Goldberg Versus Walton

http://www.futureofcapitalism.com/2011/12/goldberg-versus-walton

Remind me if I ever get rich not to start an art museum. It seems to be just an invitation for attacks from the press. First was Ronald Lauder, who started an art museum on Manhattan's Upper East Side and got smeared by the New York Times as a thank you. Now comes Alice Walton, whose Crystal Bridges Museum of American Art in Bentonville, Arkansas has gotten her not just one but two negative columns by Jeffrey Goldberg in Bloomberg News's View section.

Jeff is a former colleague and such an intrepid reporter and good writer (see the opening pages of his book Prisoners, for a particularly gripping example) that I really hesitate to quarrel with him. The commenters on the Bloomberg Web site have done a pretty excellent job of it already, on both pieces.

But since one of Jeff's fine qualities is his tendency to stick up for embattled and demonized minorities — whether they are Jews, Kurds, or even Palestinian Arabs — let me at least take a stab at standing up for Alice Walton against his condemnation of her art musem as a "moral blight" and her values as "perverse."

His complaint against her seems to be mainly that Walmart workers earn low wages and that some of them don't get company-provided health insurance. And he wishes that instead of, or in addition to, building the art museum, she would pay the workers more and give them more health insurance, or at least take better care of them somehow:

I've never heard even the faintest suggestion that she has taken an interest in the lives of the people who work at her father's stores. If she sponsored an art museum as well as a network of day-care centers for Wal-Mart employees, or a fleet of mobile dental clinics, well, I don't think my complaints would have quite as much salience.

My responses in defense of Ms. Walton break down into eight points.

1. Why focus solely on her at the expense of many other rich people who fund charities in which they are interested while making money in low-wage, low health-insurance businesses? Joan Kroc, whose fortune comes from McDonald's, gave $200 million to National Public Radio. McDonald's treats its workers about the same as Walmart, but I haven't seen Jeff Goldberg agitating about the moral blight of Morning Edition. Jeff Goldberg also complains about the aesthetics of Walmart stores, but they look pretty much the same as a Home Depot, a Staples, a Lowe's, or any other big-box store. Why single out Walmart?

2. In fact, the Web site of the Walton Family Foundation, of which Alice Walton is a director, shows the foundation did give Bentonville Child Care & Development Center $618,988 in 2010. The Arkansas Single Parent Scholarship fund got $533,682, the Benton County Single Parent Scholarship Fund $235,000. These expenditures pale beside those for the art museum, but they aren't nothing, and they probably did benefit some Walmart associates or their children.

3. If Walmart as a company moves into providing health care, as it reportedly plans to do, the contribution to public health through its own profit-seeking behavior could far outweigh that of any mobile dental clinics established by Alice Walton's charity. Already, Walmart's $4 prescription drug program has probably done more for public health than the Goldberg-proposed dental clinics or health insurance probably would.

4. No one is forcing any Walmart employee to work there. If they don't like the wages or the benefits, they are free to quit or look for another job somewhere else, or to try to organize a union to negotiate for higher wages and benefits. One could fault Walmart for its union-busting tactics, but last I checked the Bloomberg View operation isn't a union shop, either.

5. Just because some Walmart employees don't have health insurance through their jobs doesn't mean they don't get any health care at all. Sales taxes collected at Walmart (but not by Amazon.com, which somehow attracts far less derision from Walmart bashers) pay for Medicaid and Child Health Plus programs that help to insure some of the workers. Others may be covered by Medicare, if they are old enough, or by the insurance plans of parents or spouses, or by free charitable care provided by non-profit hospitals.

6. If Alice Walton decided voluntarily to pay Walmart workers higher wages and health benefits out of her share of the Walmart profits, it would probably be difficult to structure that without also adversely affecting the returns of the other shareholders. (I suppose one could establish a separate class of stock, but it's hard to see the rationale for giving the family that founded and built the company a class of stock that carried a lower rate of return than that available to the general public or new shareholders.) Giving all the shareholders a newly lowered rate of return would increase Walmart's cost of capital, making it harder for the company to compete with new competitors. Stores might have to close, and instead of low-wage, low-insurance jobs, there might be no jobs at all. And the existing shareholders, who bought their shares expecting the company would pay a market wage rather than the newly generous Goldberg above-market wage, would see the value of their shares drop. Since lots of those existing shares are held by middle-class or lower-middle class Americans through mutual funds or union or government pension funds, you'd wind up hurting some of the same people you are trying to help.

7. Another way to pay Walmart workers higher wages and health benefits would be to raise prices. But the company already faces price competition from Amazon, which doesn't have the expense of operating physical stores and which already has the price advantage of not collecting sales or use tax. And a big reason people go to Walmart is for the everyday low prices, which is the main service that is being provided. Some of the Walmart shoppers may be even worse off, financially, than the Walmart workers. So raising the pay of the Walmart workers by raising prices would hurt the poor Walmart customers, making them worse off than before. That doesn't seem like such a good idea.

8. The wages Walmart pays don't represent the full value of what the employees make, because of the earned income tax credit and other refundable tax credits. Those tax credits phase out at a certain level, so by raising the wages, Walmart would not leave its employees any better off (in fact, the employees might be worse off if they can no longer qualify for food stamps or Child Health Plus), but would simply shift the burden from taxpayers to Walmart shareholders. I'm not defending that from the point of view of public policy, but the correct remedy is to change the public policy, not for Walmart shareholders voluntarily to overpay for labor while leaving their employees no better off than before.

Am I missing anything? Maybe Jeff will devote a third column to the topic? Maybe we can have a public debate on the topic next summer before a crowd-filled grandstand in the tractor-pull ring at the Martha's Vineyard Agricultural Fair.

Disclosures: I don't own any Walmart stock directly, though I do own some shares in competing retailers. I shop there only extremely rarely, partly because the government of New York City, where I live, and the unions and competitors have made it nearly impossible to build one here.

by Editor  |  Dec 20, 2011 at 2:17 pm Related Topics:  Health Care, Income Inequality, New York, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list