In my recent post, Walmart: Our Soul - Less Money, I responded to a post by Corey Smith. Evidently I raised a few hackles when I stepped up on my soap box, and I loved the comments. They were both challenging and insightful…

So I wanted to respond to a few.

Tsudonimh, writes:

I take issue with the idea that competitive pricing is eroding the soul of America. I think Liberalism, Communism and Too-much-governmentism is a much larger threat. As far as manufacturing in the U.S. I’d say Labor unions have been a much greater detriment than Walmart could ever be… Perhaps the US should continue to strive for knowledge based jobs and allow markets to regulate themselves. Labor unions have bargained their way out of a job in many cases and I don’t blame Walmart at all.

Tsudonimh, first let me explain that I firmly believe in both self-governance and accountability. I do not believe that individuals or societies should do anything in excess; History has classically demonstrated that when over-indulgence or under-availability is at issue this often leads to a societies ruin in the end.

The term capitalism was coined, oddly enough, by Karl Marx to illustrate a distribution of power, wealth, and influence to a controlling minority. Now I know you do not believe in government, and we have had these discussions from time to time, but the opposite “extreme” cannot be pleasant either. Why? Because this would wreak of dictatorship.

So, America has found ways to accommodate a fairly stable economy by taking a middle road between total intervention and none whatsoever. The US Department of State, via About.com had this to say:

…the United States and many other countries have intervened in their economies to limit concentrations of power and address many of the social problems associated with unchecked private commercial interests. As a result, the American economy is perhaps better described as a “mixed” economy, with government playing an important role along with private enterprise.

Furthermore, unions were a response to unfair labor practices during the early industrial revolution - where government (read, a government for the people by the people) would not intervene. While I would agree I think the Unions have become as bloated as the pork-barrelling politicians on Capitol Hill, they originally served a purpose; however, it has now reached its zenith due to, yet again, excessive overtures by its members.

Walmart is not a detriment to the American way - in fact it actually underscores raw capitalism at work (at least as close as you can get in a regulated economy). In point of fact, I think “selfish-ism” is eroding the state of America to be frank… the “what’s in it for me” attitude coupled with blatant disregard for others’ well-being.

People often use “it’s just business” as an excuse to trample over everyone and everything in their path. They become myopic and loose site of the grander vision of the human experience. Admittedly, this ‘human experience’ is, and should always be, unique to each and every one of us.

Does this allow for employees of a company to have free reign over the company, taking payment and not rendering services? Certainly not. Again, it is a partnership between provider and consumer, business and employee - a symbiotic relationship to be sure.

So the real question about Walmart’s practices is not a question of good versus evil, rather it is a question of which ecosystem do we want to be a part of? The local community where we shop down the street, the national community where our goods may come from other Americans, or a global community where our goods, and services, might come from anywhere else?

Now, most have decided, via their purchasing decisions (their vote), that they would prefer to be part of a global ecosystem. The only rub there is that while we are hungrily consuming goods imported from other ecosystems, the foreign entities are not consuming any of ours because they can produce it themselves or find it on the global market much cheaper.

So how do you intend to keep paying for your supply, if your products or services are not in demand?

Sure the market will regulate itself, but are you willing to go hungry while it does so?

As Greg Walters said, “…once again, this is not Rocket Science, it’s Economics…”

Photo credit to Dayaran.

Ken Stewart’s blog, ChangeForge.com, focuses on the collision between the constantly changing worlds of business and technology. Ken is also the Director of Technology at Kearns Business Solutions.

Corey honored me with a nice little jab on his blog regarding a comment to his post on loving Walmart.

In my opinion, Walmart is soulless - but not a bad business. Corey seems to think it’s because Walmart is SO incredibly big, that they are a target now… That sounds like a whiny excuse to me…

Maybe there is some truth from the driveling masses who might shop there, but Charles Fishman (FastCompany) had a few other ideas about Walmart,

Walmart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize about globalization: Ever-cheaper prices have consequences. Says Steve Dobbins, president of thread maker Carolina Mills: “We want clean air, clear water, good living conditions, the best health care in the world–yet we aren’t willing to pay for anything manufactured under those restrictions.”

Charles writes an extremely compelling argument detailing the simple fact that Walmart has one mission:  “To bring the lowest possible prices to its customers.”

How noble, right? Some might say so. Walmart vendors would credit Walmart as a quick paying account, but one that expects year-over-year pricing decreases for products it commonly sells. If you as a vendor can’t supply the massive quantities they require at the prices they require, they’ll outsource to an overseas supplier who can.

What does that mean for you and I? Well, we get low prices but at what cost? That’s a tough question and one that MasterLock had to answer:

Randall Larrimore, a former CEO of MasterBrand Industries, the parent company of Master Lock, understands that contradiction too well. For years, he says, as manufacturing costs in the United States rose, Master Lock was able to pass them along. But at some point in the 1990s, Asian manufacturers started producing locks for much less. “When the difference is $1, retailers like Walmart would prefer to have the brand-name padlock or faucet or hammer,” Larrimore says. “But as the spread becomes greater, when our padlock was $9, and the import was $6, then they can offer the consumer a real discount by carrying two lines. Ultimately, they may only carry one line.”

In January 1997, Master Lock announced that, after 75 years making locks in Milwaukee, it would begin importing more products from Asia. Not too long after, Master Lock opened a factory of its own in Nogales, Mexico. Today, it makes just 10% to 15% of its locks in Milwaukee–its 300 employees there mostly make parts that are sent to Nogales, where there are now 800 factory workers.

Larrimore did the first manufacturing layoffs at Master Lock. He negotiated with Master Lock’s unions himself. He went to Bentonville. “I loved dealing with Wal-Mart, with Home Depot,” he says. “They are all very rational people. There wasn’t a whole lot of room for negotiation. And they had a good point. Everyone was willing to pay more for a Master Lock. But how much more can they justify? If they can buy a lock that has arguably similar qual-ity, at a cheaper price, well, they can get their consumers a deal.”

It’s Wal-Mart in the role of Adam Smith’s invisible hand. And the Milwaukee employees of Master Lock who shopped at Walmart to save money helped that hand shove their own jobs right to Nogales. Not consciously, not directly, but inevitably. “Do we as consumers appreciate what we’re doing?” Larrimore asks. “I don’t think so. But even if we do, I think we say, Here’s a Master Lock for $9, here’s another lock for $6–let the other guy pay $9.”

Is it wrong to pay less? Is it wrong to ask someone to accept less money than I would take so I can pay less of my money? Not necessarily, but in the end where does this lead? Are we leveraging our soul so we spend less money?

Corey, yes they are big, but is that why they are a target?

Ken Stewart’s blog, ChangeForge.com, focuses on the collision between the constantly changing worlds of business and technology. Ken is also the Director of Technology at Kearns Business Solutions.