Normative Narratives

Green News: Walmart, Wages, Emissions, and Personal Accountability in a Democracy

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Original Article:

Walmart is one of the biggest and fastest-growing polluters in the nation, despite the company’s 2005 pledge to become an environmental leader, according to a report from the Institute for Local Self-Reliance (ILSR).

The retail giant emits 45 million metric tons of CO2e (carbon dioxide equivalent), slightly more than Target, at 42 million metric tons, and significantly more than Costco, at 16 million metric tons, according to the report.

“The scale of Walmart’s energy efficiency and renewable power measures is not up to the scale of their business or their growth,” Stacy Mitchell, the author of the report, told Al Jazeera. “They been placing solar powers on the rooftops and getting some wind power and so on, but Walmart only derives 4 percent of its energy from renewable energy sources.”

“This is a business model that is built on these far-flung distributors and goods that are trucked all over the country [and shipped all over the world],” Mitchell said. “There are fundamental aspects of Walmart’s business model that are at odds with sustainability.”

Walmart spokesperson Christopher Schraeder told Al Jazeera that the company is “working hard every day to find solutions to the most pressing sustainability issues,” and that has “ambitious sustainability goals to improve our operations, increase fleet efficiency, source locally and sell more sustainable products.

Mitchell acknowledged that significant change in emissions will have to come through legislation, not just from companies becoming more ‘green.’

But with Congress more divided than ever, that’s not likely to happen soon, especially when companies use their financial resources and lobby members of Congress to block environmental protection measures.

Through the Walmart Stores Inc. PAC for Responsible Government, Walmart has given more than $22 million to politicians who are opposed to legislation that would regulate emissions and promote climate change.

In the 2008 elections, 80 percent of Walmart’s senate campaign contributions went to people who blocked the “cap-and-trade” bill, which would have reduced carbon dioxide and other greenhouse gas emmissions across the U.S. economy. In the 2012 elections, 70 percent of donations went to people who supported the Keystone XL pipeline

Walmart has gotten a bad rap over a number of issues, and in the past I have been critical of Walmart’s business model as well. But I was still fair in my analysis back then; the two main issues Walmart receives flack for–employee compensation and emissions–need to be addressed by government policy:

 

1) Employee Compensation: This is as clear cut an example of policy failure there can be. Walmart, by paying its sales associates an average of $8.81 cents / hr, is not breaking any laws. This comes out to a yearly income of a little over $15,000, placing a large burden on the social safety net:

On the flip side of this, it costs the nation an estimated $1 billion a year in social safety net use. Essentially, the U.S. taxpayer is subsidizing Walmart’s  low wages, which systematically produce full-time workers living below the poverty line.

It should raise a red flag that the same ideology opposed to safety net policies also tends to be against higher minimum wage legislation as well. It used to be that if you worked hard you could live a comfortable middle-class life and have enough to invest in a better future for your children. With the current minimum wage, the American Dream is no longer a reality for a large number of hard working but less-skilled Americans.

The plan to increase the federal minimum wage to $10/hr  (and thereafter tying it to a cost of living metric such as the CPI) beginning in 2014 (I believe the plan is to phase it in over three years) is a good start. This could also have the effect of pushing up non-minimum wage compensation as well, as employers looking for more skilled labor will have to compete with higher minimum wage employers. Such changes are all the more important in the context of rising inequality and falling median incomes (which are at their lowest level since 1995).

2) Emissions: 

As the report states, “significant change in emissions will have to come through legislation, not just from companies becoming more ‘green.’”. Corporate social responsibility (CSR) is a nice idea, but it only changes things at the margin. As with employee compensation, the real driver of change must come from carbon tax / cap-and-trade legislation. With proper legislation in place, CSR gives way to more enforceable corporate accountability.

Another important element of environmental sustainability should come from tax incentives for using local producers. This legislation would be less politically contentious than carbon taxation, but would have a huge impact on emissions. According to the ILSR report, Walmart’s carbon emissions disclosure does not include emissions from international shipping. However, this is a large component of Walmart’s competitive advantage, finding the lowest cost producers, which are always in developing countries due to lower labor costs. Since there is no taxation on emissions, as long as the price of production + transporting from the developing world is lower than the price of producing domestically, retailers such as Walmart have little incentive to choose the later.

By evening the playing field through tax incentives, the benefits would be twofold: 1) stimulating the U.S. economy through more local production and 2) lower emissions due to less transportation from production site to the store. These tax incentives could be paired with carbon tax / cap-and-trade revenue (to fulfill the revenue-neutrality legislative condition the G.O.P. lives by), further tilting the playing field towards lower emission  American production.

Walmart’s own CSR initiatives have led to an increase in American production, appropriate legislation can (literally and figuratively) bring these changes home.

I would like to take this opportunity to also highlight an example of the political economy definition of a “collective action problem”:

Through the Walmart Stores Inc. PAC for Responsible Government, Walmart has given more than $22 million to politicians who are opposed to legislation that would regulate emissions and promote climate change.

In the 2008 elections, 80 percent of Walmart’s senate campaign contributions went to people who blocked the “cap-and-trade” bill, which would have reduced carbon dioxide and other greenhouse gas emmissions across the U.S. economy.

A collective action problems occurs when a large group of people would be better off with a change, but that change does not occur because the gains to each individual in that large group are small, while the losses imposed by the change on a small group are large. In this case, the American public would be better off with regulations on GHG emissions, but these improvements in environmental quality are hard to quantify and will occur only in the future. In contrast, the cost to the small group (Walmart) is large and immediate–having to pay for emissions. Therefore, it is rational for Walmart to use it’s resources ($22 million in this case) to lobby against these changes.

But there is strength in numbers and in public opinion, particularly in a democracy. While civil society may not be able to raise money to counter Walmart’s lobby, it need not do so to overcome the collective action problem. This comes down to an issue of social accountability. In a democracy, we can vote for lawmakers who will stand up to lobbies for the greater public good.

The fact that these politicians are rare-to-non-existent is partially due to legislation (lobbying money is allowed to influence lawmakers), but mainly it is due to a failure of social accountability. People are either too busy or too cynical to vote, with the aggregate outcome of a legislature that represents the interests of it donors rather than its constituents.

Democracy is powerful, voting is powerful. It is why we see wars fought in the name of democracy; people are willing to die for the rights we as a nation largely take for granted. Our ability to move forward as a nation whose laws represents the interest of the general public hinges on overcoming cynicism in the democratic process.

Finger-pointing and playing the blame game are not the answers. Education / information dissemination is an important element of overcoming collective action problems, and is largely why I do what I do here at NN. But ultimately the responsibility lies with each and every U.S. citizen. Belief in the power of the democratic process is the only way to return to the more egalitarian America of yesteryear.

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2 thoughts on “Green News: Walmart, Wages, Emissions, and Personal Accountability in a Democracy

  1. You have written a very thought-provoking article. Your content speaks to me and I share in your views. Many writers don’t write original material, but you have really done a great job with this information.

    Like

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