Saturday, February 24, 2007

Wal-Mart Compromises (or maybe not)

The recent meeting among Wal-Mart, Lincoln, RG4N, and various neighborhood associations was represented as a significant step in the right direction, as willingness on the part of Wal-Mart/Lincoln to compromise. And, initially, I accepted that.

It was reported that:
  • [1]Lincoln increased the traffic counts closer to what they found at the WalMart on Ben White and I-35 and found them to come out at an acceptable level with the execption of the Burnet Rd and Anderson Ln intersection. As a result, they have agreed to add more turning capacity at that intersection.
  • [2]Lincoln will explore modifying Foster from Shoal Creek so that it's not a straight shot into the development.
  • [3]Add a turn lane into the development from Northcross drive.
  • [4]Wal-Mart would route Wal-mart truck traffic up 183 to Burnet and down Burnet to enter at Northcross Drive. Anticipate 89 deliveries a week, 1/2 of which would be Wal-Mart 18 wheelers.
  • [5]They will reduce the square footage of the Wal-Mart form 224,000 to 219,000 sq feet.
  • [6]Wal-Mart is willing to consider closing from 1:00 to 5:00 a.m.
  • [7]The new elevations showed sidewalks and greenspace along the eastern side of the Wal-Mart structure
  • [8]They said revised site design comes closer to complying with the City's recent design standards,
  • [9]Willing to modify the design to allow for small stores at the ground floor of the WalMart parking garage,
  • [10]have a rainwater capture and water quality system for runoff
  • [11]will not have gas or tire & lube operations as part of the development
  • [12]no RV parking
  • [13]24-hour security camera
  • [14]Lincoln and Wal-Mart showed the revised elevations - it did not look like a typical WalMart
  • Okay, looks great, right? I certainly thought so. Then I started looking at it more closely. Now, one of the things they teach you in Rhetoric classes is: look out for empty comparisons. Any time someone starts using "more" or "er" and doesn't finish that clause (more than WHAT), you put your hand on your wallet and back away.

    So, my question is: how many of these "more" and "er" statements are real comparisons, and how many are empty? Is this a compromise?

    And here it gets interesting. If you go back through and label them, and keep a hand on your wallet, what you find is:

  • 1. Even Wal-Mart and Lincoln admit that the Anderson/Burnet intersection will have unacceptable traffic.
    So, will a turn lane make any difference? I don't see how it will; that's no compromise--that's called admitting the major argument and then throwing a bone.
  • 2. This is a lesson I learned multiple times. An oral argument isn't worth the paper it isn't written on. Agreeing "to explore" something is rhetorically brilliant because it looks good but actually doesn't obligate you to anything. I can "explore" an option by spending three seconds thinking about it while I'm stuck in traffic--that's like a boss saying s/he'll "think about" a raise.
  • 3. That's something that benefits the project--that's like my saying, "Hey, as a special deal, I'll take my normal commission on this sale!"
  • 4. How would they route traffic? They would tell their 45 trucks a week to pleeeeeeze stick to Burnet. The other 45 that they "anticipate" (note no obligation incurred there either) would....um...what? Get really dirty looks if they drive down Woodrow or Shoal Creek? Have people think very bad thoughts about them?

    This one looks good, but, if you push on it, you notice, once again, Wal-Mart has done nothing other than said they'll try to be nice. They "anticipate" a certain number of trucks, but haven't agreed to be limited in that regard, so, oops!, they might be wrong! And they've said they'll tell people to do things a certain way, but haven't said what they'll do if those people fail to listen.

  • 5. Okay, this one walks, quacks, and smells like what is called "bad faith argumentation." From the beginning the plan was for a 219k site. So, to me it looks as though they did the classic (bad faith) bargaining strategy: when they started getting pressure, they moved the plan up in size, so that they could "compromise" back to what they wanted all along. Look here for the size of the project (check the date):
  • 6. See 2 (and 4). They'll "consider" it. Yep, and I'll "consider" letting my son stay up till ten. Just did. He can't.
  • 7-14. True comparisons? False comparisons? Another classic strategy is to put forward an intentionally bad plan, then you reveal the real one (this is the basis of many "Dilbert" jokes). Do we have a site plan that is different in any of these regards?

    For instance, would someone like to persuade me that they ever had a plan that didn't involve a 24 hour security camera? And notice that they have not promised to have that camera manned. So, great, a camera--because everyone knows that, when a camera sees someone committing a crime, it leaps off the wall and arrests them...or maybe not.
  • 14 is especially savvy, because this was never planned as a traditional Wal-Mart--that's the whole point (see my earlier post on that). This isn't a traditional Wal-Mart (at least not right now, more on that later), so it wouldn't look like one. So, this is presenting something as a compromise that was part of the initial plan.

    Okay, I was a fool of the first order. This wasn't a compromise. This was a very cunning move on the part of Wal-Mart/Lincoln, and I, for one, am backing away with my hand on my wallet.

    (I swear--the more I look into pro-Wal-Mart rhetoric, the more rabidly anti-Wal-Mart I get.)
  • Tuesday, February 20, 2007

    Wal-Mart, RG4N, and Defensive Projection

    People like stories, and they especially like stories that pit a good guy against a bad guy. This story is such an important part about how we understand the world that we try to make all sorts of situations fit into it, and, when there is a conflict, one of the first things we try to understand is: who is the good guy, and who is the bad guy?

    Because this story has two (and only two) parts, one thing the bad guy can do is to point out something bad the good guy has done, and then people flip the characters: because the good guy looks bad, what had been the bad guy must be good.

    [It was pointed out to me that this is a leetle abstract. So, I'll make it clearer. Pot. Kettle. Black.

    Or, if that doesn't work, how about this? "Stop! Thief!" (One of my favorite Goebbels' quotes--he was pointing out how effective it is when a thief distracts someone from his having picked a pocket by accusing someone else of having picked pockets.)]

    One way to get that to happen is what's called "defensive projection." You defend yourself from an accusation by accusing the other side. It works.

    One reason it works is that very few people are saints, so you can always find something bad about them, and goodness/badness exists on a continuum (not as two categories). The "he's bad, so I'm good" argument works because people tend to think in terms of good and bad rather than better and worse.

    So, if I am a politician, and the major flaw in my record is that I embezzled, the smartest move for me to make is to accuse my major opponent of embezzling. Even if it's totally false, I'll benefit from making that accusation. If I can get a third party to make the accusation, I'll look even better. And it is likely to be completely successful if I can find anything--even something trivial--to support my claim. So, for instance, if you once took some work pens home in your pocket, I characterize that as embezzling, and accuse you of it, and then people will lose track of my embezzling a million dollars.

    If you don't believe me, think about the respective records of Bush and Kerry in Vietnam. George Bush had an appalling record in regard to Vietnam, and a record about which lies had been told. So, the Bush campaign raised the issue of Kerry's record, and whether he had been entirely honest about it. Kerry's record may have been less heroic than he presented it (or not--there were supporters of his, but they didn't get the media attention), but he had a record in dangerous places Vietnam, and Bush had gone AWOL from a safe situation in Texas. The Bush campaign's projection of "bad record regarding Vietnam" worked--many people got confused by that ploy, thinking Bush and Kerry had equally bad records, and many people thought Kerry's was the bad guy--the question of better and worse got lost.

    Another place one can see this kind of dynamic is in abusive family situations, or in any case involving whistle-blowing. If there is abuse in a family, and a family member calls attention to it, the whole family will jump on that person. If there are bad consequences (e.g., legal problems), the family will accuse the person who objected to the abuse of having caused "the problem." "The problem" just shifted--the real problem is the abuse, and the legal issues are the consequence of that problem, and that problem is caused by the abuser. But, that gets lost when "the" problem gets projected onto the person who objected.

    Whistle blowers, similarly, are blamed for having spoken up, as though they caused the problem to which they were just drawing attention.

    Finally, people who resist are regularly condemned for resisting, and this, too, is a form of projection. If you threaten to beat me up if I don't give you my wallet, and I refuse to give you my wallet, and you attack me, and I fight back, who "caused" the fight?

    You did.

    But, that can get lost. There are two ways it can get lost. The most obvious is for you to say, "She caused the fight because she refused to go along with my request. If she had just given me her wallet in the first place, there wouldn't have been a fight." Rhetorically, that's risky, so the second choice is the savvier one: you say, "She fought me." That is, you don't mention what I was fighting against, or why. If the fight caused any damage--a broken window, for instance--then you make a big deal about how much I cost the community. You say, "Look at all the money she is costing the community through her fighting me."

    What you do, in other words, is make "the fight" my fault because I resisted. Had you not tried to take my wallet in the first place, of course, there would not have been any need for me to fight, but, you can distract people from that. What a PR person would tell you to do is to make "the fight" (and the consequent costs) my fault.

    So, what any decent PR person will tell someone who is costing a community a lot of money is: demonize the people who are fighting, and project your behavior on to them. Claim that *they* are costing the community money. If possible, get those claims made by a third party.

    My analysis of this situation is: Wal-Mart has a decent PR person.

    What is the problem right now? There are several ways you can describe it:

    -Wal-Mart is trying to build a SuperCenter against the wishes of the nearby community;
    -the city violated their own procedures for approving this kind of site plan;
    -Wal-Mart and Lincoln, having benefited from an irregular approval process, are not willing to make the process right. They are willing to negotiate (to some degree), but not on the most important things.
    -they threatened to sue the city if the city tried to undo a bad process.

    So, what is the problem? Either the plan or the process whereby it was approved. Neither of those was caused by RG4N.

    As I understand it, Wal-Mart and/or Lincoln got a plan approved in ways it should not have been approved. If they wanted to make it better, they could retract that plan, and do it right. They haven't offered that, have they?

    As I understand it, Wal-Mart and/or Lincoln has threatened to sue the city if they don't get their way. If they wanted to make it better, they could drop the threat of a suit. They haven't done that, have they?

    Either Wal-Mart or Lincoln could make this problem go away instantly.

    RG4N is resisting, but Wal-Mart/Lincoln started this fight. Unless there is information I've missed, and they've never threatened a lawsuit, or they've retracted their plan, and are willing to go through the process all over again (without any violations), they are the ones costing the city legal fees.

    Does that mean that I think RG4N is the good guy in this story? Not really. I don't like their press release, I think their accusations of fiduciary misconduct are rhetorically (and maybe even legally) unwise, I don't like their hyperbole, and I wish they'd get a decent PR person. But, they're blowing the whistle here, and are at fault only to the degree you think the person who resists handing over a wallet is at fault for a fight.

    Friday, February 16, 2007

    Irrational Argument

    There's more about rational argument that I want to explain. Before going there, though, I'll mention one more thing really fast: how do you know when you're arguing with someone who is irrational by this definition?

    There are a bunch of ways, and it really isn't easy. A person can look rational in the sense of giving lots of factoids, lots of evidence, and coming back with arguments, when really, nothing in the world is going to change their mind--they aren't actually rational on the subject. The most straightforward way I know is if you know the person's history: do they admit error? have you seen them change their mind? do they abandon a precommitment when new evidence emerges?

    This isn't to say that irrational people never change their minds. Sometimes there is no philosophical coherence to the positions they take, but there is always something sacred. So, for instance, John Calhoun sometimes supported states' rights and sometimes didn't, sometimes defended property rights and sometimes didn't, but he never did anything to hurt slavery. So, in the sense I'm using it here, Calhoun wasn't rational on anything that impinged on slavery (which was an awful lot). That isn't to say he was foaming at the mouth--his arguments had lots of logical moves, and he could quote chapter and verse from the Constitution (albeit with some odd interpretations), but his arguments weren't logically consistent except insofar as they consistently protected slavery.

    Now, again, you might still want to argue with someone like that--because you think knock-down drag out arguments are good fun (after all, you don't play racquetball because you expect to solve world problems, and this is just a verbal version of an aggressive game), you're trying to persuade some other group entirely (as in a courtroom or public debate), you think it's fun to pound your head against a wall, you want to understand that other side better, you're procrastinating some other task, you're hoping to pound them into submission and get your way. But, if you are really trying to get some issues settled, and deliberate in a rational manner, this kind of person is not a productive interlocutor.

    So, why do people argue irrationally? And, by "irrational," I want to emphasize that I mean "willing to defend precommitments at all costs."

    Which I should explain, I suppose. Everyone has precommitments--that is, beliefs and values that they bring to a discussion--and there's nothing wrong with that. But, I'm saying that a "rational" discussion is one in which the people involved are willing to reconsider the beliefs and values they bring in. (That isn't all it is--there's more to it, but that's the post I keep promising.)

    So, sometimes people are willing to reconsider precommitments because they're paid not to. Rush Limbaugh, for instance, is precommitted to the supporting the GOP because, as he says, he's most concerned with maximizing ad revenue, and he'll say what he needs to say to do that.

    Sometimes people won't reconsider precommitments because they like a good fight, and that makes fights bloodier. I had two friends who, every time we got together, would argue about whether Renaldo Nehemiah was going to make a good football player. You could basically count--third beer, here comes the Renaldo Nehemiah argument. I noticed, around the fourth time they had this argument, that they didn't necessarily stick to the same sides. The previous time Bryce had argued Nehemiah would be a great pro football player and Bruce had said he'd be terrible, but this time it was flipped. But, whatever side one began (on that third beer), he would stick to with both hands, feet, and belt. So, they weren't really invested in answering the question; they were invested in having the fight.

    Sometimes people won't reconsider a precommitment because they are filled with a personal loathing for their opposition. Their opposition could cure cancer, bring peace to the middle East, erase the national debt, and still that person would not grant that they might have a point or two. This is the kind of thing where someone needs to pay a hundred dollars an hour to work it out--argumentation isn't going to help.

    You also get it the other way. If a person identifies with a major leader, for instance, s/he will take personally any criticism of that leader, and therefore can't think rationally about his/her real character. Leaders who make people think they are one of the people (the "little corporal," for instance) function this way. Since I am a good person, you reason, and this person is just like me, he cannot have done the terrible things they say he did, because I wouldn't do them. (So, supposedly, the more that a jury identifies with a defendant, the less likely they are to convict.) I think this is why people value "authenticity" and "sincerity" tremendously in leaders, although those are much harder to assess than people think (everyone who met him agreed that Hitler was sincere, and he struck even his opponents as a very "authentic" person), and are also totally irrelevant.

    The more that one's ego is on the line in the argument, the less likely one is to give any ground. There are various factors that affect how much one's ego gets involved. Some people have their egos at stake in every single interaction, so can never admit error (it's losing face for them). There's a book called something like _Toxic Bosses_ that talks about working for someone like this, and, iirc, it recommends never pointing out that kind of person's error--you find a way to disagree with them that doesn't look like disagreeing because otherwise the person goes postal. People who are very drawn to authoritarianism, people who see all interactions as one-up/one-down (you're either controlling or being controlled), and people who take all criticism personally are all people who won't admit to changing their minds.

    There are other conditions that make it hard to admit error. Having said the opinion in public, for instance, makes it harder to admit you were wrong, having suffered for it (which is why people who've given up all their belongings expecting the end of the world on a certain date will still stick with the cult after the date has come and gone), having staked one's reputation on it--those are all things that make it harder to perceive (let alone say out loud) that one has blown it.

    For some people, the identity of the critic is hugely important. Adolescents won't admit that their parent might just have a clue or two; some people get enraged at dissent from a woman, subordinate, or member of an "outgroup" (whatever group--ethnic, religious, political, or whatever--they prefer to scapegoat) when they'd listen to it from another person. Sometimes someone just gets on our nerves, and we'd rather cut off a limb than admit they were right and we were wrong.

    As per usual, I could go on, but my point is just that there are so many reasons that good faith argumentation is hard that none of us succeeds at it at all times. But, some people never manage it, and, unless you're on that third beer and you feel like a real adrenaline rush, save your breath.

    Thursday, February 15, 2007

    Rational Argument

    I grew up in a politically conservative area. It was conservative in several senses, the most important being a kind of evasion of political discussion. Political pronouncements were perfectly acceptable, as long as they were within line with what was the conventional wisdom, but disagreement with that wisdom was NOT considered tactful--this is one reason I start to hyperventilate when people talk as though "political correctness" was an invention of the left.

    Something that people don't always understand is that evasion of conflict is fundamentally conservative--you can't have social change without change, after all. That doesn't mean that all conflict is the same, and that's sort of what this post is about: degrees and kinds of discursive conflict.

    It was the late sixties and early seventies, and I had the sense that people around me didn't want to discuss Vietnam. There was just a kind of laying down of the law--that if we didn't fight them there, we'd be fighting them on the beaches of Santa Monica. No kidding--that's what people said. Why Santa Monica? I'd wonder. Why not Huntington or Haggerty's? That was such an obviously loony response, and so thoroughly evaded the questions I had, and it was generally said in such a loud voice, that this was clearly not a discussion going anywhere helpful. And then I happened to go to India, and all these people (including a beggar in a loin cloth) wanted to talk to me about Vietnam. They were vehement, and passionate, and very informed. And I had better discussions with them that I did at home, and that struck me as very weird--why, in America, with its emphasis on free speech, do we have so many cultural stigmas against disagreement?

    Americans seem to have a bifurcated view of political discussion. Either you have a community (which is in perfect agreement), or you have conflict (which has disagreement). Community is good, and conflict is bad. Conflict is screaming, and vehement, and vicious, and different only in degree (not kind) from violence. So, the only real difference between a verbal disagreement and a physical battle is the degree of vehemence with which people fight.

    This is rhetorical fatalism. It presumes that, when people are passionate, they cannot be persuaded through reason, so you don't try reason, you try various forms of verbal intimidation. Those don't work, which seems to confirm the premise (that people can't be persuaded). Or, to put it another way, it's a self-fulfilling prophecy. You think you can't persuade people, so you fight, and strive for just getting the other person to give up. "Reason" becomes "things with because clauses" or "assertions with something that looks like evidence" attached. And they're weapons. You don't persuade people, not because people can never be persuaded, but because the strategy you're using is not persuasive.

    This bifurcated view (conflict=verbal violence; community=agreement) is also all wrong, one of those conglomerations of wrongness so mangled and mungled that even sorting out the ways it's wrong (and the wrong-headed ideologies that contribute to it) is incredibly complicated. I'm not doing that here, but I will mention a couple of books that do a good job of explaining what's wrong with equating disagreement and a battle: Booth, Modern Dogma and the Rhetoric of Assent; and Tannen, The Argument Culture. If you're looking for something more philosophical, I think Mouffe, The Return of the Political is really brilliant, and she's relying heavily on Arendt, The Human Condition which is beautifully explained by Pitkin, Attack of the Blob.

    But, the fact is that a really vehement argument often does turn into (or maybe even starts out as) something that just makes people feel awful. So, people have proposed solutions.

    First, since the arguments that make some people feel icky are generally vehement, then good arguments must be not vehement! Bad premise, bad conclusion.

    This is not only a bad argument (although it is that), but a dangerous and damaging one. The short version is this: when I started doing research on proslavery rhetoric, the thing that stunned me was that the most common argument that proslavery rhetors made about abolitionists was that they should be censored because abolitionists made slaveowners feel bad. This line of argument continues to today--any discourse that makes people feel bad is bad, and should be stopped.

    But, of course, however you do this, only the feelings of some people count. If I criticize Hugh, and that makes him feel bad, then I should be silenced, right? But now I feel bad, too. So, Hugh should be stopped from making me feel bad by having me silenced.

    Or maybe we shouldn't be so sensitive.

    But, there's another version of this. Basically, being told that you're wrong makes you feel bad, so what people who want to avoid bad feelings do is to say that you should never be direct about telling someone you think they're wrong. You avoid words like "but," and you don't contradict, and you don't hurt anyone's feelings. Well, you know what? There's no way to tell someone that you really think it's bad for them to be a slaveowner without hurting their feelings. And you know what else? That's fine and dandy. Slaveowners should feel bad.

    The problem with trying to have a discourse that doesn't hurt anyone feelings is that you've just thrown out the possibility of a critical discussion. Criticism hurts. Unless you dress it up so much that it's no longer criticism (which William Ellery Channing tried, and it still made slaveowners mad), criticism hurts people's feelings. So, the first step that people who talk about productive conflict say is that people should not intentionally make personal attacks, but, equally important, people shouldn't take criticism of their ideas personally. The responsibility is reciprocal. Still and all, that doesn't get you very far in terms of distinguishing good and bad conflict, I think (although it's a good start).

    Second, another way to think about this is that, since vehement criticism makes people mad, and since mad people don't reason well, good arguments can only be had by people who aren't emotional about the issues--vehemence and feeling bad are both prohibited.

    Another bad premise leading to another bad conclusion.

    The problem is that you can't hope to have a public sphere of people disagreeing without their emotions getting involved. A discussion of slavery that didn't involve how slaves feel about it is an incoherent (and essentially irrelevant) discussion. Feelings are reasons, and a feeling-less discussion is, actually, an unreasonable one. It is irrational.

    Now, that may sound weird, as the common notion is that rational=emotion-free and emotional=irrational. But, that's a poisonous legacy of a bastardized version of logical positivism (which, even in its legitimate forms is not helpful for thinking about public discourse). Again, this is a long argument, and I'll say that I think Martha Nussbaum is really helpful (especially the essays in Love's Knowledge). But, basically, the point is that it would be irrational, for instance, to try to think about what career a person should have without taking into consideration how they feel about things like working outdoors versus in an office, working with people or alone, the sight of blood, and so on.

    Third, since icky arguments tend to be distracting, misleading, and fallacious, then a good argument must be one that consists of arguments that follow the logical forms.

    If "logical" means "unemotional," then this is just a variation of the second option, and just as vexing. If not, then it still isn't much help. Going as far back as Plato, logicians have tried to figure out how to apply the rules that work so well in regard to geometry to public affairs. Aristotle said they don't apply--math is capable of certainty, because you can begin with a universally valid first premise, but politics and ethics don't follow from universally valid first premises. That made people nuts (and was one reason that Aristotle's writings were banned from the University of Paris till Aquinas made his thinking more acceptable--but even Aquinas had his troubles). So, various people have tried to find universally valid first premises for political and ethical discussions ever since. (They get into a tricky place with "universally valid"--they have to decide whether something is "universally valid" even if not everyone accepts it.)

    The problems with this line of pursuit are really interesting, but, again, too complicated to follow here. The short version is that formal logic doesn't apply to political and ethical arguments because an argument can be formally valid and still untrue, and true although formally invalid.

    Premise: Chester is a dog.
    Premise: All dogs are canines.
    Conclusion: Chester is a canine.

    If either of those premises is untrue, then the conclusion isn't true (if, for instance, Chester is a cat, or if Chester is a "dog" in the sense of being ugly or unreliable.)

    Gazillionth, I'll skip a whole bunch of intervening ones, including the notion that rationality is bad, so people should just rely on feelings, or that verbal disagreement is pointless, so just hit people who disagree (a surprisingly popular notion). It isn't generally helpful to try to distinguish a rational from an irrational argument by looking at single arguments; you have to look at them in context.

    Now, to some extent, you can look at a single argument--does it appeal to consistent premises throughout (is it internally contradictory). And that's a little helpful, but it falls into the formal problem pretty fast (that an argument can look formally good and yet be completely untrue). Even more helpful is to look at argumentation--that is, the whole process in which the argument happens, and the person(s) who is(are) making it, and the person(s) to it's being made.

    What makes an argument rational, in this sense, is that the person(s) making it can articulate the conditions under which s/he would abandon it.

    An "irrational" argument is an assertion (with or without reasons attached) that a person will not abandon, regardless of evidence--the belief cannot be disproven or tested. There's nothing inherently wrong with irrational beliefs--I have plenty of them--but there also is no point in trying to prove them wrong. Because they can't be proven wrong. That's their nature.

    I'm perfectly happy to tell people about why I think democracy is the best form of government, and I can cite chapter and verse. But, fundamentally, nuffin you say is going to make me abandon that belief. It's the foundation for all sorts of other beliefs (most of which are up for debate--what is the role of representation in democracy? what kind of representation is most democratic? and so on). But, I'm perfectly willing to grant that my faith in democracy is irrational. As I said, nothing wrong with that, but it means we won't have a rational debate about democracy--we might have an interesting exploration, or a really fun talk, but not a rational discussion.

    But, that isn't enough as a definition. There's another set of traits, but that's for another post. The short version of that is that a debate is rational when the rules apply equally to all parties--when the "rules of argument" (whatever they are) apply reciprocally. So, however "inaccuracy" is defined, it is defined the same way for everyone. (In other words, I can't slam you for inaccuracy if your facts are no more accurate than mine.)

    (to be continued)

    Monday, February 12, 2007

    More Info on Wal-Mart

    About benefits:

    "Wal-Mart Says Health Plan Is Covering More Workers." The New York Times, Jan 11, 2007 pC13.
    But the company said that, even with the increase, less than half of its 1.3 million employees -- 47.4 percent -- receive health insurance through Wal-Mart. About 10 percent of its employees, or 130,000, have no coverage at all.

    Offering what it called an in-depth snapshot of its employees' health care, Wal-Mart said yesterday that most workers were insured, but many relied on coverage from a spouse, parent, previous employer or government program.


    About Wal-Mart and taxes:
    "Wal-Mart Cuts Taxes By Paying Rent to Itself." Jesse Drucker. Wall Street Journal - Eastern Edition; 2/1/2007, Vol. 249

    Abstract: The article focuses on a unique tax cutting strategy which is used by Wal-Mart Stores Inc. Wal-Mart pays billions of dollars a year in rent for its stores but has saved itself tax dollars by taking advantage of a tax loophole and placing stores in the United States in approximately 25 states which allow Wal-Mart to pay rent to itself and deduct that amount from its state taxes. According to court records the technique has saved Wal-Mart from paying several hundred million dollars in taxes.


    About the expansion strategy:
    "Slowing Expansion Plan: Wal-Mart Cuts Openings, Tweaks Fashion Formula." Jeanine Poggi and Katherine Bowers. WWD: Women's Wear Daily; 10/24/2006, Vol. 192
    Issue 86, p1-14, 2p, 1c

    Abstract: The article reports on the plan by Wal-Mart Stores Inc. to adjust its growth model. The world's largest retailer will slow the pace of U.S. expansion and spending next year as it seeks to improve returns and jump-start its stock price. In another key shift, the company intends to halt a market saturation strategy in which giant supercenters -- stores of at least 100,000 square feet or more -- were built a mile apart, which cannibalized existing store sales and was unpopular with some investors.


    About Wal-Mart performance:
    "Wal-Mart Woes Bring Hope to Supermarkets." Mark Hamstra. Supermarket News; 12/18/2006, Vol. 54 Issue 51, p24-25, 2p

    Abstract: The article reports that Wal-Mart saw its sales momentum deteriorate throughout 2006. The company attributes its weak sales performance on causes ranging from the high cost of gasoline through summer months to difficult comparisons with post-hurricane spending in Fall 2005. In November 2006 Wal-Mart posted negative comparable-store sales, marking its worst performance in a decade and an unhappy start to the holiday season.


    See also "Wal-Mart's revamped '07 expansion plans aim to increase capital" in Retailing Today, November 6, 2006 (author Mike Troy). It's an interesting article, pretty much an expansion on the same meeting reported in the Shapira article mentioned in a previous post. Had I but worlds enough and time, I would quote more, but, since at my back I always hear ungraded papers hurrying near, I'll just quote this part:

    [...]Investor discontent and a stagnant share price caused Wal-Mart to re-examine its pipeline of new stores and rethink the timing of when and where store openings should take place to minimize the impact on existing stores while achieving the greatest return on invested capital. That wasn't the case the past several years as Wal-Mart was intent on opening U.S. stores as fast as possible before its expansion efforts could be stymied by anti-big-box regulations[...]


    About real estate:
    "The Wal-Mart Way." Curt Hazlett. Retail Traffic. July 30, 2004.

    [Wal-Mart] currently offers 380 buildings for lease or sale and about 350 parcels of land. Last year the division sold 240 outparcels and 70 buildings.

    The article explains that those outparcels go to fast food franchises. What that suggests is that, in 2004, Wal-Mart was sitting on 310 buildings, or very nearly the same number given by Sprawlbusters.

    Friday, February 09, 2007

    Email from a lurker

    I went to the RG4N meeting as a very skeptical person, as I'm not a big fan of big public meetings. There was one moment that, almost literally, sent a chill up my spine, though. The planner was talking about the history of malls, and showed a mall that was completed in (iirc) 1990 and abandoned in something like 1998.

    "WHAT?" I thought. I know that malls can have a short lifespan, but UNDER TEN YEARS?

    Think about that for a minute--imagine that this plan goes through, and we have a two story Wal-Mart with a multiple story parking garage, and...

    ...it's empty.

    Granted, the traffic wouldn't be bad ;), but the crime would be hell. And, although I'm not a realtor, methinks there'd be a bit of a property value issue.

    But, I figured that it isn't an issue because Wal-Mart is a Fortune 500 and wildly successful company, and successful companies don't put up buildings that they abandon quickly. So, I was surprised to run across this statistic on the Sprawlbusters website:

    Wal-Mart has 390 empty stores on the market today.


    Sprawlbusters doesn't give sources for info (which irritates me), so I'm not sure where this stat is from, and therefore how reliable it is. Email from a lurker says that 40 of those sites are in Texas.

    I haven't succeeded at verifying or falsifying either of those numbers, but in the course of trying to, I came across something that surprised me. Wal-Mart is not doing as well as I had thought.

    See, for instance, "Wal-Mart: where's the remodeling boost? Goldman analyst Adrianne Shapira downgraded the stock Monday, saying the retailer's turnaround is taking longer than expected" in Business Week Online, Jan 9, 2007.

    It's a short article, and here's the punchline:

    Shapira pointed out that Wal-Mart has remodeled 1,300 stores, overhauled merchandise, and aggressively promoted. Yet sales have only become increasingly pressured. "We continue to believe that investments in Wal-Mart's existing store base were long overdue, and should lead to long-term sales and returns improvement," Shapira wrote in a research note. "That said, returns on these investments do not seem to be materializing as quickly as we would have hoped."

    Shapira lowered the firm's one-year price target to $51 from $53 per share, after lowering forecasts for Wal-Mart's earnings per share in 2007 and 2008. She noted that "weak sales continue to suggest payback from earlier investments will take more time."


    Edwards' January 24, 2007 report says, "Hold/Conservative" and that the "currelative relative ROE of 1.25 compares unfavorably with the five-year historical average of 1.46." Credit-Suisse's January 24, 2007 report says that recent changes in management (which I'll explain in a bit, as I think they're relevant to the Northcross plan) "signal that upper management is cognizant of the problems plaguing the business and shareholder frustration with deteriorating results and a flat stock price." According to Bear Stearns' January 24, 2007 Report: Wal-Mart shares are trading "below the three-year and five-year historical average premium of 16-32%." They have a "target price" of $54-55. The Report has a footnote saying that they "do business with companies covered in its research reports" and that the "conflict of interest could affect the objectivity of this report."

    None of these reports claims that Wal-Mart is in a terrible situation, but instead that it has been in a kind of flat place. They all (to me) seem hopeful that the recent changes in management will improve.

    Most of the reports emphasize the replacements and moving around of people in upper management, especially the move of John Fleming from heading up marketing to being "in charge of all merchandising" (Edwards). Fleming had, at some point, been at Target/Marshall Fields.

    Here's the potential relevance for the Northcross plan. What I gather from various things is that there is a big income split between the kind of people who shop at Target and the kind who shop at Wal-Mart, and Wal-Mart would like to get the Target crowd. So, they are looking to move slightly upscale. This didn't go very well in the last year, however, so they are looking to do things differently (but with the same goal). According to the CreditSuisse report (which put Wal-Mart as a top pick):

    We believe Wal-Mart's "store of the community" initiative will be a major driver of sales as the company attempts to better tailor its merchandise on a market-by-market and even store-by-store basis. With better store standards, remodeling of key departments, and better tailoring of merchandise, Wal-Mart should be positioned to drive higher same-store sales growth.

    So, one scenario is that the Northcross site store is placed where it is because they're trying to compete with Target, and hoping to lure Allandale types (and cross Mo-Pac types) to shop in a slightly more upscale Wal-Mart.

    This scenario is supported by other shifts in marketing, such as offering "organic" foods and native plants. If this is the case, then it seems to me that something like the "hands around Wal-Mart" is a potentially effective strategy. It also means that the boycott is more powerful than I had initially thought. (When people announced the boycott, I thought, um, how many people here shop at Wal-Mart anyway? What impact does a boycott by people not in the target market have? But, if we are the target market, then a boycott could be very effective.)

    That isn't the only possibility. Another one, also suggested by the CreditSuisse report, is that this plan is part of what they had been trying to do. The report also mentions:

    Over the past several years, Wal-Mart has targeted 8% domestic square footage growth despite calls from many investors to moderate that growth. At its October 2006 analyst meeting, management indicated that it would move away from its 8% growth goal, opting instead for a more bottom-up approach. As a result, domestic square footage growth for 2007 is targeted at 7%.

    The report concludes:

    After 2007, the more stringent ROIC requirements for new stores could result in a more significant reduction in square footage growth, which we believe would be a major positive for the stock, helping to contribute to meaningful improvement in ROIC.

    [ROIC is "return on invested capital"]
    So, here's another possible scenario. Wal-Mart had been in major expansion mode when this lease was acquired, but that's now shifted. If that's the case, then Wal-Mart might be more amenable to negotiating on the size of the plan.

    There are other scenarios, too. One, also suggested by a lurker in email, is something like this. Let's say that Chester, Inc. stock is flat, and I want to heat it up by showing lots of growth. One way to do this is to keep building new (and larger) stores. As long as I can make sure that I have a "go dark" clause in my leases (meaning that it's easy for me to turn off the lights and walk away from stores), this could look good on the books. If I wanted to do that, I would build bigger stores near existing stores (so I don't lose customers, but just make them move) that I then close. If that's what we're facing here, then there's no negotiating on size. In the worst case version of this scenario, it doesn't matter if the new location is boycotted; it doesn't even matter if the new location goes bust in a few years; all that matters is that Chester, Inc. gets an even bigger location built before what was once "the new location" goes dark.

    I'm not sure how we can know just what scenario we're looking at here, but I sure would like to know more about the other locations in Texas that are vacant.

    FWIW, continued

    FWIW, continued.

    In the comments on the last post, Mike says

    "As anyone in Austin knows, Wal-Mart has planned an unusually big box on the edge of a residential neighborhood,"

    Nope.

    http://mdahmus.monkeysystems.com/blog/archives/000373.html
    Hmmm....looking at your photo, it looks to me as though the properties next to Northcross Mall on the south and southwest side are residences. Perhaps you and I have different definitions of the term "residential," but, for me, it's a place with residences (and I don't think it matters if people are renting or owning).

    So, wrestle with a different pig on that one.

    Quoting from Mike again:

    "The current plan is inadequate in regard to public transportation (for which, I have heard anecdotally, Wal-Mart is notorious)."
    Hard to support. Other Wal-Mart sites (on frontage roads) supported by your neighbors are far worse for public transportation access.


    Ah, one of my favorite fallacies: "the fallacy of moral equivalence."

    Although lavender has more blue in it than pink does, it still isn't blue. Although California is closer to Mexico than is Oregon, it's still in the US. Although X might be worse than Y, that doesn't make it good.

    So, although there are plans that could be worse in terms of public transportation, that doesn't make this one adequate.

    You can go on and on and on about frontage road plans, but that's fundamentally irrelevant to the question of whether this plan has adequate public transportation. So, just let it drop--you ain't fooling me.

    What you need to show to counter my point is:

    1) that the plan submitted to the city (not the current situation at Northcross) has sites for public transit that
    2) will not worsen the situation in regard to the surface streets.

    In other words, that Wal-Mart proposes a substantial area well off the street dedicated to public transit. (That was what I couldn't see when I was trying to find out just what they propose.)

    As Hugh says in the comments, the intersection is currently overutilized. It doesn't matter if other areas are even worse, or if a frontage road plan is worse (that's called "shifting the stasis"--another fallacy), what matters is that this plan proposes to make a bad situation significantly worse. Nothing you have said counters that.

    Thursday, February 08, 2007

    FWIW

    As anyone in Austin knows, Wal-Mart has planned an unusually big box on the edge of a residential neighborhood, and this has generated considerable controversy. (We call this litotes.) Being a researcher, I wanted to see whether assertions made by critics of the current plan had something significant to back them up. For me, an article in a peer-reviewed journal is the gold standard, so that's what I was looking for. I also looked at web sources, studies cited by various sides, and arguments made by advocates. I only spent a few hours on the task, so this is my highly personal take on just a few hour perusal of that research. YMMV.

    There are two major issues about the current Wal-Mart plan: traffic, more general impact on neighborhood.

    The first is traffic, and that one I stopped researching pretty quickly, as everything I looked at suggested that the ANA newsletter has it dead to rights. I didn't come across anything that caused me to doubt that analysis, and much to support it.

    The plan will not result in 900 trucks a day unloading, nor will it result in hundreds of 18 wheelers on Mo-Pac, but, assuming the same number of cars as other Wal-Marts, it is likely to result in approximately 20,000 cars a day visiting that location. (Since this is an unusually big location, I wasn't clear if that number is conservative--my hunch is that people should assume that Wal-Mart expects the number of cars for which they are providing parking.)

    The current plan is inadequate in regard to public transportation (for which, I have heard anecdotally, Wal-Mart is notorious). The (already barely adequate) roads in the immediate vicinity will almost certainly be overwhelmed, so there will, necessarily, be some kind of spillover effect on other potentially arterial roads like Foster, Shoal Creek, Cullen, but it's hard to say just how bad that will be.

    The second issue is, generally, effect on the neighborhood. Within that general category, there have been three main accusations: that crime would increase; that small businesses would be hurt; that Austin would have to pick up a tab. My research suggests the first claim is neither verified nor falsified (but my brief research has made me pretty skeptical); the second is true (admitted even by defenders of Wal-Mart); and the third is supported by very good research (and not refuted by defenders of Wal-Mart).

    Here's the science, as they say:

    A study of crime at Wal-Mart v. Target (as reported in news outlets): www.walmartcrimereport.com/report.pdf
    See also: http://www.wakeupwalmart.com/press/20060511.html

    Personally, I wasn't wild about this study for several reasons. It depends upon news reports (rather than crime stats compiled by the Feds, for instance), and does not control for fairly important variables (like crime in the city being studied). It was better than the only other thing I found on the topic, though, which was an undergraduate thesis. I couldn't find any articles in refereed (scholarly) journals on the issue of Wal-Mart and crime (but maybe I wasn't using the right search terms or databases). I didn't expect to find studies of Wal-Mart specifically, but I did think there would be studies of the impact of 24 hour stores and crime.

    I did notice that several of the anti-Wal-Mart sites did not claim an increase in crime, so I'm not sure what to make of that. (My intuition is that, if they could make an even plausible case for an increase, they would, but there are various reasons I might be wrong about that.)

    General Impact of Wal-Mart on Communities:

    The wikipedia entry "Criticism of Wal-Mart," especially the section "Economic Impact" summarizes the issues. It has some good sources, although very few of the scholarly studies. Still and all, it seemed to me pretty good.

    If you have access to CQ Researcher, the relevant report is "Big Box Stores." It presents both sides of the issue very well. I highly recommend it. (If you have access to the UT Library databases, you can find it under "Databases and Indexes" and then under "CQ Researcher.")

    A frequently cited study is:

    Dube, Arindrajit and Ken Jacobs. "Hidden Cost Of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California" also at: http://www.dsausa.org/lowwage/walmart/2004/walmart%20study.html

    This study concludes that Wal-Mart pays very low wages and "At these low-wages, many Wal-Mart workers rely on public safety net programs— such as food stamps, Medicare, and subsidized housing—to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state’s taxpayers."

    Although I wasn't wild about the fact that this was not published in a peer-reviewed journal, I couldn't find any obvious faults in the methodology. (But, I didn't recalculate their numbers, and statistical analysis is not my long suit.) Perhaps more important, other studies come to same conclusions. Probably most important, the most damning evidence on that point is from Wal-Mart itself--look at the figures that Wal-Mart releases about their pay and number of employees who have benefits, and then try to figure out how their employees are supporting a family. Even Wal-Mart does not claim that they provide a wage that could support a family, and they're open about being opposed to providing benefits for employees. (The defense is that low wages and no benefits are offset by low prices, but, until doctors and pharmacies start accepting low prices as payment, that doesn't really answer the question.)

    Stephan J. Goetz, Hema Swaminathan, "Wal-Mart and County-Wide Poverty" SOCIAL SCIENCE QUARTERLY, Volume 87, Number 2, June 2006.

    Stephan Goetz is co-author of two of the most thorough articles on the topic. This one concludes that Wal-Mart is not always bad, but, on the whole:

    "After carefully and comprehensively accounting for other local determinants of changes in poverty, we find that the presence of Wal-Mart was unequivocally associated with smaller reductions in family-poverty rates in U.S. counties during the 1990s relative to places that had no stores. This was true not only in terms of existing stores in a county in 1987, but also an independent outcome of new stores built between 1987 and 1998. The question of whether the cost of relatively higher poverty in a county is offset by the benefits of lower prices and wider choices available to consumers associated with a Wal-Mart store cannot be answered here. However, if Wal-Mart does contribute to a higher poverty rate, then it is not bearing the full economic and social costs of its business practices. Instead, Wal-Mart transfers income from the working poor and from taxpayers, though welfare programs directed at the poor, to stockholders and the heirs of the Wal-Mart fortune, as well as to consumers. These transfers are in addition to the public infrastructure subsidies often provided by local communities. Regardless of the distributional effects, the empirical evidence shows that the Wal-Mart business model extracts cumulative rents that exceed those earned by owners of other corporations, including Microsoft and Home Depot. In conclusion, the costs to communities in terms of labor displacement and higher poverty need to be weighed against the benefits of lower prices and greater shopping convenience. Similarly, once local businesses have been driven out, the possibility of monopolies or oligopolies emerging in retailing (both on the input and the output side) needs to be considered carefully by public policymakers."

    (Both of those studies are available at http://www.wakeupwalmart.com/research/
    although they were not performed by that organization)

    Personally, the article I recommend most is:

    Irwin, Elena G. and Jill Clark. "Wall Street vs. Main Street: What are the Benefits and Costs of Wal-Mart to Local Communities?" Choices 2nd Quarter 2006 (21:2): 117-122. (available through http://www.choicesmagazine.org).

    Conclusion:
    "Consumers have benefited from Wal-Mart's tremendous cost efficiencies in the form of greatly reduced retail prices, which generate substantial savings to U.S. customers annually. However, evidence also shows that Wal-Mart does not bear the full economic and social costs of its business practices. As a result, the benefits and costs are unevenly distributed across individuals. Those who are employed in non-retail sectors of the economy reap substantial benefits from lower prices and absorb some of the potential costs if tax revenues are needed to cover increased social costs. Those employed in the retail sector absorb the additional cost of lower wages, fewer benefits and a potentially shrinking employment base" (119).


    My take on the whole issue

    Having looked over the various arguments, I've come to these conclusions (again, I emphasize, YMMV):

    1) the opening of a Wal-Mart means the closing of a significant number of small businesses (even the defenders of Wal-Mart grant this, but argue that it doesn't really matter).
    2) if those businesses are supporting families or giving a "living wage" (that is, they provide full-time employment with benefits), then Wal-Mart replaces good jobs with bad ones.
    3) Wal-Mart costs a community a lot, indirectly in terms of infrastructure (especially transportation, costs of providing the benefits that Wal-Mart intentionally ducks through keeping people to part-time employment, and so on) and often directly in terms of subsidies.
    4) the community benefits to the extent that they get a lot of part-time, low-wage, no-benefit jobs and lower prices. If all of Wal-Mart's employees are married to people who have jobs with good wages and benefits, then this is a significant benefit to a community (but, as far as I can figure, iff).
    5) however, those lower prices are achieved through forcing supplying businesses to shift to lower wages (and the claims of union-busting are very well-supported), so that the impact of a single Wal-Mart reaches far beyond the community in which it is located. In other words, for Wal-Mart to have an overall beneficial impact on the economy, two conditions have to prevail:
    a) Wal-Mart's employees be married to people with jobs that have good wages and benefit packages, AND
    b) the people working for the companies that supply Wal-Mart must be married to people with good wages and benefit packages.
    5) Wal-Mart strives for a monopolistic business model, so, it's deeply opposed to the free market model of capitalism. That's a fairly important point, and it's one that's often missed. Defenders of Wal-Mart sometimes try to spin the opposition as simply coming from an anti-business contingent, but it's worth remembering that a lot of the hostility to Wal-Mart is from businesses. If you believe that capitalism is the best economic system because it fosters competition, then you have to be really troubled by Wal-Mart. That's why some of the really critical articles about Wal-Mart are in business magazines (see, for instance, http://www.fastcompany.com/magazine/77/walmart.html).
    6) there isn't any really good evidence as to whether Wal-Mart increases crime, nor whether a 24-hour retailer increases crime (although I did run across quite a few scholarly pieces that argued that mixed living/retail plans do reduce crime).


    This research did change my view on this whole issue. I've never been a huge supporter of Wal-Mart (I assume I've shopped there at some point, but I don't remember when), but I'd always had the attitude that, since we're in a capitalistic system, and since some people do shop at Wal-Mart, NIMBY is a perfectly valid response. The weird thing about doing this research is that it persuaded me that it's precisely from the viewpoint of capitalism that Wal-Mart is most destructive. Wal-Mart undermines the free market. Wal-Mart benefits the community only to the extent that other businesses behave better than they do--giving better wages and benefits. That means that this really is not just about whether there is a Wal-Mart within a mile of my home, or whether this Wal-Mart is 24 hour, or two story, or how much parking they have. It means that this is about whether Wal-Mart provides a living wage with benefits to its employees, and whether it allows its suppliers to do so with theirs.