S93-03 Sombunall

"Price Is Not Everything"

A sermon by Dave Weissbard

delivered at

The Unitarian Universalist Church

Rockford, Illinois

11/13/05

Enlightenment in relation to capitalism refers to the understanding by all of us that the pursuit of the political ideals of liberty and freedom of choice, together with the implementation of liberal economic principles has landed us in the power position in the system. This position gives us the opportunity to exercise moral choice in deciding what type of values we will reward. We, as individuals, collectively have the opportunity to change the way we relate to the system and to move it forwards. That is, when investing money, buying goods or deciding where we want to work we have the ability to deny capital and support to people or organisations that don’t fit our value system or view of morality. We can actually break the cycle of solely rewarding the twin inhuman values of profitability and efficiency and instead begin rewarding companies which are actively standing up for the values we believe in.

This all sounds very simple and it’s hard to believe that a relatively small change in the way we behave could have a dramatic effect on the world as we know it. But it is possible, just as dogs change their behaviour according to whether or not we punish or reward them, businesses can do the same. An example that springs to mind is the recent move by manufacturers of washing powder to reduce phosphorous levels which in turn reduces the amount of phosphorous flowing into our waterways.

If we all exercised our values when relating to the economic system then morality would be a force operating in the market, exactly like Adam Smith proposed, and those values which we all hold dear would shine through. At the same time, companies which did things that were against the moral ethos of the people would be denied capital and would have to either change their ways or cease to exist.

But is it possible to do this ? If we look at the economic cycle as a loop consisting of supplier of capital, manufacturer and consumer, to be able to make a change happen there must be an alternative ‘loop’ to the norm. Today, it is possible to invest money in ethical investment funds which seek out companies that meet the required standards, so there is capital available. There are also manufacturers who are addressing environmental and other community concerns, and of course, there are individuals who are willing to purchase these products.

So,it is possible to actively exercise moral choice in the marketplace and it is vitally important that we actively reward companies that are addressing our current concerns. If we have the courage to stand up for our beliefs by refusing to support companies that operate against our moral principles, slowly they will be forced to change or they will go out of business. So now is the time to stop wondering about where the world is headed and to actively take a part in driving it towards a better future. Every time you interact with our economic system you have the opportunity to exercise your moral choice and to create a better future.

This is “Higher Expectations Week.” It was so declared by a coalition of over 300 groups brought together by Wal-Mart Watch. Sam Walton, the founder of Wal-Mart, wrote that he believed that Wal-Mart should be held to “higher expectations,” and Wal-Mart Watch is an organization which is committed to doing just that. It is not interested in driving Wal-Mart out of business, but recognizing the company as a dominant force in the American economy, it believes Wal-Mart should be challenged to address major issues in its operation that have a negative impact upon our society. Their mission is “to make Wal-Mart a more responsible company by informing, motivating and supporting the work of consumers, workers, community activists and elected officials who, together, will demand reform in their hometown.”

What does this have to do with religion? What concern is this of ours? The principles of the Unitarian Universalist Association call for us to affirm and promote “Justice, equity and compassion in human relations.” This call does not come out of nowhere. It was the practice of the prophets of the Hebrew people to decry the oppression of the poor as a violation of the fundamental covenant between the Hebrews and their deity. Jesus of Nazareth told his followers that in the day of judgement there would be a separation between those who fed him when he was hungry, gave him drink when he was thirsty, and clothed him when he was naked, and those who turned their backs. When asked when this feeding and clothing had happened, Jesus told them, “Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” Jesus message was one of compassion and justice.

160 years ago, the great Unitarian minister, Theodore Parker, challenged his wealthy congregation with a series of sermons on poverty in Boston – One was one “The Perishing Classes and Why They Perish,” and another was on “The Power of the Merchant Class.” Parker said:

I cannot believe that there is that sharp distinction between weekday religion and Sunday religion, or between justice and charity, that is sometimes pretended. A [person] both just and charitable would find [their] charity run over into [their] justice, and the mixture would improve its quality. When I remember that all value is the result of work, and see likewise that no [person] gets rich by [their] own work, I cannot help thinking that labour is often wickedly underpaid and capital as grossly overfed. I shall believe that capital is at the mercy of labour, when the two extremes of society change places.

A great change will doubtless take place before many years in the relations between capital and labour; a great change in the spirit of society. . . . I do not believe it is just and right that less than one-twentieth of the people in the nation should own more than ten-twentieths of the property in the nation, unless by their own head and heads or heart they do actually create and earn that amount.

A hundred years hence, [people] will stand here as I do now, and speak of the evils of these times as things past and gone, and wonder that able [people] could ever be appalled by our difficulties and think them not to be surpassed. Still, everything depends on the faithfulness of [people] – your faithfulness and mine.

Oh, that it were so. Here we sit a hundred and sixty years later and in 2001, the top one twentieth of the population owned not ten twentieths but twelve twentieth of the wealth, and under the present administration, there has been an increased concentration of wealth among that top five percent. It has gotten worse, not better, since Parker’s time. Parker could probably not have imagined people working full time and still being in poverty, which is the experience of a significant percentage of Wal-Mart employees.

If for us, religion is not about supernatural powers of a paradise after death but about making this life better, we need to consider our own faithfulness to that principle.

When addressing an enormous problem, it is important to focus one’s attention. The Wal-Mart corporation is an ideal focus for our concern about economic justice because of its size and its influence.

Wal-Mart is the world’s largest company. It employs 1.2 million Americans and its revenues alone represent 2 percent of the US Gross Domestic Product. And the problem is that Wal-Mart is considered by many to be one of the poorest corporate citizens. It is seen by many as a voracious monster, exploiting employees and driving small businesses and its competitors ruthlessly into the dust.

Given its size and impact, there have been scores of studies of Wal-Mart’s business practices and economic impact. It may not surprise you to learn that the findings of these studies vary according to the perspectives of the economists doing them. The studies funded by Wal-Mart and those of a like mind find it to be a benevolent force; those funded by labor unions and competitors find it greedy and destructive. For a long time, Wal-Mart ignored its critics. It is now getting nervous. There have been reports in recent weeks about the enormous operation the corporation has set up to respond to “Higher Expectations Week” and its sponsors.

One of the highlights of the week is going to be the showing in some 7,000 sites across the country of a new movie, “Wal-Mart: The High Cost of Low Price,” produced by documentary maker Robert Greenwald. If you go to the internet, you can locate the nearest showing. I can save you the trouble. The Rockford showing is here, in this church, tomorrow at 7:30 in the context of the Rockford Peace and Justice Coffee Talks, although I am the one who purchased the DVD.

It is a propaganda film. The producer makes no attempt to point to the virtues of Wal-Mart. It is, however, I believe, well worth seeing. I have spent the last couple of weeks researching the pros and cons of Wal-Mart, and I believe there are reasons for us, if we are concerned about justice, to become engaged in the process of pressuring Wal-Mart to do better.

I am not, by any means, opposed to capitalism. I believe that people who have a good idea and who work hard are entitled to benefit from their creativity and labor. I do, however, share with A.C. Ping, a belief in an “Enlightened Capitalism” which holds that profit is not the only measure of success, but that moral values also play a part. I believe that moral values like justice, equity, compassion and respect are hard to find in the Wal-Mart operation.

Let me state the positive first: Wal-Mart does provide people with food and products at a lower price, which means that people with limited resources can get more for less. The low prices have, in part, been achieved by a very sophisticated distribution system. But that is not all.

A significant factor in the low price is also what many believe is the exploitation of employees, both here and in the plants which produce goods for Wal-Mart.

It is well known that the Walton family are among the richest people in America, and in the world – five of its members each have wealth exceeding $18 billion. At the same time, the average Wal-Mart employee was paid $8.23 an hour in 2001, and they consider 34 hours full time which meant an annual income of $13,861 which was at the time $14,630 for a family of four. The average figure in 2004 was $9.68. In addition, Wal-Mart has faced charges of requiring some employees to punch out on the time clock and then continue working unpaid. Local managers are charged with the responsibility of achieving profit goals that sometimes require more work and less pay for employees. People who are anxious to keep a job are often not in a position to complain. According to Business Week magazine, in 2004, Wal-Mart ‘s competitor Costco paid its workers 65% more than Wal-Mart , yet it earned more profits per employee.

Part of how Wal-Mart gets away with this is by keeping unions out. There are no Wal-Mart stores that are unionized. The company spends a great deal of money training their managers how to spot people who may be talking about unionizing, and getting them out of the company’s employment. Many of the company’s security people are assigned to anti-union work rather than protecting customers or merchandise.

A reported issued in January, 2004 by the International Confederation of Free Trade Unions focused a lot of attention on Wal-Mart violations of workers’ rights. Wal-Mart has repeatedly been found guilty by the National Labor Relations Board of illegally firing workers, unlawful surveillance, threats and intimidation.

Recently, Wal-Mart has been found guilty of using cleaning contractors who employ illegal immigrants, and there is evidence that knowledge of this practice reached all the way up to corporate management. Needless to say, the non-documented workers were not paid in accordance with minimum wage standards since they are in no position to complain. Wal-Mart paid $11 million in fines for this practice to the federal government.

I remember the first time I went into our Sam’s Club where I saw a very big sign on the wall proclaiming Sam Walton’s pledge to “Buy American.” Walton stated:

Something must be done by all of us in the retailing and manufacturing areas to reverse [the] serious threat of overseas imports to our free enterprise system. Our company is firmly committed to the philosophy by buying everything possible from suppliers who manufacture their products in the United States.

In 1995, Wal-Mart claimed that only 6% of its merchandise was imported; today the figure is in excess of 50%. The problem is that, because of its size, Wal-Mart tells its suppliers how much it is prepared to pay for their products. It is often impossible to produce them at Wal-Mart’s price here, given our minimum wage standards, so Wal-Mart suppliers have to open foreign plants where they can pay less. Today, Wal-Mart has a network of more than 3,000 factories in China alone.

As capital scours the globe for cheaper and more malleable workers, and as poor countries seek multinational companies to provide jobs, lift production, and open export markets, Wal-Mart and China have forged themselves into the ultimate joint venture, their symbiosis influencing the terms of labor and consumption the world over.

Wal-Mart imports more goods from China than all but seven nations of the world do. 70% of its merchandise contains components made in China. The working conditions and compensation in the plants supplying Wal-Mart are often appalling.

Returning to the United States, one of the big issues for Wal-Mart employees is health care. The company offers a very expensive health plan that has very high deductibles and many exclusions. A single worker could spend $6,400 out of pocket before receiving any benefit from the health plan – that 45% of salary. In fact, fewer than half of Wal-Mart employees are covered by its plan. The company actively encourages its employees to get Medicaid because they are poor enough to qualify and the benefits are better. In other words, taxpayers are subsidizing Wal-Mart.

The Democratic Staff of the House Committee on Education and the Workforce, estimated that one 200 person Wal-Mart could cost taxpayers $420,000 a year between:

But that may be just the tip of the iceberg. There are conflicting data on the impact of a Wal-Mart store on employment in a community. To the degree that the market remains stable, the presence of a Wal-Mart means the closing of a lot of other employers, thus putting a lot of people out of work altogether.

In a study in Iowa, Dr. Kenneth Stone found that as the result of new Wal-Marts, over a ten year period 7,326 Iowa businesses closed down, including: 55 grocery stores, 298 hardware stores, 293 building suppliers, 161 variety shops, 158 women’s stores, and 116 pharmacies. The national Trust for Historic Preservation cited a study that showed that 84% of all sales at a new Wal-Mart store comes at the expense of other businesses within the same county.

What is most obscene about this is that the Wal-Mart stores are generally given very large tax subsidies to build in a town - one estimate is that the company has received over $1 billion in subsidies, which then results in putting local businesses out of business. They take taxes from businesses to pay Wal-Mart to come in and drive them out of business. Doesn’t make a lot of sense.

The only justification I have found for these subsidies is the claim that some non-competing businesses find a slight increase in their trade because of the customers attracted by Wal-Mart, and, as I said earlier, customers are able to benefit from the low prices. Communities are afraid not to offer the subsidies because of the threat by Wal-Mart that it will build just outside their jurisdiction and steal all the sales taxes from their community. There are horror stories about the pressure Wal-Mart has put on local officials to allow them to build in their communities.

There is also the issue of discrimination, both among employees and customers. While nationally 15% of truck drivers are African American, at Wal-Mart only 2-3% of its drivers are. In the largest class action suit ever, 1.6 million current and former Wal-Mart employees have sued Wal-Mart for gender discrimination – 92% of its cashiers are women, but only 14% of its store managers. In 2001, Wal-Mart settled 13 lawsuits for discrimination against persons with disabilities for $6.8 million, and promised to end the pattern. In spite of its gutting by the Bush administration, the Equal Employment Opportunity Commission has recently announced that it is investigating Wal-Mart for violating the 2001 settlement.

These are only some of the issues. The only real arguments against these charges I can find are the assertions that because Wal-Mart is making a profit, it must be doing something right. If profit equals good, then that is true. If our concept of good includes fair treatment of people, a just society in which people are not exploited, then it does not necessarily follow that Wal-Mart is good, and, on the contrary, there is abundant evidence that we are getting low prices from Wal-Mart while paying for them through social disintegration.

First of all, become better informed. I have only scratched the surface. I hope many of you will come to see the movie to get some more meat on the skeleton I have described. But go also to the internet where you can get more information pro and con. If you agree that there are problems, join with WakeUpWallmart.com. One of the important current campaigns is one which supports “Fair Share Health Care” legislation which would require employers like Wal-Mart to pay their fair share for health care.

it is possible to actively exercise moral choice in the marketplace and it is vitally important that we actively reward companies that are addressing our current concerns. If we have the courage to stand up for our beliefs by refusing to support companies that operate against our moral principles, slowly they will be forced to change or they will go out of business. So now is the time to stop wondering about where the world is headed and to actively take a part in driving it towards a better future. Every time you interact with our economic system you have the opportunity to exercise your moral choice and to create a better future.

Theodore Parker, 160 years ago, insisted that the move toward social justice was dependent upon the faithfulness of religious people who were committed to those principles. I believe that is as true today as it was then. I hope we will prove equal to the challenge.