business news in context, analysis with attitude

We referred last week to a piece in The Boston Globe that addressed the whole low-carb diet issue, and we expressed a certain amount of irritation with the idea that the medical establishment has so much disagreement about what is halthy and what is unhealthy. Which led one MNB user to write:

You know what makes me cranky????? Reporters who do not thoroughly research something before they write about it or it makes it one the air.

People are always looking for the ONE thing that will fix all of their problems. Weight loss is no different. If you listen to the people who are doing the research like Walter Willet at Harvard or Marion Nestle who wrote Food Politics you will hear the same story we have always heard. Eat too much, get fat. The one variable that seems to have thrown an even bigger monkey wrench into that basic equation is the kinds of foods we are now eating. Never before in the history or mankind have we eaten the crap we now call food. If it's processed, filled with empty calories because it is made with the big three we all love - sugar, fat (bad fats, i.e. Hydrogenated), white flour we eat it.

Food is the biggest drug we take. Its job is to fuel our bodies, not deplete
and ravage it. Come on people, wake up.

Wait a minute. While we would agree that the media (and that includes us) gets caught up in all these diet/nutrition stories, we're not sure it is fair to blame it for all the confusion. After all, you have doctors writing books that recommend this or that, and those books become best-sellers with millions of people adhering (or trying to adhere) to their recommendations…and the press is supposed to not notice?

Our approach - and that taken by a lot of outlets - is to examine the ongoing diet/nutrition story from the social/cultural angle. We're neither doctor nor nutritionist, and aren't qualified to reach the kind of conclusions that even the medical establishment argues about.

One other thing. We've never looked at food as fuel. It is that, of course,, but that understates its power and mystery. Food can be art and music and poetry.

We also referred last week to a recent piece in The Washington Post suggesting that while Henry Ford wanted to pay his employees enough to be able to buy a car, Wal-Mart seems to want to pay its employees so little that they can only afford to shop at Wal-Mart. This struck MNB user Randal O'Toole as revisionist history on the part of the Post:

I love your newsletter. But one correction: As much as I admire Henry Ford (who Fortune magazine called "the businessman of the twentieth century" -- I think they should have named Henry J. Kaiser), he didn't have a goal of paying his employees enough so that they could buy a car. Instead, his assembly line methods made it possible to reduce the cost of construction -- but also made the work so boring that he had a hard time keeping employees. So he took half of his profits and doubled wages, making his workers the highest paid factory workers in the nation. One result was that his workers could afford to buy his cars -- but that wasn't his goal. He just wanted to keep a skilled work force.

The contrast today is not between Wal-Mart and Ford but between Wal-Mart and Costco. I appreciate having a Wal-Mart nearby, but I am passionate about Costco, and not because Costco pays its employees more. But that fact is just one more reason why the Costco model is very different from the Wal-Mart model. I can't say which is best -- I am just interested in seeing the diversity in the market place.

MNB user O'Toole also weighed in on another ongoing discussion - the role of communities in deciding what kinds of retail are appropriate and inappropriate inside their borders:

On the issue of whether communities should have the ability to rule on development issues: When you give them the power to do so, you create incentives for special interest groups to manipulate the process in their favor and at everyone else's cost. Communities should have the right to make sure that everyone pays their fair share. But what someone does with their private property, provided they pay for any services they use, is their own business.

The advantage that free markets have over electoral systems is that free markets do a better job of protecting minorities. A majority of people (or, more likely, a minority of politically powerful people) might rule against building a Wal-Mart. But they are denying other people the opportunity to save money. Why should someone else have the right to tell me where I can spend my money any more than they have the right to tell me what I can say or what church I go to? This nation has forgotten that the fifth amendment to the Constitution is just as important as the first (and, economically, more important).

The nature of competition by Wal-Mart was discussed by another MNB user:

The destruction of retailing by the strong arming of Wal-Mart is easily deduced and must be stopped per the following equation:

The calculation of economic output and input divided by PI*R squared to the 2nd power confirms the effect that if you create working poor and create the cheapest priced retail outlet you will create the largest retailer in the world.

Put another way - "Thems that got the gold make the Rules and the stores, thems that don't cower to and shop at Wal-Mart"

MNB user John von Uffel wrote:

The cycles of creative destruction are unstoppable. Capital flows, capital
writes, and once written, is subject once again to the next wave of creative destruction. If Wal-Mart destroys another 30% of quality, union retailing jobs over the next 5 years, what they (WMT) may face is an unstoppable union drive in their own shop. Then, once unionized, other smaller operators can rise again to compete with them on a different, altered playing field. These new, smaller players might eat away at niche portions of the Giant's business, and so on and so on.

MNB user David J. Livingston wrote:

Personally Wal-Mart is what keeps me in business. A lot of my work is to do due diligence for retailers looking to purchase chain locations that Wal-Mart has put out of business. Keep in mind there are some retailers who love Wal-Mart. Why? Because they use Wal-Mart as muscle to drive out their competitors. After the dust settles, they are doing more business than before Wal-Mart opened. If a business closes as a result of Wal-Mart opening - they deserved it.

Wal-Mart gets a lot of bad press about paying low wages. Their wages are no different than K-mart, Target, or any other discount retailer. These other companies are not under fire because they have not been as successful as Wal-Mart. Wal-Mart is on top and gets all the visibility. I bet Wal-Mart can't wait for the new immigration laws to take affect. I predict in 5 years nearly all of Wal-Mart's store level employees will be immigrants with green cards.

MNB user Bob Vereen chimed in:

With all the talk about Wal-Mart and its employee pay practices, it
might be worth mentioning that Wal-Mart has been named as the best retailer in Canada to work for.

Interesting that in Canada, apparently, people aren't complaining about
its employee practices.

Maybe because Canada has nationalized health care? Which CEO Lee Scott would like to see in the US?

MNB user Mark Rodrigues offered:

I think Wal-Mart raises the question of Universal Health Care in America. If there is none, then a company (i.e. Wal-Mart) can choose to offer none. This allows them to lower their prices and attract more customers, thus driving out of business companies that choose to over health care to their
employees. In countries where Wal-Mart operates that the government provides Universal Health Care through the taxation system, Wal-Mart must pay its taxes like everyone else, thus fund the Health Care system. This raises the cost for Wal-Mart but puts everyone on the same level (an the employees are not exploited).

MNB user Dean Parker had some thoughts on all this:

I see Wal-Mart as a cancer that lives because the working man sees it as a "blessing'. Wal-Mart job pay and benefits (lack of) will eventually increase workers at the poverty level and destroy the union concept of good pay and benefits. The unions on the other hand have created the opportunity for Wal-Mart to grow and prosper because of their incessant demands that the employer is responsible to improve every union members way of life. Too much because of union greed and too little on Wal-Mart side is creating a chasm that will only be filled with workers lacking decent salaries and benefits and eventual reduction of union strength due to their inflexibility.

Wal-Mart is also creating huge pressures on manufacturers! Wal-Mart is in a position to dictate. Sooner or later some one has to pay for Wal-Mart!! Our laws seem to be mixed up.

Community leaders say the do not want Wal-Mart box stores so Wal-Mart in its omnipotence take them to court outside of their community and win the right to invade communities that elected officials have said no to them! This is not right.

And another member of the MNB community suggested:

I want to start off with a question. There is no doubt that Wal-Mart’s public marketing campaign is brilliant. Get them hooked on the perception of “always” having low prices, and then they will never question themselves about going somewhere else. If the general public had the same kind of campaign thrown at them presenting the information such as what we see here and in the papers, that I am sure only a select few ever take the time to read, where would Wal-Mart be today?

I have been one of those people, but after reading some of the information about the effects of Wal-Mart, I can see the validity in a lot of the negative points. I have found myself buying more items at the local grocery store, the local hardware store, the independent gas station, because I know these local operators depend on it. They in turn will purchase the product I sell.

A lot of the information presented here indicates a down ward spiral affecting many issues, and where it leads is still unknown, but indicators say it isn’t good. How will it stop? How do we as Americans begin to re understand the importance of buying and using services produced in this country? It wasn’t enough to compete with other stores, Wal-Mart’s hunger for competing against its own previous year retails are speeding up the process, however you define what the process is.

The Pete Rose/Hall of Fame story continues to generate a lot of email. (Non-baseball fans who are mystified by this discussion should shoot us an email at . and we'll try to explain it to you.)

One MNB user wrote:

Pete Rose did make on the field contributions to the sport of baseball. They are worth noting until you put the betting from his job over things related to his job, on a balance scale with his contributions. All people have feet of clay, and all do things that are wrong, but their contributions in a particular area are often not connected to the arena in which they make heavy contributions. For example, FDR is revered for things he did to draw our country out of the Depression. His personal life, however, was scandalous for the times in which he lived. Those do not wipe out his contributions to our nation.

Pete Rose, however, wipes out his contributions to baseball by the betting on that very sport. He held knowledge of other teams and the power to make games go one way or another because of his position in baseball. That wipes out any contributions he made on the field, period. He blew it, and even after all this time is still in the state of denial to some extent. He is a sad story.

Another MNB user disagreed:

You can't just label one crook in the Hall of Fame. They would need to go back and label the crimes of everyone there. The Hall of Fame then would look more like a Who's Who in jail than a display of greats.

We disagree. There are crimes. And then there are crimes against baseball. You can debate which are worse, but as the MNB user above noted, the crimes against baseball are directly connected to the career that the Hall would be recognizing.

We argued last week that if Rose were allowed into the Hall of Fame (albeit with a plaque that explained his disgrace and banishment from the game), then Shoeless Joe Jackson also ought to be permitted in. Which prompted one MNB user to write:

I couldn't agree more! Shoeless Joe Jackson should be in the Hall of Fame! We don't have to go there, it's indeed unfortunate that out forefathers' ignorance prevented many great men and women from receiving the recognition they richly deserved.

Yes, I also agree there should be a disclaimer plaque stating that even though Pete Rose was a legend on the field, he succumbed to an illegal addiction. Like so many other athletes that reached the pinnacle of their game, he sought out another source for that adrenaline rush (or high). Some of them do it with drugs, his venue was illegal gambling, worse yet he bet on baseball while he was a manager. That is a total taboo, and in some folks eyes it's akin to a lynching offense.

Lucky for us that we get our adrenaline rush from MNB.

MNB user Richard Riggs argued:

Hypocrisy is as All-American as Apple Pie, Mom and Chevrolets.

Witness: LBJ, Richard Nixon (I am not a crook), Ronald Reagan, (Iran-Contra), blah-blah-blah.

And Chevrolets are not so hot either. Harley Earl was the last honest designer they had for the '55's.

So what if Bart Giamatti could quote Shakespeare. What was his on base percentage?

Put Rose in the Hall of Fame and maybe he, and all of his detractors will go away. I'm sick of hearing about it.

We're sort of sick of it, too…but on the other hand it is a fascinating argument because the discussion of virtue, achievement and, yes, hypocrisy, provides a window into the uniquely American soul.

Yet another MNB user chimed in:

I was listening NPR yesterday and the suggestion was made that the Hall of Fame wait to induct Pete Rose posthumously. This would recognize his baseball accomplishments but not let him reap the rewards from breaking the rules. Sounds reasonable to me.

Boy, that would make Rose conflicted, wouldn’t it? (Problem is, he'd probably start laying bets on his time of death.)

By the way, we have one other point to make on this. There are people who keep saying that Rose ought to get some consideration because he never bet against his team, only on it. But unless he bet money on his team in every game that it played, then every time he didn't lay down a bet he was, in essence, betting against his team.
KC's View: