Wal Mart and Politics

Some have suggested that in the developing global economy, nation states will be joined by global corporations as political actors. The following longish article from Today's FT may be a description of how this can happen on the ground.

FT is subscription only, so I've pasted the full article below:

Wal-Mart takes the fight to its critics

By Jonathan Birchall and Holly Yeager

Published: August 16 2006 19:40 | Last updated: August 16 2006 19:40

John Edwards, Democratic vice-presidential candidate in 2004, was in Pittsburgh this month doing his bit for the party ahead of November’s midterm elections to the US Congress. His agenda included addressing a rally against the shortcomings not of the Bush administration but of Wal-Mart, the country’s biggest retailer and largest private-sector employer.

“Wal-Mart needs to be a more responsible employer, by offering decent wages,” Mr Edwards told a crowd who had turned out to support Wake Up Wal-Mart, a campaigning group funded by the UFCW grocery workers’ union that, along with others, the company staunchly refuses to recognise. Mr Edwards also attacked the company’s record on health benefits, arguing that the dependence of some Wal-Mart employees on state-funded Medicare programmes meant the chain was being unfairly subsidised.

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“Every consumer should know when they walk into Wal-Mart their tax dollars are going to provide healthcare for Wal-Mart workers...while the people who own Wal-Mart are making billions of dollars,” he proclaimed. The retailer struck back immediately. A Wal-Mart official denounced the Pittsburgh event as part of “a union-funded publicity stunt that’s more about politics than anything else”.

Then Working Families for Wal-Mart, officially a non-profit lobbying group, hit even harder, pointing out that the former senator’s family had previously held Wal-Mart shares. “Now he and other political candidates are telling working men and women that they can’t save money or take jobs at Wal-Mart? This is all about special-interest politics. And that’s sad,” said a spokeswoman for Working Families.

This is the world of Wal-Mart, the political retailer.

Under Lee Scott, chief executive, the company has in the past year expanded beyond the usual realm of corporate lobbying to wage a fully-fledged campaign in the mainstream of American politics. “When a company is as large as ours, we’re certainly going to have a lot of interaction with both politics and government,” says Bob McAdam, vice-president of corporate affairs.

On Tuesday it sent 18,000 “voter education” letters to its employees in Iowa, pointing out what it said were factual errors made by politicians who had attacked the company. The group is to despatch similar letters to its staff in other states.

But Wal-Mart’s embrace of some of the darker arts of US politics – it has set up a campaign-style “war room” at its Bentonville, Arkansas headquarters – also attests to the success its critics have had in turning the “big-box” retailer into a political issue at local, state and, increasingly, national level.

In January, Maryland passed a law aimed at making Wal-Mart increase the amount it spends on its workers’ health benefits – a move that has led to similar legislation being proposed elsewhere. In July, in an initiative aimed at large national retailers including Wal-Mart, Chicago’s city council passed an ordinance intended to raise the minimum wage for retail workers.

John Kerry, to whom Mr Edwards was running-mate, cited Wal-Mart and the family of founder Sam Walton in a speech this month on the failings of the US healthcare system. “It’s unconscionable and it is unacceptable that five of the 10 richest people in America are Wal-Mart stockholders from the same family – worth double-digit billions each – but they can’t find the money to secure health coverage for their own workers and their families,” he complained.

Senator Byron Dorgan in his new book, Take This Job and Ship It , uses the company to illustrate what he sees as bad consequences of globalisation. He devotes a chapter to Wal-Mart’s business practices in China, which he calls “the most obvious example of what has gone terribly amiss on the way to a healthy and truly free market”.

For Wal-Mart, all this raises an unwelcome possibility – that it will become a focus of debate during the 2008 presidential election campaign as well, something that its union critics are eager to bring about. “It’s going to be so important in the presidential cycle,” says Chris Kofinis, of the Wake Up Wal-Mart campaign. “Everyone is going to talk about this issue . . . about where you stand on corporations that make $11bn a year in profits and say they can’t afford to pay for healthcare for their workers.”

Wal-Mart’s evolving political strategy, shaped with advice and support from Edelman, the public relations consultancy, has been twofold. First, it has attacked its critics – arguing that it is the victim of an unholy alliance between Democrat lawmakers and the unions they rely on to deliver votes and campaign financing. Second, it is seeking to make the argument that the company is good for America.

It is doing this by mobilising its own political constituency, seeking alliances with local community leaders and businesses – in particular, black and Hispanic groups – that accept Wal-Mart’s argument that the company helps low-income Americans by offering low prices and jobs with the prospect of advancement.

Working Families for Wal-Mart, funded mainly by the retailer, is part of both strategies. Operating with more personal animosity than might be appropriate from the company itself, it is attacking the store chain’s critics. For instance, it has just launched a website called PaidCritics.com, aimed at exposing what it says are special-interest links between the anti-Wal-Mart campaign, the unions and politicians in the Democratic party (Wake Up Wal-Mart struck back with its own site – Abunch­ofgreedyrightwingliarswhoworkforwalmart.com).

Working Families has also set out to mobilise support. It is chaired by Andrew Young, the pro-business former mayor of Atlanta who served as the first black US ambassador to the United Nations. Its board includes Hispanic business figures, while its recently created state organising groups include leading black clergy.

“There’s a large majority of people out there who support Wal-Mart and who have had no vehicle to voice their opinions on what they see as Wal-Mart’s positive impact on their lives and on the economy,” says Kevin Sheridan, Working Families campaign director and a former spokesman for the Republican National Committee.

At the same time, Wal-Mart has reorganised its own community relations operations and has announced plans for “Wal-Mart jobs and opportunity zones” in inner-city areas, aimed in part at encouraging businesses owned by people from ethnic minorities.

In an indication of the strategy’s potential, the black caucus on Chicago’s city council was evenly split on the move to set a minimum wage for workers in the city’s big stores – with opponents saying depressed inner-city areas needed Wal-Mart’s investment and tax revenues.

The vote in Chicago also highlights the risk to the Democrats of trying to use Wal-Mart’s record to galvanise support in the run-up to 2008. While Mr Kerry and Mr Edwards might see Wal-Mart’s low-paying jobs and healthcare record as a rallying point for voters who feel left out of the American dream, other elements of the party will take a different view – including New York’s Senator Hillary Clinton, who in 1986-92 served on the board of the retailer based in Arkansas, her home state.

John Zogby, the pollster, argues that focusing too much on Wal-Mart “means no net gain”, because union voters already favour the Democrats and the party must seek other support if it is to recapture the White House in 2008. “When are the Democrats going to talk to Wal-Mart shoppers?” he asks (see below left). Mr Zogby, who has done some polling work for Wake Up Wal-Mart, says Democrats still lack “a strategy that deals with Joe and Mary Middle America – and Joe and Mary Middle America are at Wal-Mart”.

Polling shows that people who shop at Wal-Mart do care about human rights and worker healthcare, he adds. Democrats therefore need a more subtle message “about trouble in paradise, without carpet-bombing paradise. There are too many people who shop there”.

Mr McAdam counters that the recent criticisms from the Democrats are instead tied to the party’s own battles in the primaries. To win union support, candidates are prepared to deliver an anti-Wal-Mart message that will often not be carried through in the coming midterm campaign.

“There’s abundant survey data that says that attacking Wal-Mart for the population as a whole is detrimental,” he argues. “So if they persist in doing this as the general election approaches, they may find themselves doing more harm than good.”

Wal-Mart is meanwhile taking no chances. It is pursuing a broad effort to enhance its public image, including its record on environmental sustainability. That might drive a wedge in an alliance between its union critics and environmental groups such as the Sierra Club, which have faulted the company on issues ranging from waste water management to its stores’ impact on urban sprawl.

In a sign that political Wal-Mart is here to stay, Leslie Dach, a former political adviser to Al Gore’s failed 2000 presidential campaign, this month becomes head of its government relations and corporate communications. Mr Dach, who will serve on the company’s powerful executive committee, joins Wal-Mart from Edelman, where he became the retailer’s top politics tutor.

His appointment shows just how far the chain has come, with its small army of consultants and political advisers, from the days when Sam Walton argued that if you gave the customers low prices and good service, everything else would look after itself.

Mr McAdam, who will work for Mr Dach, argues that the retailer had no choice. “I think any company that is faced by the kind of campaign-style attacks would be naive not to respond in kind. It became clear to us that, to maintain our ability to do our business, we needed to have a similar style of response.”

But here's the kicker...

A purchase on psephology

By Holly Yeager

Published: August 17 2006 03:00 | Last updated: August 17 2006 03:00

What does where you shop say about how you vote? In the case of Wal-Mart, John Zogby, the highly regarded pollster, thinks it says a lot.

As he reviewed data from the 2004 US presidential election,

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Mr Zogby noticed something unusual: a strong correlation between how often people shop at Wal-Mart and how conservative they are.

The figures are stark: 76 per cent of voters who shopped at Wal-Mart every week voted for George W. Bush, while 23 per cent voted for John Kerry. By contrast, 80 per cent of those who never shopped there supported Mr Kerry, while just 18 per cent voted for Mr Bush.

"Wal-Mart is more than retail. I think it has become a culture unto itself," says Mr Zogby, who is writing a book about what he calls "the new American consumer". That culture is seen in the books and magazines the retailer puts on its shelves and those it keeps off. "You walk into a Wal-Mart and you're walking into the moral equivalent of a spiritual revival tent for born-again Christians."

Just as "soccer moms" and "Nascar dads" drew the scrutiny of pollsters in past elections, Mr Zogby is now paying close attention to weekly Wal-Mart shoppers.

African-Americans and Hispanics who shop there frequently are significantly more conservative than their cohorts who do not, he says. And he knew that Mr Bush was in deep trouble with the public when the president's standing slipped among weekly Wal-Mart shoppers, who had been among his strongest supporters.

Mr Zogby has placed other US retailers on the political spectrum. Firmly on the left are Neiman Marcus, Bloomingdale's and Macy's. Target, he says, is near the centre, "a hair to the left", and in the centre-right are Sears and JC Penney.

But none are as strong a predictor. "Wal-Mart's pattern is just incredible."