In the Past Few Years, Multibillion-Dollar Corporations Have Gained Control Over Our Hospitals, Media, Book Stores, Even Our Trash; What Does It Mean for Our Future?
By Steven T. Jones
Colin Johnstone is a happy man–"24 hours a day I'm happy," he said–all because he works for Wal-Mart. His is the ecstatically grinning face Corporate America shows to San Luis Obispo County.
Johnstone manages Wal-Mart's just-opened Arroyo Grande store, the one whose approval generated such emotional opposition that it cost the supportive mayor his job.
Johnstone smiled his way through last week's grand opening celebration and through a media preview of the store a couple of weeks earlier.
He smiled through difficult questions about Wal-Mart's corporate practices, questions alternately fielded and evaded by Wal-Mart's less-smiley corporate public relations representative, Cynthia Lin.
Johnstone smiled while he did the "squiggly" during a pep rally of perhaps 100 employees, known in Wal-Mart-speak as "associates." And he smiled when he explained that if associates weren't feeling up to doing the squiggly, they "probably shouldn't be working for Wal-Mart anymore."
$ $ $
Corporate America has long had a presence in San Luis Obispo County. One of our largest employers is Pacific Gas and Electric Co., which came in at No. 85 on last year's Fortune 500 list of the country's largest companies, with $15 billion in revenues and $716 million in profits.
But Corporate America has used the current economic boom to expand its control over SLO County commerce, as larger and larger corporations extract more and more profits.
Consider the following changes of the last few years:
• The San Luis Obispo County Telegram-Tribune was taken over by Knight Ridder, the third-largest newspaper chain in the country, and one committed to achieving unprecedented profit margins. Three locally owned newspapers–the Country News, Paso Robles Daily Press, and Five Cities Times-Press-Recorder–were also bought by national newspaper corporations.
• Thanks to deregulation changes by Congress in 1996, two large corporations–AGM and Sphere–now control nine radio stations in San Luis Obispo County.
• Even our once-sacrosanct downtowns have been invaded by Corporate America. On Higuera Street in San Luis Obispo–from the Downtown Centre to strategic corner locations at Morro and Chorro streets–almost every major change has been by corporations.
• Tenet Healthcare–the second-largest health company in the country–now owns two out of five hospitals in the county. Two others, technically nonprofits, are run by a for-profit corporation. The fifth, General Hospital, could be closed this year by the county. Most physicians' groups and clinics have also fallen under corporate control.
• Despite being recently thwarted in its bid to take over the North County's garbage collection franchise, Waste Management Inc., by far the biggest waste company in the country, has taken over the Paso Robles Landfill and Atascadero's garbage collection contract. 
• Forced by electric deregulation to divest itself of the Morro Bay Power Plant, PG&E sold the facility to Duke Energy, another Fortune 500 company. When Unocal decided to leave California, its local holdings were bought by Tosco, another large corporation.
• The powerful Hearst Corp. has left North Coast planning efforts in disarray, as it and supportive county supervisors seek to build a large resort–ruled illegal by the California Coastal Commission–on a massive coastal property that the company has owned for nearly a century.
• Not long ago, the U.S. 101 corridor through San Luis Obispo County was a bucolic setting, marked only a few times by the signs of Corporate America at gas stations and a few fast-food restaurants. Now we have Target, Wal-Marts, and two factory outlet centers in the once-open spaces along this corridor–and more corporate burger joints than ever.
Many call all of the above changes inevitable progress. With its economies of scale and vast financial resources, Corporate America can take care of consumer needs cheaper, faster, and with higher profits than independently owned businesses.
All we're seeing is the free market running free.
Besides, Corporate America has a huge selection of goods and services, and they smile so big and bright. And, remember, we’re the ones who are shopping there. But what is the cost? What does Corporate America take for the polished commerce it gives?
$ $ $
"In Wal-Mart, we call our employees associates," Johnstone beamed. "Wal-Mart allows associates to be owners in the company."
As Wal-Mart associates scurried around preparing for opening day, Johnstone, Lin, and other Wal-Mart officials directed members of the media into the Radio Grill for a briefing and schmoozfest.
The in-store McDonald's restaurants have been replaced in some new Wal-Mart stores with the company's own food concession, the ’50s-themed Radio Grill. Johnstone didn't know why his store got a Radio Grill instead of a McDonald's.
"I'd love to say that I was part of that decision," Johnstone smiled. "It's all dependent on home office and what they dictate."
They outlined all the wonderful benefits of working for Wal-Mart: full-time benefits for employees working more than 28 hours; the company will match 50 percent of employee purchases of Wal-Mart stock, up to $270; and Wal-Mart's wages are good for the retail industry.
"How good?"
Lin said that starting wages at Wal-Mart are above minimum wage. But she wouldn't reveal how far above minimum wage, because that information is "proprietary."
"All we can tell you is that we're competitive," Lin said of Wal-Mart's wages.
But still, there's the benefit package, which is great considering that 40 percent of the 230 Wal-Mart associates at this store are part-timers.
"So, how many of these part-timers work the 28 hours needed to qualify for benefits?"
Lin said she didn't know.
"Well, is there a way to find out? Can I find out approximately what percentage of Wal-Mart's part-time associates have, say, health insurance?"
No, Lin said. That's proprietary, too.
$ $ $
It's not what they tell you, it's what they don't tell you.
That's the concern that independent booksellers across the country have about Barnes & Noble, whether it be the corporation's competitive tactics or the impacts of its proposed purchase of Ingram, the country's largest book distributor.
"The Ingram purchase will just speed up our ability to get books," said Michael Beals, manager of Barnes & Noble's San Luis Obispo store.
That statement scares people like Jim Hill, owner of the Novel Experience in San Luis Obispo, who wonder whether that translates into slower service for the independents and about Barnes & Noble accessing the independents' truly "propriety" ordering and credit information.
"My concern is the sheer scale and the power that comes with [this merger]," Hill said. "How will this impact us? That is the biggest question mark of my career."
The American Bookseller Association, already suing Barnes & Noble for unfair competition, is also trying to convince the Federal Trade Commission to block the Ingram deal.
"This must go against anti-trust laws, because they're becoming a monopoly," said Ginny Rhoads, owner of Magic Windows Bookstore in Templeton.
Hill plans to wean itself of Ingram if the sale goes through, instead getting books from a handful of smaller distributors or direct from the publishers, even though that can sometimes take weeks.
"The mass marketing of books has been very successful," Hill said, "and I'm pessimistic about the future."
$ $ $
Wal-Mart, the fourth-largest American corporation, last year reported a profit of $3.5 billion, all of which is extracted from the nearly 3,000 communities with Wal-Mart-owned stores and sent back to company headquarters.
Even pro-growth advocates see that as a problem.
"The only thing you are going to keep in the community is the payroll," said Dave Spaur, president of the county's Economic Vitality Corp., which promotes economic development. "A company with a branch operation like a Wal-Mart, those profits are going back to Bentonville, Arkansas."
And with Wal-Mart's relatively low wages, the payroll doesn't do much to improve the quality of life of San Luis Obispo County residents. That reality, and its resulting public relations problem, is why companies like Wal-Mart do well-publicized donations to nonprofit organizations in the community.
The Arroyo Grande Wal-Mart store is donating about $22,000 to area nonprofits, including Arroyo Grande Community Hospital, the San Luis Obispo Women's Shelter, and Oceano Healthy Start.
Spaur was surprised by the figure and said Wal-Mart will usually give a few thousand dollars to communities this size when it opens.
"They must sense the need to do something extra in Arroyo Grande," said Spaur, who moved to the Central Coast just two months ago from Arizona.
$ $ $
Tom Talbert has spent years vocally opposing the arrival of Wal-Mart in his community of Arroyo Grande. He doesn't like its competitive practices, disingenuous patriotic appeals, low wages, political manipulation, economic impacts, or cookie-cutter image.
"I just hate to see what they're doing to our town," he said. "They all seem the same, and it's all mass merchandising."
But he accepts the fact that Wal-Mart is now here and tries to take pleasure in how the opposition he led did decrease the size of the store and have an impact on last year's mayoral elections.
"One good thing that happened with all the bashing and crashing is we got a fast-growth major [Pete Dougall] out of office, and that was a direct result of the Wal-Mart decision," Talbert said.
Pat Veesart, an environmentalist and county planning commissioner, scoffs at Wal-Mart's claim that its stores generate millions of dollars in sales tax revenue.
"There are only so many discretionary dollars for San Luis Obispo County residents to go out and buy stuff. And if they spend those dollars at Wal-Mart, they're not spending it at other stores," Veesart said. "Wal-Mart does not create dollars in the community, it consolidates the sale of stuff and the collection of those sales taxes."
At the same time, it extracts profits from the county, profits that would continue to circulate in the local economy if they were collected by a locally owned business.
That's why Spaur's big economic development focus as head of the Economic Vitality Corp. is to attract start-up companies to locate their headquarters in San Luis Obispo County.
"We want them to grow and stay here," Spaur said.
Wal-Mart officials dispute the notion that their low wages and extraction of profits from the community are harmful, either economically or socially.
"I have studies that say the opposite," Lin said. "You can't say Wal-Mart hurts towns."
It's been said that if you torture numbers enough, you can get them to say anything you want. But the simple fact remains: Wal-Mart's profits leave the county and are only partially offset by contributions to nonprofits.
"It's up to the independent business owners and the media not to let their guard down, to keep sounding the message about the dangers," Hill said.
But what happens when Corporate America also owns the media?
$ $ $
Knight Ridder, in a move to increase its attractiveness to Wall Street, last year announced a goal of increasing its profit margin to 20 percent of revenues.
Already, Knight Ridder's profit margin is 13.2 percent (last year's figure; this year's is expected to be around 15 percent). Industry leader Gannett (owner of USA Today) had a 15.1 percent profit margin, while No. 2, Times Mirror, was at 7.5 percent.
All Knight Ridder newspapers, including the Telegram-Tribune, were ordered to start cutting costs and finding ways to increase profitability to 20 percent.
Veesart sees real danger in corporations ordering its newspapers or television stations to start increasing profits to new highs.
"I would be fearful that a business manager in a newspaper would look to the editorial stance as a way to boost profits," Veesart said. "I'm not saying that's necessarily happening here, but it's a very real fear."
For example, he said such a strong focus on profits could make newspapers reluctant to critically cover growth and development issues, because strong support from business interests is essential to increasing profitability.
Telegram-Tribune publisher Harold Higgins, who was brought in by Knight Ridder in August, said the newspaper doesn't have to compromise its news product to become more profitable.
"The two go hand in hand," Higgins said. "You can be a good business and a good newspaper."
But others see an inherent conflict, saying you can't hold the business community accountable for its misdeeds and still boost profits.
In a special issue on "Media Mergers" two years ago, the acclaimed Media Studies Journal (put out by the nonprofit Freedom Forum) featured two dozen articles and essays by noted authors and analysts.
"It is time, high time, that newspaper corporations become subjects of debate and be held accountable for covering the communities they serve," wrote veteran newspaper editor Gene Roberts. "Meanwhile, many are managing their newspapers like chain shoe stores, with no sense of being important community institutions with highly important responsibilities to the public."
Higgins is familiar with the views of Roberts, who left Knight Ridder for a job at The New York Times.
"I've heard Gene's criticism in the past and I disagree with his perspective," Higgins said.
So how does Higgins maintain a watchful newsroom on a shrinking budget, keep needed advertisers happy without muzzling reporters, and eke out maximum profits without being seen as a tool for those paying the bills?
"That is always part of the balancing act that any publisher has to go through," he said.
$ $ $
Suddenly, the front part of the store was filled with Wal-Mart associates, young people and old people, suits and T-shirts, all rhythmically clapping and cheering, pumping up the energy level of this corporate pep rally.
One associate named Mike, wearing a back support brace, was jumping up and down, getting in the faces of his fellow associates like a crazed football team captain getting the other players psyched up for the game.
"Give me a 'W'....W!!!...give me an 'A'...A!!!..."
Between the "Wal" and the "Mart," the cheer was punctuated by a "squiggly"–a kind of twisting dance move given almost mystical importance by the associates.
"Do a squiggly," Johnstone told the shell-shocked members of the media watching the spectacle, even physically grabbing and twisting a few.
"Who's number one?!?!" the associates roared, "The customer always, HUH!" punctuating the last sound with a clap, a sound like you make when you pretend someone has just punched you. Mike gave Johnstone an exaggerated high five.
Then Johnstone and his Wal-Mart cohorts started grabbing reporters and photographers again, dragging them into the circle to do the cheer once more. Most resisted, to the bafflement of Johnstone, but Kofi Jones of KCOY was persuaded to lead the second round of the cheer.
Talbert laughed when he heard a description of the scene.
"Who really responds to that kind of thing? It's not the guy out trying to support a family, or the woman who has to get a job to subsidize her family's income," Talbert said. "Their mentality is not meant for the town of Arroyo Grande."
$ $ $
Wal-Mart’s parking lot is full, but some see a backlash emerging.
There are people like Cal Poly architecture professor Ken Haggard and his Communities United for Sustainable Progress, which is currently developing policy papers on sustainable economic development issues, an agenda it will push during the 2000 elections.
"It's modern-day colonialism," Haggard said of corporate expansion, "and the natives are not going to do well under this system."
He believes that we are nearing the end of an industrial era that is based on competition and entering a new period in which society will start to fundamentally question whether our economic model–with its unbridled free market focus–promotes the social good.
Consolidation of companies and the resulting economies of scale may have made sense during the industrial era, but he said we as a society must begin to value more than just profitability.
"Nobody ever talks about the dysfunction of centralization, and the dysfunctions are enormous," Haggard said, citing the long-distance voice mail gauntlet we must run to raise a complaint or ask a question of most companies.
Yet while some see cause for alarm, others see nothing wrong with the increasing corporate influence on San Luis Obispo County.
"I'm not sure they have much influence," said John Brantingham, the Nipomo real estate agent who chairs the county's Economic Advisory Committee. "But now you're talking philosophy instead of business impacts."
On the economic side of the equation, Brantingham doesn't draw a distinction between large corporations and smaller companies. He even disputed the impact of corporate profits leaving the county, arguing that we can return them here by buying stock in the companies.
Beyond the economics, some are anticipating a backlash against the homogeneity of Corporate America, homogeneity that has made the Telegram-Tribune look like every other Knight Ridder newspaper in the country and placed a Starbucks in every town.
"People will see and feel their community is becoming a cookie-cutter duplicate of most other communities," Hill said. "The more corporate control there is, the more conformity there is. Sameness in product is the inevitable result of this trend."
With its focus group designs and plastered-on smiles, there is a sense that Corporate America just isn't real, that it is some artificial creation, an illusion so carefully crafted that we forget how it was calculated to maximize profitability.
$ $ $
"Doing the squiggly, that's Wal-Mart. The squiggly is our culture," enthused Johnstone, without a hint of sarcasm. "It is done every single day in every single store. It's done at the home offices."
After a while, Johnstone's evangelical reverence for Wal-Mart started to become very unsettling, his manic enthusiasm having lost some of its power through sheer robotic repetition of words like "phenomenal" and "outstanding."
"I love going home and I love going to work," said Johnstone, who was an unhappy Kmart employee before becoming a happy Wal-Mart associate. "I've got the best life in the world. Twenty-four hours a day, I'm happy."
The cultlike quality of Johnstone and his people–Sam Walton's people, Corporate America's people–gave a surreal quality to the store. After all, it's just retail, and the "above" minimum wage workers can't possibly share Johnstone's 24-hour glow.
But Johnstone insisted all Wal-Mart employees just love their jobs, and the corporation, and doing the squiggly.
"That's the power of Wal-Mart," Johnstone said, the palms of his hands turned upward, as if he was really saying, "That's the power of God."
And that's when it all started to make sense. Corporate America is more than companies, more than a device created by humans to supply goods and services, more than an employer. If you depend on Corporate America, if you believe, then it is a provider, a wise supreme leader, the godlike force that controls our economic system and, by extension, our lives.
"This company gives you all the tools you need to succeed," chimed in Dave Towne, store manager for the soon-to-be-opened Wal-Mart store in Santa Maria, wearing Johnstone's same ecstatic grin.
Praise be to Corporate America.
Steven T. Jones hides from Corporate America at New Times, where intern Leslie Stevens helped with research for this article.