Quote: Kelvin's Ferret "I don't have a relationship with Wal-Mart as far as I'm aware, I rarely shop at ASDA, not out of any guilt but simply because there isn't one near me.
However, I'm not telling people they should shop there, shouldn't shop there, should work there, shouldn't work there. I am sticking to reality and saying that if people go there for low prices it is because costs are low, and for most businesses staff costs are the big variable cost they squeeze to get low costs. I don't advocate poverty wages as a business strategy, I think there are often better ways, but not neccessarily ones you'd be happy with. Business will pay higher wages when they see higher productivity as a return on that, but the flip side is that with higher productivity you need less staff but better skilled staff and capital investment in technology. That's just the nature of adding capital to labour, I read it expressed recently as like replacing ten men with shovels with one man and a mechanical digger, the man operating the digger gets more money than a man with a shovel. Now, it may be that the for Wal-Mart there is weak opportunity to replace low skilled labour with capital investment and higher skilled labour, I don't know. But higher wages without increased wage costs means increased productivity, and that means less staff; higher wages without increased productivity means higher costs, means higher costs that flow to whoever bears the costs.'"
And the suggestion is, given the level of profit, the shareholders should bare that cost.
I don't think [iare[/i dealing with reality. There no suggestion Wall Mart is going to replace low skilled labour with higher skilled or could if it wanted to. This is not an industrial revolution scenario. It's about a equitable distribution of the profits.
Winston Churchill had it right whe he made the case for a minimum wage in 1909The profit issue can become a bit of a red herring, most investors look for a normal range of return on investment, a certain percentage that varies based on the industry and the level of risk (I don't know what this is for Wal-Mart btw). Quoting huge headline figures is misleading without knowing what the return on investment is, $15bn is only a good return for the investor if each $ invested is generating more than that same $ could earn invested in something with a similar risk profile. By all means people can look at it very simplistically and say we'll slice a chunk off $15bn, but if $15bn is a normal return on investment on the amount of capital invested then it's a silly idea. This is the same sort of silly trap people fall into when they advocate Tobin taxes that shave pennies off billions of daily financial transactions, what they don't look at is what percentage of the value of those transactions they are actually looking to take i.e. taking 2p off a billion transactions looks great unless each transaction only generates 1.5p of profit, at which point the idea collapses.'"