In April 2005, The Inquirer wrote a profile of Tasty Baking Co., the beloved local company whose signature Tastykakes are a delicacy dating from 1914. The story was about Tasty Baking's effort to revitalize its stagnant business, and it included this sentence about the snack-cake business: "U.S. consumers spent $850 million on snack cakes during the 52 weeks ended March 20, the same as the previous year, according to Information Resources Inc., a Chicago company that collects checkout scanner data."
For those unfamiliar with the many nooks of the U.S. economy, it's a remarkable snack cake of a datum: Who knew that someone separated and collated all that grocery-story checkout data, right down to the individual snack-cake category? Who knew we were buying $2.3 million worth of snack cakes a day? And could it be a good thing -- for our waistlines, if not Tasty Baking -- that our consumption of snack cakes is not increasing?
But here's the problem: The sentence doesn't tell the whole story. Indeed, the picture is -- and must remain, at least for now -- very much incomplete. Yes, in the 52 weeks from March 20, 2004, to March 20, 2005, U.S. consumers did spend $850 million on snack cakes -- but that does not count snack cakes we bought at Wal-Mart, where Americans do almost 20 percent of their grocery shopping. The Inquirer duly noted this whopping lacuna in an accompanying graphic.
The $850 million number does not include a single dollar of snack-cake sales at Wal-Mart because Wal-Mart does not contribute its sales data to the big pools of information collected by the national consumer clearinghouses. It stopped in July 2001; now it keeps all its category sales data to itself. Secret.
Even in this quirky corner of the economy, the world of snack cakes, Wal-Mart's secrecy is hardly trivial. Wal-Mart is 17 percent of total U.S. grocery spending, so if Wal-Mart sells 17 percent of the nation's snack cakes, we actually bought $1 billion in snack cakes, and Wal-Mart sold $150 million worth.
Another market research firm, ACNielsen, concluded that in the same year, Wal-Mart sold $2.4 billion worth of something called "snacks" and $2.4 billion worth of bread and baked goods. Whatever you call snack cakes, Wal-Mart could easily be selling $200 million, or $300 million, or $400 million of them a year. And snack-cake sales are quite likely rising at Wal-Mart -- sales of snacks there grew 12 percent, and sales of bread and baked goods grew 23 percent.
So it is not just that the number itself -- $850 million in sales of snack cakes to Americans -- is wrong. It's also that the interpretation is wrong. Wal-Mart is so big, snack-cake sales are likely to be rising nationwide, even rising dramatically, with all the increase coming from Wal-Mart.
Secrecy is deeply woven into the culture of U.S. corporations. It goes back to the very idea of a company, and of competing with other companies in the same business. Wal-Mart, founded in 1962, has made corporate secrecy an obsession. Not only has Wal-Mart been largely silent about its own operations, but also it has for decades erected a wall of silence around its partners as well: The contract signed by suppliers forbids them to talk publicly about their relationship with Wal-Mart without permission.
But corporations are reaching a scale not envisioned a century ago, in the youth of industrial capitalism. The 20 largest public companies in the United States together account for 20 percent of the entire economy. Fifty years ago, the 60 largest companies did not add up to 20 percent of the economy. Corporate secrecy is corroding capitalism, damaging our ability to have a responsive democracy, and frustrating our ability to both understand and manage our own economy.
Market economies thrive on information. The point of a market economy is -- constantly, automatically -- to use information to adjust what the economy provides -- products, services, jobs, even philanthropy -- to what people need. Without accurate information, the price of snack cakes gets messed up, the supply of snack cakes gets messed up, and we end up with too many, or too few, people making and selling snack cakes.
Snack cakes are a small example of a much bigger problem: Wal-Mart is so large, it doesn't just change the way business gets done, and the way the economy and consumers behave. Wal-Mart also changes the way we understand the world. And unlike many areas in which Wal-Mart has an impact -- prices, for instance, where it is easy to see how Wal-Mart's effect is beneficial -- Wal-Mart's passionate secrecy distorts reality.
A university professor trying to answer the most basic questions about Wal-Mart's impact could not even get the company to cough up something as innocuous as a list of stores and store-opening dates.
During an acrimonious yearlong debate in the Maryland legislature about whether Wal-Mart should be required to pay more for health care in that state, one bit of information was never surrendered by Wal-Mart: How much it actually does spend on health care for its Maryland employees. So much for informed public policy.
These days, in fact, because of Wal-Mart's dominance, it is almost impossible to understand the U.S. economy with precision because of this particular company's lack of transparency.
Of course, in the arena of information, as in so many other arenas, Wal-Mart does nothing technically wrong. It is a publicly traded corporation, and it complies with the routine rules from the federal government for reporting its basic financial performance. Wal-Mart is not under any obligation to participate in academic studies, or in consumer sales data-pooling arrangements (the company withdrew, it said, to protect information it considered a competitive advantage).
The secrecy becomes such a habit that we sometimes forget that Wal-Mart and all companies operate in the U.S. economy according to the rules we set -- about minimum wage and safety standards, where businesses can be built and how their buildings must look, trade practices, pollution standards, and, of course, the information companies must provide publicly.
What Wal-Mart's size, power and secrecy make clear is how antiquated, and how trivial, is our present standard for the type and quantity of information we require from public companies -- not just Wal-Mart, but companies of vast scale in all kinds of industries that routinely behave in ways that collide with not just the economy, but also with public policy: United Airlines, abandoning its pensions; General Motors Corp., closing factories; Toyota Motor Corp., opening them; Exxon Mobil Corp., making as much profit in three months as Wal-Mart makes in a year.
We should ask questions about imports, wages, health insurance, employee turnover, pollution. The answers would be complicated and hugely revealing. The answers would also be contentious and controversial. But as a country, we have the right to ask the questions; we have the power to ask the questions; indeed, we have the responsibility to ask the questions. The lack of information is, in fact, a lack of accountability from companies that are really public institutions.
Wal-Mart is not to be singled out. Its size simply makes the cost of secrecy most vivid. It is time to do two things: To acknowledge in public-policy terms that there is a difference between a $10 million corporation, a $100 million corporation, and a $100 billion corporation. We need to acknowledge that scale matters. And we need to start a fresh process of understanding by insisting on a richer level of information from megacorporations.
Indeed, in an era when companies relentlessly gather and analyze data about us -- all for our own benefit, we are assured -- it is far past time for those companies to provide far more data to us about themselves.
Author Charles Fishman wrote this article for Sunday's Philadelphia Inquirer.
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