Monday, March 22, 2004

The fruits of poverty

Title: The fruits of poverty
Source: The Guardian
Date: March 16, 2004

The article starts with this point:
    Every year the list is the same, but every year it still comes as a shock. Of the 10 richest people on Earth, five of them have the same surname. It's not Gates, or Murdoch, or Rockefeller, but Walton. They are the heirs and trustees of the supermarket chain Wal-Mart. And between them they are worth $100bn.
Then makes this point:
    Wal-Mart, which owns the British chain Asda, is now the biggest company on Earth. In the last financial year it took $245bn. It is successful partly because it is one of the most ruthless employers in the western world.

    In the US its sales clerks made an average of $13,861 in 2001, almost $800 below the federal poverty line for a family of three. It is reported to have told new employees how to apply for food stamps so that they don't starve to death. In November, the police found hundreds of illegal immigrants working as cleaners in its stores. Some of them claimed that they were obliged to work seven nights a week, without overtime, insurance or benefits.

    By forcing down the prices of the goods they buy, the superstores encourage even more repressive conditions in the companies that supply them. A recent study by Oxfam documents the systematic abuse of workers in the factories and farms that the superstores buy from. The Waltons are so rich because others are so poor.
"The Waltons are so rich because others are so poor." That is exactly the point. That is how the concentration of wealth works. If $100 billion were spread out among 1 million workers at Wal-Mart, each worker would be $100,000 richer. It would completely change the lives of those 1 million people. Instead, all of that wealth concentrates in five people, to the benefit of no one.

It is not as though the concentration of wealth is "preordained by the universe". Things do not "have to be this way." Very simple changes in the law could end the concentration of wealth. For example, as discussed in this article, there could have been a substantial inheritance tax applied to Sam Walton's estate when he passed away. Or there could be substantial income and property taxes applied to the surviving Waltons. Or there could be labor laws in place to protect Wal-Mart's employees. If so, many of the problems we are seeing today would disappear, with no ill-effects on the economy. Chances are the economy would be doing far better, in fact.

See also this post.