy clothing, long a high-priced and valuable commodity, by the pound, for prices comparable to cheap agricultural products,” notes Juliet Schor . Cheapness — and the decline in durability that has accompanied it — has triggered an astonishing increase in the amount of clothing we buy. In the mid-1990s, the average American bought 28 items of clothing a year. Today, we buy 59 items. We also throw away an average of 83 pounds of textiles per person, mostly discarded apparel, each year. That’s four times as much as we did in 1980, according to an EPA analysis of municipal waste streams [PDF].

Most consumer products have followed a similar trajectory over the last two decades. Walmart has done more than any other company to drive these changes, though other retailers have since followed its model. Where once we measured value when we shopped, Walmart trained us to see only price. Its hard bargaining pushed manufacturers offshore and drove them, year after year, to cut more corners and make shoddier products. As union-wage production jobs and family-owned businesses fell by the wayside, many Americans could no longer afford anything but Walmart’s cheap offerings.

Today Walmart says it wants to reduce the amount of pollution involved in making some of the stuff it sells. That seems like a good thing — except that everything else Walmart does is designed to undermine the durability of consumer goods, accelerate the flow of products from factory to landfill, and get us to buy more stuff. Even if Walmart does succeed in reducing the resources used to make a T-shirt or a television set, those gains will be more than outstripped by growth in the number of T-shirts and TVs we’re consuming.

The six-dollar toaster
On a recent visit to Walmart store No. 2659, just outside of Portland , Maine , I tried to find evidence of a shift to more sustainable products, but I didn’t see much beyond CFL bulbs and reusable shopping bags. There were no Seventh Generation cleaning supplies or organic cotton clothes, for example.

I did, however, spot a toaster that retails for $6.24 — a price that renders its longevity virtually irrelevant. If it breaks, just buy another.

Prices on general household goods have fallen by about one-third since the mid-1990s. Given how awash in stuff we were in those boom years, it’s shocking just how much more we buy now. Since 1995, the number of toasters and other small electro-thermal appliances sold in the U.S. each year increased from 188 million to 279 million. The average household now buys a new TV every 2.5 years, up from every 3.4 years in the early 1990s. We buy more than 2 billion bath towels a year, up from 1.4 billion in 1994. And on and on.

While there are certainly factors beyond Walmart that have contributed to this ever-expanding avalanche of consumption, the company has been a major driver of the trend. Its growth and profitability rest on fueling an ever-faster churn of products, from factory to shelf to house to landfill.

In a paper [PDF] that came out last year, three business professors illustrate how inducing manufacturers to cut product quality enhances Walmart’s competitive position. “Because lower quality products are usually cheaper to produce, it is often argued that discount retailers induce lower quality in order to drive down prices. Our model suggests, however, that the competitive and bargaining position effects provide incentives to induce lower quality regardless of changes in production costs,” the authors write.

In other words, getting manufacturers to make shoddier products doesn’t just mean that Walmart can offer super-cheap wares; it also helps Walmart marginalize its competitors and gain more dominance over its suppliers. By using its market power to drive down the quality of manufacturing, Walmart gains an advantage over department stores and independent retailers because quality (and the knowledgeable service that typically goes with it) is no longer an important factor in a consumer’s choice about where to shop. If you are going to end up with a crappy to mediocre blender anyway, then why bother spending more or availing yourself of the advice and service of a specialty retailer? Reducing the overall quality of products thus destroys a key competitive advantage of Walmart’s smaller rivals.

Even when a manufacturer responds to Walmart’s cost-cutting pressure by producing a separate, cheaper line to sell only in big-box stores — as many name-brand companies now do — the brand’s reputation for quality can suffer, making it hard for specialty retailers to persuade customers that the higher-quality, longer-lasting versions they offer are worth more.

As local stores and other competing retailers are weakened, manufacturers become more dependent on Walmart. Many major consumer products companies now rely on Walmart for one-quarter or more of their business. According to the study, this gives the chain greater bargaining power over its suppliers, who have fewer options for bringing their wares to market and thus little leverage to resist the retailer’s demands.

Walmart is also a master at getting shoppers to buy more than they came for. It employs all of the techniques that have been shown to spur “unplanned buying,” according to a recent study [PDF] in the Journal of Marketing. The study found that large stores that promote the concept of one-stop shopping and can only be reached by car generate the most impulse buys. Marketing messages that evoke abstract shopping goals are also highly effective at inducing people to put more stuff in their carts. The authors cite Walmart’s “Save Money, Live Better” slogan as a leading example.

According to the study, the least amount of unplanned buying occurs when a shopping trip involves multiple stores, each with a specific product focus, and the customer arrives on foot or by mass transit — in other words, when you shop at small neighborhood and downtown retailers.

A low-tar cigarette
Walmart has a powerful incentive to increase the scale of consumption. Sustainability will never be more than a modest sideshow to this larger endeavor. Nowhere in Walmart’s pronouncements about greening its supply chain does the company mention the durability of products or the pace at which households burn through the stuff its stores sell.

As consumers, we’re hardly innocent in all of this, of course. With prices falling below the real human and environmental costs of production, we have been happy to upgrade to a bigger TV or buy four T-shirts when one would suffice. But imagining that Walmart might be part of the cure is like putting tobacco companies in charge of ending smoking. Walmart’s sustainability plan is the low-tar cigarette of the environmental movement: it admits there’s a problem, but offers a kind of pseudo solution that’s really aimed at keeping us all puffing.

As Walmart takes over an ever-larger share of the global economy, companies that favor a more durable and sustainable model of production are squeezed to the margins. The business press is replete with tales of storied U.S. brands, like Levi’s, which held out against Walmart for years before finally giving in, moving overseas, and figuring out how to make a $10 pair of jeans. Some still resist. Stihl, for example, the world’s leading maker of chain saws, has been vocal about retaining the quality of its products by not selling to the big boxes . But if Walmart and those that follow its model continue to grow, there may soon come a day when no producer can escape its dictates.

Check out Grist’s whole series on Walmart’s greenwashing.

Stacy Mitchell is a senior researcher with the Institute for Local Self-Reliance, where she directs initiatives on independent business and community banking. She is the author of Big-Box Swindle and also writes a popular monthly newsletter, the Hometown Advantage Bulletin. She lives in Portland, Maine, and has lately joined Twitter .

©2011 Grist.com

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Filed Under: Walmart

Media Literacy

August 8, 2011 by staff

One crucial step in increasing awareness of corporate influence in our society is media education. The United States has lagged significantly behind many other countries in K-12 media literacy education, but more teachers, educational leaders, and others are recognizing this need in the United States. All 50 states now have K-12 media-related standards on the books, and several national organizations have emerged over the past few years to improve young people’s understanding of the media.

“Media literacy” is an increasingly recognized term in the field of education. Barry Duncan, co-author of the Media Literacy Resource Guide (Ontario Ministry of Education, Toronto, ON, 1989), states that “Media Literacy is an informed, critical understanding of the mass media. It involves an examination of the techniques, technologies and institutions that are involved in media production, the ability to critically analyze media messages and a recognition of the role that audiences play in making meaning from those messages.” Media literacy is, in short, critical thinking about the mass media.

We believe (as do many other interested individuals and organizations) that media literacy education should emphasize not only interpretation and analysis of media messages but also a careful examination of the institution of the mass media and its relation to large corporations. For example, it’s important to understand the persuasive strategies used in a political or public issue advertisement, but it’s also important to know who sponsors the ad and what those sponsors’ primary missions and motives are. Kids and teenagers can understand these concepts, and they should be given the opportunity to develop their critical thinking skills about the mechanisms at work to inform, influence, and frame their lives now and in the future.

You’ll find here some media literacy student activities we’ve written plus links to related Web sites. Whether you’re a teacher, a parent, or just interested in promoting critical thinking about the media, please use these resources and feel free to contribute your own ideas. We hope you’ll find us a valuable resource for teaching others about the media, its influence on society, and its corporate relationships.

See some sample critical thinking classroom activities here.

Filed Under: Education & Critical Thinking Curriculum

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