Costco v Sam's Club/Walmart

Costco pays its workers 40% more, on average, than Sam's Club, and offers a very generous health insurance plan.

Despite the prevailing weakness in the U.S. retail sector, Costco has recorded impressive sales growth in the last few quarters. The firm's comparable-store sales grew at an average pace of more than 5% for the last three quarters. The biggest drivers fueling this new growth include the company's rapidly swelling membership base and the robust growth of the warehouse industry in the country. Costco's core value proposition, strong private labels, and ancillary businesses have also been at the helm of this progress.

Costco: One of the Leading Retailers Defying the Big Box Apocalypse

 Sam's Club is laying off over 2,000 workers; Costco is expanding.

Rick Ungar addressed precisely this point last summer in Forbes: 'Walmart Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails-Proof That You Get What You Pay For', along with a bunch of other commentators, all concluding that Costco is going to eat Walmart's lunch.

This is why Obama is following up his call to "Give America a Raise" in last night's State of the Union address with a speech at at Costco in Maryland today.

His message is pretty clear: paying a decent wage is good for business as well as good for employees and the economy.

And the Oul' Collecting Tin Went Jingle-Jangle...

It feels like I have been bashing Ireland a lot these past few days, but then that's like blaming someone playing Whack-a-mole for battering the little blighters when they appear.

The RTÉ News.

As a further illustration of the endemic problems Ireland has, I now have to turn to the sorry tale of the charitable sector and the inflated pay of some of its senior executives.

Ireland is rather odd in that much of what is the function of the State in most other countries (the provision of education, healthcare and other social services) was contracted out to the 'charitable sector' (primarily the Catholic Church) by a very poor newborn national government, and enthusiastically embraced by churches, holy orders and charities, for whom the provision of such services guaranteed a line of government funding, and gave them a degree of control over the recipients of the services (think again of the Catholic Church and education).  The result is the sad tale of the like of the Magdalene laundries and mental asylums, where the Irish State paid private institutions to make problems disappear.

And although charitable fundraising to supplement the budgets of hospitals and schools is pretty common in the UK and the US, it is (I think) even more prevalent in Ireland, where many of the charities and institutions could not function at all, despite funds from central government, without the committed and dedicated work of its supporters and volunteers, running raffles, selling teddies and taking street donations, all to plug a gap in service provision that the inadequacy of funds from direct taxation has created.  Many of these charities, such as the Central Remedial Clinic do sterling work, and provide support and relief to many of the most disadvantaged, unfortunate or challenged in Irish society.

I cannot begin to understand then the disappointment and sense of betrayal felt by people such as Tom Clonan, when they discovered that the Board of the CRC, like that of St. Vincent's hospital in Dublin, had been making 'top-up' payments to the salaries of senior executives from private sources, including the charitable funds raised by the charity's supporters.

Essentially, when Ireland fell into economic crisis, pay-caps were introduced across much of the public sector to reflect the strained circumstances the Exchequer found itself in, and to dampen public anger towards salaries that were barely justifiable during the boom times let alone in a country that was bankrupt.  For charitable bodies like the CRC and St. Vincent's, whose senior executives receive salaries that are mostly funded from the public purse, but also partly-funded from private sources, the boards of these organisations decided (apparently having signed employment contracts that made no allowance for pay reductions in times of reduced funding) to adhere to their contractual obligations and top-up their CEO's pay-packets from their private funds.

Private funds
(NB: Children In Need is in no way implicated)

So one of two things happened:

Ze Germans Aren't ze Bad Guys

Germany’s central bank backed move to burn bondholders - Irish Economy News & Headlines | The Irish Times - Fri, Jan 24, 2014


A popular narrative has existed in many of the eurozone countries hardest-hit by the Great Recession that says the suffering of the people of [insert choice of Ireland/Greece/Spain/Cyprus/Portugal/Italy] has been orchestrated to save ze Germans from losing their geld.  It's not a terribly convincing explanation and in some countries, most notably Greece, has been part and parcel of a fairly disgusting racist campaign against both those who are perceived as having money, and against ethnic and racial minorities (in times of worse economic crisis in 1930s Germany, these were one and the same).

Tory MPs on their way to a stag do in Athens.
Photograph: Action Press/Rex Features

In Ireland there was much understandable domestic anger at slack and irresponsible lending practices by Irish banks.  While to a certain degree this allows Irish borrowers to let themselves off the hook for irresponsible borrowing, it is hard not to sympathise with your average couple keen to get on the housing ladder and who took whatever was offered to them by the bank.  (Sympathy wanes somewhat, when it comes to commercial borrowers and those who borrowed to buy apartments in Spain, Estonia and Bulgaria).

So, the story goes, where you have irresponsible borrowers you also have irresponsible lenders, who really should know better and are really the villains of the piece.  And now that the Irish taxpayer has had to shoulder the multi-billion euro burden of the mistakes of Ireland's banks, who was so irresponsible to lend so much money to Ireland's banks that they had to shove it down the throats of Ireland's borrowers, whether it was prudent for the borrower to take out such large loans or not?

And the answer of course is:  Ze Germans!

An Irish Financial Sanity Check

The Alphaville blog on the Financial Times makes a very important point:

"until your local stock market can adequately price one of your biggest banks, your local finance sector still has some way to go."

It draws attention to the massively inflated valuation of AIB on the Irish Stock Exchange.

 This follows a report in today's Irish Times, that Ireland is still the 5th most expensive country in the EU, with prices 15% above the European average.  Ireland is the 11th wealthiest country in the EU (based on GNI, a more reflective index than GDP in Ireland's case), at 5% above the European average.

The country's problems are so endemic, so culturally embedded and its politics and constitutional system so stunted, that it is going to take decades, if ever, for Ireland to fully put its house in order.

Ireland may have left the bailout, but it still has a heck of a long way to go.  I wish the country well, but sure as hell am glad I am not there any more.