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Rationalizing Wal-Mart in Mexico

by Robert Teitelman | Published April 25, 2012 at 1:33 PM

On a Wall Street Journal opinion page that has grown as dreary and dogmatic as the old Soviet-era East Germany, Holman Jenkins remains a rare pleasure, a throwback to the old you-never-know-quite-what-they'll-say-conservatism of the late Robert Bartley. Maddening, often enough, but thought provoking and often smart. Today, Jenkins wades into a defense of Wal-Mart, the retail giant that, after a long piece in The New York Times Sunday, seems to be up to its neck in a bribery scandal and cover-up in Mexico. Jenkins ventures to articulate what many Americans, particularly those in business, undoubtedly think, even if they don't offer it up in public. Yeah, Wal-Mart undoubtedly did it. But after all, it's Mexico (or China, where the Securities and Exchange Commission is now looking into possible bribery by Hollywood film studios), where corruption is a Way of Life. Why should U.S. companies operate at a disadvantage? And, gee, Wal-Mart did the poor Mexicans a favor by throwing up modern, discount stores so quickly and giving locals real jobs, although Jenkins makes it seem almost as if Mexican Wal-Mart employees have it better than their American counterparts (rights! benefits!). And besides, Wal-Mart in the long run will be better off -- and so will America -- for having done what needed to be done, which makes the bribers and the cover-uppers martyrs to the long-run prosperity of the corporation.

Now Jenkins also admits that this is "an ambiguous and disturbing affair." Of course, it's not. Or rather it is, if you ignore the fact that there is a well-known law, the Foreign Corrupt Practices Act, on the books that makes it clear that bribery by American companies overseas is illegal. The ambiguity arises only when you decide that ends justify means, which is what Jenkins gingerly explores here. Look at the good Wal-Mart brings to benighted Mexicans! We've seen a lot of this in the past decade, which is ironic given how much we've also heard about fundamental values. There is about this a kind of warmed-over Ayn Randian celebration of the creative entrepreneur, which in turn taps a warmed-over Nietszchean transvaluation of all values: That is, if you're a superman, you don't have to worry about pedestrian rules and morals. At the very least, shuffling means and ends, whether in war or torture or everyday corruption, allows you to dream of higher ends.

Again, Jenkins doesn't go quite that far, though whoever wrote the headline on his column does: "Wal-Mart Innocents Abroad." Was anyone involved at Wal-Mart "innocent"? They may have felt justified, but they were pickled in personal and corporate self-interest. This appears to have been an organized and efficient bribery system, which allowed the company to beat out its competition in putting up modern retail outlets. (This notion that Wal-Mart had to move fast to beat the competition, which Jenkins mentioned, undercuts his argument that the company was necessary to modernize Mexico's retail sector. There were clearly others. Wal-Mart just wanted to be first.) This was a cover-up of Wal-Mart's own investigation, meaning that executives in Arkansas knew full well that this was a problem, probably criminal (can't wait to hear if lawyers were consulted). If they were legitimate martyrs, they would have sacrificed their own bonuses, shut down the bribery operation in Mexico and cleaned house. But they needed overseas growth as Wal-Mart hit its limits in the U.S. market. This was not really about the long-term good of Wal-Mart, which will now undergo a long, expensive and destructive scandal that will also suck in a new generation of (possibly) innocent executives, employees and shareholders. This was about personal self-interest in the short term.

That headline evokes a kind of vague American exceptionalism: We really do believe we are innocent compared to depraved foreigners, although Mark Twain's original use of "innocents abroad" was heavily freighted with irony. Hovering over Jenkins' column is the notion that the FCPA is some sort of deranged American exercise in idealism from the '70s, like human rights: just another job-killing, corporate-strangling law. No wonder we can't compete. Now no one is suggesting that bribery in the U.S. should be legalized. But let's get real: The rest of the world is a swamp. And if we want to set up big-box stores there, or show movies, we have to play their game. Again, this recalls policies like pre-emptive war and enhanced interrogation: It involves a kind of neoconservative "realism." But if Wal-Mart can justify bribery in Mexico, why couldn't it justify bribery in parts of the United States that have long histories of corruption, kickbacks and payoffs, like nearly everywhere? After all, couldn't some neighborhoods in New York City use Wal-Marts? How different, really, is the South Bronx, say, from some Mexican neighborhoods? If we can eavesdrop overseas, why shouldn't we chase bad guys on American soil?

The unfolding Murdoch case in Britain should provide a warning -- and not because The Wall Street Journal is owned by News Corp. But the phone hacking, police bribing and now political influence peddling aspects of that case clearly reflect the slippery slope that develops when you confuse means and ends. You start with a few cases of tabloid phone hacking, it spreads to a quiet, if self-righteous practice, oozes steadily into bribing police and using private investigators and then to that most fertile of fields for corruption and glad-handing, politics. From within News International (and throughout the British tabloids) the rationales were offered up: The tabs were doing readers' bidding; the practices were so widespread you had to play the game; or these practices were necessary for the good of the company. The difference: There were really no foreigners involved, unless you count the Murdochs. And there were apparently few innocents and little ambiguity. - Robert Teitelman

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