From The New York Post:
When Jeff Bezos announced that Amazon would be raising its minimum wage to $15 an hour last week, the reception was rapturous. The Seattle Times called it “the just thing.” “Good for them,” said President Trump’s chief economic adviser Larry Kudlow. “I’m in favor of higher wages.” Bloomberg called it proof that “an even higher minimum wage is probably safe for big, productive cities.” Senator Bernie Sanders, a chief Bezos antagonist, called it “enormously important.” “Unequivocally good news,” said The Washington Post.
The latter is owned by Jeff Bezos, an all-too-easily forgotten point these days. Because for all the questions to follow this announcement — Why now? What is Amazon eliminating to pay for this? How much praise does Bezos, recently crowned the World’s Richest Man, deserve while paying, as of 2017, a median Amazon income of $28,446? — we are not asking the real one.
When did we become The United States of Amazon?
Author, entrepreneur and NYU business professor Scott Galloway has emerged as one of Amazon’s fiercest critics. At last month’s Recode Code Commerce, Galloway gave a 45-minute talkon the future of retail that savaged Amazon and warned of the threats the company poses not just economically but philosophically and morally.
“I believe our society is effectively going through this very uncomfortable transition that is bad for our youth, bad for America and bad for the planet where we no longer worship at the altar of character and kindness,” he said. “We worship at the altar of innovators and billionaires.”
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Galloway calls this “a perversion” that has occurred without our true realization. And Amazon, he says, is more responsible than any other tech giant.
In his best-selling book “The Four: The Hidden DNA of Amazon, Apple, Facebook and Google,” Galloway cites some arresting statistics: Far fewer U.S. households have a gun than Amazon Prime, by 30 to 64 percent. More Americans have Prime than voted in 2016 (55 percent), or earn $50,000 or more a year (55 percent), or go to church (51 percent). He calls Amazon’s ability to woo Prime subscribers at a $119 yearly cost the equivalent of “entering into a monogamous relationship” with its consumers, who as of 2016 spent, on average, $193 per month. (Non-Prime members average $138 per month.)
From 2006 to 2016 Amazon’s stock price growth surged by 1,910 percent, destroying Sears, J.C. Penney, Kmart, Best Buy, Macy’s, Nordstrom, Target and Walmart.
Perhaps most importantly: Since the Great Recession, Amazon has paid just $1.4 billion in corporate taxes compared to Walmart’s $64 billion.
“We have institutionalized a regressive corporate tax structure at the hands of our idolatry of innovators and Amazon,” Galloway says. In 2017, Amazon paid nothing in federal tax.
The company is now on pace to become the largest clothing retailer in the country by 2021 and has become the most valuable company on the planet without ever posting substantial profit.
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In a world where so much is now controlled by so few — there are five big book publishers left, five Hollywood studios, five large health insurers, four phone providers and four cable companies — and this summer AT&T bought Time Warner — Amazon’s reach is terrifying.
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Think about that, Galloway says: A retailer in Seattle as content king. And after announcing a vague health care initiative back in January, stock prices for major health care insurers plummeted — such is Amazon’s power that the mere hint of market entry damages long-standing competitors.
That’s not all. Bezos’ company Blue Origin, with a mission statement that goes not just to colonizing the planet but outer space — “Earth, in all its beauty, is just our starting place” — plans to launch the first private manned spaceflight by next year. Bezos also says he’s going to establish free preschools in low-income areas based on the Montessori method.
Outer space aside: Amazon wants to feed, treat, entertain, educate and medicate America — and that’s just what it’s told us. Nothing Orwellian here, right?
Galloway says that Amazon’s new $15 hourly wage needs to be viewed through a much more cynical lens. “Jeff Bezos doesn’t do anything that’s not the smart thing to do,” he says. “When Amazon raises their wages so publicly, other people are forced to do so” — thus starving out the competition. It’s our new Cold War, he says, and Amazon won’t stop at retail. It will outspend every other entity in pursuit of global domination.
Link to the rest at The New York Post
In a capitalist economy, there are winners and losers in the competition to attract customers and their dollars. Yesterday, others were saying exactly the same thing about Walmart.
Here’s a PBS timeline for Walmart published in 2004. Note how Walmart becomes more evil as it grows:
The following is a brief history of Sam Walton’s Wal-Mart.
1962 – The first Wal-Mart store opens in Rogers, Ark.
1968 – Wal-Mart expands outside of Arkansas, opening stores in Sikekton, Mo., and Claremore, Okla.
1970 – With 38 stores open, Wal-Mart enjoys $44.2 million in sales. The company also opened its first distribution center in 1970 in Bentonville, Ark.
1972 – Wal-Mart is listed on the New York Stock Exchange. For two years before it was listed on the NYSE, shares in the company were traded over the counter, meaning that brokers directly bought and sold the stock from one another.
1977 – Illinois becomes the tenth state to have a Wal-Mart store.
1983 – The first Sam’s Club, the company’s first members-only warehouse store, opens in Oklahoma. The new club is setup to compete with Costco, which first opened for business customers in 1976.
1987 – Wal-Mart celebrates its 25th anniversary. After 25 years in business, the company boasts some 1,198 stores with $15.9 billion in sales that year.
1988 – The first Wal-Mart Supercenter opens in Missouri. Those stores, which now encompass some 109,000 to 220,000 square feet, contain a traditional Wal-Mart and a supermarket.
1990 – Wal-Mart becomes the number one retailer in the United States, with some $26 billion in sales. Wal-Mart also purchased grocery distributor McLane Co., which was sold to Warren Buffett’s Berkshire Hathaway in 2003.
1991 – Wal-Mart opens its first international store in Mexico City. The company also continued to increase the number of Sam’s Club by merging with The Wholesale Club Inc. of Indianapolis. Those 28 stores were then integrated into the Sam’s Club chain.
1992 – Wal-Mart co-founder Sam Walton dies at the age of 74. His brother and Wal-Mart partner James “Bud” Walton dies three years later.
1993 – The Wal-Mart International Division is created to increase the company’s ability to expand overseas.
1995 – With the opening of the first store in Vermont, Wal-Mart has stores in all 50 states.
1995 – The company’s 1,995 Wal-Mart stores, 239 Supercenters, 433 Sam’s Clubs and 276 international stores reached $93.6 billion in sales and employ and 675,000 people.
1996 – Wal-Mart and several other retailers file suit against Visa and MasterCard. The suit accused the credit card companies of violating antitrust laws when they forced merchants that accept Visa and MasterCard credit cards to also accept their debit cards. The lawsuits were later settled, with Wal-Mart and the other retailers receiving several billion dollars from the card companies.
1996 — Wal-Mart opens its first stores in China.
1997 – Wal-Mart sales reach $100 billion for the first time.
1999 – With some 1.14 million employees, Wal-Mart becomes the largest private employer in the world. That same year Wal-Mart sues to stop the United Food and Commercial Workers International Union from organizing its workers. The retailer claimed the union was trespassing and harassing employees. The Arkansas Supreme Court in 2002 ruled against Wal-Mart in the case, reversing a lower court ruling.
2000 – A case filed in Indiana charges that Wal-Mart did not pay workers for overtime and off-the-clock wages they had earned. In April 2003, the case became the first such suit to be designated as class action. Jay Kennedy, a partner at the law firm handling the case, says Wal-Mart is challenging that class-action designation which may delay the scheduled start to the trial in January 2005.
2002 – Wal-Mart enjoys its biggest sales day in history — $1.43 billion on the day after Thanksgiving.
2002 – A federal jury finds that Wal-Mart forced Oregon employees to work unpaid overtime between 1994 and 1999. In the first of dozens of such lawsuits to come to trial in the United States, some 400 employees claimed managers got them to work off the clock by asking them to clean up the store after they had clocked out and by deleting hours from time records.
2004 – On July 6, Wal-Mart’s lawyers appealed a ruling that granted class action status to a sex-discrimination lawsuit against the retailer that was filed in 2001. The class could include up to 1.6 million current and former female employees of the retailer — making it the largest private civil rights case in U.S. history.
And from a New York Times article in 2003:
The company that ate America is now swallowing Mexico.
Wal-Mart, the biggest corporation in the United States, is already the biggest private employer in Mexico, with 100,164 workers on its payroll here as of last week. Last year, when it gained its No. 1 status in employment, it created about 8,000 new positions — nearly half the permanent new jobs in this struggling country.
Wal-Mart’s power is changing Mexico in the same way it changed the economic landscape of the United States, and with the same formula: cut prices relentlessly, pump up productivity, pay low wages, ban unions, give suppliers the tightest possible profit margins and sell everything under the sun for less than the guy next door.
”This is the game that Wal-Mart has played in the United States,” said Diana Farrell, director of McKinsey Global Institute, a policy research group run by the international business consultancy McKinsey & Company. ”They’ve changed the name of the game in Mexico.”
In the United States and Western Europe, Wal-Mart has been accused of driving down wages, introducing cut-throat business practices and bankrupting local companies.
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”Wal-Mart has changed the retail market in Mexico,” said Raúl Argüelles, a Wal-Mart vice president in Mexico City. ”Every store manager has authority to lower prices if he sees the store across the street selling for less. If you have to lower the price, you lower it.”
For Mexicans trying to compete with Wal-Mart, a new business culture is emerging, based on those hard-nosed, sometimes cut-throat tactics. For Mexicans with money to spend, a new consumer culture is rising, along with the sales of McDonald’s hamburgers and Domino’s pizzas (the three favorite toppings here are jalapeño peppers, ham and pineapple).
The marketplace is making Mexico look more like the United States, like it or not.
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Wal-Mart has also become the largest retailer in Canada, and has outlets in Argentina, Brazil, Germany, South Korea, Puerto Rico and Britain. The global expansion has helped make it the world’s biggest company in terms of revenues, with $245 billion in sales last year — a sum greater than the economies of all but 30 of the world’s nations. Nowhere outside the United States are its stores as numerous as in Mexico, where the scope and scale of its operations have grown to resemble its dominion in the United States.
Wal-Mart says that it treats its Mexican employees so well that the workers want no union, and that it pays its workers better than do its Mexican competitors.
However, in the United States, a unionized supermarket worker makes, on average, about $19 an hour. At Wal-Mart, where there are no unions, that worker makes about $9 an hour. In Mexico, for a newly hired Wal-Mart cashier, the pay stub reads about $1.50 a hour.
And from a 2006 article from Reclaim Democracy!
In the late 1940s, when Sam Walton was franchising a Ben Franklin’s variety store in Newport, Ark., he had a simple but momentous idea. Like any retailer, Walton was always looking for deals from suppliers. Typically, though, a retailer who managed to get a bargain from a wholesaler would leave his store prices unchanged and pocket the extra money. Walton, by contrast, realized he could do better by passing on the savings to his customers and earning his profits through volume. This insight would form a cornerstone of Walton’s business strategy when he launched Wal-Mart in 1962.
The quest for low prices came naturally to Walton: He was freakishly cheap. Although he was ranked as the richest man in the United States by the 1980s, he continued, it is said, to have his hair cut by the local barber, a $5 expense that he never supplemented with a tip. (Perhaps he wasn’t satisfied.) Cost-cutting was, as one might also expect, an obsession in the Wal-Mart culture, and Walton was almost as chintzy with his executives as he was with his cashiers. On business trips, everyone, including the boss, flew coach, and hotel rooms were always shared. Even a cup of coffee at the office required a 10-cent contribution to the tin.
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If such a regimen seems stifling, Walton’s employees nevertheless accepted it. In part, it was because Walton framed his cheapness as a crusade on behalf of the lowly consumer and as a quest for a better life for all Americans. It was also because he lived an outwardly modest life, driving an old truck with his hunting dogs in the back. Mostly, it was because he had charisma. Even when Wal-Mart grew outsized, Walton made a point of keeping in touch with his employees on the ground or, as he termed them, his “associates.” This would often involve flying from store to store — Walton had a pilot’s license — for impromptu visits.
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Equally important was Walton’s ability to sell employees on the notion that working at Wal-Mart meant limitless opportunity. Here, from Fortune, is a portrait of Walton at a Saturday-morning meeting in 1989:
[Walton] proposes that whenever customers approach, the associates should look them in the eye, greet them, and ask to help. Sam understands that some associates are shy, but if they do what he suggests, “It would, I’m sure, help you become a leader, it would help your personality develop, you would become more outgoing, and in time you might become manager of that store, you might become a department manager, you might become a district manager, or whatever you choose to be in the company…It will do wonders for you.” He guarantees it.
And things could get downright cultish:
Then, just to make sure, Sam asks the associates to raise their right hands and execute a pledge, keeping in mind that “a promise we make is a promise we keep.” The pledge: “From this day forward, I solemnly promise and declare that every customer that comes within ten feet of me, I will smile, look them in the eye, and greet them, so help me Sam.”
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Although Wal-Mart’s “Made in America” campaign was still nominally in effect, “Dateline” showed that store-level associates had posted “Made in America” signs over merchandise actually produced in far away sweatshops. This sort of exposure was new to a company that had been a press darling for many years, and Wal-Mart’s stock immediately declined by 3 percent. While the “Dateline” flap was short-lived, Wall Street soon found other reasons to lose faith in the company. Profit margins were declining, yet David Glass, who was Wal-Mart’s CEO at the time, chose to make ambitious investments in distribution, technology, and construction. Such risk-taking, while smart, scared off investors at the time, and, by 1996, Fortune was even mocking the company’s “everyday low stock prices.” It was no longer the feisty little chain out of Bentonville.
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Wal-Mart’s new leaders took to heart one element of the founder’s business philosophy — the importance of reducing costs — but they didn’t show his intuition about the importance of making employees feel as though they had a stake in the company. They were already at a disadvantage as it was. Wal-Mart’s rate of growth was impressive but slower than in its early years — the inevitable result of becoming so big — and this weakened the appeal of such incentives as stock ownership. But character also played a role. The company’s focus on saving money was leading it to make unrealistic demands of local managers, particularly with regard to payroll, and this pressure would eventually lead to serious trouble.
For a while, though, it worked. Between 1997 and 2001, the company’s stock value increased by over 500 percent, rising by 70 percent in 1997 alone. This undoubtedly helped to mollify employees who’d been unhappy with the slump earlier in the decade. Between 1996 and 1999, sales increased by 78 percent while inventory rose only 24 percent, a feat Fortune lauded as “mind-bending.” Today, with $288 billion in annual revenues (more than Switzerland’s GDP) and over $10 billion in profits, Wal-Mart is the world’s largest corporation, according to 2005 Fortune 500 list. It operates over 5,000 stores worldwide and employs over 1.6 million people — 1.3 million in the United States alone.
That growth has been accompanied by two distinct kinds of perceptions among the public. On the one hand, Wal-Mart has been celebrated for its business innovations, which have set a new global standard for efficiency. On the other, it has been condemned for its hard-charging business practices. One of the most prominent attacks came last November, when filmmaker Robert Greenwald released Wal-Mart: The High Cost of Low Price, a documentary that excoriated the company for its approach to unions, independent retailers, outsourcing, and wages and benefits.
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Washington, too, has gotten involved. In 2003, in the run up to the primaries, Democrats began to make an issue of Wal-Mart’s wages and benefits. In 2004, Rep. George Miller of California released a report called “Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart.” And last year, organized labor put together two Washington-based groups: Wake Up Wal-Mart, backed by the United Food and Commercial Workers (UFCW), and Wal-Mart Watch, supported by the Service Employees International Union (SEIU). Staffed by prominent veterans from the campaigns of Howard Dean and Wesley Clark, both groups are devoted to keeping the world, and Washington, informed of Wal-Mart’s alleged misdeeds. For many progressives, the fight to change Wal-Mart represents a central organizing challenge for the 21st century.
There’s evidence that the bad press has taken a toll on the company. A 2004 report prepared for Wal-Mart by McKinsey and Co. found that up to 8 percent of Wal-Mart customers no longer shop there because of “negative press they have heard.” For the last two Christmas shopping seasons, the company has reported lower-than-expected sales. And in January, Maryland gave final approval to a “Wal-Mart bill,” requiring large employers to spend at least 8 percent of their payroll on health benefits. Thirty other states are now considering similar bills. Developments of this sort have led the company to form a war room of political PR experts from both parties — including Ronald Reagan’s image-meister Michael Deaver, and Leslie Dach, a media consultant to Bill Clinton — to generate more positive media coverage.