Wal-Mart's 'China Price'

By Joshua Holland, AlterNet. Posted November 7, 2005.

Wal-Mart is responsible for approximately 10 percent of the United States' trade deficit with China.

The problems with the company's overseas production are the result of sweeping changes in public policies brought about by the Conservative Revolution and by disastrous, industry-written global trade and finance rules supported by a bipartisan consensus for the past three decades (Democratic presidential hopeful Hillary Clinton, whose husband championed "free trade" deals like NAFTA, sat on the Board of Wal-Mart between 1985-1992).

It was the system in which Wal-Mart's practices have flourished that were on my mind when I sat down with Robert Greenwald ("Outfoxed," "Uncovered"), director of "Wal-Mart: The High Cost of Low Price," in his Culver City offices earlier this month. (A note of disclosure: Greenwald is on the Board of Directors of IMI, AlterNet's parent organization.)

I asked Greenwald if he was concerned that focusing on the mega-retailer might distract people from the larger systematic issues that have made the New Economy so very productive for so few. Is there a danger of letting the Targets, Home Depots and Sears of the world off the hook?

He told me his hope is the film "will allow us to go on the offense on economic issues, corporate issues" writ large:

With Outfoxed, it was a similar argument -- it's not just Fox, it's media consolidation. That's absolutely right, but you need a story to tell. Fox was a very strong story and Wal-Mart's a very strong story. And I believe -- as with Outfoxed -- it helped us make the larger issue. In other words, one can say: "is it a distraction, or is it connecting the dots?" And what I hope to do, what I try to do with the films is to use them to connect the dots.

Wal-Mart has made itself the perfect focal point of the New Economy -- the perfect "dots" to connect -- by its success and with its ruthlessness. Kent Wong, Director of UCLA's Center for Labor Research and Education, explained that Wal-Mart's overseas production isn't unique, but "because of their reach, their volume, their power" Wal-Mart does more than any other firm to fuel the "race to the bottom":

What we see with Wal-Mart is a much greater level of international sophistication -- of fierce competition in searching for the very lowest prices they can get, anywhere in the world ... and it's about vicious competition in the sense that if they can get a product produced for a nickel less, they will shift their suppliers at a drop of a hat.

That's capital searching out the cheapest labor, the friendliest environs -- places without pesky environmentalists or labor organizers.

We often look at that process from an American perspective. Job off-shoring has become a potent political issue. Our trade deficit with China has ballooned since its entry into the WTO in 2001, contrary to the promises made by politicos of both parties at the time.

The imbalance -- in combination with soaring fiscal deficits, a low savings rate and high energy costs -- has become a real threat to America's middle class.

According to a study by the Economic Policy Institute [PDF], America's balance-of-payments deficit with China (of which approximately $18 billion dollars is created by Wal-Mart) was responsible for the loss of 1.5 million manufacturing jobs between 1989 and 2003.

The study found that the jobs being displaced have changed over that period. The authors noted: "Where the largest impact was once felt in labor-intensive, lower-tech manufacturing industries such as apparel and shoes, the fastest growth in job displacement is now occurring in highly skilled and advanced technology areas once considered relatively immune."

That's a troubling trend: China -- often portrayed as the production destination of choice for cheap plastic toys and similar low-tech goods -- now accounts for the entire $32 billion U.S. trade deficit in high-tech products, and is starting to make inroads in what were considered bulwarks of first world manufacturing: automobiles and aerospace.

Feeling the threat of emerging competition, working people from advanced countries often react with fear and hostility towards their brethren overseas. But Greenwald's film gives us an important look at the other side of the coin: from the perspective of the overseas workers of a globalized labor force who make the goods that Wal-Mart hawks in its super-stores. Hopefully, the message people will take away is that raising the power of working people in developing countries raises the standards of our own.

Joshua Holland is an AlterNet staff writer.