Like most readers of my screed, I am certain that the phrase “China Marts,” has replaced the Wal Mart title of the largest retailer in the world, and deservedly so. It is virtually impossible to buy anything at a Wal Mart, which isn’t made in China. It is said that Wal Mart owns over 700 factories in China. Since Wal Marts are the largest importer of Chinese goods, and are directly responsible for perhaps 3 million American jobless, thousands of American factory closings, and decapitation of the American economy, to be colloquial anyway, I thought I’d dig out a book written by Sam Walton, and published after he died in 1992. I remembered that Sam was a merchandising genius, and worked very hard to establish his Wal Marts. I have a client who knew Sam, who hunted on his Dad’s property in Arkansas. Glen says Sam was very tight with his money. I figured there must be a reason for the Wal Mart – Chinese monopoly as well. Some say Wal Marts have harmed America, by driving out small business, and others say they are a bonanza. From reading the book a second time, I think I have the answer, economically anyway. I am not getting into whether Wal Marts have hurt America. Economics is my forte, as it is with all readers and writers for Gold Eagle. This economics tome is about imports and factory closings.
The book is, “Sam Walton, Made in America, My Story,” Doubleday, 1992. Great reading, even a second time, and one cannot but appreciate the man, his tireless effort, and success. It is full of anecdotes and quotes from employees and friends. Sam was a fine man, even though a bit ruthless. I knew there must be a China connection in that book somewhere, but as I read, I couldn’t find it. Finally, towards the very end, it was there, on page 241 of a 260 page book. I must quote from Sam, who died of cancer at age 74. “Maybe the most important way in which we at Wal Mart believe in giving something back, is through our commitment to using the power of this enormous enterprise as a force for change. One of the better examples of what I am talking about, is our “Bring it Home to the USA” program, which we started in 1985, in response to the soaring US trade deficit. Wal Mart, like every other America retailer, is a huge importer of merchandise from overseas; in some cases too many in my opinion. We, like any other retailer, will only buy American, if those goods can be produced efficiently enough to offer good value. We’re not interested in charity here; we don’t believe in subsidizing substandard work, or inefficiency. So our primary goal became to work with American manufacturers, and see if our formidable buying power could help them deliver the goods, and in the process, save some American manufacturing jobs.” Skipping a bit to pages 242 and 243, Sam really tried hard, it appears. “Today, we instruct our buyers to make trips to places like Greenville, South Carolina; Dothan, Alabama; Aurora, Missouri; and hundreds of other out-of-the-way places in Pennsylvania, New York, Ohio, or New Hampshire, before just routinely dashing off a letter of credit to the Far East. From the time the program began in 1985, until the end of last year 1991 we estimate that we have bought American made goods with a retail value of more than $5 billion that would previously have been purchased overseas.”
Sam died in 1992, which was 12 years ago. Since then, his four kids have become billionaires. They worked their way up through their child-hoods, working in the stores, carrying boxes, driving trucks, mopping floors and doing the grunt work which makes kids turn out well, in my opinion. Wal Marts are such a huge operation, and have so monopolized American retailing, that I have to wonder if perhaps old Sam’s ideas have gone to rest with him. I can find virtually no American-made merchandise in Wal Marts. Sam’s wonderful philosophy, seems to have vanished.
Our true unemployment rate is close to 9%, rather than the fiction figures government hands out. Of the supposed 300,000 “new jobs created” last month, it is estimated that a third of them were from striking grocery store workers returning to work in California. Thousands were government jobs, which do not create prosperity, but rather hinder it, and not a single job was in manufacturing. Last week, I noted that Radio Flyer Wagons will, in the future, be made in China. I have a question. Suppose Radio Flyer decided to keep that factory open, and advertise that those wagons would have to go up in price a couple of bucks, but they would be MADE IN AMERICA. Suppose the Walton kids; Rob, Jim, John, and Alice, who still control the majority of stock in the outfit, decided to try to turn the trend around, and re-open factories they are responsible for closing? As Sam said in his book, “Every job that we save, creates another potential Wal Mart customer. So we all come out ahead.”
To digress for a moment, we must look at another example, and that was Henry Ford. Ford doubled his worker’s wages, and invented the production line. Their pay went from $5 a day to $10, instantly. Was this foolish on Henry Ford’s part? Of course not, because it allowed his employees to buy the cars they were making. Would the Model T ever have reached the 15 million, which was the ultimate number of units made, if they weren’t priced low enough for the common man to own one? Sam Walton invented a lot of things, which made his merchandise cheap, and killed all competition, as did Ford. One of them, was his warehousing and delivery system, which shaved many percentage points off the cost of an item. He was a genius, as was Henry Ford. Both accomplished similar things. Both became filthy rich, and both had kids who lost sight of the old man’s goals and principles, it seems.
I am well aware that to make something at a reasonable cost in America, is virtually impossible, due to confiscatory taxes, bureaucratic bumbling, and rules, rules, rules, which stifle everything productive. Workman’s comp, thanks to lawyers, is a huge expense for an employer, and the close to 19% for Social Security, and Medicare, plus unemployment insurance, and income taxes, makes a $20 per hour wage, less than half, in actuality. Chinese employers have no such expenses to worry them, so they can turn out the stuff for a fraction of what an American manufacturer’s cost is. There is no real competition possible, unless there were some other way for it to happen. Tariffs are one way, but here is another.
Sam, when he got started, used to buy a lot of one item from a manufacturer, and sell it at a ridiculous price, to get a new store going, and kill the competition. Suppose the Walton kids found a factory that was closed, but still had machinery in it, and workers loafing around, collecting unemployment checks. (This is all “suppose,” I know). Suppose Wal Mart offered to buy a million widgets from that factory, and got it re-opened. Suppose Wal Mart bought those widgets, kept buying them, sold them as American made widgets, and sold them in all Wal Mart stores, under a red, white, and blue banner. Suppose Wal Mart did this over and over again, causing factories to gradually re-open all across America, and as new items “Made in America” came on line, they were sold and displayed in a special place in Wal Mart stores, labeled and advertised as the “Made in America section,” with advertising and photos of each factory as it re-opened. Suppose Wal Mart advertising showed photos of happy workers returning to work, and factories re-opening, rather than just ever lower prices.
I know, it’ll never happen, and China and India will take our jobs and thunder, till not much is left here other than trillions of laughing stock paper dollars fluttering down from helicopters, as the fed has promised. Government will forever lie to us about inflation, unemployment, and the wars it loves to conduct. Ever more people will realize the futility of it all, and seek protection in gold and silver. I am a dreamer. In every situation, there are a few key people who control the rest of us, be it from DC or Bentonville, Arkansas. And Wal Mart does control us in a way, because it is literally the biggest business in the world. The Walton kids, could do a lot for America, if they decided to do as I have stated above. Manufacturing things, is extremely important to a civilization, and a nation which does not make what it consumes, is in deep trouble. We are in that situation. I wonder how one could influence Bentonville, Arkansas to begin to turn the tables. No one has ever had a lick of success in trying to change DC. Can four super rich kids be approached? With Wal Mart’s strength and purchasing power, in spite of the DC gang’s road-blocks, perhaps the tables could begin to be changed. I doubt that it will happen, but in the mean time, protect yourself.