Confessions of a Wal-Mart Schizophrenic

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How fitting that the symbol of economic angst in America has turned out to be a store. The displacement caused by globalization, the anxiety felt by the undereducated and the have-nots, the national addiction to stuff we don't need: Wal-Mart embodies it all.

I must confess: I love Wal-Mart. Here's why:

Stuff is cheap. And not just because it's made in China and other low-cost countries. Wal-Mart is famously relentless about driving cost out of its supply chain, pitting suppliers against one another and running some of the most sophisticated inventory and tracking software systems in the world. It's a model of capitalism and efficiency, which is what keeps companies healthy.

It employs a lot of people. Wal-Mart has grown into the second-largest company in the world, with revenues of $315 billion and 1.8 million employees. We all know that most of them are not highly paid. But groups like Wake Up Wal-Mart, which agitate for the company to raise wages, are missing the broader point: It's much more important for people to have skills that will force Wal-Mart to pay them more or give them better options than stocking shelves in Aisle 12. If there weren't such a vast supply of captive, underskilled labor in America, Wal-Mart would have no choice but to pay more.

It has made the Walton family rich. True, the family's $80 billion fortune is probably more than necessary for living comfortably in a pleasant suburban home and taking a couple of nice vacations each year. And if the family yields another Paris Hilton, I may change my mind. But in America, the spoils still go to those who innovate, work hard, and keep trying even after they fail. That's what Sam Walton did. We can all learn from his persistence.

It has taken on Big Pharma. We're used to thinking of the battle over high-cost prescription drugs as a lobbying and legislative battle in Washington, D.C., and in state capitals. But Wal-Mart had a different idea: Apply the power of markets to bring down the cost of drugs. Its $4 price on certain generic drugs still covers only a small portion of the medicines people need. But I hope the company pushes this experiment as far as possible. It may be the only organization with the power, and incentive, to harness consumer demand and change prices in the markets, not in the legislatures.

But I have to admit: Wal-Mart is kind of awful. Loathsome in ways. Because:

It has monopoly power. Not everywhere. It can't crack into New York City, for instance, and lots of smaller towns have anti-Wal-Mart zoning policies to help keep local entrepreneurs in business. But in many communities, Wal-Mart is the only show in town. The merchandise is dull, and the service iffy. More important: Can anybody think of a monopoly that ended up being good for consumers? Trust-busting, carefully done, is one area where regulators earn their pay.

It dehumanizes people. By many accounts, Wal-Mart regards employees–sorry, "associates"–as just another resource to be deployed as efficiently as possible. There have been controversies about employees being denied work hours if they're not available for certain busy shifts, and about exploratory efforts to make sure its workers are healthy, young, and medically inexpensive. Personally, I feel sorry for the store greeters who hand out smiley-face stickers and say, "Welcome to Wal-Mart" about 500 times an hour. What kind of job is that? Here's what would be more impressive: a company that is profitable and is a beacon of decency.

Hubris. A paranoid company employee tape-recorded calls to Wal-Mart officials by a New York Times reporter. Wal-Mart financed a "blog" by a woman who said she represented a "grass roots" organization called Working Families for Wal-Mart. The company has hired expensive PR consultants to primp its image. Is this a department store or the government of North Korea? When you must resort to chicanery and image consultants to justify your core business, you've lost touch.

It's making America fat. Actually, Americans are making America fat, but all the ingredients are there in the store: wide-screen TVs in one aisle, jumbo bags of Doritos in the next. Maybe Wal-Mart should offer diabetes testing on the way out.

I'm not the only Wal-Mart schizophrenic. Union leaders decry its personnel policies yet encourage their members to shop there. Wall Streeters praise its business practices but don't want it to come to Manhattan. Even shoppers complain about the size and the service–but return because they're addicted to the low everyday prices. We are a Wal-Mart nation that doesn't want to admit it.

--Rick Newman

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  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.