frontline: is wal-mart good for america?: interviews: gary gereffi | PBS: "But they say, 'Oh, we're just following consumer demand.' Is that right? Are they just following consumer demand, or [are] they also shaping it? Do they have a power of decision? I mean, everybody sort of says: 'It's the power of the market; it's the power of the consumers. All we're doing is responding. This process is inevitable.' Is that right?
The Wal-Mart model is a double-edged sword. On the one hand, Wal-Mart is probably the most efficient company in the history of American business. It's pushed a low-cost, global sourcing model to the nth degree. It's created suppliers that produce goods cheaper than they ever could before.
The flip side of that model is that this has come at the cost of U.S. jobs that are actually moving offshore, and even Wal-Mart's own suppliers are concerned that by pushing costs down so low, companies can no longer be profitable. So in a sense, it's like we have two models in the world economy. We have the efficiency model, which is based on low cost and global sourcing, and Wal-Mart is the best company of its kind in promoting efficiency, low-cost sourcing. But we also have an innovation model based on higher wages, new products, good benefits for U.S. workers.
And those two models are in conflict to some degree. Wal-Mart has actually been producing global efficiency, but it's as though the efficiency model doesn't have a floor.
So a race to the bottom?
Wal-Mart is one of the major companies that's been promoting a global race to the bottom. It's like we're on a bus with an accelerator pedal with no brakes. We're going in this global sourcing, global efficiency direction, and it's pushing everybody's costs down to the floor, but suppliers are complaining about this model because they can't make profits. They can't pass higher costs on to Wal-Mart, because Wal-Mart is so big, it holds the fate of any one of its suppliers in its hand. And workers are concerned that, even if you work for Wal-Mart or you work for one of Wal-Mart's suppliers, this efficiency, low-cost model drives your wages to a point where you feel you can't even consume the goods that you're selling or the goods that you're making."