Wal-Mart's clumsy, self-defeating attempts to influence the election.

Commentary about business and finance.
Aug. 5 2008 4:01 PM

Always Dumb Politics. Always Wal-Mart.

The retailer's clumsy, self-defeating attempts to influence Washington.

(Continued from Page 1)

As it tries to scare managers and workers about the inevitable triumph of unions should the Democrats sweep this fall, Wal-Mart also seriously misreads recent political history. The company behaves as if private-sector unions are juggernauts gaining strength, enjoying enormous support in Washington, and bending the Democratic Party to their will. In reality, private sector unions are very weak and getting weaker. Data from the statistical abstract of the United States show that in 2006, just 8.1 percent of private-sector workers (7.4 million) were covered by unions, down from 9.8 percent in 2000 and 15.9 percent in 1985. Given the massive job reductions in the auto industry, the figures are almost certainly lower now. Yes, big unions such as SEIU and AFL-CIO spend money on (mostly Democratic) campaigns and help get out the (mostly Democratic) vote. But the long-term trend is against unions and has been so under all partisan combinations in Washington. While Washington Republicans are almost uniformly hostile to organized labor, Washington Democrats aren't exactly the second coming of Samuel Gompers. Remember that NAFTA, a piece of legislation that organized labor vociferously opposed, was passed in 1993, when a Democrat was in the White House and Democrats controlled both houses of Congress. In today's enlarged Democratic tent—with its upscale constituencies on the coasts and newly flipped districts in places like Mississippi, North Carolina, and Texas—unions just don't matter as much. (While this shift could explain Wal-Mart's increased willingness to fund Democratic candidates, it strikes me as too subtle a change to register with Wal-Mart's Manichean strategists.)

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Finally, consider this. Wal-Mart's brass plainly believes—no, know—that a Republican president would be good for Wal-Mart, while a Democrat would be bad. Despite Clinton's Arkansas roots, most Wal-Mart executives probably opposed Clinton in both his successful campaigns. But during his presidency, Wal-Mart's stock more than tripled. By contrast, Wal-Mart executives polled in 2000 would have been exultant at the prospect of two George W. Bush terms, especially if they were to be coupled with mostly Republican control of the House and Senate. And yet this decade has been a lost one for Wal-Mart shareholders: In the Bush years, the stock hasn't budged at all.

Yes, politics matters. But in the end, the macroeconomic climate matters a lot more. Wal-Mart's success ultimately depends on whether the lower-income and middle-income customers on whom it depends are doing well or getting eaten up by stagnant incomes and rising costs for health care and gas. Here, again, the last two decades offer a pretty good contrast. In the 1990s, when a Democrat was in the White House, the rising economic tide lifted all boats (though not all boats equally), and Wal-Mart benefited. In this decade, the rising tide lifted only the yachts. The Bush years have been something of an economic disaster for people on the lower rungs of the income ladders. Census data show that household income in 2006 was below its 1999 peak and that the uninsured rate has steadily risen throughout the decade. Layer on soaring energy prices in the past couple of years, and you've got trouble. It's not all the fault of Bush or congressional Republicans, of course. But it's pretty clear that the dominant fiscal and economic policies of the past eight years—massive tax cuts for the wealthy, economic royalism, hostility to labor, and neglect on health care—haven't made things better for Wal-Mart customers.

Instead of asking whether a particular candidate or political party will be favorable to Wal-Mart's labor-relations policies, the executives in Bentonville, Ark., should be asking whether the candidate or party will be good for Wal-Mart's customers.

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