Bloomberg reports on Indian opposition to corporate giants forcing open the lucrative retail market:
“Opposition parties and government allies rounded on Prime Minister Manmohan Singh’s bid to open India’s retail sector to foreign companies like Wal-Mart Stores Inc. (WMT), stalling parliament for a fifth day with their protests.
In a rare concerted attack on the ruling Congress party, Singh’s two largest parliamentary partners joined the opposition in criticizing the policy approved by the Cabinet last week, forcing both houses of parliament to adjourn. Overseas retailers stand to be barred from opening stores in at least 19 of India’s 45 largest cities with state assemblies set to veto their entry. “
I’m glad to hear this. Even though it’s too little too late. The spineless Manmohan Singh has already opened up local mutual funds to foreign investment, with all the economic and other dangers of cross-border financial flows and hot money.
Of course, the globalist mouthpieces, (Time: Jyothi Thottam, “Why India Should Stop Fearing Walmart”), are anxious for it to happen.
The big media outlets like to put a local face on the policy (“India’s Wobbly Walmart Embrace’), but astute readers aren’t fooled.
One writes:
Let’s say our law says that Walmart will source 30% from small players. What about the rest, the 70%? Is it going to source 100% of it from India or is allowed to import the rest, i.e. 70%? According to the WTO you cannot stop them from importing. The example the writer gave was from Bharti-Walmart which is a wholesale cash and carry store (like SAM’s) not Walmart – it is the consumer side which will kill the Kirana business and the Indian manufacturers. She talks about the food supply and global chains without even knowing what it means. …..
They are in the business of making money and lots of it for their US shareholders. They are not in the business of reducing cost for Indian consumers. If it happens that they buy in bulk in China and flood the Indian market with imports, so be it. Today India is a net Export-Import deficit country with $85 Billion per year. This is the contribution of Dr. Singh…from a few billion a year trade deficit that we had before to having to borrow $85 Billion a year to pay our imports minus exports. So what do you think will happen when Walmart imports $100 Billion dollars worth of goods into India every year?
Now you have to somehow find current $85 Billion net deficit + $100 Billion = $185 Billion dollars PER YEAR. In the case of the USA, it was simple. The USA borrowed $3 Trillion to pay the deficit. It has the luxury of printing dollars. So if China demands money, they can print it. They just recently printed $600 Billion. India can not do this and India will ultimately be screwed. In the 17th Century, India was a net exporter. Then the Britishers came and India became a net importer and in turn a poor country. That will happen after a few years if our appetite for imports continues to grow and our exports dont keep up with the rise in imports as happened in the last many years. Today, we borrow soft money and hard money from the IMF, bonds, FDI in other sectors etc. to pay the difference of $85 Billion of dollars that we have to pay to import more than what we export. How long do you think this is sustainable? How long do you think we can continue to borrow either via the FDI route or via IMF loans to pay for our imports. India is one of the few countries where you can allow all these things, including changing our nuclear policy, allowing FDI, etc. without discussing this in Parliament first.
Remember also that Walmart started putting in RFID tags into their clothes from last year, August 1, 2010, making it possible at some point that you could be tracked anywhere you went, because of your clothes. This is incipiently fascistic.
India FDI Watch has a detailed report on what really happens when foreign lobbyists get big retail giants into the market, monopsony:
“Industrial licensing had brought monopolies to India but monopsony is a new phenomenon for India which has recently come to the forefront in the manufacturing goods sector due to the increased specialization in the global process of production. This has led to the concept of a single supplier to a large producer who obtains the goods at a ransom. The larger the amount of any commodity a large retailer can purchase, the greater the concession on price, delivery, it can extract. This is a demonstration of monopsonistic procurement and the awesome monopsonistic purchasing power which comes with it. This is unique to the modern world of digital instant communication (branding, streamlined logistics distribution can drive down prices still further) and hugely affects the agricultural commodities market also, as shown. The more of a commodity large retailers purchase in bulk, the lower the prices growers of agricultural commodities obtain!”
“The Bank has identified laws such as the Essential Commodities Act (1955) the Agricultural Produce and marketing Act (APMC 1972) and the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act (1980) which have defended the rights of farmers to a just price and the rights of the poor to a fair price for food, as having “prevented the free mobility of agricultural produce and thus segmented the Indian domestic market into many smaller markets.
The government has also imposed restrictions on foreign investment in the retail of agricultural commodities, and on both foreign and domestic private investment in wholesale. These restrictions have collectively discouraged and/or prevented the private sector from undertaking large-scale investment in agricultural storage, marketing, or processing activities – an example of horizontal fragmentation preventing desirable vertical integration. The result is that today there is no large, organized, efficient pan-Indian supply chain in the agricultural sector, including in horticulture. What the Bank defines as “fragmentation” is in fact self-organized local systems of production and trade which are not controlled by a centralized store or by centralized, monopolistic corporations. And the repeated attack on India’s “geography” shows how anti-nature World Bank’s basic economic thinking is. Not only the World Bank like to wish away India’s diversity and geography, it would like to destroy India’s food sovereignty.
Thus, the Bank takes apples grown in Himachal and says it would be cheaper to import them for Chennai. This was exactly the argument the trade liberalisers had used to justify wheat imports. However, the imported wheat turned out to be twice as costly as domestic wheat. Navdanya has filed a case in the Supreme Court against wheat imports.”
Note:
I’ve shopped at Walmart, and they have great prices, true. But in the US I don’t have that much of a choice of smaller shops. In India, however, there are plenty of choices….and it should stay that way. Anyway, I don’t think I should be shopping at Walmart, even if the prices are low. It’s a question of choosing smart self-interest over self-defeating self-interest. I like cheap prices, but I also want to live in a country of small shops and farms, not one of huge commercial farms and supermarkets.
It’s time to buy from local retailers, wherever possible.
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On this issue, I agree with OccupyWallStreet.
If we can’t lower taxes to bring companies back, we can boycott multinationals with predatory practices. Giant corporations of this kind have nothing to do with the free market.
From TowardFreedom:
“The shiny happy people featured in Wal-Mart advertisements, as well as the company’s continued PR claims of corporate responsibility (“We at Wal-Mart take an active interest in conserving the environment!”), simply doesn’t match the frustrating reality of their corporate behavior. Even the largely toothless Environmental Protection Agency, for example, a federal regulatory outfit that sometimes seems to exist simply to provide permits for giant corporate polluters, has managed to prosecute Wal-Mart for Clean Air Act violations in nine states, due to the company’s stubborn insistence on storing lawn fertilizer and other toxic chemicals in parking lots located near local watershed areas.
Greenwald even takes us to Wal-Mart’s global factories in where Wal-Mart workers put in 14 hour days 7 days a week and brush their teeth with fireplace ashes because their salaries don’t allow them to buy tooth paste. Implicitly in this global tour is the fact that, while wrapping itself in the American flag and a shallow sham version of patriotism, Wal-Mart cares very little for the health and well being of its workers, the environment, or the health of the U.S. economy as a whole, beyond the short-term dollar value it can extract to increase its profit margin.
While all of this is deeply sobering, Greenwald wisely chooses to end the film on a powerful high note, spotlighting and interviewing several citizen/activists – normal people just like you and me – who have chosen to organize their communities to oppose Wal-Mart’s predatory behavior and fight for more just and sustainable local economies.”
The article smacks of protectionism–I’ve always believed more trade was a good thing. I don’t necessarily see “boycotts” as a constructive response, though I choose where I spend my money every day and it’s not at every merchant. A boycott is different to me, and not in a positive free trade way.
I am a protectionist – against managed trade, and that’s what we have now – managed trade.
Walmart is not a creature of the free market. It’s a huge monster created by a subsidized, perverted market, that’s destroyed the economic and agricultural landscape in the West. My main gripe with it these days is the RFID chip.
I think boycotts are voluntarian. And there are LOTS of reasons why a Walmart boycott makes sense. Globally, it, like Monsanto, is one of those giants that have done more harm than good.
There are plenty of cheap local food stores that don’t destroy any kind of competition.
No problem with small businesses trading freely.
No to Walmart.
They are using the government’s help to break through market barriers. That’s a kind of economic war. So it’s fine to fight back with the law.
Can’t RFID chips be easily destroyed either by exposure to a stong magnetic field such as an MRI scanner, or for the less technical, with a hammer or a hot wash?
Ok. I agree that a boycott is a voluntary act. I still think commerce is a good thing, and blocking it (e.g., as an act of boycott) is not conducive to a proper market signal. The “market” responds to changes in pricing; it is the informal pricing mechanism, influenced by the combined preferences of millions of buyers and sellers, that determines prices and disciplines the marketplace.
An economic boycott is designed to eliminate an entity, in this case, Wal-Mart. The reason, if I understand the article properly, is so that local producers won’t be forced to compete with “predatory” (lower?) pricing. In the absence of such pricing, the local producers are better able to charge, well, higher prices, right? I don’t see how this tactic, at least from an economic standpoint, benefits the consumer.
Isn’t a boycott of Wal-Mart just another method of managing trade?
(A key point in my mind involves the existence of subsidies, which clearly are also not conducive to a proper market signal. You identify that subsidies are involved with Wal-Mart’s pricing but I’m not clear on where these subsidies are given. Might just be my current ignorance of them.)
I also support protectionism. Australia is now suffering heavily due to it’s completely deregulated market.
Many people support deregulated markets, and it is true that there are benefits form markets opening up to each other. The problem is that this only works when both markets are engaging in fair and equitable practices. Let’s look at what the Chinese. They artificially lower the value of their currency, making them unfairly competitive. Their devalued currency makes the products they produce cheap and very hard to compete against.
@tunecede
Sorry, but you seem to be confusing VOLUNTARY CHOICES with statist enforcements.
A sanction against a country is damaging and wrong.
But a voluntary boycott of a specific company, which has a known history of devastating economies where it enters is perfectly voluntary.
If you like cheap prices better than supporting small farmers or shops or locally produced things, then go ahead and buy.
But you can’t tell other people who feel differently from boycotting a company they don’t like.
Nothing says you SHOULD buy the cheapest thing around. (By the way, Walmart is NOT always the cheapest either).
Nothing says you can’t VOLUNTARILY place a higher value on other things or punish companies whose policies you don’t like.
If you think the Walton’s have terrible business practices or if you don’t like the way their shops look (I don’t like huge inhuman supermarkets, sorry…). then why are you obliged to send price signals to other people?
People are confused way. They say no many should slave for others (via the government) but then they say you should become a slave to mass production or cheap goods or sleazy stuff.
Well, enslavement that is voluntary (choosing unwisely) is still enslavement. Even if it is not a crime, it is a bad thing morally.
If you want freedom in the real sense, you can’t be enslaved to your appetites.
If you are, all the market signals in the world aren’t going to produce a decent society.
Re Walmart.
Any corporation that large only got that way because of regulation, cheap money, federal courts etc, which all conspire to make it difficult for smaller companies to compete.
So I think it’s safe to say (even outside their allegedly poor treatment of workers) they are part of the diseased outgrowth of the state.
I am fairly sure that in a free market you wouldn’t get that kind of gigantism.
And even if you could, there’s no reason for me to patronize it if I don’t like the end product – the dislocation and destruction of culture.
I am not that kind of libertarian. I don’t worship the market.
The law and the markets exist for human beings not the other way around.
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Any corporation that large only got that way because of regulation, cheap money, federal courts etc….
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I hate Wall[Of China]Mart and prefer American.
But all being equal, today I’m on the free trade side of the fence. Thing is, to my knowledge we never have had free trade internationally. If we did — starting with freeing *domestic* trade from dumb taxation and regulation — I’m pretty sure it wouldn’t matter what China did with its currency, labor policies, etc. Americans would be able to start making things again and would prefer to invest and buy American manufactured goods. Wall Mart would lose its artificial lustre.
More so than price, I worry about safety with Chinese goods. I really prefer drywall, toothpaste, toys, etc without the cancer-causing chemicals. I’m not sure whether current trade deals or “statuses” hinder safety enforcement.
Getting back to corporate gigantism, the whole tax structure, federal to local, favors it. Big guys like most taxes and many regs since they fall comparatively harder on small biz. For the biggies it’s just a nuisance they pay people to handle. For mom and pop (or hipster guy + girl, or insert preferred archetype) it can be the end.
The real estate tax in most localities taxes the wrong thing, therefore penalizes what most people want and subsidizes what most don’t want: sprawl, big-boxism, uglification.
Henry George, referenced in that link, was best known for one really big idea, which as it happens, would spell the end of premature sprawl, and Sprall Mart dominance, by un-slanting the playing field of location and taxation that these outfits depend on.
And, incidentally, if you want a really fair and really simple revenue system, and you want one that can operate from the bottom up rather than top down, then George’s idea also makes sense. Milton Friedman, for instance, said if we must have any tax it should be George’s “single tax” (or class of tax) on land minus improvements. Wish he’d repeated that more loudly, and more often. Most people don’t realize land was the original public revenue base when the republic was formed. The nature of a land *value* tax is more of a use fee (pay to use) than a typical tax (pay to produce; or pay an arbitrary amount for an uncertain benefit). Americans rebelled more than once, OTOH, against excises, since back then they understood which type of tax hurt the common man and which helped him.
Of course tax reforms have to be combined with complete transparency and legislation ending all special breaks.
WSJ “they see the poor as capitalism’s victims rather than as its biggest potential beneficiaries. Foreign profits are synonymous with loot rather than wealth creation that benefits all.”
Capitalism? Try mercantilism.
I was wrong about Mike Huckabee running for pres, but got some good links and snarky remarks about Wal-Mart, the special government favors supporting it, and the poseurs who spin it as a success of the free market.
Clean URL for that link.
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