Originally published by Investor’s Business Daily on June 6, 2017.
“Main Street” is Americana. Literally, it’s the primary road in a town, but culturally it’s much more than that. Main street is synonymous with mainstream, but it also evokes core American ideals like fairness — that the rules are the same for the “average Joe” as they are for wealthy corporations.
In recent years, Wal-Mart has tried to appropriate “Main Street” into the names of various lobbying campaigns it’s funding. First, it was the “Alliance for Main Street Fairness,” a Wal-Mart-led coalition to impose price controls on payment fees.
Now the company is behind the “Main Street Energy Alliance,” a group of companies who are working to convert the government’s ethanol quotas into a weapon against their competitors.
Claiming the mantle of American values is utterly ordinary in politics, but there are several reasons to draw attention here.
- First, to correct any benefit of the doubt for Wal-Mart, which despite its rich history as a success story of American capitalism and entrepreneurship has fallen behind in the Internet age, a dynamic that may explain the company’s turn to Washington cronyism.
- Second, to highlight the particular, self-serving policies that Wal-Mart has wrapped itself in the American flag to justify, despite the harm they are causing to consumers and the larger economy.
- Third, simply to note the depth of cynicism for a company to cloak its efforts to tilt the playing field in its favor as “main street” — a concept that stands for literally the opposite of what Wal-Mart is engaged in.
It wasn’t always this way. The story of how the late Sam Walton transformed the “Walton’s 5 & 10” in Bentonville, Ark., into what was at one point the world’s largest company is inspiring. At its best, Wal-Mart was the champion of low prices, tirelessly pushing for ways to cut costs to produce value for its customers.
But things change — quickly. Just last month, Jeff Bezos’ online retail behemoth, Amazon saw its market cap rise to roughly double the value of Wal-Mart, an undeniable sign that the Internet era has changed the rules of retail, and those changes aren’t necessarily good for Wal-Mart.
One possible response would have been to double down and out-compete Amazon. But there was another, less principled course available: “If you don’t like the game, change the rules.”
It’s interesting: Back in 1998, the first year that data became available on the money-in-politics website OpenSecrets.org, Wal-Mart’s lobbying presence was tiny — $140,000. “Saving Private Ryan” was on the big screen, Savage Garden on the radio, and Amazon announced that it would expand beyond just selling books. Wal-Mart and Barnes & Noble both filed lawsuits against the new company, one of many failed tactics to stop the march of technology.
Last year, Wal-Mart spent $6.8 million on a small army of 70 Washington, D.C., lobbyists, a 4,757% increase. That amount will let you cover your bases — former Republican senators like Jon Kyl and Don Nickles were recipients, as were Clinton loyalist and uber-lobbyist Tony Podesta and other top Democrats.
Modern Wal-Mart’s legislative agenda would likely cause Sam Walton deep shame were he alive today.
Wal-Mart has always succeeded by pushing its suppliers to cut costs. The difference now is that it’s decided to use the government for the same purpose, partnering with arch-liberal Illinois Democrat Sen. Dick Durbin to enact Venezuela-style price controls on processing fees for credit card payments, something conservative House Republicans are fighting to repeal.
The other main agenda item (the origin of the “Main Street Energy Alliance”) is exploiting loopholes in the government’s ethanol quotas to mortally wound its competitors. Through a quirk in the law, big players like Wal-Mart are awarded special environmental credits for blending renewable fuels into gasoline on its way to the station, something they are already required by law to do.
Wal-Mart and other gas-station giants are spending big bucks to keep the “point of obligation” for renewable energy credits on independent refiners. The subsidies from this program are worth billions to Wal-Mart and their “Main Street” coalition of giant corporations.
Since smaller, independent players don’t have an in-house blending operation like the giants, they’re forced to buy these credits from Wal-Mart (and the other companies in their “main street” alliance) at exorbitant cost. It’s like making Wal-Mart buy permission to sell things from Amazon, at any price Amazon deems fair.
Someone, somewhere, had a good laugh when they plastered “main street” all over these egregious crony-capitalist campaigns. Sadly, the depth of cynicism required for such a gambit is abundant in Washington.
For the rest of us, for “average Joe,” it’s no laughing matter. It’s time for people to wake up to the fact that, in its internet-era desperation, Wal-Mart has turned to political cronyism to keep up.
