Tuesday, January 11


Talk about the giant sucking sound that Ross Perot made a central theme of his presidential campaign bid some years back (and it's come to roost), it appears the behemoth that is the fast-growing Chinese economy is having its deleterious effects on American jobs. Wonder what the impact of Wal-Mart's growing propensity to buy goods from China has had on these numbers? That Wal-Mart is of a size to be impactful to the macro U.S. economy (I know, it's still hard to imagine) is now a given. It was in 1993, a year after Wal-Mart's founder, Sam Walton, had died that the stock took a bad tumble and Wal-Mart's management team hit on the idea of turning to high-margin, cheap imports from Asia, rather than continuing to sell mostly American-made goods, that the Wal-Mart world started to change dramatically and with it U.S. manufacturing jobs. Remember, we're talking about a company whose sheer size and scope dwarfs anything heretofore seen in the U.S. economy. Manufacturers used to dictate to retailers. Wal-Mart single-handidly turned that supplier-buyer equation in the retail industry inside out. And fact is that Wal-Mart has actually dictated to many in its supplier community that they move domestic manufacturing overseas to China in order to deliver the level of wholesale pricing that Wal-Mart demands and has the buying power to exact from suppliers. Indeed, something like 80% of Wal-Mart's suppliers now have operations in China.

A February 8, 2004, article in the "Washington Post" capture's the transformational power of Wal-Mart's buying habits and business model on the U.S. economy in providing some amazing facts:

  • Wal-Mart, at $245 billion in annual revenues, is the largest corporation by far in the U.S. economy -- a veritable colossus
  • one-eighth (1/8) of China's exports to the United States are shipped to Wal-Mart and were Wal-Mart a trading nation, it would be China's 5th largest export market among all nations of the world
Adam Smith and Ronald Reagan must be turning over in their graves: a Communist government has now become, as the WP article noted, the "greatest facilitator of capitalist production" in the world. And with Chinese laborers working (willingly or otherwise) for 25 cents - 50 cents (USD equivalent), it follows that other American corporations, even those not supplying Wal-Mart, will export an ever increasing number of American jobs to this burgeoning bastion of the world's most insidious political philosophy.