Anyone who wants to understand the machinations of “free market” capitalism in the U.S. today needs only to take a look at Wal-Mart’s new 4 million-square-foot distribution complex near Baytown, Texas, which will become operational this summer. The primary purpose of building this massive facility (big enough to hold 30 downtown city blocks or 70 football fields) is to by-pass organized labor on the West Coast. Wal-Mart began looking for cheaper and more manageable labor after the 11-day work stoppage in 2003 that hindered Christmas shipments from Asia at California ports and cut deeply into Wal-Mart’s profits. Corporate officials reportedly shopped 36 sites in 8 southern states and on the Gulf coast of Mexico before deciding on Baytown, which is served by the Port of Houston.
The state of Texas and the city of Baytown offered a deal that Wal-Mart couldn’t refuse. Although the new Asian route to Baytown via the Panama Canal is almost 5,000 miles and 11 days longer than the straight shot across the Pacific to the West Coast, the new destination is more than worth it to Wal-Mart — Texas is a notoriously anti-labor state with draconian right-to-work laws and a standing army of unorganized minority and immigrant workers that keep wages low. In addition, nominal state corporate taxes help businesses avoid most of the social costs of production.
To seal the deal, Texas officials offered Wal-Mart the biggest tax break in the state’s history. Using legislation passed in 2001 under Republican Governor Rick Perry, the Texas General Land Office used over $100 million dollars from the Permanent School Fund (PSF), which was established to support public education, to buy the land from U.S. Steel Corporation and develop the facility that it is leasing to Wal-Mart for 30 years. Because the PSF is non-profit, the complex will generate absolutely no property taxes — a deal that amounts to an estimated $2 million-a-year tax break for the retail giant and will deny needed revenue to the cash-strapped Baytown public school district, which, like all public schools in Texas, is funded primarily from local property taxes. The city of Baytown tossed in another $177,000 in public funds to pay for water and sewer lines to the distribution center. To top off the deal, the state awarded a gratuitous $500,000 infrastructure grant to Wal-Mart, supposedly to help defray the cost of the move from California.
When the second stage of the project is completed and fully operational, the Wal-Mart distribution center in Baytown will be one of the largest in the country, flooding the nation with even cheaper, Asian-manufactured goods in an attempt to revive the corporation’s flagging profits. This project, praised by Texas politicians and business groups as a worthy investment of public money, is nothing more than another state-sponsored end run around organized labor in an attempt to head off the looming crisis of U.S. capitalism. It is noteworthy that the new Wal-Mart distribution center in Baytown sits on the former site of an enormous U.S. Steel plant that was shut down in 1986 because of the importation of cheap South Korean steel.