New Orleans It’s been a while since we talked about Walmart and that lot. It’s not because they have really gotten kinder and gentler, since they have continued to grow bigger and bigger, it’s just because talking about Walmart seems not to change the way they do business. What’s different now, you might ask? Well, there might just be a name for what they have been doing to grocery consumers, not just at their stores, but everywhere we stop to get what we must have to eat. It turns out they are waterbedding us. If that sounds like waterboarding, an inhumane way the USA and others have tortured prisoners in defiance of the Geneva Conventions governing war, then you can get a sense of how waterbedding feels as well, especially to your wallet.
According to economists, the waterbed effect is when a major, large trader is able to leverage especially favorable terms from a supplier, which then forces worse terms for the less powerful, smaller competitors in the market. The effect of this kind of consolidation in the market ripples throughout the food chain from the rancher running cattle to a single mother trying to make it on food stamps with one getting less and less for their product, and the other paying more and more, and often being forced to feed their family less and less.
Stacy Mitchell, the head of the Institute for Local Self-Reliance detailed in an op-ed recently in the Times, explaining,
What accounts for the difference in price is not efficiency but raw market power. Major grocery suppliers, including Kraft Heinz, General Mills and Clorox, rely on Walmart for more than 20 percent of their sales. So when Walmart demands special deals, suppliers can’t say no. And as suppliers cut special deals for Walmart and other large chains, they make up for the lost revenue by charging smaller retailers even more…
Besides that, it means that there are more grocery deserts in urban and rural areas. More dollar stores without fresh meat or produce, offering whatever they want at whatever price. More stores closing as well. And, doggone it, more people forced to shop at Walmart because it’s the only game around and because it has lower prices, since it’s waterbedding consumers.
The Texas congressman Wright Patman from the Texarkana area was a power in his day, and for all his faults, and a populist from time to time, and he joined with Arkansas Senator and at the time majority leader Joe T. Robinson in the Senate during the New Deal to pass the Robinson-Patman Act which outlawed “predatory pricing.” The Britannica explains that…
when a … megastore absorbs short-term losses as a necessary function of driving out its local competitors. The outcomes are twofold. First, area competitors are eliminated, thus securing the megastore’s profit margin. Second, once the newcomer has increased its market power, prices are set at a higher level than before. In the long run, revenues are restored.”
The Federal Trade Commission used to enforce this act, but laid off of it, which allowed Walmart and its wannabes to blow up in size and blow away a lot of rivals. The FTC needs to get on the stick and do its job again, rather than looking the other way.
` This is personal to me, not just because we’ve spent years organizing against these big boxes, but also because mi companera is on the board of the local co-op. They do a good job down there. I have their bumper sticker on the back of my truck. They can’t compete though and are in continual crises, entailing endless calls that I can hear in the kitchen for hours some nights when I’m in town. Our support with other families isn’t enough to allow them to succeed. We do our part, but the little guys just can’t make it unless the government does its job of protecting all of us, not hiding out and abetting the big corporates to waterbed and waterboard us.