Opinion

The Great Debate

What Beijing can learn from Wal-Mart

“So, how?”

The question, short for “So, how do you want to handle this?” is a common, subtle way to invite someone to offer you a bribe in Asia. A traffic cop pulls you over for running a yellow light. He’s at your passenger window, a leather strap covering his name tag. He tells you to follow him to the police station so he can process your $100 fine. “So, how?”

If you slip 10 dollars into his ticket book — 20 dollars if you’re a foreigner — he’ll close it, and you’ll both be on your way.

It’s small scale — not like the graft that accompanied China’s high-speed rail system — but it happens all the time in Asia’s developing countries: in traffic, at customs offices, while getting and keeping licenses of all sorts. Nowhere is the bribery problem more severe, and more relevant to the rest of the world, than in China. Three years ago, China’s central bank reported that up to 18,000 officials have fled the country since the 1990s, taking some RMB 800 billion ($128 billion) with them. China lost almost $3 trillion in illicit financial outflows — crooked officials and businesspeople moving their dirty money out of the country — between 2000 and 2009, according to estimates by Global Financial Integrity, a Washington, D.C. financial watchdog. Because China is the world’s largest exporter, bribery in manufacturing and food production — and the related quality control issues — is a global problem.

Wal-Mart is in the news this week for not paying bribes in China — or at least, that’s the underlying premise in the retailer’s three-year-long struggle with Chinese authorities. On April 13 the Wall Street Journal reported that the Chinese government has fined Wal-Mart $9.8 million for infractions ranging from having the words “net weight” in a too-small font ($486) to botching the genus and species on an almond label ($2,323). China’s domestic companies rarely face such scrutiny.

Anyone who has ever run a retailer in a developing country can see how these fines come to be — and how they are often avoided. It’s easy to picture government inspectors in pursuit of extra income, swarming stores across China, finding minor infractions, and asking “So, how?”

On minimum wage: Mind the Gap

Just 24 hours after Senate Republican Leader Mitch McConnell (R-Ky.) warned that raising the minimum wage to $10.10 per hour from $7.25 would deal a “devastating blow to the very people that need help most,” Gap Inc. announced it would raise employees’ minimum pay to $10 per hour by next year.

In striking contrast to the alarms sounded by McConnell, Gap chief executive officer Glenn Murphy emphasized the benefits of this pay raise for the company’s lowest-paid workers. He described it as a “strategic investment to do more for our employees” — one that  will help “attract and retain a skilled, enthusiastic and engaged workforce.”

If there’s a lesson in the recent tug-of-war over the Congressional Budget Office’s report estimating the impact of a federal minimum wage increase, it’s that despite the dire predictions made by opponents of raising the minimum wage, many CEOs have already seen that higher wages are good for business.

Can Western companies put an end to Bangladesh factory disasters?

On Wednesday, while a Bangladeshi survivor of last November’s Tazreen fire that killed 113 people was talking to a Seattle audience about the need for corporations to be held liable for safety violations, it happened again. That day, a factory housing dozens of garment manufacturers in Bangladesh collapsed outside of Dhaka. Since then the death toll has skyrocketed to more than 300 workers, with hundreds more still trapped in the rubble.

Could it be that the so-called convenience of economic globalization is collapsing, too?

Sumi Abedin survived the Tazreen fire in a Bangladeshi garment factory by jumping out a window, breaking an arm and a leg. The Tazreen factory manufactured clothes for a number of Western companies, including Wal-Mart Stores, Sears, Sean John and Disney.

Why Republicans should pressure Wal-Mart

Some Republicans, like Bobby Jindal, the governor of Louisiana, are arguing that the GOP needs to move away from big business and become a more populist defender of the middle class. That is good advice, and one dramatic way for Jindal or other party leaders to turn over a new leaf would be to join the pressure campaign on Wal-Mart to raise wages for its 2.2 million workers – a campaign that led to protests at Wal-Mart stores nationwide on Black Friday. The protests were coordinated by a labor-backed group of Wal-Mart Associates that wants the company to pay a minimum of $13 an hour, among other demands.

Republican criticism of Wal-Mart is not as unthinkable as it might seem. While the right heaps praise on Wal-Mart for its cheap consumer goods, the company’s low-wage business model should be problematic for conservatives for several reasons.

First, when Republicans talk about the economic challenges facing ordinary Americans, they invariably argue for private-sector solutions like faster growth and rising wages – facilitated, of course, by lower taxes and less regulation. Yet even if this fantasy of a rising free market tide lifting all boats were ever to come true, it would bypass Wal-Mart workers. Thanks to a permanently weak labor market for non-college workers, Wal-Mart can get away with paying low wages even when the economy is booming. The same goes for the rest of the retail industry. According to the Bureau of Labor Statistics, the average annual salary of a full-time retail sales worker is $21,000, with cashiers making a good deal less. Those numbers haven’t fluctuated much over the past decade, through good times and bad.

Wal-Mart will see you now

By Dave Chase
The views expressed are his own.

“We don’t have a debt problem. We have a healthcare problem.” Those are the words of Laura Tyson, one of the most respected economists in the world. In Bill Gates’ recent TED talk, he described healthcare as the factor that is devastating state budgets leading to education cuts. Clearly something must to be done now to address this crisis.

With the possible exception of the federal government, no organization is in a better position to reverse healthcare’s hyperinflation than Wal-Mart.

If that sounds crazy, let me explain. As Ezra Klein recently pointed out in a Washington Post graphic, it’s not the age or obesity of the population that is driving healthcare costs. Nor does it have much to do with alcohol or even malpractice costs. Rather, as the many cost comparisons in the presentation below show, we simply pay more for the same items when compared to other countries.

For real results on climate, look beyond Copenhagen

– Aron Cramer is the president and CEO of BSR, a global business network and consultancy focused on sustainability. He is also coauthor of the forthcoming book Sustainable Excellence (Rodale 2010). The views expressed are his own.  –

(Updated on December 17th to correct figure in McKinsey study in paragraph 7.)

As world leaders seem uncertain about whether a binding treaty is even possible at Copenhagen, it’s important to remember what was already clear: Twelve days in Copenhagen were never going to solve climate change anyway.

No doubt, these negotiations, now extending into 2010, are crucial. The sooner we can seal a global deal to reduce emissions, the sooner we can avoid catastrophic climate change. But as important as the treaty negotiations in Copenhagen’s Bella Centre are, even a successful outcome will be for naught if boardroom decisions and factory processes aren’t reoriented toward a low-carbon future.

Collaboration is the key to economic growth

aron-cramer– Aron Cramer is president and CEO of BSR, a global business network and consultancy focused on sustainability. The views expressed are his own. —

As the World Economic Forum’s “Summer Davos” meeting in Dalian, China, gets underway, it is a bit chilling to think back to how the financial crisis was unfolding in real time during last year’s event.

As the 1,000 leaders gathering for this year’s event spend three days debating how to restore economic growth and social stability, the need to focus on a long-term transition to a more sustainable economy is clearer than ever.

Green business and the conscience premium

bryan-welch-ogden-publicationsWelch is the publisher and editorial director of Ogden Publications, home to Mother Earth News and Utne Reader. Any opinions expressed are his own.

Green business is arguably the most important marketing innovation of the century. And it’s here to stay.

When we talk about green business, we’re really talking about the provenance of the products and services we sell. A business is green if its creators take into account its impact on the environment, and on society. Like a historic work of art, a pair of running shoes now has a provenance – a chain of collaborators, stakeholders and events that led to its appearance in your closet.

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