Brainshrub.com - Economic

Corporate press releases reported as hard news in television and newspapers.

Paul -V- — Tue, 14 Nov 2006 09:31:26 -0500

The Center for Media and Democracy (CMD) released a report today documenting how local television newsrooms use video news releases (VNRs) created by corporations - and then passed them off as locally-produced journalism.

Fake TV News: Widespread and Undisclosed

CMD identified 77 television stations, from those in the largest to the smallest markets, that aired these VNRs or related satellite media tours (SMTs) in 98 separate instances, without disclosure to viewers. Collectively, these 77 stations reach more than half of the U.S. population. The VNRs and SMTs whose broadcast CMD documented were produced by three broadcast PR firms for 49 different clients, including General Motors, Intel, Pfizer and Capital One. In each case, these 77 television stations actively disguised the sponsored content to make it appear to be their own reporting. In almost all cases, stations failed to balance the clients' messages with independently-gathered footage or basic journalistic research. More than one-third of the time, stations aired the pre-packaged VNR in its entirety.

I suspect that many newspapers essentialy do the same thing with corporate press-releases.

For example, within the last week the "business" sections of newspapers have features a spate of stories reporting how Wal-Mart has been lowering prices before Christmas. In some cases the stories read like advertisements, listing prices on coffee makers and Gerber baby food:

Holiday discounts: Few (besides Wal-Mart) Source: CNN Money Date: November 13 2006
Wal-Mart extends price cuts to small appliances Source: Yahoo News (Via Reuters) Date: November 13 2006
Wal-Mart lowers appliance prices Source: MetroWest (Via AP) Date: 11/08/2006

Note that while each story was slightly different, each gives the same message: That Wal-Mart is cutting prices.

I suspect the PR flacks at Wal-Mart have been working overtime, and the press has been giving them a free ride.

Read counterpoint here.

Tags: Wal-Mart - Public Relations - fake news passed off as journalism

Note: Special thanks to Patty Alman who helped with this post.

Wal-Mart can't compete when unable to bully vendors and labor.

Paul -V- — Fri, 28 Jul 2006 11:59:13 -0400

In a victory for European consumers, labor, local businesses and fair trade: Wal-Mart is pulling out of Germany.

Wal-Mart to Sell Division to Metro, Exiting Germany

Wal-Mart Stores Inc., the world's largest retailer, will retreat from Germany by selling its 85 stores to Metro AG at a $1 billion loss, two months after exiting South Korea.

Wal-Mart failed to make money in Germany, Europe's largest economy, where consumer spending didn't grow last year and closely held Aldi Group and Lidl dominate. Its U.K. unit, the Asda supermarket chain, missed profit and sales goals last year, and the company is leaving South Korea after failing to win customers. The German unit had revenue of 2 billion euros ($2.54 billion) last year, compared with the parent's $312.4 billion.

The real story here is that even if you factor in the pro-corporate spin that Bloomberg added to the above article; without monopolistic practices, government subsidies and under-priced labor - Wal-Mart was unable to compete.

This is another example that demonstrates how Wal-Mart's strength doesn't come from superior management or distribution, but from the ability to bully their opponents into giving them what they want.

Read counterpoint here.

Tags: Wal-Mart - Labor - Germany - South Korea - competition

Minimum wage is little more than Vaseline for the poor.

Paul -V- — Tue, 18 Jul 2006 11:10:58 -0400

Recently, the North Carolina state legislature raised the minimum wage from from $5.15 to 6.15 an hour.

I do not share my fellow Democrats enthusiasm for the rate increase. All it succeeds in doing is to remove from the table an important election-year issue, and does nothing for the hardest-working members of our society: The working poor.

An extra dollar-an-hour wage increase means that a worker slaving her life away for a chain-store, will now make a whole extra eight bucks a day.

Before taxes.

Coincidentally, this is about the same cost for three 7.5oz jars of Vaseline.

So now, when a NC laborer goes to work for McDonald's, Wal-Mart or the corner convenience store - he can afford to smear some Vaseline on his rear before his employer exploits him for another day.

Do you think the language I'm using is too harsh?

Consider: At $6.15 an hour, that is about $12,792 a year.

Assume a hypothetical worker only pays $600 a month for rent, electric, water, heating and doesn't pay taxes. (Yes, I know this is unrealistically low, and that's what makes this scenario so poignantly sad.)

That leaves less than $466 a month for food, phone, child-care, transportation and Vaseline to ease the pain.

So excuse me if the comparison today is rather harsh. In my defense: 1) I don't usually use such graphic analogies. 2) If comparing minimum wage to getting exploited daily by your employer isn't an accurate analogy, I don't know what is.

Sometimes the truth transcends polite language.

$6.15 an hour does nothing to stimulate local economies, encourage savings or raise living standards.

Nothing.

If Democrats are serious about re-building the middle-class in North Carolina, they have to stop short-changing the working poor with "minimum" wages, and start working toward a "living" wage.

There is a significant difference.

Think of it this way: The human body needs a minimum of 1 liter of water a day to survive. You'll live, but how would you bathe, cook and clean the house?

If someone "raised" the minimum of water you get to 1.5 liters... does that improve your life much?

To thrive, you need at least 10 liters a day. Anything close to the "minimum" and you are living in a constant state of emergency.

Similarly, at $6.15 an hour, a worker might also survive day-to-day. But forget about healthcare, rearing children properly and helping the community. The employer has most of the power in such a relationship, and the worker is little more than a slave; with the primary difference being that the modern slave gets to choose which plantation to work at for minimum wage.

Lest anyone bring up the straw-man argument that I'm one of those liberals calling for workers to get paid more than they are worth. I say: No, no no!

If that was a solution, then why not pay everyone $100 dollars an hour?

I'm talking about making sure businesses pay the actual cost to maintain a productive employee that will not be a burden on the taxpayer. This is not a radical idea. To do anything less harms society.

A worker who is forced to sell her labor for less than a living wage needs to turn to alternative means of support in the form of public assistance, loans from friends, prostitution and drug sales.

Raising the minimum wage a measly dollar is a slap in the face to the exploited. If that's all our legislators are willing to do for the working class, then they should have just sent underpaid employees a bottle of lubricant directly. At least that way, it would have been less disingenuous.

If the politicians in Raleigh want to be helpful, they should allow cities and counties to set their own wage standards. A de-centralized policy allows communities to have a say in how much they are willing to shoulder the burden for employers who under-pay their employees.

For more information on living wages, and for the raw data behind why they are a good idea see the Living Wage crib sheet.

Read counterpoint here.

Tags: Living Wage - Minimum Wage - slave wage - North Carolina - labor - working poor - corporate subsidy

Note:

The second image is titled: "A Mortally Wounded Brigand Quenches his Thirst"
c. 1825
Oil on canvas, 32,5 x 40,7 cm
Ã–ffentliche Kunstsammlung, Basel

The Cheap Labor Conservative who cried wolf

Paul -V- — Thu, 27 Apr 2006 09:30:02 -0400

Once upon a time there was a Cheap Labor Conservative who made his living as a pundit on behalf of large corporations and wealthy elites.

He became famous for coining the acronym W.O.L.F. (Wicked Or Liberal Freeloaders), whom he blamed for a host of social evils - such as low church attendance, marijuana use, or, anything that cost his employers money.

"Beware the WOLFs," he would warn his radio and television audiences. "They have a crazy idea that all citizens should be paid fairly - even the ones who didn't have the opportunity to go to college!"

"If WOLFs force defenseless corporations to pay their employees what they need to survive, then the entire economy will collapse!"

For a long time people believed what the Cheap Labor Conservative told them and were too scared to demand what they deserved. Corporations took advantage of this fear and lowered wages, forcing poor families to squeak by while the executive class reaped huge profits.

Eventually the situation got so bad that a group of workers formed a union in order to control the conditions of their labor.

"Wolf! Wolf!" screamed the Cheap Labor Conservative. "Those uppity union organizers are anarchists and communists! If you force businesses to negotiate with unions they will go bankrupt, and hard work will never be rewarded again!"

After a long and difficult strike, the workers managed to negotiate for enough pay so they could pull themselves out of poverty. The companies grumbled at first; but then noticed that productivity went up.

Seeing how unions who obtained a fair wage did not lead to economic collapse, voters decided that everyone should be rewarded for working; so they began to push their political leaders for a minimum wage.

"Wolf! Wolf!" frothed the Cheap Labor Conservative. "A minimum wage will destroy small businesses and reward laziness!"

"Besides," he'd add snidely, "you wouldn't want someone from a lower class to get paid the same as you, would you? If a poor person at the box store got paid more, that would diminish your own status in society."

Despite the predictions of immanent doom from the pundit, eventually the voters were able to pass a minimum wage law.

Almost immediately local shops noticed an increase in sales because people now had more money to spend.

As an added bonus, since people did not need to depend on social services as much when they are able to earn what they needed from working, the taxes went down.

Rather than encouraging laziness, the minimum wage rewarded those who worked hard. Families were able to save, build credit and create a future for themselves.

The minimum wage was raised many times without a single economic crisis, and several states passed wage laws that were higher than the nationally mandated one.

Minimum wages were so successful, that citizens began talking about "living wages."

"Wolf! Wolf!" whined the Cheap Labor Conservative. "A living-wage law will gut the economy! Hyper-inflation will ruin everyone's savings accounts and bring disaster to us all!"

At this point, no one believed the Cheap Labor Conservative anymore. People understood that hyper-inflation was created by resource scarcity, printing too much money, natural disaster or war. There was not a single economy or community on the planet that has ever suffered an economic crisis due to a living wage.

Since the pundit lost all credibility, he lost his audience and quickly blew all his money on pain killers and alcohol.

Thankfully for the Cheap Labor Conservative, once he hit bottom and was ready to pull himself together - he found a job that paid him enough to get by due to the same living-wage law he fought so hard against.

The end.

Read counterpoint here.

Tags: cheap labor - conservative - Unions - labor - business - living wage - minimum wage - wolf - economics

Credits: Special thanks to the blog The Talent Show for the inspiration behind this post.

Sitting on the board of directors for a Fortune 500 company must be an easy job.

Paul -V- — Fri, 13 Jan 2006 11:25:10 -0500

TheyRule.net is a site that allows users to display graphically how American corporations are interlocked with one another. It's like the game Six Degrees of Kevin Bacon - for political wonks.

After observing the close relationships between these companies, I've come away with the following impression:

For the amount of money executives get paid, serving on the board of directors for a Fortune 500 corporation must be one of the easiest jobs on the planet.

Among the working-class if you are paid a decent salary and are critical to the functioning of a business, you are expected to spend a significant amount of time working at the said business. A career mechanic can't just spend a few hours in the garage, then take a quick shower and go across the street to spend the rest of the afternoon as a full-time accountant. (At least she can't without a significant drop in pay from both companies.)

Corporate board members, on the other hand, seem to have plenty of time to work multiple jobs.

For example, Leonard S. Coleman sits on the board of directors for five Fortune 500 companies. (See image on left) Either the man never sleeps and snorts caffeine to keep moving, or sitting on the board of a Fortune 500 corporation does not take that much time out of the day.

I should make it clear that I have no beef with Mr. Coleman. A quick look at his bio shows that he's an intelligent, hardworking individual who cares about his community.

But five jobs?

With so many commitments pulling him in so many directions, how does Coleman develop a true understanding of what makes any one of these companies tick?

What the heck is Coleman doing that makes him so invaluable that he can justify a six-figure salary for what must be, at the very most, a few months work.

Is he the only one with keys to the file cabinet?

Further research shows that Leonard Coleman has got a lot more going on than what the TheyRule.net database gives him credit for. He also serves on the Board of Directors of New Jersey Resources, Churchill Downs and Electronic Arts.

Wow! Either the rich have more hours in the day than us working folk... or most of those directorships only require a few days of attending meetings a year.

Coleman is not a unique case, I just pulled him out at random. It turns out that this kind of arrangement is hardly unusual among the upper class. For the amount of compensation an executive can demand, you'd think they would be expected to focus on one company... or at least one type of company!

Another observation I've made is that the more power an industry has, the fewer degrees of separation there are between direct competitors.

For example, there are five degrees of separation between the retail booksellers Barnes & Noble and Borders:

Now compare this to the chart for the financial houses Bank of America and Wachovia: (See image to right)

What industry do you think has more influence over your day-to-day life: Retail book chains or banks?

Is the general public to believe that there is any true competition between the most important industries, when the people who run these companies seem to have such overlapping interests?

The charts I've made are just a tiny sampling. I don't want to get into any tinfoil-hattery, but I do recommend that you go to TheyRule.net and come to your own conclusions.

The way executives are able to work for so many corporations simultaneously, makes a strong case that most boardrooms are excuses for the upper-classes to harvest the work of the rest of the organization without contributing much to the companies they supposedly manage.

Read counterpoint here.

Summary: For the amount of money executives get paid, serving on the Board of Directors for a Fortune 500 corporation must be one of the easiest jobs on the planet.

Wal-Mart does not need to be perfect to be loved like COSTCO.

Paul -V- — Thu, 08 Dec 2005 07:00:11 -0500

You don't need to be perfect to be loved, you simply have to treat people with kindness. For proof of this look no further than Sam, the world's ugliest dog.

Just in case you don't know what Sam looked like, here he is in all his aesthetic glory:

This picture was taken a few months BEFORE he died in November.

In 2005 Sam won the title "World’s Ugliest Dog" for the third time in a row. He was the Mohammad Ali of the ugly-dog competition - no other canine came close.

Sam's owner, Susie Lockheed, welcomed Sam into her home in 1999 after an animal shelter marked him as un-adoptable. After a while, his imperfections began to endear him to millions of fans. According to CNN:

"Sam became an international celebrity after winning the ugliest animal contest at the 2003 Sonoma-Marin Fair in California -- a victory he twice repeated. The purebred Chinese crested hairless made appearances on TV in Japan, radio in New Zealand and in Britain's Daily Mirror tabloid, stayed in luxury hotels and met Trump on a talk show set."

To maintain his good relationship with the media, Sam and his owner did not not need a public-relations firm or a war-room to manage bad publicity; what he did have was a heart of gold. By all accounts Sam was a loving pet who was friendly to anyone brave enough to touch him. His neighbor eulogized him with these words:

"How many ugly, old OR sick dogs have been adopted into loving homes because of you? You have arguably done more to help the K-9 condition than Lassie, Rin Tin Tin, Bengie and all other TV/Movie dogs put together. You and your story have touched the lives of countless millions of people and inspired them to consider something other, than a cute little puppy, and perhaps, maybe even cut down the demand for so many puppy mills. Those are some accomplishments you and your mother can be very proud of! "

I'm writing about Sam's story today to illustrate that you don't need to be perfect to get the public to appreciate you. One's behavior can transcend ugliness, or, conversely, enhance it until immoral behavior becomes a self-fulfilling prophecy.

For example, everyone knows that Wal-Mart is a retail giant that encourages the outsourcing of US labor to communist China. However, I'm not so naive that I don't understand why they do it: Wal-Mart isn't a charity, it's a business. Outsourcing labor is ugly, but you can't blame Wal-Mart for legal behavior that lowers the bottom line anymore than you could blame Sam the dog for being buck-toothed.

Still, competitive pressure does not excuse Wal-Mart for being so underhanded and petty, that they allegedly hired security guards to spy on Union organizers. The union-busting policies of Wal-Mart is only one of the many instances where the company behaves like a bully and a brat. If the corporation were a dog, they would be like Paris Hilton's chiwawa: Attractive to Wall Street but spoiled rotten - with no limits on their crass behavior.

Now let's look at look at another retail giant that sells products that were made with cheap labor: COSTCO. While COSTCO lives with the same economic realities as Wal-Mart, employees are paid a fair wage and the company does it's best to try and be a good corporate citizen.

COSTCO is a profitable company that does not suffer from hoards of angry activists itching to kick them out of their neighborhood, because they show kindness and respect to the communities they work in.

If Wal-Mart executives can't learn from COSTCO's example; perhaps they should ask Susie Lockheed why Sam was so beloved by the public? Nobody is perfect, but if a physically flawed dog can endear itself to the world with kindness, imagine what good behavior from Wal-Mart's management would do to enhance their image and bottom line.

Read counterpoint here.

Summary: You don't have to be perfect to be loved.

Related articles:

Wal-Mart compares personal health records with productivity and satisfaction, implies memo.

Paul -V- — Wed, 26 Oct 2005 12:07:34 -0400

Based on a recent internal memo that suggests ways to cut their employees benefits, it appears that Wal-Mart keeps track of its employees medical status, and then compares this personal information to productivity rates and benefit satisfaction.

According to the The New York Times:

The memo noted that Wal-Mart workers "are getting sicker than the national population, particularly in obesity-related diseases," including diabetes and coronary artery disease. The memo said Wal-Mart workers tended to overuse emergency rooms and underuse prescriptions and doctor visits, perhaps from previous experience with Medicaid.

The memo noted, "The least healthy, least productive associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart."

While there are many other odious aspects to the memo that are being well-covered in the blogosphere; how does Wal-Mart find a correlation between health status and satisfaction with benefits, unless they have access to both sets of data? Does Wal-Mart breach the trust of it's employees or break the law in order to analyze this deeply personal information?

Most large corporations offer benefit and job satisfaction surveys, but to be scientifically accurate the associate must be assured that their answers are anonymous. (Would you want your boss to know that you are dissatisfied with your job and that you plan to leave soon?) Therefore, either the managers of Wal-Mart are misleading employees about the confidential nature of the surveys, or, Wal-Mart is using statistically flawed information to come its conclusions.

I hold that the former is more likely since Susan Chambers, the executive who wrote the memo, appears to be someone well-qualified and experienced enough to understand the importance of scientifically sound data. Chambers has a bachelor's degree in systems and data processing, as well as an impressive resume that includes a seat on the Center for Women's Business Research Advisory Council. This is a person who obviously knows a thing or two about how to do solid analysis.

As far as getting access to personal records, it's possible that Wal-Mart is deducing the health of its employees based on health insurance claims, and then matching them up to the satisfaction surveys. If so, Wal-Mart may be in violation of the Health Insurance Portability and Accountability Act, especially if the information was kept electronically.

Even if my theories about how Wal-Mart gets access to personal information are incorrect; the ability to correlate employee health status with productivity and benefit satisfaction is the most insidious part of the memo, and the one least likely to attract notice.

Read counterpoint here.

Adam Smith's Invisible Slap.

Paul -V- — Fri, 21 Oct 2005 10:09:46 -0400

I have an internet-chat friend who lost his job in Milwaukee last year. He worked for Master Lock for 12 years before the factory closed down. His plant's closing wasn't due to a lack of efficiency, union problems or low sales. In fact, MasterBrand Industries, the parent company of Master Lock, has been making record-profits for years! So why did the factory close? Because Wal-Mart representatives told Master Lock that unless they lowered their prices, the retail giant would switch to a competitor. The only way Master Lock was able to slash costs enough to satisfy Wal-Mart was to open a factory in Mexico, where the labor pool is cheaper.

I asked my internet-chat friend if he was mad at Wal-Mart for being the primary reason that he lost his job. I saw his shoulders shrug on the web-cam as he wrote:

"I'm not going to hold that against them. I learned in school that Adam Smith proved that the Invisible Hand would ensure a net gain in wealth for the economy overall. ... I'm going to keep shopping at Wal-Mart because I need their low prices now more than ever. Besides, I'm sure that there is another job out there that I can fill."

He is still unemployed.

I was shocked when I heard how his misunderstanding about macroeconomics justified, in his mind, his treatment at the hands of the Wal-Mart. Talk about victim mentality! Here was a man who was advertising the services of a corporation that had helped put him on the unemployment line in the first place! His blind, religious faith in Adam Smith's "invisible hand" would have made the most radical fundamentalist blush. What makes this especially ironic is that Adam Smith would have feared Wal-Mart more than the most hardened anti-globalization activist.

To quote Noam Chomsky: "Adam Smith is the guy we are all supposed to love, but not supposed to read." Conservatives love to use Smith to justify Darwinian-style, international globalization. In reality, Smith's famous "invisible hand" comment, when taken in context, shows that he put his faith in local economies, not international corporations, for long-term prosperity.

Adam Smith only used the term "Invisible Hand" ONCE in his 500 plus-page epic tome, "Wealth Of Nations."

"...by preferring the support of domestic to that of foreign industry, he intends only his own security, and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." (emphasis added)

Smith goes on later in his book to predict that global corporations destroy local economic ecosystems to the detriment of the larger economy. In other words, we consumers think we are saving money, but the long term consequences are disastrous for the nation. If Adam Smith were alive today, he would be a pro-union Democrat!

So what happened to the benevolent invisible hand that would sustain local economies and protect us from Wal-Mart's predatory practices? The reason that the invisible hand seems to be, well, invisible, is that it has been temporarily short-circuited by two factors:

The removal of protective tariffs, thus allowing large corporations to out-source manufacturing jobs to countries with low wages and weak environmental safety laws.
Foreign dictatorships that prevent their people from demanding a living wage.

Please note that both of the above factors are temporary political realities; the tariffs that once protected the American manufacturing base were removed after intense lobbying by the corporate elitists who wanted to exploit the slave labor in Asia and Mexico. Yet, history shows us that tyrannical governments do not make good long-term partners; the locals in those countries will eventually rise up to overthrow their oppressors, be they political dictators or corporate executives. Even if a foreign revolution doesn't happen in the foreseeable future, Wal-Mart's business plan is doomed because eventually Americans will not be able to buy goods from them if they don't have jobs.

Thanks to the shortsightedness of politicians and corporate elitists who have gutted the protections needed for a sustainable national economy, the invisible hand has become a low wage fist that is pounding workers into the unemployment line. There is simply no way the average American can compete against a foreign labor pool that only needs to be paid $50 per week. This problem is best summed up in the final paragraph of the article: "The Wal-Mart You Don't Know" by Charles Fishman (2003).

"It's Wal-Mart in the role of Adam Smith's invisible hand and the Milwaukee employees of Master Lock who shopped at Wal-Mart to save money, that helped shove their own jobs right to Nogales, Mexico. Not consciously, not directly, but inevitably.

'Do we as consumers appreciate what we're doing?' Randall Larrimore, CEO of MasterBrand Industries, 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.'"

Americans must learn that when we choose Wal-Mart's low prices, we become accomplices in the dismantling of the local economy. Every dollar spent in a Wal-Mart equals another dollar the federal government will have to spend on unemployment checks when Adam Smith's invisible hand finally slaps us across the collective face.

Editors note: This essay was originally written in the old HTML version of Brainshrub.com. I'm placing this here as I gradually upgrade content from the HTML site to the Drupal CMS.

Read counterpoint here.