Bangladeshi Garment Fire: Downstream Effect of a WalMart Economy?

One of the things hot on the nets yesterday was Peter Suderman’s pushback against the anti-WalMart action that has been progressing over the last week, culminating in organized protests at numerous stores across the country on Black Friday. Even Alan Grayson got in on the WalMart Thanksgiving protest mix.

But Suderman, loosing followup thoughts after an appearance regarding the subject on Up With Chris Hayes caused a storm. Here is a Storify with all 17 of Suderman’s Tweet thoughts. Suderman, who is a Libertarian and certainly no progressive, nevertheless makes some pretty cogent arguments, and the real gist can be summed up in just a few of the Tweets:

So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food.
Obama adviser Jason Furman has estimated the welfare boost of Walmart’s low food prices alone is about $50b a year.
Paying Walmart’s workers more would mean the money has to come from somewhere. But where?
Raise prices to pay for increased wages and you cut into the store’s huge low-price benefits for the poor. It’s regressive.

Suderman goes on to note that WalMart workers are effectively within the norm for their business sector as to pay and benefits.

My purpose here is not to get into a who is right and who is wrong, the protesters or Suderman, I actually think there is relative merit to both sides and will leave resolution of that discussion for others.

My point is that the discussion is bigger than than simply the plight of the WalMart retail workers in the US. WalMart is such a huge buyer and seller that it is the avatar of modern low cost retailing and what it does has reverberations not just in the US life and economy, but that of the world. Ezra Klein came close to going there in a reponse piece to Suderman’s take:

But Wal-Mart’s effect on its own employees pales in comparison to its effect on its supply chain’s workers, and its competitors’ workers. As Barry Lynn argued in his Harper’s essay “Breaking the Chain,” and as Charles Fishman demonstrated in his book “The Wal-Mart Effect,” the often unacknowledged consequence of Wal-Mart is that it has reshaped a huge swath of the American, and perhaps even the global, economy.

Not “perhaps” the global economy Ezra, definitively the global economy. WalMart sets the tone for high volume mass merchandizers in the US market. Their cut throat and efficient management of the supply chain laid the ground, and still does, for much of the market – Target, Costco, Kohls, the latest JC Penney, The GAP, etc. What WalMart innovated has become the dominant model and gives the lead to the rest of the segment. And one of the prime ways WalMart is able to sell so low is mass purchasing from dirt cheap overseas producers, and that makes WalMart a driver of foreign economies as well, and in some of the poorest and most fragile areas.

The pervasive effects of this giant WalMart global market effect were driven home in a particularly gruesome way last night. A garment factory in Bangladesh burned, and consumed over 112 lives in the process, with the death toll clearly expected to rise:

At least 112 people were killed in a fire that raced through a multi-story garment factory just outside of Bangladesh’s capital, an official said Sunday.

The blaze broke out at the seven-story factory operated by Tazreen Fashions late Saturday. By Sunday morning, firefighters had recovered 100 bodies, fire department Operations Director Maj. Mohammad Mahbub told The Associated Press.
He said the fire broke out on the ground floor, which was used as a warehouse, and spread quickly to the upper floors.

“The factory had three staircases, and all of them were down through the ground floor,” Mahbub said. “So the workers could not come out when the fire engulfed the building.”

“Had there been at least one emergency exit through outside the factory, the casualties would have been much lower,” he said.

And what type of garments does Tazreen make you ask? WalMart garments it seems. While the Washington Post AP report linked and cited above notes that the local factories make garments for “Wal-Mart, JC Penney, H&M, Marks & Spencer, Carrefour and Tesco”, further research seems to indicate a direct relationship between Tazreen and WalMart. Now, let’s be clear, the report at the link is from 2010 and does not necessarily mean that there was current production for WalMart at Tazreen, and even if there was, it certainly does not mean WalMart has any direct responsibility. It should be noted that it appears WalMart was more than aware of the safety problems at Tazreen Fashions and did nothing more than issue a cover your ass meaningless safety notice, but did not stop placing production orders.

Further, it should be noted that there are a lot of garment factories in Bangladesh, up to 4,000 according to the Post article above. And there is a long and tragic history of deadly fires in them. Here is one from 2010; here is another from 2006. Here is a 2001 report in the New York Times delineating the intersection of the Bangladeshi garment industry, fire and throw away treatment of workers’ lives.

What happened last night is not a one off exception in the Bangladeshi garment business, it is closer to the rule. And it is fueled by the demand for cheap at all human cost product by the WalMart led business sector. Again, to be fair, just as there are competing arguments in the Suderman/protesters views as to US WalMart retail employees, there is another side of the Bangladeshi garment coin. As deplorable as the manufacturing conditions in Bangladesh are, because of it Bangladesh actually has an economy. It may not be first world, but it is a marked improvement over the life depicted in decades past.

And here is where Suderman’s arguments run smack into the Bangladeshi plight. Suderman noted that the marginal extra dollar may not do much for the average American WalMart retail worker:

Erase the Walmart CEO’s entire salary, and you can raise average hourly wages by just a penny or so.
Erase the entire Walton family fortune and you get an average $1/hour boost to Walmart workers.

For the sake of argument, let’s assume Suderman is right that the marginal boost won’t make that huge a difference for the average worker (and leave aside for the moment the benefit from all that extra money in the economy). Even if you assume the extra marginal dollar may not do that much here, think what it would do in Bangladesh where garment workers live, and die at alarming rates, on incomes as low as $37 per month? The labor is so cheap in Bangladesh that China is starting to outsource work there! That extra bit of money in the hands of the workers in Bangladesh could make a world of difference in their safety and quality of life.

These conditions are perpetuated by the low cost penny pinching WalMart business model:

Ready-made garments account for 80 per cent of the country’s $24bn annual exports.

Haque said that labour groups he spoke to claimed that factories “are simply not equipped to the safety standards that are required to meet the demands of Western brands”.

“If you speak to garment managers, they say that they are under pressure to produce as much clothes as possible with the least amount of money,” he said. “And so they say in these circumstances, safety isn’t always the priority.”

“The priority here is to produce as much clothes as possible.”

I have no idea what the fix or answer to these problems and incongruities are. Maybe there isn’t one. But I do think the equation is a lot more complex than people like Suderman and Ezra Klein let on. The effects of the WalMart economy go a lot further downstream than US retail employees. The Triangle Shirtwaist Fire of 1911, where 146 souls perished, served as a wake up call for these types of labor practices in the US. The Tazreen Fashions garment fire may well match or eclipse that death toll by the time it is all said and done. Perhaps it, too, should serve as a wake up call as to the human cost of the WalMart business model.

17 replies
  1. Lex says:

    The savings to consumers in the lowest socio-economic cohort is something of a straw man. I don’t and have never shopped there, but my better half is tempted by the low prices. My argument to her is that every dollar she saves comes out of someone’s pocket. The low paid Walmart worker can’t afford to shop anywhere else, meaning that Walmart takes the food and discretionary spending of its payroll back. That it’s workers are likely to have federal food assistance means that it intakes those federal subsidies as well as most (?) other federal food subsidies. In the first case, it’s double dipping the taxpayer.

    And the upstream argument presented here is important too. It’s the same situation of savings to one coming out of the livelihood of others. Now that’s almost always the case, but Walmart has taken it to the extreme and as is likely in “free market” scenarios, the ideal of competition is eventually destroyed by one or two players getting big enough to distort the market. Here, we have every other retail chain needing to follow the Walmart model (I don’t think they mind) in order to survive because the market is so heavily distorted.

    But you won’t find a libertarian who recognizes corporate market distortion or that the foundational ideal of market theory contains the seed of its own destruction. They’ll defend Walmart and its shoppers based on an individualist-utilitarian principle that requires ignoring context: my saving money is a good enough reason to keep others in poverty. Theoretically, if we all practice this ruthlessly enough, everything will come up roses. Realistically, it’s the road to serfdom.

  2. bmaz says:

    @Lex: I don’t know, I think there is arguable a real component of assistance to the lower economic class. If you only have a $100 a month to spend on food, being able to buy 25%-30% more of it for your family, and by doing it at one place (which also means no driving around) – WalMart – is a serious benefit to your family.

  3. scribe says:

    In their 4 pm Euro time news, German radio reported that, just like at Triangle Shirtwaist, workers were jumping from the upper floors (of the 9 story factory) to escape this latest Bangladeshi factory fire.

    Apparently, the fire broke out late in the evening when there were about 1000 workers actually working; at least 100 are dead and another 200 injured.

    And, like at Triangle Shirtwaist, most of the workers (and, presumably, victims) were girls and women.

  4. bmaz says:

    @scribe: That is exactly what I was reading as I wrote this. The similarities are impossible to ignore, up to and including the large death toll. Frankly, I am surprised there was not more dead given the description of the situation.

  5. bmaz says:

    @Lex: Though, to be fair, while I don’t think I agree it is a “straw man” as you claim, for the reason I stated above, there is a separate, but integrally related, question as to what degree the “lower price benefit” is helping even if it does, in fact (and that too is challenged) exist as claimed. As Marcy notes here:

    Policy measure should be: is our food system resulting in healthy people. Resounding answer? No.

    That is a good point.

    As I stated near the front of the post, I am not really judging this portion of the WalMart argument, I am more interested in the thought that, irrespective of your position on that and the situation of the US retail workers being publicized over the Thanksgiving/Black Friday holiday, there exists the issue of other indirect worker for WalMart, i.e. those in the foreign supply chain.

  6. P J Evans says:

    I remember reading about one company that builds riding mowers and garden tractors dropping W*lM*rt as a customer because W*lM*rt was demanding ever-cheaper products, and the company felt that they couldn’t provide ‘cheaper’ without sacrificing the quality they believed their customers deserved.
    I bought a four-place set of Big Name stainless-steel flatware at W*lM*rt and the quality didn’t live up to the brand name; two of the knives were completely different, two of the salad forks should have been rejected. I suspect this is more the rule than the exception for W*lM*rt.

  7. Casual Observer says:

    I doubt this tragedy will change things, because unlike the Triangle Fire, it will not be visible to the public. The Triangle fire couldn’t be ignored.

    another thought on this–wonder what, if anything, the TPP free trade deal would do to alleviate conditions like this among participating countries…

  8. scribe says:

    @bmaz: from the few images I’ve seen, it would appear the local fire department had some high-reach truck equipment. And we don’t know which floors were below the fire floor and thus were more-easily escapable, nor the presence, absence or state of any fire escapes. Also, there is no indication yet, one way or the other, whether the doors to the fire floor(s) were locked as was the case at Triangle Shirtwaist.

    So, we have to wothhold judgment on those points for the time being.

    And, as noted upthread, the difference between this fire and Triangle, in terms of making changes, are threefold:
    1. the modern supply chain has made it possible to exploit poor people in these conditions half a world away from the customers and owners, as opposed to happening just a walk away downtown.
    2. modern media is beholden, through consolidation, ownership and advertising, to whore themselves out to the corporate PR departments, unlike in 1906. And modern reporters are a lot lazier, when it comes to making and breaking stories, than their predecessors.
    3. the victims were way browner than the consumers, probably had Muslim names, and therefore counted for less (at least in the public mind).

  9. scribe says:

    @scribe: I know – the report quoted in the main post talks about where the fire broke out and the conditions of the stairs, etc., but I want dual sourcing on those issues before I draw any conclusions.

  10. bmaz says:

    @scribe: The reports I have seen are that all stairwells led to the interior bottom floor of the building, which was completely consumed by impassable fire and there were no other fire escapes or outside egress. Some workers made it to the roof and were rescued by helicopter. So, for many employees, there was no way out, effectively as in Triangle (though not because of locks technically). That was what I got from multiple international reports, not just the AP report circulated domestically

    The bottom three points are exactly my reaction to having seen the news of the fire very late last night. While I support the action on WalMart, and really do not like WalMart in the least*, I think the Bangladeshi Tazreen Fashions fire, and deaths, is a stark reminder that there is more at stake in the deleterious effects of the WalMart economy than the American retail workers.

    * I used to go houseboating on Lake Powell regularly; the town by Powell is Page. If you want to buy anything in Page, you gotta go to the WalMart. And it was a gift to that remote area.

  11. scribe says:

    @bmaz: Fair enough on the conditions of the fire – I’m inclined to agree but have been wary b/c of experience with “the first report is always wrong”.

    As to the Walmart action, the best way to effect any change on their part is to stop spending there. The core problem with that, though, is that they have succeeded in driving out most of whatever competition may have existed and the survivors have had to adopt the same odious practices to survive. It’s yet another example of Gresham’s Law (bad money drives out good) in action.

    And while having a Walmart in a place like Page (with which I am briefly acquainted) is surely an improvement over whatever may have been there in the past, those outposts are the exception and not the rule.

  12. GulfCoastPirate says:

    @bmaz: What would be a larger benefit to your family is having more to spend on food and other items. The only way you’ll ever stop this crap is with tariffs and by organizing strong unions across the planet but particularly here in the US. Mathematically, left unhindered, for the worker who doesn’t own any means of production and has to depend on his/her labor, capitalism is essentially a negative feedback loop in which more input is continually necessary to get an equivalent output (wages).

    I always laugh when I hear people talk about the collapse of housing as the cause of the current economic downturn. Housing collapsed because wages collapsed and WalMart (and others like them) were richer after the collapse. It’s mathematically impossible for it to be any other way under ‘laissez-faire’ capitalism.

  13. Matoca says:

    Now that Obama has won the election, and has nothing to lose politically, it is his prerogative to make sweeping changes in the clothing import market. Making it economically difficult for Walmart’s business model may upset the apple cart worldwide, but when was doing the right thing ever easy?

    I see our small efforts as consumers meaningless in the larger picture of worldwide human rights issues. As consumers we have no way to ascertain which item of clothing has the certainty of a death sentence associated with it. Leaving us personally responsible to try to find our own way out of supporting these abuses in a way denies us the freedoms that so many Americans have fought for. We may always crow about how we have beaten slavery in the US, but we still wear it proudly on our backs.

  14. Gitcheegumee says:

    FWIW, I posted this on an EW thread back in 2009…a thread entitled “Max Tax….”

    This Penn State study is definitely worth a look. Concludes that WalMart CREATES poverty:

    Big Box Impact Studies and Reports (including Wal-Mart)Oct 2004, Wal-Mart and County-Wide Poverty (16 pp. pdf) is a study produced by Penn State U. Aug 2004, The Hidden Cost of Wal-Mart Jobs (16 pp. pdf). ……..eports.php – Cached – Similar

    [PDF] wrong about the rightFile Format: PDF/Adobe Acrobat – View
    18 Stephan J. Goetz and Hema Swaminathan, 2004, “Wal-Mart and County-Wide Poverty,” Pennsylvania State University Department of ……..urce_2.pdf – Similar
    by TFC Change – Related articles

    Division of Labour: More on Wal-MartMay 30, 2005 … “We didn’t expect Wal-Mart would be able to affect poverty on a countywide basis, but lo and behold it did,” says Goetz.” … – Cached – Similar

  15. Gitcheegumee says:


    Wal-Mart: Is This the Worst Company in the World?

    Nov 2, 2005 – WAL-MART: The High Cost of Low Price takes you behind the glitz and …. Employees are locked in stores until managers return in the morning.

    Workers Comp Insider -Walmart locks night shift workers in
    Jan 18, 2004 – Walmart locks night shift workers in. The New York Times today features a shocking story on night shift employees who are locked in at Walmart …

    Wal-Mart Locked-In Employees | Plaintiffs Trial Attorneys – The Law …
    From Everyday Low Wages: The Hidden Price We All Pay For Wal-Mart – A Report By The Democratic Staff Of The Committee On Education And The Workforce, …

  16. earlofhuntingdon says:

    I wholeheartedly agree with your observation that Wal-Mart’s business model affects the global economy. It is so large and aggressive, its model of supplier relations is so predatory, that it overtakes suppliers’ ability to make independent decisions, engulfing them into the Wal-Mart hive. Once part of the hive, it is nearly business suicide to leave, even as it comes close to suicide to stay in.

    Wal-Mart is so large that this directly affects some of the largest suppliers worldwide, in key countries and business sectors. Other retailers adopt the Wal-Mart model or lose market share, which affects still more suppliers, their managers and employees. The knock on effects capture still more companies and their people. Wal-Mart is that avatar of the abuse of private power, with global ramifications.

  17. Ada Media says:

    This is why American companies got to 3rd world countries for manufacturing American goods. They do not have to pay for health insurance, retirement or functional fire extinguishers. American companies can turn a blind eye to poor conditions in these countries. After all, the US can’t dictate health and safety standards in a foreign country. It is part of the cost of doing business there. It is a win-win for American companies even with a tragedy such as this. they’ll just find another factory, meanwhile millions of Americans can’t find a job. We are just too expensive for these companies.

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