Richard Vedder is a Senior Fellow at The Independent Institute and a Professor of Economics at Ohio University. I wanted to talk with Richard because of my new found word “monospony.” In case you haven’t heard of monospony, it is rather like a monopoly, but one controlled by the buyer, not the seller. My concern arose when I heard that Walmart had caused layoffs by Rubbermaid when Rubbermaid refused to lower the quality of its products as demanded by Walmart.
Vedder and I discuss some of the issues surrounding the pros and cons of the ascendency of Walmart as a commercial world power. He fully believes the U. S. and the world is better off with Walmart than without, and I don’t think anyone can realistically argue this is not essentially true. However, even he admits dissatisfaction with Walmart’s current management.
According to Vedder, Walmart does provide its employees with health insurance, even if it doesn’t cover everything, and pays an average salary of $10 an hour. He is not unaware of the criticisms directed at Walmart, and when he suggested that whatever abuses may exist at Walmart are no different from those of most other corporations, large and small, I realized that most of this discussion is based on different viewpoints that are not easily reconciled.
I think his viewpoint, and that of all Republicans, is that the viability of the corporation is more important than the success of the American middle class. No doubt the two are intimately related, and while I understand the need to be competitive, the real struggle is between shareholders and employees. Shareholders want as much return as possible. Employees want higher wages. Both are dependent on profits.
The philosophy of most of the 20th century was that employees would experience more and more of the American Dream as the economy grew and productivity increased and wages increased. That idea was exported to India, China and Mexico with NAFTA and the out sourceing of globalization. Not only has corporate America exported our jobs, it is has fooled us into believing that it is great to work more, have more responsibility and earn less.
But that is not what they are telling the shareholders. They do everything they can to convince shareholders that they will make more and more. And the shareholder is so far removed from the employees that the shareholder has no understanding that he is also a part of the war on the middle class.
It may take another decade, but something will occur that swings this pendulum in another direction. But it may not swing in the direction of either the shareholder or the middle class. It may swing in something new, something good or bad.
The answer? We missed the boat to resolve or avoid this problem back in the late 80′s and early 90′s. If you want to read a prophecy of 2007, take a look at “The Trap” by Sir James Goldsmith. A gambler and a capitalist, Goldsmith accurately predicted the consequences of globalization at the beginning and urged the industrialized nations to take a more conservative approach by restricting globalization to regional trading alliances that did not have the potential to gut the hard earned living standards of the West. Of course, to do this someone (those in power) would have to actually put considerations other than profit into the mix as to what is in our national interests. Yeah, sure! No one did and here we are!
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