Ten Miles Square


December 12, 2011 9:11 AM How Wal-Mart Could Re-elect Barack Obama

By Rick Ungar

Sam Walton was a man of considerable talent who, almost single-handedly, built the greatest retailing operation the world has ever seen, innovated an entirely new approach to inventory efficiency and became fabulously wealthy as a result.

While Sam’s accomplishments and contributions to innovation are legendary, Walton was also a devout anti-unionist and a committed Republican. So it may seem strange that none other than Sam Walton may, in no small measure, be largely responsible for returning Barack Obama to the White House for a second term.

Viewed by most as a ‘down-home’ guy who continued to drive his old pickup truck long after he had become a billionaire, Walton’s common man appeal belies his true financial genius - the ability to use his vendors’ money to finance the growth of his operations. The secret lay in his creation of a supply chain so efficient that he would order a product for his stores, get it on the shelf and have it sold in about three days. With payment to the vendors of these products not due for a full month following delivery, Walton was able to use vendor money for the remaining twenty-seven days of the month to purchase another’s goods on which he would profit while expanding his store count to perpetuate the process on a massive scale.

The secret to Walton’s skill in this area was his willingness to get ahead of his competitors in the area of technology. He was the first to utilize barcodes to automate the inventory tracking process and spent big-time on a private satellite system that could keep track of delivery trucks, hasten credit card transactions, and track sales data.

In other words, like many of the great business leaders of the last century, Sam Walton innovated on a huge scale.

Of course, it also didn’t hurt that - as a rabid anti-unionist - Walton managed to do a good job of not sharing the wealth with his many employees.

As his reward, Walton would become one of the wealthiest men on the planet - topping the Forbes list as the richest man in the world from 1982 to 1988. And while Walton’s difficult treatment of employees continues to be the policy of Wal-Mart stores to this day, I suspect that most Americans continue to hold Sam Walton up as an example of American inventiveness and the ‘can do’ spirit that made this country great and likely do not begrudge him his great wealth.

But can the same be said about the Waltons who inherited Sam’s fortune?

According to the Survey of Consumer Finances, the combined net worth of Sam’s family equals the combined wealth of the entire bottom 30 percent of Americans.

Let that sink in for a moment… and then consider that the same survey finds that the richest 400 Americans have as much wealth as the bottom 50 percent of Americans combined.

The fact that the Walton heirs have so much money certainly does not mean they’ve done anything wrong. While they can be judged by how they have conducted business at Wal-Mart since Sam Walton’s passing, or whatever else they have - or have not- done with their lives and money, they certainly cannot be blamed for inheriting the founder’s massive wealth.

Yet, their story highlights the issue that I believe is destined to become the deciding factor in the 2012 presidential elections - economic fairness. And it is on the basis of the president “owning” this issue that I believe that America will return Barack Obama to the White House for another four years.

Thank you, Sam Walton.

At the end of the day, it won’t be about the specifics of how we should or should not - or even if we should or should not - control the income disparity in America that now exceeds anything we have seen in our history. It will be about the common sense among what we now call “the 99 percent” who can’t help but see that something is fundamentally wrong in our country when one family can possess so much of the nation’s wealth - particularly when they provided no great innovation or advancement in and to the American way of life- while so many are suffering.

Elections are emotional events. Americans vote their pocketbook and their “gut.”

And while we can accept -and even cheer - those who accomplish great wealth as a result of great innovations that improve the lives of Americans and others throughout the world, we know all too well that much of the nation’s wealth is in the hands of people who have done little to nothing to benefit our way of life.

I’m speaking, of course, of the bankers who do little to add value but scam the financial system at our expense; corporatist who dramatically tilt the game in their favor as a result of having the money to rig the system; oil barons who control the flow of energy to the public’s great financial disadvantage; trust funders who spend their money perpetuating their wealth rather than improving the lot of the American people; CEOs who pocket the profits while their workers fall further and further behind the economic curve; and pharmaceutical executives who make billions by keeping prices high because they can.

These are the people Obama will be running against in 2012 no matter who the GOP fields as a candidate. And while the opposition may have hundreds of millions more to be spent on misleading the public, I’ll take the 99 to 1 odds all day long.

Expect the Walton family to become the poster-children for income inequality in America. Also expect much discussion on how they have chosen to spend the funds Sam Walton, who made huge contributions to American culture (for better or for worse), left to them.

Here’s a hint:

“When the Maryland legislature passed a bill requiring large employers to spend at least 8 percent of total wages on employee healthcare, Wal-Mart fought the bill by donating to Maryland’s governor, Robert Ehrlich, who later vetoed the legislation. Additionally, Wal-Mart “deployed at least a dozen Annapolis lobbyists” to prevent a veto override. When a similar bill was being pushed in California “which would [have] forced big employers like Wal-Mart to either provide affordable health insurance to their workers or pay into a state insurance pool”, Wal-Mart spent $500,000 to defeat the measure. And as Wal-Mart’s recent REIT tax scandal in North Carolina shows us, Wal-Mart will take great measures to avoid paying taxes.

Then there are the millions the Walton Family has spent to kill the estate tax so that they can hang onto all that money and continue the income disparity that plaques us. Jim Hopkins at USA Today writes:

The Waltons have joined a coterie of wealthy families trying to save fortunes through permanent repeal of the estate tax…review of public documents reveals a small-town Arkansas family emerging as a political juggernaut on tax issues, extending Wal-Mart’s influence over U.S. society even more.

Starting to get the picture?

While Sam Walton’s legacy has dramatically impacted on how we buy goods and services in much of the world, who would have imagined that his legacy might also play a key role in re-electing a president he would have greatly disliked?

The world can be a very ironic place.

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Rick Ungar is an attorney in Southern California and a frequent writer, speaker and consultant on health care policy and politics. He is a contributing writer at Forbes. Readers can reach him at rickungar [at] gmail [dot] com.


  • OKDem on December 13, 2011 10:24 AM:

    The Walton family as a whole have had a large amount of land in Tennessee for generations. They at times were poor in cash flow but there was wealth in the property. They supposedly descend from the Georgia Waltons, landed gentry that produced a signer of the Declaration.

    Sam was brilliant,and ruthless, but he was not the product of generations of dirt poor farmers sometimes implied.

    BTW he was not born in Arkansas but Kingfisher OK, which has a huge bust of him in front of their Super Walmart.

  • SquareState on December 13, 2011 12:56 PM:

    "another goods" ???? what language is that?

  • Ned Roberts on December 13, 2011 8:28 PM:

    Wal-Mart and other large retailers have also fed at the government trough (city, state, etc) by getting favorable tax treatment, local incentives to locate there, etc.. The following book by David Cay Johnston describes this in great detail:

    Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill)

    He estimates the Waltons have received billions in government subsidies. Another company, Cabellas, made more in subsidies in one year than through sales of goods.

  • Cal Gal on December 13, 2011 11:14 PM:

    A perfect example of why we need to keep the estate tax.

    OK, Sam made a fortune through innovation. But his kids did NADA except being lucky to be born into a rich family.

    There would still be plenty of money in the family after the estate tax, but at least some of that money he sucked out of the pockets of vendors as well as customers would come back into repaving the roads his trucks break down as they drive all that junk from the ports where they arrive from China to the stores where un-insured employees ring them up on the cash registers.

  • Steve P on December 14, 2011 12:27 AM:

    And this information is supposed to go out through print and broadcast media heavily dependent on WalMart advertising revenue?

    Good luck.