We’re all pretty familiar with the omnipresent accusations that Wal-Mart treats its employees poorly. And that’s in the United States where we at least pay lip-service to the idea of workers’ rights. Travel abroad and you get a true sense of the cynical attitudes at the heart of the company.
Here’s an example from Mexico. South of the border, Wal-Mart is now in the micro-lending game. In Mexico, that essentially means Wal-Mart has opened a loan-sharking operation. Don’t believe me? Think I’m overstating the case? Here’s a great article from Business Week on how micro-lending operates in Mexico. Also instructive is this analysis of the Business Week article.
Wal-Mart will loan money to people who are too poor to qualify for loans from traditional banks. Noble cause? Not when the interest rates on those loans reach as high as 100% annually!!! It’s a lucrative business in Mexico. Enough to perk up the ears of any businessman. But shouldn’t U.S. businesses be held accountable to U.S. predatory lending laws even when that predatory behavior is practiced abroad? That’s the heart of the Alien Torts Claim Act. So why doesn’t that apply here?
Quite simply, the people who will be harmed by Wal-Mart’s predatory lending scheme in Mexico won’t lose enough to make it worthwhile. They’ll lose everything. Home, property, etc. But it still won’t be enough. Many will walk away from their “banking” experience with Wal-Mart completely broken, but it won’t rise to the level of “human rights abuse.”
Community activists, watchdog groups, perhaps even the hand of God (and by that I mean vote-hungry Congressmen) would descend on Wal-Mart if it tried to practice this scheme in Houston, Miami, Atlanta, or any other U.S. city. If it didn’t violate the law, then the law would be quickly changed to make sure that it started violating the law.
Fortunately, Wal-Mart has found a place where people’s rights are not nearly as important and the government not nearly so attentive. Look for this predatory micro-lending business model to spread through Wal-Mart’s stores in developing countries. You can check the company’s international web-site to find out where poor people will be getting fleeced next.
