TOS Blog: Daily Commentary from an Objectivist Perspective

Don’t Blame Walmart for Bribery in Mexico

WalmartThe great producer Walmart, loathed by Marxists, “Progressives,” and Occupiers everywhere, has once again found itself at the center of a controversy. Recently, the New York Times broke the story that, for years, Walmart systematically bribed government officials in Mexico in order to secure building permits, which enabled Walmart to expand and thrive to the extent that one in five of its stores is now located in Mexico. As a result of these allegations, Walmart executives may go to jail, as bribery of foreign officials is a violation of the Foreign Corrupt Practices Act. In addition, the company’s image and stock price have suffered.

But such bribery is made possible and necessary only by government interference in the marketplace.

In a free market, if a business wants to build a new store, it purchases the necessary property from the current owner. If the owner does not want to sell the property for the price the business is willing to pay, the business is free to look elsewhere for property, or not to build the store. There is no possibility of bribery in such a market because no one holds the power to grant or withhold permits. The only role of the government in such a market is to protect the rights to property and voluntary contract.

Of course, Mexico is not a free market but a highly controlled, heavily regulated mixed economy, with a complex bureaucracy of government officials dictating who is permitted to sell what and to whom. In fact, in a report quantifying how easy it is to do business in various countries, Mexico ranks 53rd, right between St. Lucia and Botswana.

When government officials are able to permit or forbid businesses to engage in voluntary transactions, businesses must either pay the officials for permission or go out of business. And the more power government has in this regard, the less businessmen can produce the goods and services on which our lives depend. As Ayn Rand put it:

When you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed.

Unless Walmart has somehow violated someone’s rights (via force or fraud), the company is morally innocent. If the company is legally guilty of violating some illegitimate laws—such as laws forbidding voluntary contracts or mandating government permits—then the illegitimate laws should be repealed and the company should be praised for bringing the problem to the light of day.

Mexican society, like American society, may simply be doomed at this point. But if Mexicans and Americans care to save their faltering societies from that tragic end, they need to unshackle the producers. They can start by standing up for Walmart.

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Image: Creative Commons by Sven

Posted in: Ayn Rand and Objectivism, Business and Economics, Individual Rights and Law

Comments are welcome so long as they are civil.
  • http://pulse.yahoo.com/_CRE6REGHBOCNFLN4NJIXNMIEFM Mike Kevitt

    Not sure I understand.  Did Wal-Mart pay bribes instead of getting permits in order to build stores in Mexico?  In any event, Wal-Mart’s defense is to claim it had to do what it did in order to engage in legitimate business that is being illigitimately obstructed by the Mexican government.  But, that’s a hard position to take in a country where it is a foreigner.  It would be hard, though not AS hard, right here in the U.S., its home country.  That’s the position it should take, publicly, here in the U.S.

    That could be a rejection of, allegedly, the only two alternatives: paying tribute or going out of business (or not building another store), in favor of a third alternative: asserting individual rights and challenging the illigitinate obstructions, publicly, above board, high-profile.  A fourth alternative is to pay tribute, but under protest, publicly, citing individual rights and the illigitimate obstructions.  Any private entities can publicly back Wal-Mart in both alternatives, three and four.

    This approach can be taken in countless cases, down to the most obscure.  In time, if not sooner, the most obscure will become as publicly noticed as any Wal-Mart case, just by virtue of the issue involved.

    Success can translate to other countries, including Mexico, among entities home-based in them.  This, in turn, can benefit U.S. entities in those countries, like Wal-Mart in Mexico.

    Some entity should make the first moves, on its own behalf, here in the U.S.  Would not that entity find backing?

  • http://pulse.yahoo.com/_GLZEOP3NHHO4BYL3VMA4YOHQCQ doug

    I grew up in Mexico.  You pay the ‘mordida’ (Translation: bite) as bribes are called, or you do not do business at all.  It is a corrupt place, where the currency is a yo-yo ride and extortion is the lingua franca, the only currency that speaks.

  • http://pulse.yahoo.com/_GLZEOP3NHHO4BYL3VMA4YOHQCQ doug

    Mike Kevitt,
    In Mexico one pays a bribe to get a permit or whatever is necessary at a given moment, in order to do business at all. Complain at all, and you will not be allowed to do business. Mexico is government by arbitrary fiat.  This is tough for Americans to understand, though it will not be for much longer, because we are headed in that direction.

  • http://pulse.yahoo.com/_CRE6REGHBOCNFLN4NJIXNMIEFM Mike Kevitt

    I see, enough, at least, to know I don’t want to get involved down there.  If the U.S. is going the same way and gets there, the alternatives I mentioned will be out the window.  Paying a bribe for a permit will be only the first of an endless series of extortions.  That means, back to the, allegedly, only two alternatives: pay or go out of business.  I’m still not sure those are the only alternatives.

  • http://www.facebook.com/people/Fernando-Daza/100000538950016 Fernando Daza

    >Wether paying bribes or do not bussiness at all , I believe Walmart morally speaking,  should have opted the second. After all it is mexicans problem if they get the job in their country or Walmart takes it somewhere else.

  • madmilker

    it’s not about the bribes….it’s about the coverup.

    oh!

    what about that port deal in Mexico…did you see who they partnered with…

    what about those fake blogs….

    what about the less than 5% foreign in all their stores in China…

    what about that dossier on that Russian….

    what about those fifteen cargo ships that pollute as much as 760 million automobiles….    

  • http://www.facebook.com/thedaileydiet Jean Dailey

    Laws vary state by state, country by country, to hold a company accountable to laws of one country (US) while doing business in another country with different laws (Mexcio)violates
    “when in Rome, do as Rome.”  The intent was to do business
    not to bring harm.  The harm is the US Government taking their slice, damaging the economy.