How does Wal-Mart go about setting what you call the opening price point or what I understand to be kind of the entry-level price point in any product line ... which, as I understand for your marketing strategy, is a very important piece of the business?

The opening price point is clearly a foundation of who we are and how we interact with our customers. One of the things ... that's really important to understand is who we serve. Just as an expression of that: There's about 20 percent of the people that shop at our stores [that] do not have bank accounts. They go where they might [be able] to cash their checks that they get through employers or what have you. And they shop out of an envelope. They don't have bank accounts.

The reason I tell you that story is it's an expression of the kind of people that depend on Wal-Mart. And so how did that relate to the opening price point? We are able, because of that aspect of knowing our customers and also because of the volume of sales we have -- about 130 million transactions a week -- to determine what's selling and what's not. So if you were to imagine, for example, having a toaster or, in the summer months, even a window air conditioner that was selling well, you can make assumptions about that price point and determine whether if that price point was lower, could you sell more? If it's not selling well, is the price point too high? And we can gauge the elasticity of demand by changing the price.

If we have to do markdowns because they're not selling and there's no other reasons for that -- say, not a hot summer and the air conditioners haven't sold -- if we are able to be able to look at that in a scientific way, we then can define opening price point through our massive experiences with those people that are shopping in our stores.

So basically, you're studying all this data that you're picking up from point-of-sale information. Is that right?

Right. We also are in touch through our associates and through more statistical data with the people that shop with us. One of the things that our company is about is being very in touch with our customers. I was in the store with some very senior people this week, and these are people that have enormous responsibility for our company. They would stop regular shoppers in the store and talk to them about what they are seeing: What [do] they like about our store? Why did we carry certain things? Why is this more expensive? Why can I find this in this store and not in another store? How come competitors have this? Some of it's statistical, some of it's anecdotal, but we pay very much attention to the customers and what they tell us.

You just said 130 million transactions a week, but the figure that we hear is that you have roughly 100 million visitors to your store each week. Is that about right?

Yeah.

What does that mean in terms of market share? ...

If you take automobile out of retail, we're about 8 percent of the market share across the United States. If you go to markets outside and inclusive of the United States, it's significantly less than that. We have stores in other markets outside the United States, but globally, we are well below 5 percent. In some markets, we're less than 1 percent. For example, in China, we're less than 1 percent of the market share.

Talk to me a little bit about global sourcing. Why is global sourcing important to Wal-Mart, and what is its function?

Well, again, the customer is what guides us. And those people that I described, the 20 percent of the population that shop at our stores out of the envelope, that live paycheck to paycheck, we think and we know that they rely on us for the best prices that are available in the marketplace. And over the course of time, the basic needs that they have, whether it's in the electronics department or whether it's in health and beauty aids or in groceries, we feel that they need to have the best product, the best value at the best price we can achieve.

One thing you have to think about in the history about us is that we are a company [for which it wasn't] that long ago that we were a regional player. If you look at our history -- I just have some facts here -- in 1970, we're only in three states. We only had 38 stores in 1970. We now have 3,500 stores in the United States roughly. [In] 1980, we're only in 11 states with 276 stores. And even in 1990, not so far ago, we were only in 33 states with about 1,500 stores. So that's an expression certainly of growth.

But with respect to the global-sourcing aspects here, what we found is we had to compete with, as [a] regional player, those that were national players. How do we do that? We had to go overseas to find products in some cases. In some cases, we found local American suppliers, but we had to compete with them by providing value.

Value is an interesting proposition. We could talk about that perhaps some more, but it's not just price. In some cases, it's the quality of the product. So it's a combination of things.

And how important is global sourcing to the well-being of the company, to profits?

It's essential, because we do depend on products from around the globe to draw our consumers into the stores so that, as I said, they can benefit from the low prices, and they can make it from paycheck to paycheck.

You're talking about the consumers. I was asking about your stockholders. I was asking about the company making a profit and making good profits through global sourcing. How important is that?

Well, in a way they're one and the same, because without the sales we don't make profits, and if we didn't offer the products we achieved through global sourcing, then we wouldn't have the sales. If we didn't have the sales, we wouldn't have had the success we've had, whether it be growth or whether it be profitability. ...

How much higher [is] the profit margin from goods you're getting, say, made in China, at a low-cost place like China, than they would be from goods made in America?

Well, if you study Wal-Mart -- and we all do -- and as you join this company, one of the things that you learn is how we became successful. It might seem counterintuitive, but Sam Walton started the process of saying you don't become successful by creating a process to have larger margins. What you do is you work on supply-chain efficiencies in many ways. You pass those savings on to the customer; you don't put them in your pocket. You pass them on to customers. That volume makes up for the item-by-item lower margin, if you will, and that volume allows you to grow and succeed and prosper.

It creates also customer loyalty, knowing they can come to us every time and find the lowest price. And I'll tell you, though Sam is not with us anymore, that this is something we talk about all the time.

And so our global sourcing is not to create higher margins. That's not what it's there to achieve. It's there to achieve having low-priced goods so we can pass those low-priced goods on to our consumers. ...

Historically, when does [global sourcing start to] happen in the company? How does it begin? How does it develop?

Sure. Well, it's been going on probably since the inception of the company. ... Back in the '70s and '80s, Sam Walton would travel overseas, and he would travel overseas looking for goods that would sell in our stores. ... So we've been doing it for a long time, again, in order to compete when we were regional players with some of the more national players.

We heard Kmart and Sears and JCPenney were well ahead of Wal-Mart particularly in terms of going to Asia to do some sourcing. ... But we understand also from people who studied this a lot more than we have that Wal-Mart was the most effective in integrating overseas sources, outsourcers, into its supply chain. How did that come about? When did that come about? When do we see that movement begin to gather momentum? ...

First of all, I think that part of the answer lies in the fact that we work with suppliers even in -- especially in -- the United States to make them part of our supply chain in a way that allows them to be better while we are better.

What does that mean? That means sharing data. It means having them understand what is selling, where, when, how, so they can do their management of the factories or wherever it is that they're bringing the goods in from so that there is some transparency about our relationship. We have done the same from the beginning with suppliers outside. There are people that have access to Retail Link [the software used by Wal-Mart and its vendors] around the world, so if they make [a] product that we sell around the world, they can look at where it's selling. We are transparent with that data, allowing them to be more successful.

The other thing we've done a good job [with] is helping these factories understand the power of quality assurance and quality management. We have had them understand the value of having loyal associates. It's something we don't talk about very often, but there are factories now that are trying to understand that by having associates work for them, that want to work for them, feel good about that, they're going to be more productive. And we talked about that with them. We share that kind of information with them in much the way that American manufacturers try to do with their associates so that they want to come back to work for them and the factories are more productive. So it's an across-the-board kind of sharing to try and help them be more efficient.

I think finally, the last point that we would tell you is that if there's a middleman in our process, even if it's a Wal-Mart middleman, we try and eliminate those. We try and make the relationship face-to-face, factory-to-buyer, factory-to-global sourcing, so that there is no mix-up and no [mis]understanding and also no expense in the process of and the buying of goods and the delivery of goods. ...

I just wonder, how has that grown? … How important has that become for Wal-Mart in its ability to deliver these low price points? [And] how important are house brands now to you as a company?

Well, a couple questions in there. The first one I'd try and answer is in terms of, are we doing more of this kind of thing? Yes, absolutely, because there is a supply-chain [efficiency] to gain by working directly with the factories. So if we have a middleman involved, we're going to try and work directly with the factories -- not always, but it's an area that we're exploring all the time, and some significant opportunities exist there.

In terms of the importance of the house brands, they are important. Even those companies that we have grown up with and that they've been successful with us, that view our house brands as competition, will say that they are better as a result of our house brands. It makes them more efficient, and they do not begrudge us ... that. I suppose you could suggest that they would like to not have that competition, but it makes them better.

They may feel that on 10 mornings after, but on the day they are first confronting it, they find it uncomfortable.

I suppose, but if you look at the suppliers that are out there, that have grown up with us, they have been very successful. There are some suppliers that are very big that have grown up with us. They have moved around the world with us, or we have moved with them, I suppose, and their profit margins exceed ours. They do better than we do as a result of the relationship they have with us, in a way.

And so it's not as though we're squeezing them because of either the house brands or how we do business, that this allows them to be successful. There's no dead bodies in the past here of suppliers that have not been successful. As a matter of fact, there's many that have been very successful because of working with us.

So they might say they're being squeezed by you. Your answer is they're being stimulated by you?

I think most that I've heard from will say that we are tough, that we're demanding, but they also say we're fair. And we don't often ask for things they can't deliver. And we're willing to listen with demands that are not fair.

There's a much talked-about human resources policy -- we call it "People Policy" here at Wal-Mart -- called the open-door policy. What this means is that if you're an unhappy cashier in Albuquerque, N.M., you can pick up the phone or send an e-mail to Lee Scott, our CEO, and there is no fear of retribution. If retribution occurs, then the person who might have been guilty of that is in danger rather than the person that brought the issue up.

Suppliers have the same right, and they often exercise it. If we ask too much of them, they go up the chain of command, and they talk to our managers about, "We can't deliver what you want, but we're not being listened to," or "This is a one-way street," and we learn a lot from that. So we try not to be arrogant in our dealings with suppliers and squeeze them.

I suppose one of the classic cases that comes to mind is Rubbermaid back in the mid-'90s, when the price of resin shot up all around the world, raw material. ... They came to you; you said they had the right to protest. My understanding is they did. They did exactly what you said. They went up [through] the line. They got up to [then-Vice President] Bill Fields; I don't know whether or not they got up to the CEO. But at that time, they certainly had made the point that it was circumstances beyond their control. It was a raw material; it was worldwide; it was obvious that it was public to everybody else. A number of other retailers went along with price increases with them, partially at least. But Wal-Mart said absolutely no. Why would Wal-Mart do that? This is a longtime supplier.

I'm afraid I can't answer the specifics because that precedes my time. I do know that we had recent cases where we've talked about the increase in fuel and things like that, and the tenor and tone of those conversations is we need to treat our suppliers fairly.

So whatever happened there, I'm sorry I can't comment, because it predates me, and I'm not familiar with the specifics. But I would just re-emphasize that it is not our intent to be bullies as buyers to our suppliers. We don't think that there's value in that. We think we need to be have a win-win situation, and I would suggest to you if that happened today that there would have to be [a] very good reason for us not to support an increase for Rubbermaid. Doesn't mean we would, but we'd have to understand it very well, and we'd like to treat them as fairly as possible.

... A number of [suppliers] have told us that they have felt real strong, particularly opening-price-point pressure from Wal-Mart that has effectively forced them to make decisions to move overseas, specifically to China; that the China price becomes the world low price, and it's got to be matched. I'm just wondering whether or not in your dealing with your suppliers and in this openness, this open sharing of information you've described, how candid you are with them about saying: "Hey, these are the facts of life. We've got to have a price point with a lawn mower under $100. We've got to have a bike under $70. We've got to have whatever it is at some price point that's a steep jump below the annual 3 or 5 percent decline." How candid you are with them in telling them what the world facts of life are?

Well, I'm not a buyer, first of all, but I think we are a very candid company. And again, the feedback that I have from the supplier relationships that I talk to people about is that the candid discussions are what it's all about. We do share as necessary what we think, that things need to happen the way they need to happen, why we think the price needs to be a certain position. We will say, "We could sell a lot of these if the price was X," and those conversations are open. There is an opportunity there for us to be very candid with them.

Would you say, for example, to a sock maker that's been giving you a bag of socks for six bucks a bag and you can get it from China at four bucks a bag, "Hey, we can't continue to give you the same kind of shelf space we did before unless you can match this four bucks a bag of socks"?

Naturally, we'll have conversations about the price, about where they are relative to what we can find on the outside, whether with another American supplier or not. The thing that I would say is that we have on a number of occasions stuck with American suppliers; [for example,] the very public case of the bags that you see at the checkout counters. And we're spending probably about $18 million roughly a year more than if we bought those from China. We stuck with a supplier that was in the Carolinas called Pillowtex that is now not in business anymore, did not ask them to reduce prices, tried to help them in every way by carrying their products, and they were not just not able to compete given the competitive nature of their business.

And that brings me to another point I guess I'd like to make: When I talk to suppliers, the pressure is not just about the price; it's also about cost. The cost of doing business in America relative to other countries -- especially in [the] manufacturing environment -- is another factor. We can't lay blame on one or the other, but to be sure, the cost of health care is very high here. The cost of environmental regulations is higher in the United States than it is in Europe, which is well known for its green policies. Regulations in general [are] higher. The litigation risks that occur in America are higher than anywhere else in the world. Tax subsidies and tax rates are in many cases higher in the United States for manufacturers than they are in other parts of the world. So it isn't just about the price of good[s]; it's about the cost to produce them. So I hear balance in these conversations with senior businessmen on these issues, and those two together cause them to make decisions that are difficult if they didn't have to send work offshore.

That makes good sense. What I'm wondering is ... if the nature of the conversation is ... "Look, the facts are you can't get around these environmental, these health, these tax costs and so forth. It's your decision, but this is the price point we've got to hit, and the facts look as plain as the nose on your face. You can't hit the lower price points from here."

Well, I don't know that we reach that conclusion together, but we do talk about price, and yes, we do talk to one another. We have relationships with them that allow those conversations to occur. We hear people talk about business issues that are not just about price; they may be about packaging or whatever [is] at issue. And it's sort of a very broad relationship that we work very closely together. [The] manifestation of that is we do have offices here of suppliers, some of which you probably drove by when you were coming to and from the airport or maybe your hotel, and I think that's a reflection of the kind of relationships. It's not just about price; it's about all of the things that go into the business equation with Wal-Mart. ...

I asked you about the candor of your conversation, because we recently talked to a couple of suppliers, one in particular who was very high on Wal-Mart's candor and was very praiseworthy of Wal-Mart for its candor. But he and others said to us that occasionally they get a shock; they get a cold splash of water. ... He said, and these other people said, they came to one of your global-sourcing meetings here at Wal-Mart, and one of your vice presidents got up and said ... "If you want to be in the opening-price-point business in the area you're in, that's 25 percent of the market. You're not going to be able to hit it unless you are offshore. Just can't do it from here." And that was a pretty direct statement.

Well, like I said, I'm not a buyer, and I'm not in merchandising, and I don't know that that is a common practice. I can't even confirm that that happened. I suspect that this is a legitimate occurrence that you're citing, and there may be some validity to that.

It's useful to think about this maybe from a historic standpoint. If you look at what we buy a lot of -- let's pick on China for a minute. We buy a lot of electronics from there, home appliances, small home appliance-type things and electronics goods. We buy a lot of seasonal goods -- Christmas trees and Easter baskets, things like that. We buy a lot of lawn and garden things, some apparel and shoes.

Then say, what is the history of that? Toys is another one. You know, electronics started leaving the United States, not going to China but going to Japan, in the '60s. Toys started leaving about the same time, significantly more in the '70s. Same thing with the seasonal goods, Christmas trees and that.

And I guess I would tell you that if you're a company that says, "I want to make Christmas trees in the United States," you are operating from a position of weakness, not strength, because there is a history here.

Or socks or toys or --

A number of those things. Apparel has been leaving this country for a long time. The sad truth is, because of perhaps the pressure on price, because of this opening-price-point initiative that we and others have, and because [of] the pressure of costs on the other side, that it's difficult to make ends meet, if you're a business, by staying here. It's a sad, if you will, situation. That said, it's a reflection upon our economy. It's a reflection upon the consumer's needs. And it's a phenomenon that Wal-Mart is not responsible for. It's been going on for a long time.

Is it a reflection of our trade policy? Do we have a good level playing field with a country like China, from your perspective?

Well, I would tell you that we support free trade. I believe that the shoppers and consumers around the world deserve the right for as low a price of goods as that trade will allow. As our policy, does it have enough teeth in it is perhaps a question for somebody beside me. I could tell you that we believe in fair trade, but we also think it needs to be a level playing field, and you cannot create a situation where you don't have teeth in your policy. If there's dumping going on and things like that, then we have to take advantage of the various vehicles to make sure that that stops. And we think that the U.S. is engaged in that when necessary, and they should be.

Let me just ask you about the dumping. So do you all get involved in dumping cases?

Only if the cases result in tariffs that are applied to those products. We don't weigh in on them with the government by saying, "Don't listen to this case." In fact, the system doesn't really allow it, and we honor that. We think it's a decision the government should make internally.

There's a case not too long ago -- Five Rivers [produces] color television sets in East Tennessee. They filed a complaint [that] said the Chinese were dumping. ... We talked to the CEO of that company, Tom Hopson, and he said when the International Trade Commission had the hearings, he was astonished to find Wal-Mart on the other side of the case, arguing in favor of the Chinese importers.

... I'm not familiar with that particular case. ...

Does Wal-Mart have a position on dumping cases? …

I think the decision to decide whether the dumping cases are justified or not is not one that we should make. I think we should weigh in if we feel a need, if there is an issue that we see that perhaps needs a perspective from the retail trade ourselves, or if we're asked to. But the decision is a process, as you know, to determine whether dumping cases are legitimate and if so, how they're rationalized in going forward, in the future, whether they apply tariffs or what have you. And I think that process is what it should be and if it has teeth, and I think that the U.S. government uses it appropriately.

And do you see Wal-Mart's position [as] weighing in on behalf of the American manufacturers or on behalf of the foreign companies that are supplying [the goods]?

I think it's on a case-by-case basis. ...

Shenzhen, your procurement center there, does it have global functions? How big is the office? What does it do?

There's a couple of hundred people there. What happened there is in part practical in that when we decided to bring in the functions that PREL [Pacific Resources Export Limited] did internally to our company, many of those associates that were PREL associates lived and worked in Hong Kong, and we retained them and made them Wal-Mart associates. So as a practical matter, many of them were in China anyway, or in the Hong Kong area.

We felt it was important to move into the Shenzhen area, to mainland China, because a lot of our work was there, and much of the work that we did was no longer in Hong Kong. [Hong Kong] used to be a major center for purchasing, [but it] sort of migrated into the mainland.

So some of it was practical. And then the question then became ... where should the headquarters be for global procurements operation around the world? And because we had a large concentration of people there, we decided to have the headquarters there. So the gentleman who runs our global procurement operation is out of Shenzhen.

It's important to say, though, that just because we do a lot of work there, we have a number of offices around the world, and there are a number of employees around the world. So we're trying to focus on growing the procurement businesses not just in China, but in South America and the United States of America and also in Europe, the Middle East, some in Africa, and finally in Asia. ...

What is the level of Wal-Mart's imports from China directly?

Right, we're asked this often. The direct imports that we have -- and this is ones that we had company-to-company relationships, us to the factories -- is roughly $7.5 billion a year. ...

We estimate -- we don't know this for certain -- that if you buy a product from, say, an American manufacturer ... that they source from China in some occasions, and we estimate that figure to be about the same -- another $7.5 billion.

So the $15 billion is both indirect -- say, a Black & Decker. We do business with them here in the United States. They decide to build it in China, to build those products in China, first that product and also that which we buy directly from Chinese manufacturers. ...

So you've mentioned a figure of $15 billion [in] direct and indirect imports. Others have given us higher estimates, well into the 20s and maybe $30 billion. Is that possible?

I think it's possible. It could be higher, and it could be lower. The other thing you have to remember is that we're growing pretty significantly in terms of sales, so next year it will be higher, and the year after that it's likely to be higher as well. So it's proportional to our sales.

What about global sourcing overall? ... Do you have any idea what percentage [of non-grocery, domestic sales] comes from overseas?

China is about $15 billion as I've said, and you start adding the others up, and they're nowhere near those when we look at all the various countries that we buy from around the world. Again, what we don't know is the numbers of products that come from distributors or from manufacturers that they decide where to manufacture. So it's difficult to say.

You just don't track that?

Not now. We hope to in the future by simply having a file in our data that says this product by SKU is made in this country, or at least in this region, but that doesn't exist today. And like I say, it sounds simple, but an average Supercenter has over 100,000 [stockkeeping] units, SKUs, and we just don't have the data.

Now, I will tell you this. I will tell you this if you think of us being one of the largest food retailers in the United States. Most of the food that we have in our stores, over 90 percent I am told, is made or grown in the United States. It's about $40 billion. If you think about the fact that we're building 50 million square feet of stores just in Supercenters -- it doesn't include distribution centers; it doesn't include the variety of Neighborhood Markets that we have and just what we call Division One stores, the stores that don't have food -- it's over 50 million square feet a year [total]. The jobs that are created just in construction alone are 40,000, 45,000 jobs a year, and about $5.5 billion of product bought that goes into [those] stores, whether it's carpet on the floor or ceiling tiles or lights or toilets in the bathroom or plumbing fixtures -- that is significant. We likewise estimate that in information technology, we support roughly 20,000 jobs in America. We do no outsourcing of our information technology at Wal-Mart. And the list goes on.

If there are products that you buy in our store -- if you just go through the category of health and beauty aids, for example, or tire and lube or CDs or DVDs, all the cleaning products that are in our stores, that stuff is by and large made in America.

What I can't tell you is that I created X numbers of jobs that way or what the dollar amount is. We understand the importance of being able to convey that. We're trying to get a handle on it. But I can tell you the numbers are significant, and all you have to do is walk in a Wal-Mart store and see all that is sold. We are the biggest purveyor of pet food and the biggest purveyor of shampoos, and that stuff is made in America.

We are creating a lot of American jobs, and that is on top of the fact that we have 1.2 million workers of our own. So this is an economic engine that's all about creating jobs in America. It's not just about buying things [from] China.

I understand and I hear what you're saying, and I value what you're saying. I also need your response to the people that were saying that suppliers, longtime American suppliers ... a lot of their jobs are getting driven overseas. Either they are moving their facility overseas, or they can't compete. They're shutting down, and they do, in fact, point to you. I mean, they point to Target; they point to Costco; they point to you as a group, and they point to Wal-Mart as the leader of the group. What do you say to them?

Well, again, I'd go back to the fact that we think we have an obligation to provide the lowest price of goods. We also think we have an obligation to be fair to our suppliers and tell them what we need of them, what the customers that we are in touch with [need].

One of your beginning questions [was] what they require of them in terms of an opening price point. We'll share that with them in a fair way, and if they can continue to build those products or provide those products in America, that's fine. And if not, then I think that's an issue that is far greater than Wal-Mart. It's about our economy. It's about the kind of jobs that we create. It's about the kind of costs that are inherent in our system, that are in the overhead of our manufacturing and businesses alike, that are creating us to be noncompetitive. It's unfair to pin that on any one company, not just Wal-Mart or Target, Costco. It's also unfair to pin it just on government, but it's a complicated set of issues that play into this that makes it difficult for a manufacturer to compete here. It's not a Wal-Mart phenomenon. ...

The larger question, I think, that I want to ask here … [is] can America go this way? Ohio lost 225,000 manufacturing jobs in the last three years alone -- 225,000 in one state, one of the core states in our manufacturing economy. And a lot of those jobs were held by people who had held them a long time, and they were $12- to $15- to $16- to $17-an-hour jobs, and quite literally, it is Wal-Mart to the rescue. It's a Wal-Mart Supercenter that's coming in that's going to replace some of those factories. ... And these people are looking at jobs that are going to move them from $15, $16 an hour to $8 to $9 to $10 an hour. You look at Wal-Mart jobs. They may not even be looking at standard full-time jobs, 40 hours a week; they may be looking at 32 or 28 or whatnot; or they may be looking at part-time jobs. ... Are we going to wind up hollowing out our middle class in the process of trying to serve the people who are buying out of envelopes? I'm not saying the people who buy out of envelopes [don't] have a right to a good deal, but as a national strategy, if we all go this way, 10, 15 years from now, how many more people are going to be buying out of envelopes and not out of bank accounts because they don't have the bank accounts? Can we keep going the Wal-Mart way as a country?

Well, you're asking a very persuasive, contemplative question, and I think, in a sense, we live for today. We're not trying to force this to occur. We don't believe that having 20 percent of the population living out of envelopes is necessarily a good thing. But it is what it is, and we can't ignore those people either.

It's important for me also to say that there are people in our stores that count on us for the basics that make a whole lot more money, and so the demographics of our shoppers is not just about the lower end of the pay scale.

But will living for today work for America's future?

Well, I think ... that how do we engage in this is important. Wal-Mart feels because we are as big as we are, and because we are a company that employs so many people, that our country has problems that need solving, and I think there are other companies that feel the same way.

I had, I think, the privilege of going to both the Democratic and the Republican conventions here recently on behalf of the company. And the people that worried me the most are the ones that simplify the complex problem that you've just laid out to one enemy. Sometimes that's the other party; sometimes it's China; sometimes it's currency in China. And I think the issues you've described are much more complex, and we need to start addressing them as a country. ...

There are issues like health care that have to be addressed by our country. And we think we need as a company to work with the government in solutions for that. It can't be all taking; it has to be giving. And this, as I say, is a complex issue. Wal-Mart has an obligation as this country's largest employer. And we don't take that obligation lightly. We think we need to be a part of the solution, and we can't just step back and say, "It's not my job."

Somebody said we're on a bus that's going in a direction we like going, but it's got no brakes. And in effect, the question is, [is] the single-minded pursuit of lower cost and lower prices bringing with it costs that in the end will be greater, and that Wal-Mart is not alone in this, certainly, but is a part of this?

I would argue that the answer to that question in my mind is no. This question almost belongs [to] a Nobel Prize-winning laureate in economics rather than an executive from Wal-Mart. But I have to tell you that I can't think of a real reason, as a businessperson, why a company that in 1970 had 30-some stores in three states and in 2004 has over 3,500 stores in 50 states and 1,500 in 10 countries, has gone from less than $1 billion a year to $250 billion a year in that same time period, how that's a bad thing to the world's economies. If we focus, as we have, on suppliers, many of these suppliers I go back to, they'll say that we're tough but we're fair. Many of them will likewise say that they are better companies for having been involved with us.

I'll share a story with you, a simple anecdote. We sell cheese in America, a company called Cabot. Cabot was chosen as our company's supplier for the year in that particular category, and they felt so strongly about the fact that they're a stronger company as a result of their interaction with us, that we've caused them to be a better company, that they are willing to go to Capitol Hill and tell the Vermont delegation -- that's their hometown, and we have our challenges in that part of the country -- that Wal-Mart is a good company. And I think that's a reflection upon the question you're asking. It's not the whole answer, but to me I find it hard to believe that there is some underlying evil, and I don't know that you're implying that.

There is no suggestion of underlying evil.

Well, maybe underlying bad or concern. ... There's unintended consequences that we don't foresee, so I would say I don't believe that it's a bad thing, that our single-minded focus on cost is a bad thing. I think it provides for a better company that serves a need in our society and our economy. ...