News & Articles

This country is acting as if dementia is just around the corner–or maybe we haven’t been taking our Prozac lately.  We have about 19 million underemployed and unemployed in this country but the Polaris Company of Roseau is flying low-paid Mexican skilled workers from their Mexico plant to Roseau so they can continue to sell small recreational and work vehicles at a “double-digit” rate. What is going on? Have we succumbed to what is now being called the WalMart Mentality?
Perhaps Randy Osmun of the nonprofit The Source in Grand Rapids, Michigan, according to a Washington Post article has it right.  His organization is an innovative support group that connects employers and employees and helps to stabilize the living conditions of low-paid workers. Osmun’s observations: “People in poverty want to work, but sometimes life, due to the complexity and lack of resources, causes them to make trade-offs where work is the best thing for them to lose. When we can address the complexity, whatever that is, and allow them to continue to work, they work.”
But then he cites the real reasons for our present “complexities”: “There has been this WalMart mentality of cutting wages, reducing taxes that fund social spending, and prioritizing profitability today without thinking about the future. Twenty years later we’ve seen a complete destruction of our school system, huge rates of incarceration and poverty, and now employers are saying, ‘I can’t hire good people.’ You can’t hire good people because you have devastated the community.”

Priorities, Priorities

California, as an example, spends $62,300 per prison inmate per year while spending only $9,200 on average to educate a child in a K-12 school. In the last 30 years California has built 22 new prisons and one new higher ed school. Priorities are concentrated on expanding  prison systems rather than expanding the minds of the state’s inhabitants. Studies have shown that having a parent in prison is more harmful to a child’s health and development than divorce or death of a parent. Prison sets up a never-ending cycle of “loss”: friends, mentors, the family unit, and “community.”
What is the WalMart mentality that Osmun is talking about? Last year WalMart led by the world’s richest family, made $13,000 in pre-tax profits per employee–but each of the approximately 1.2 million employees cost taxpayers $5,815 in subsidies such as food stamps, health care, and other necessities. So Sam Walton’s wife and sons and daughters, each with fortunes over $36 billion, could have paid salaries enough last year to cover the government subsidies and still have a pre-tax profit of $7,185 per employee. Multiply that figure by 1,200,000 “associates.” Why, that’s real money!

“The Hollowing Out Of The Heartland”

George Packer in his book “The Unwinding: An Inner History of the New America” describes our current economic and cultural predicament by covering the lives of average Americans across the country. It’s a terrific read. He has a very revealing chapter on Sam Walton, WalMart’s founder, who put up prominent “Made In America” signs over racks of clothing manufactured in Bangladesh by wage slaves. One Packer paragraph sums up the damage done by Sam to the American people: “And it was only after his death...that the country began to understand what his company had done. Over the years, America had become more like WalMart. It had gotten cheap. Prices were lower, and wages were lower. There were fewer union factory jobs, and more part-time jobs as store greeters. The small towns where Mr. Sam had seen his opportunity were getting poorer, which meant the consumers there depended more and more on “everyday low prices,” and made every last purchase at WalMart, and maybe had to work there, too. The hollowing out of the heartland was good for the company’s bottom line. And in parts of the country that were getting richer...many consumers regarded WalMart and its vast aisles full of crappy, if not dangerous Chinese-made goods with horror...while stores like Macy’s, the bastions of a former middle-class economy, faded out, and once more America began to look once more like the country Mr. Sam had grown up in.”

What WalMart And Other “Box” Stores Did To Iowa Small Businesses In Ten Years

During the ten-year period of 1983-93, after WalMart came to Iowa, Professor Ken Stone of Iowa State University estimated that over 7,300 small businesses were forced out of business br WalMart and other discounters. Business owners were turned into WalMart clerks and greeters.  Although Iowa gained significant population during those ten years, the state lost 555 grocery stores, 298 hardware stores, 293 building supply stores, 161 variety stores, 158 women’s apparel stores, 153 shoe stores, 116 drug stores, and 111 men’s clothing stores.
Remember, this is just one small state. One can translate and transpose small business losses involving over 300 million people in the other 49. It’s an absolute disaster for the ever-declining middle-class. WalMartization has resulted in the largest transfer of wealth from 80% of the American people to the already rich. I wonder if the members of the  richest family in the world, the Waltons, ever think of their badly paid, mostly part-time workers without any benefits, who have to depend on government public assistance programs to survive. The six have more assets and cash than over 90 million Americans at the bottom of the economic ladder. Those blue vests worn by WalMart greeters and other employees?  They are made in Jordan in factories that have a history of horrible labor conditions. In some cases workers work 20-hour days and live in “dorms” without heat or water. WalMart recently adopted a new dress code that requires employees to buy new uniforms. It’s estimated that WalMart could make as much as $80 million off their own employees by changing the dress code. The company “recommended” the employees buy their uniforms at their own stores.

World War III In The Second Stage

The economic inequality problem in the US is one of the worst in the world, according to Joseph Stiglitz, Nobel Economic Prize winner, in an article “The Age of Vulnerability.” The US Census Bureau’s annual report reveals that the so-called “economic recovery” we have been going through for five years has exploded the wealth of the superrich while keeping the median household income, adjusted for inflation, at a level lower than it was 25 years ago. Between 2007 and 2013 the median wealth fell 40%. Millions of Americans lost their homes in those six years, and it is expected that millions more will lose their homes in the near future. The jobs and the wages are just not there.
Something is bound to happen to the stability of the country if the economic system fails to deliver gains to all of its citizens. Stiglitz’s summary of our present failings: “Regardless of how fast Gross Domestic Product grows, an economic system that fails to deliver gains for most of its citizens, and in which a rising share of the population faces increasing insecurity, is, in a fundamental sense, a failed economic system. And policies, like austerity, that increase insecurity and lead to lower incomes and standards of living for large proportions of the population are, in a fundamental sense, flawed policies.”
The disparity of skills and education among the 99 Percent is a really big deal. College costs have increased dramatically for individuals because the states have failed to adequately support education. College students have shouldered massive student loans that will take them many years to pay off–if ever. College graduates now earn an average of $34,969 per year more than a high school grad. The US is no longer investing in higher education and fewer high schoolers are going to college because the average tuition for four-year state colleges is now over $23,000.  Other countries have already solved the problem of educating a skilled work force. Germany, as an example, has no tuition for its college students. The state pays all costs for attendance at 379 higher ed institutions where 2.4 million students are enrolled. Isn’t that a great idea?  The only question now is, when will Occupy Wall Street turn into Occupy America with sharp pitchforks and hurling bricks?

What Do Billionaires Do With Their Fortunes?

Another important question, mainly for millionaires and billionaires, is, when is enough actually “enough?” Larry Ellison, developer of Oracle business computer software, has a net worth of $50 billion. He has 15 homes scattered around the world, and recently bought an entire Hawaiian island for himself–for about $600 million.  He also bought Island Air, the airline that serves the island, so his friends could fly there. His main mansion is at Woodside, Cal., and is valued at $110 million. He owns a $43 million home and private golf course at Rancho Mirage. He has a mansion at Carbon Beach on five lots he bought for $65 million. He has a dozen other homes.  (The Reinast Company is peddling a $4,000 toothbrush for those “with a high net worth.” Will Larry buy one for every bathroom?) He also has had four wives. One was so eager to get rid of him she gave up the rights in divorce court to some of his billion-dollar corporation for $500!
Larry owns numerous airplanes, pilots an Italian Marchetti jet, and drives the world’s most expensive cars in his collection to go to and from airports. He owns two huge yachts, the largest being the 452-foot Rising Sun which cost over $200 million to build. It has five stories which house several jacuzzi bathrooms, a spa and salon, a wine cellar, a private theater, and a basketball court on deck. Larry loves basketball and wants to own an NBA team. Whenever Larry plays basketball one of his employees drives a power boat behind the yacht to pick up any basketballs that land in the drink. I guess you would call him a real job creator! For some reason, I think that means he is really rich. But he is only the third richest man in America.

Would You Use Sex And Billionaires To Pay Off Debts?

With World War III basically about economic inequality progressing quickly around the world (Arab Spring, Occupy Wall Street, Hong Kong protests), a former writer for Dow Jones financial news has written a satirical play about the subject that’s gaining popularity in the financial capital of the world, New York. Felipe Ossa has created a monologue play that suggests a dating service between our billionaires and our middle-class could solve most of our financial ills. He claims the only feasible way to close the wealth gap is to have our billionaires adopt many members of the middle class as economic concubines. He must have gotten the theme and plot from the Bible story of King Solomon, who was so rich he supported 700 wives and 300 concubines. How many middle-class concubines could Larry Ellison support? A dozen perhaps, in each of his homes?
Actually Ellison and Solomon are alike.  God told Solomon (Deuteronomy 17) not to collect horses, wives, or silver and gold. But he, like Ellison, never seemed to know the meaning of “enough,” so he first collected as much gold and silver as he could–then he started to collect women. (Ah, the two most important things in some lives–money and sex!) Ecclesiastes contains the following thoughts of Solomon: “I amassed gold and silver for myself, and the treasures of kings and provinces. I acquired...a harem as well–the delights of the heart of man.”  But his harem did not bring him happiness (I wonder if Viagra would have helped!). Solomon added: “Everything was meaningless, a chasing after the wind; nothing was gained under the sun.”  There is no sign that the psychopath Ellison will ever get over collecting gold, silver, homes, planes, cars, yachts–and wives. Larry might go for the economic ideas expressed in Ossa’s play “The Ultimate Stimulus.” As an America’s Cup sailor and financier, Larry should begin to understand what “chasing after the wind” means.

Raymond is a former Marine officer and school board superintendent and resides in Detroit Lakes.