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SEIFFE:  Boxing In The Competition

Tuesday, July 25, 2006

By Ralf Seiffe

Wal-Mart is one of those subjects on which nearly everyone has an opinion including the fifty aldermen who run Chicago .  The upcoming vote on the “Big Box” Ordinance pits the largest company on earth against Chicago --which has been trending smaller since its mid-century high-water mark--mandating the wages the company must pay for the privilege of building a store on land no one else wants. The politicians have positioned this as another battle between their good and corporate evil but, as usual, they have it wrong.  The real reason for the aldermen’s  enmity towards the “big boxes” is much more fundamental and much more sinister.  

Mugging business is nothing new for politicos.  They believe they are entitled to a large share of business’ earnings and, here in Chicago , they impose much larger real estate taxes on property businesses use.  The result is predictable; companies are leaving Chicago (and Cook County ) for friendlier places as a trip down I-55 or up I-94 just over the Wisconsin border will prove.  

But the “Big Box” ordinance is a new tactic which, for the first time, seeks to raise a business’ prices directly to restrict trade. Ostensibly, the council is acting as the pawn of organized labor which has long targeted the retailer for organization.  The company has avoided unionization because its employees have chosen to remain unorganized and that fact has helped the company keep prices low.  By legislating the pay and benefits of stores whose very size and scale are a significant attenuator its prices, the unions believe they can co-opt the council to drive the Big Box’ prices to parity with unionized outfits. 

The unions’ motivation is obvious but what about the Chicago City Council’s? 

Their target is clearly Wal-Mart if one accepts the notion that the other “Big Boxes”, including Field’s and Carson’s State Street flagships, have operated a long time without attracting the Council’s attention.  The difference is Wal-Mart and that’s the key to understanding why the City Council is poised to impose wage controls that would have embarrassed Richard Nixon. 

Wal-Mart is an economic beacon for low-income people in blighted neighborhoods.  These Big boxes replace the liquor stores, high-priced convenience markets, drug markets and aldermanic hand-outs that are often the only current economic activity.  By imposing efficient pricing and hiring locally, the stores offer a practical alternative to the paternalistic--and apparently hereditary--political system that exists here.  Over time, the stores can replace the hopelessness of living on the west or south side with the dignity that comes with a real job with real prospects.  The fact that Wal-Mart promotes able people from within must be especially infuriating to the solons in city hall because it directly contradicts the politics of victimization in which the Democrat party trades. 

If Wal-Mart were to establish a beachhead in Occupied Chicago, it would create a very different threat to the politicians than the other obvious targets of the ordinance, Home Depot and Target.  Local politicians easily tolerate the home improvement chain because that company’s customers are generally middle class homeowners and taxpayers. The bonus is that the company hires city building inspectors to help its customers understand building codes.  Target’s situation is similar.  Wal-Mart, on the other hand, sells general merchandise to customers who run the economic gamut.  Unlike a Home Depot, a Wal-Mart works in areas where there are no homeowners  and is especially welcome in economically challenged areas.  They are so large and so successful that they swamp the politicians’ ability to create loyalty to their organizations’ unfortunate constituents. 

©2006 Ralf Seiffe

Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader and Illinois Review.