Ah, I love being from Kerala. Now I can claim genetics as the reason for my refusing to shop at Wal-mart. Ha!
The Communist government of Kerala is threatening to ban “retail giants” from setting up shop in the Indian state. The measure, which appears to be backed by all the major political parties in Kerala, is chiefly aimed at India’s version of Wal-Mart, Reliance Industries. The concern is that a proliferation of large retail outlets would drive tens of thousands of mom-and-pop shop operators out of business. [Salon.com]
Hmmmm. That last sentence explains why I prefer Olsson’s > Borders, too.
Kerala made headlines not so long ago for attempting to ban Coca-Cola; the state has a long history of pursuing its own unique path to development. Naturally, the more gung-ho-for-capitalism elements of Indian society aren’t mincing their deprecating words: An editorial in the Indian Express made no attempt to restrain its sarcasm:
Coke poisons people. Highway tolls exploit them. Fiscal discipline starves projects that can better their lives. So, of course, big retail chains, as Kerala’s Left explained to this newspaper on Monday, are anti-people … Food minister … C. Divakaran is ever so bold in proposing to ban a business activity permitted almost everywhere bar places like North Korea. [Salon.com]
Yo, I totally feel exploited by highway tolls. It’s the only thing I don’t miss about driving to NYC. Anyway, I think it is a bold move, and an interesting one at that. Salon’s Andrew Leonard raises a sobering point:
Let’s switch venues. The safety of Chinese-made products is in the news again today, as China’s government announced that a whopping one-fifth of the products on the shelves of Chinese stores were found to be substandard or tainted. The immediate, and understandable impulse, is to blame the health hazards of Chinese products on the lack of regulatory enforcement in China, a state of affairs exacerbated by state corruption, a weak judiciary, and a general absence of effective checks and balances in Chinese society. But that’s only one-half of the picture. The other half is the imperative, in the biggest markets for Chinese exports, that demands ever-lower prices for everything.
In “The Wal-Mart Effect,” Charles Fishman makes a compelling argument that Wal-Mart’s market power inevitably forces its suppliers to cut corners on quality in order to deliver the lower and lower prices that Wal-Mart demands. So those suppliers close their American manufacturing facilities and start sourcing their products in China — if they don’t, they’ll lose their place on Wal-Mart’s shelves. [Salon.com]
Mein Gott, I’m starting to feel like a very pink democrat…
But the symbolism of Kerala’s “bold” move, however quixotic, is still potent. Markets left to themselves do not deliver perfect outcomes. Sometimes government has to push back.
Indeed, especially since those sell-outs in Bengal don’t have the stones to do so. 😉
Interestingly, in the other Left-ruled state of West Bengal, Chief Minister Buddhadeb Bhattcharjee has rolled out the red carpet to Mukesh Ambani’s ambitious retail initiative, though coalition partners have expressed their reservations on the issue. [CNN-IBN]
Compare that reaction to THIS thenga-flavored one:
“The public mood is against Reliance, so we will stop them in their tracks,†Food and Civil Supplies Minister, C Divakaran said. [CNN-IBN]
Sigh,
Being a U of C grad, I can appreciate the Chicago school, without having to worship at the altar of individual faculty there. I never saw the big deal behind guys like Coase. Plus, the bail-out of Long-Term Capital Management (which had heavy involvement by several U of C economists) back in 1997 shows that theory often shatters when it collides with actual marketplace conditions. The cliche is, “An economist is here to tell you tomorrow why what he predicted yesterday didn’t happen today.”
KXB, your arguments are immaterial as they do not take into account the awesomeness of freshly squeezed local juice. Even your mind is making you spew your inferior juice onto your monitors to blind you to this obvious truth.
yea well 50% of kerela is the “gyulf” as they say it.
Also, “local” is just a georgraphic term, not a value term. In Illinois, if I had to depend on “local” growers, I would never get any juice, since this ain’t citrus country. Similarly, if my counterpart in Florida wants “local” corn, he’s out of luck.
50% of bittermelon is in the gelf?
Nice post, Anna. What’s interesting about the Reliance/Wal-Mart debate in India is how quickly people seem to lose sight that it is in fact Reliance, not Wal-Mart, that is running these operations. Wal-Mart is providing back-end services, such as supply chain support. More interesting is the economic nationalism that is going on. There are already large Indian companies that have set up and these are already running the Mom and Pops out of business in the grocery and clothing sectors. Many Indians seem to be okay with their own multinationals (or soon to be multinationals) gaining ground, and I suspect the Indian government is too. As is often the case, it’s not really about principles, it’s about who gets the bling.
There may be better, cultural and communitarian reasons to retain small businesses, but that’s a different question.
I don’t see you disagreeing with me then. My whole point was that Wal Mart’s strength cannot be traced to the “market”, since theoretically the perfectly competitive market should not allow for any firms. The very presence of firms means that the theoretical market does not exist in reality. This in turn means that Wal-mart is not the result of “market forces” (at least in the classical sense). This logically leads to the point that the “market” does not “decide”. Which then means that the automatic normative elevation of the market (if “market” is defined as economists normally do, i.e. as a special kind of allocation mechanism) is far more problematic than it seems. Thus I said:
To which some reacted with incredulity and others accused me of “sensationalism” (whatever that means).
By the way, although I love Olsson’s, particularly as against Borders, B&N, and (dare I say it) Kramerbooks, it’s not a Mom and Pop business, it’s a chain. But they’ll play an entire Yo La Tengo album in the store while you shop and also give you a 20% discount.
As someone who goes out of her way not to shop at Wal*Mart, the first word that popped into my head at the thought of the company setting up shop in India was, “Nooooooooooooooooooooo!” (Darth Vadar style)
After I calmed down, I made myself read all of your posts in an effort to bring a little more balance to my perspective. It did that, but not by much I’m afraid.
I can’t help but equate WalMart with evil in my mind–in my eyes, they are the epitomy of a behemoth that takes advantage of little towns, their residents, and small manufacturing companies that supply to them. They’re low prices come at a cost–someone* has to suffer for them, and often it’s the manufacturing companies. They go out of business when they can’t supply at the rate Wal*Marts paying.
And don’t even get me started on their responsibility in obliterating mom and pop stores.
In Atlanta a newly constructed Super Wal*Mart has put countless small ethnic grocers in the area out of business, and their workers (who previously owned their own business), are now forced to work minimum wage for 38 hour workdays (making them ineligible for health care).
Urgh.
Now if you excuse me…I’m gonna go enjoy some juice. From the local Farmers Market.
=D
Anna:
when they are in the “gelf”…they luv shopping at Carrefour…the french version of walmart. so the keralite govt can promote their pinko agenda… but ppl from kerela would luv walmart
Kramer’s is a chain!? Really!?
I’m with sigh! re: the “market” regulation of mass companies like WalMart, or in my hometown, Chevron (boo hiss).
I think there are a lot of arguments that go back and forth re: chain vs. mom/pop, but there are relatively few economic arguments that hold a lot of weight, particularly when you regulate basic things like whether homey pouring milk from a jug watered down the milk. (after all, this used to happen in the U.S. also from.. oh, guess who? chains)
This story is nifty, thanks ANNA 🙂
No, I don’t think Kramerbooks is a chain, but they charge more for the same book than Olsson’s does.
You know what they would love more? You spelling KerAla PROPERLY. If it’s my inner communist who is so annoyed by your consistent disrespect (once is an accident, twice was deliberate, esp. after my comment pointing it out) then I don’t mind being THAT as well as a radical feminist today.
One common denominator in all of these discussions– what is missing is respect. For names, for women, for differences, for everything.
My whole point was that Wal Mart’s strength cannot be traced to the “market”, since theoretically the perfectly competitive market should not allow for any firms. The very presence of firms means that the theoretical market does not exist in reality. This in turn means that Wal-mart is not the result of “market forces” (at least in the classical sense). This logically leads to the point that the “market” does not “decide”. Which then means that the automatic normative elevation of the market (if “market” is defined as economists normally do, i.e. as a special kind of allocation mechanism) is far more problematic than it seems.
WalMart is not the result of the market – price and selection are the results of the market. WalMart is a player in the market. And as other posters pointed out, WalMart came about in a uniquely American fashion – take wide open spaces in underserved rural communities plus a well-laid road network with plenty of cars – you have the conditions for a WalMart. A century ago, when Americans lived in apartments, did not own cars, and did not have a lot of space, you had Woolworth’s.
Second, what market are you talking about? WalMart actually had to leave the German market, cause they could not withstand the market conditions there. In China, they are flourishing. How WalMart will do in India is not clear, unless you’re the government of Kerala, believe you know better than your constituents, and won’t let them enter the marketplace.
Slight change of venue – in American inner-cities, they only place many shoppers can go to is a Mom and Pop. Most don’t like it, cause they realize they are paying more money for poorer quality, and they don’t hire anyone from the neighborhood. They would love it if a chain store could come in to give them better selection.
I think the history of WalMart is interesting, but it can’t be denied that they are AWFUL to their labor/employees, and that they go out of their way to drive out other businesses in the area. At the same time, in poor parts of the country WalMart is one of the only providers of affordable items (including organic food now, apparently), and they’re the first major retailer to try to go green. They’re complicated, as are all MNCs.
All A N N A’s asking is for a little respect when you come home!
Also, A N N A, bittergourd is spelt kArela 🙂 Alright, it seems like I am not capable of making any coherent comments anymore. To work, to work!
Duly chastened, even as I mutter “whatever, mang”. 😉
My point is, it’s in the title, it’s in the article and my snarky “paavaka” comment was a reminder. Enough already with the butchering. 🙂
Have you tried looking in Walmart?
Nope, I only buy respect and juice at Costco. 😀
http://kerela.org/
yea didnt mean to be disrespectful.. and kerela is nowhere close to sounding or being spelt as kArela.
i have seen it spelt both ways. but kerala henceforth!
Calcutta is a glittering example of the economic growth that the Communists can bring about. Such industry, capital growth, FDI by the boatload. I could only laugh the day the sensex dropped 10% because these same clowns wanted to apply the reservation system to the private sector, especially the MNC’s in order to operate within India’s borders.
oh, the Carrefour in KL is amazing…
Your comment really struck me, because I have never thought of them as chain, even as I’ve patronized at least half their locations. 🙂 This is what I read about them via Google…
and the following quote from an ancient article from WaPo really turned me all Polly-A N N A 😀
I know, semantics. But I still love them (much more than Kramerbook’s, which is in my ‘hood…Kramer’s, the only bookstore in the world where I have to throw ‘bows…yeesh).
whenever i visit a pizza hut or mcdonalds in india, the people working there seem thrilled with their jobs and i think, “wait a minute, you’re working for a HUGE big bad MNC and you’re getting screwed right? so how come you seem so content unlike your brothers and sisters in the west?” what makes it different there? the sheer improvement over what else was available? MNC pride in a shrinking world? free maharaja burgers?
You are being a little obtuse here; you know that what I meant was that theoretically relative prices under perfect competition make it impossible for firms to arise.
A N N A, I was just giving you a reality chakkai and a hard time 🙂 As for books, I have you all beat. I use the community library. So there. I will now be off to preen myself.
Orthogonal to your point, I am reminded of this great nugget from a speech by Coase a few years ago:
As Ely Devons, an English economist, once said at a meeting, “If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’” And they would soon discover that they would maximize their utilities.
Hey Rahul, check out his prize lecture too (available at the noble website); good stuff.
Lots of Indians buy packaged milk currently. The doodwalla has mostly been replaced is urban areas. But fruit is another story. Mass produced and shipped fruit is tasteless. And, whatever health benefits Indians get from consumption of such fresh produce, will be sacrificed. Whatever will happen to “mango season?” But then isn’t India one of the few countries that has embraced genetic modification of food? Huge Simla Mirchi are available in local markets.
On the other hand, there is something to be said about hygiene in a regulated environment. Have we seen the last of the local cow happily munching by the butta stand?
Maybe we do not need a Walmart type makeove but something like vendor collectives where they are provided sanitation, shade, trash facilities but shoppers still wander the labyrinths and can bargain.
sigh!, I will check out the lecture, thanks!
As for the serious content of this post, I don’t know how to feel about it. Yes, there is something about the monopolist mega-corporation that steamrolls all into submission that makes people uncomfortable, but at the same time, if people are not willing to pay for superior service or vote with their wallets because they are not willing to understand the hidden costs to them, how much is it reasonable for the government to protect them? And Walmart does provide affordable products to some strata of the society that couldn’t afford them, as well as generates employment (there is the cost to Medicare it imposes, the way it treats immigrant workers, its discrimination against women, its Big Brother behavior towards its employees on its private time etc. which are galling, no doubt).
As for Communist hypocrisy in India, the latest ongoing drama in West Bengal is the Tata plant which they are pushing in Singur, even against farmers’ protests, sometimes violently.
Lets not even go down the Walmart road. I am completely with Shalu (# 59) on this. WMT does not engage in its horrendous labor practices to survive in a competitive market. It engages in these practices to annihilate competition and rake in the billions. It makes my blood boil. And, yes, I do know that companies are supposed to rake in the profits but when an organization so clearly screws its employees to do so…AAARGH!
The clean, air conditioned environment. The chance to socialize with others in their age group at work. The contemporary music being played in the background on a decent CD player. The paycheck which will be anyhow bigger than if they were working at Pandu’s Dhaba down the road. And the work culture, the “team player” type mentality, yada, yada, yada.
So many things.
Same could be asked of the call-center workers who have to work all kinds of weird hour un-healthy shifts. The work environment tends to be more lively and fun then working for some “uncle-ji’s” office.
My best friend was an accent neutralization instructor at one of these MNC’s and she said she can never go to work for an Indian company after that experience, despite the fact that the weird hours took their toll on her body.
Widow Power, you forget to mention the passionate sexuality inherent in the kneading of the dough, and the milking of the cow in the shed at the back.
………that depends on who’s doing the kneading and milking………..
per Pardesi Gori (Widow Power ?), many desis are unable to locate their errogenous zones without the assistance of Westerners. Surely there is an unmet need/business model here that can be monetized, franchised, teased, tickled and turned into an HBR case study. Instead of Victoria’s Secret we can call it “Vimala’s Enigma”.
As an “abcd” I must say, why am I here in the USA–ummmm–the $$, no doubt–so,nostalgia for the commies in Kerala ain’t doing it for me–nozick rules!
Rahul: “There’s the entire non-small-farmer supporting, flying-organic-food-across the country, anti-union aspect of Whole Paycheck, and it probably wouldn’t irritate me as much if they didn’t pretend to be whiter than Lalitaji’s saree.”
–> Have you read Omnivore’s dilemma ? Michael Pollan addresses this organic fetish even if only tangentially.
Shalu “In Atlanta a newly constructed Super Wal*Mart has put countless small ethnic grocers in the area out of business, and their workers (who previously owned their own business), are now forced to work minimum wage for 38 hour workdays(making them ineligible for health care).”
–> Does Walmart have its own corporate calendar ?
work minimum wage for 38 hour workdays(making them ineligible for health care).
non-sequitur alert–paging Dr. Logic
(snark off)
Walmart scares the crap out of me in the Indian context, I was picking on Kerala more for its Coke & MSFT related idiocy than anything else. That being said, I think the anti-Walmart haterade in the US is mostly around aesthetics. I doubt the individual proprietor mom & pops were providing health care benefits. It’s devilishly awesome propaganda to call these mom & pops, implies “maa baap” relationship where it does not necessarily exist or does but it is more of the “Mommy Dearest” dynamic 😉
It’s devilishly awesome propaganda to call these mom & pops, implies “maa baap” relationship where it does not necessarily exist or does but it is more of the “Mommy Dearest” dynamic 😉
From the same Seinfeld episode:
JERRY: So all my sneakers are gone?
KRAMER: I’m afraid so. And that’s just the tip of the iceberg. I’ve been asking around – they didn’t even have any kids.
JERRY: Mom and Pop aren’t even a Mom and Pop?!
No, but the thought crossed my mind even as I wrote my original comment. Great minds think alike, and apparently, so do we.
I read the excerpts in the New York Times, and didn’t feel compelled to go read the whole book because I wasn’t sure what mental nutrition I’d get out of it.
Amazing how little awareness there seems to be here of how much this obsession with “small-scale industry” has damaged India in the past.
It has been the reason India has produced so many shoddy, substandard, unsaleable, internationally uncompetitive goods and services in the past and for the most part continues to do so.
There is nothing more dangerous than someone with good intentions and a refusal to examine their consequences critically.
Many of the extremities of India’s poverty in the last several decades are attributable to Indira Gandhi (may-she-rot-in-hell) and her adoption on a grand scale of the same kind of idiocy Kerala displays in this case.
Fulminations about Wal-Mart in an American context are simply beside the point in an Indian context. People suffer and die for this kind of stupidity.
If you can’t make your point without abusive language, go elsewhere, unless you want to be banned and deleted.
Eurodesi,
Amen آمين
SM Intern, thank you for reminding me of one of the basic cultural differences between Europe and America. It has been so long since I lived in the US that I quite tend to forget it. I was initially quite dumbfounded by your comment, since I hadn’t said anything abusive, certainly not by the ordinary standards of commentary. Then I remembered — In Europe, it is considered deeply shameful to have said something stupid, while in America, it is considered deeply insulting to point out that someone has said something stupid. The result is that Americans tend to find Europeans insulting and abrasive, while Europeans tend to find Americans precious and hypocritical. (Indians, I think, sometimes seem abrasive to both, cf. Krishna Menon, but I have no convenient theory to hand as to why that might be the case.)
Without being culturally judgmental I personally prefer the European style and have no intention of reverting to an American one, which I personally find brittle and childish. Therefore, please feel free to ban or delete me as you see fit. In case you are interested in broadening your horizons, here are a few samples of European commentary that I feel you would benefit from reading. (While googling up these articles, I noticed the phrase “morally imbecilic”, which I like and plan to try to use in conversation.)
http://observer.guardian.co.uk/comment/story/0,,750810,00.html http://www.guardian.co.uk/commentisfree/story/0,,2028181,00.html http://www.guardian.co.uk/commentisfree/story/0,,2073123,00.html http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2007/07/07/do0705.xml http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/07/29//do2902.xml
Louie cypher Why would call kerala out on its idiocy on KO and MSFT? KO does not serve any useful purpose and messes up ones health. Quite like MCD. You may not agree with this and so doesnt most of urban India. MCD and DPZ are premier dating spots 🙂 KO & IBM were thrown out of India in 1977 – dont see how that had a detrimental impact. For a governmental organization Open Source is a far better way system than Proprietary. I am not basing this just on cost but on other factors as well. It may mean that Bill G makes a couple of billions less but that is hardly an issue. On the whole a good idea – commies sometimes do have good sense. And for all those who think that mixing water with milk is a serious crime, how do you react to the mixing chemicals with milk. Read the labels on the food packets. Most of the stuff is designed to kill.
I am curious to know how many Indians have heard or seen peanut allergy. Peanuts are considered one of the safest foods in India. Unheard of in India but quite common in the Western world. Further, peanut allergy has increased in the last 30 years in Australia.
Just for the record – I love shopping at WMT / Aldi / Costco/ Coles / Carrefours/ IKEA. I love shopping in the “mom&pop” stores. Dont agree with a big box store in Kerala. Long distance NIMBYism at its worst 🙂
In France, there are studies to show that super stores like Wal-Mart (Carrefour, Auchan, Leclerc) do have adverse impacts on the community, on local security, on jobs. Many studies indicate that the real impact is net job loss after five years. Though initially there is an increase in jobs, small businesses cannot survive because the size and scale of Wal-Mart is such that it can be involved in predatory pricing schemes where people are forced to sell below cost. Thousands of farms and small-scale industries had to close down because they were compelled to sell below cost. In fact, the tendency is for big businesses to exploit all other businesses and ride roughshod over health safety or employment norms. There should be a way for small and big businesses to co-exist. It’s all about consequences. You cannot insert Big Box models without thinking of the consequences. It is paramount to find common ground to protect the interests of the community and retailers. Competition between big corporations and small businesses tend to destroy competition and install monopoly!
Eurodesi, touching and pious as your rejoinder in #96 is, the primary issue with Indira Gandhi’s regime that led to many of the problems you state including poor quality and lack of quality is not the obsession with small-scale industry, but the protectionist regime that led to the complete absence of competition and an overwhelming amount of corruption as the bureaucrats and politicians wielded far too much power in the license raj. Her arrogance and insularity even led to such travesties as the 1977 emergency. However, it can be argued that at some level, Indira Gandhi only took to an extreme the social policies and ideas put in place by Nehru.
I am not saying that all aspects of these policies were bad, but they definitely had tons of severe detrimental affects.
P.S: Maybe what you wanted to argue was that small-scale industry was the only viable way to beat the license raj. but that was a second-order effect of the crushing burden of the babus, not the primary focus of Indian economic policy.