Wal-Mart to pay $33 million in back wages

This was due to the incorrect mechanism walmart had for counting overtime and missed breaks. These are serious violations from the biggest private employer in US. Walmart agreed to pay the sum after many lawsuits were brought against it. I think this was not just an error on part of walmart but a widespread policy which walmart had which violated labor standards. To avoid this in future and so that corporations learn walmart should be fined heavily, otherwise corporations will continue these policies in hope that nobody catches them and the cost of being caught is not huge as they just have to pay the salary which was anyway due.

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=WMT:US&sid=avnZRDjVKWOk

Walmart - Health Insurance for employees

Some important things to note:

"Wal-Mart Stores Inc. released health insurance enrollment rates for its employees Thursday, highlighting that more than 90 percent of its workforce is insured.

At the same time, the nation's largest private employer, based in Bentonville, Ark., also noted that less than half of its 1.3 million workers -- 47.4 percent -- are enrolled in Wal-Mart's own health program, despite recent changes that offer broader eligibility and low-cost policies.

More than 22 percent of Wal-Mart employees get their health care through their spouse's employer, 8.7 percent are covered through government programs such as Medicare, Medicaid or the military, and nearly 10 percent go without any health insurance, based on the fall 2006 enrollment period."

"Wal-Mart's employee enrollment figures buck national averages, which show upward of 84 percent of employees accept coverage offered by their employers."

"The company has seen employee enrollment rates increase from 41 percent in 2004 to 43 percent in 2005 t0 46 percent in 2006. In the past year, enrollment increased just over one percentage point."

The thing to note is that last year walmart after lot of media backlash intorduced new plans which were advertised as far better, but they increased coverage by only 1% - shows the rhetoric of Walmart. And also depicits the point that even after media pressure without regulation corporations on their own wont do anything which seriously impacts their bottom line.

Article:
Most workers at Wal-Mart insured; half avoid its plan
Many get health coverage through spouse or government, but nearly 10% go without it

Friedman: Free to Choose Part 1

The video is part 1 of documentary series "Free to Choose" by Milton Friedman, followed by a discussion between Friedman and others about free markets/capitalism/government intervention/corporate power/freedoms. The discussion is good and brings up lots of points in the debate as compared to the documentary which shows only part of view points.

In the documentary Friedman purports various benefits of free markets. He stresses the point that free markets provide economic freedom to everybody and even though in sweat shops the conditions maybe bad, people choose it over other options and they move on to better futures after the hard work. Here he is making a big assumption that people are free to choose which is debatable. In my opinion people who "choose" sweatshop labor have a very constrained set of choices - maybe between a tyrannical government or sweatshops. The goal should not be to find which is the better option among these choices but rather to find policy options to broaden and enchance the set of options in order to make a truly "free" choice.

He goes over the neo-classical economic theories of "Magic of Prices" and how they provide incentives. He seems to be a great beleiver that free markets lead to more freedoms both political and social and for this he uses example of Hong Kong which has almost zero tariffs, low or non-existent government regulation but which is thriving. But the fact is that HK with all the prosperity has huge disparities in income with the inequality index of 0.46 in 1996.

I would question his premise the free markets help everybody and is the solution to poverty. Free markets are not level playing fields and dont provide equal freedom to all. They are highly skewed in favor of the rich who get more votes - in terms of voting with their checkbooks - while poor get less votes as they have only so much to spend. Free Markets are definately good for the rich as they get more votes, their voices are heard. Like for example pharamecutical industry comes up with drugs for the illnesses of the rich but rarely comes with new drugs for the illnesses of the billions of poor like malaria etc as shown by recent new medicines introductions.


He is a strong proponent of reducing government regulation. He says govt regulation tends to work for the industralist and government anyway cant do anything good so its better when they intervene the lease. He tends to believe government regulation restricts indiviual freedom. Again this point is highly debetable. Absence of government regulation in my opinion instead of freeing the poor, empower the rich as they have more voting power in this new setup. I understand over government regulation stifles innovation and leads to a bureucratic power strucutre where again the rich seek benefits. But this does not mean complete de-regulation and no government oversight as that leads to corporations exploitation of labor, communities, enviornment. There needs to be a balance between the two and only government where - one person, one vote holds true to a large degree can represent interest of the poor.

The discussion which follows brings up series of interesting points. Though in theory if everybody has equal power than free markets will benefit everybody but power strucutres are too squewed towards corporations & the rich for a free market setup to benefit everybody. The challenge I think is to device government regulation and control upto extent where the less powerful are represented, without giving the rich additional powers. I would highly recommend the documentary, especially the discussion.

Case Study: City of Atlanta Water Privatization

This case study of city of Atlanta water privatization analyzes the reasons for the failure of water privatization in Atlanta and lessons to be learned from the failure for other cities which are considering privatizing their water services. It was done in collaboration with a bunch of folks.

Case Study @ http://docs.google.com/View?docid=ddnrwjjv_7f5msvf

New Worker Scheduling at Walmart - Another way to exploit workers and be more "efficient"

WSJ in an article described the new worker scheduling system which walmart will roll out in all its stores this year. The new computerized system schedules workers based on number of customers in store, receipts from counter, past record and such parameters as loading time for stock etc. This system will lead to unpredictable schedules for workers and they would be asked to be on hold at various times and if system demands they would be on work. This makes workers life a hell as they dont know at what times they will work and schedule for picking up kids, doing other chores goes berserik. This system will also help in not scheduling more hours for part time workers who are reaching full time status as that rquires walmart to provide more benefits. Also current full time workers will be asked to work at random points making life difficult for them and forcing them to leave. (Full time have to be paid more benefits but dont have very high productivity as compared to part timers according to walmart. So the company prefers part time employees).

This will lead to increased efficiency for walmart customers and the managers. But what about workers?. They are not unionized and organized so its easy for Walmart to get these draconion rules through. Walmart has feverntly opposed any form of unionization in its stores and infact closed stores where it was threatened with unions. Another example of corporate explotation without concern for employees for more "efficiency" aka profits.

Corporations: Human Lives vs Profit? Winner: Profit

In a classic example of how the basic nature of corporations - pathological greedy, explotative person - comes into play in day-to-day decisions they make, the Abbott case demonstrates that corporations will go to a huge extend for their profits without caring even about human lives. In this piece from the Wall Street Journal, Abbott - a pharmaceutical giant - was faced with question of how it should increase sales of its new AIDS drug, Kaletra, which were decreasing as a result of its own older AIDS drug, Norvir, which when used in combination with drugs from competitiors was working well for patients. The options considered were

"removing Norvir pills from the U.S. market and selling the medicine only in a liquid formulation that one executive admitted tasted like vomit. The taste would discourage use of Norvir and competitors' drugs, the executives reasoned, and Abbott could claim it needed Norvir pills for a humanitarian effort in Africa. Another proposal was to stop selling Norvir altogether.

A third proposal carried the day: quintupling the price of Norvir. One internal document warned the move would make Abbott look like a "big, bad, greedy pharmaceutical company." But the executives expected a Norvir price hike would help Kaletra sales, and they bet any controversy would eventually die down.

They were right. Kaletra sales in the U.S. rose 10 percent over the next two years"

These all plans are captured in emails and internal presentatios:

"A slide presentation titled "HIV Communications Plan" and dated Sept. 24, 2003, reviewed the two options and added a third: pulling all formulations of Norvir from the global market. This radical step, the presentation said, would remove "pricing from public debate" and render moot any discussion of the liquid's taste. However, it noted that Abbott's "corporate reputation" would suffer. As for the price-increase scenario, the document listed as a "Pro" that health insurers might stop covering Norvir, which would hurt sales of other protease inhibitors and force patients to use Kaletra."

This was done even though most of Norvir's intial research was funded by a grant from government - which is typical of all major drugs.

(John Erickson, a former Abbott scientist who did much of the research work on Norvir) "testified that it was unlikely Abbott would have funded Norvir's early development without a $3.5 million grant it received from the NIH in 1988."

Drug companies usually fund the drug at a later stage when chances of its approval are more certain like at the clinical trial stage when Abott spent $300 million. Though NIH had legal right to grant rights for generic production of drugs it didnt do so - in a world where corporations control and lobby the government this would have been too much to expect.

And the decision taken by Abott was this:

"In December 2003, Abbott implemented its final decision: a 400 percent price increase. Norvir's U.S. wholesale price rose to $257.10 from $51.30 for 30 100-milligram capsules. The move made Kaletra a cheaper option for American AIDS patients. It raised the cost of using a Reyataz/Norvir regimen by $2,504 to $11,187 a year. In the case of regimens requiring more than once-daily Norvir boosting, the cost rose by $5,000 or more a year. Kaletra at the time cost about $7,000 a year."

So it used its monopoly power in norvir to increase sales of Kalitra, sales have incresed 27% since then without a iota of concern or thought about the patients who would have to pay higher costs - in terms of higher deductible costs or those who would not be able to afford the drug at all. All throughout the decision making the most important concern for Abbott executives was about company image not about patients.

This is a not an isolated case of corporate power play, it happens almost daily on some level because corporations are designed to care only about profits. I will try to demonstrate through various case studies the patters of such behavior. As Milton Friedman puts it "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits". Corporations try to talk about "social responsibility" and that is only as a brand/image building excercise as shown in news release on Abbott's website, which talks about new program for reducing AIDS amonf blacks which at the same time when decision time comes Abbott favors profits.