[Mb-civic] Progressive Wal-Mart. Really. - Sebastian Mallaby - Washington Post Op-Ed

[William Swiggard]

Progressive Wal-Mart. Really.

By Sebastian Mallaby
Monday, November 28, 2005; A21

There's a comic side to the anti-Wal-Mart campaign brewing in Maryland 
and across the country. Only by summoning up the most naive view of 
corporate behavior can the critics be shocked -- shocked! -- by the 
giant retailer's machinations. Wal-Mart is plotting to contain health 
costs! But isn't that what every company does in the face of medical 
inflation? Wal-Mart has a war room to defend its image! Well, yeah, it's 
up against a hostile campaign featuring billboards, newspaper ads and a 
critical documentary movie. Wal-Mart aims to enrich shareholders and put 
rivals out of business! Hello? What business doesn't do that?

Wal-Mart's critics allege that the retailer is bad for poor Americans. 
This claim is backward: As Jason Furman of New York University puts it, 
Wal-Mart is "a progressive success story." Furman advised John "Benedict 
Arnold" Kerry in the 2004 campaign and has never received any payment 
from Wal-Mart; he is no corporate apologist. But he points out that 
Wal-Mart's discounting on food alone boosts the welfare of American 
shoppers by at least $50 billion a year. The savings are possibly five 
times that much if you count all of Wal-Mart's products.

These gains are especially important to poor and moderate-income 
families. The average Wal-Mart customer earns $35,000 a year, compared 
with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's 
"every day low prices" make the biggest difference to the poor, since 
they spend a higher proportion of income on food and other basics. As a 
force for poverty relief, Wal-Mart's $200 billion-plus assistance to 
consumers may rival many federal programs. Those programs are better 
targeted at the needy, but they are dramatically smaller. Food stamps 
were worth $33 billion in 2005, and the earned-income tax credit was 
worth $40 billion.

Set against these savings for consumers, Wal-Mart's alleged suppression 
of wages appears trivial. Arindrajit Dube of the University of 
California at Berkeley, a leading Wal-Mart critic, has calculated that 
the firm has caused a $4.7 billion annual loss of wages for workers in 
the retail sector. This number is disputed: Wal-Mart's pay and benefits 
can be made to look good or bad depending on which other firms you 
compare them to. When Wal-Mart opened a store in Glendale, Ariz., last 
year, it received 8,000 applications for 525 jobs, suggesting that not 
everyone believes the pay and benefits are unattractive.

But let's say we accept Dube's calculation that retail workers take home 
$4.7 billion less per year because Wal-Mart has busted unions and 
generally been ruthless. That loss to workers would still be dwarfed by 
the $50 billion-plus that Wal-Mart consumers save on food, never mind 
the much larger sums that they save altogether. Indeed, Furman points 
out that the wage suppression is so small that even its "victims" may be 
better off. Retail workers may take home less pay, but their purchasing 
power probably still grows thanks to Wal-Mart's low prices.

To be fair, the $4.7 billion of wage suppression in the retail sector 
excludes Wal-Mart's efforts to drive down wages at its suppliers. 
"Wal-Mart: The High Cost of Low Price," the new anti-Wal-Mart movie 
that's circulating among activist groups, has the requisite passage 
about Chinese workers getting pennies per day, sweating to keep 
Wal-Mart's shelves stocked with cheap clothing. But no study has shown 
whether Wal-Mart's tactics actually do suppress wages in China or 
elsewhere, and suppression seems unlikely in poor countries. The Chinese 
garment workers are mainly migrants from farms, where earnings are even 
worse than at Wal-Mart's subcontractors and where the labor is still 
more grueling.

Wal-Mart's critics also paint the company as a parasite on taxpayers, 
because 5 percent of its workers are on Medicaid. Actually that's a 
typical level for large retail firms, and the national average for all 
firms is 4 percent. Moreover, it's ironic that Wal-Mart's enemies, who 
are mainly progressives, should even raise this issue. In the 1990s 
progressives argued loudly for the reform that allowed poor Americans to 
keep Medicaid benefits even if they had a job. Now that this policy is 
helping workers at Wal-Mart, progressives shouldn't blame the company. 
Besides, many progressives favor a national health system. In other 
words, they attack Wal-Mart for having 5 percent of its workers receive 
health care courtesy of taxpayers when the policy that they support 
would increase that share to 100 percent.

Companies like Wal-Mart are not run by saints. They can treat workers 
and competitors roughly. They may be poor stewards of the environment. 
When they break the law they must be punished. Wal-Mart is at the center 
of the globalized, technology-driven economy that's radically increased 
American inequality, so it's not surprising that it has critics. But 
globalization and business innovation are nonetheless the engines of 
progress; and if that sounds too abstract, think of the $200 
billion-plus that Wal-Mart consumers gain annually. If critics prevent 
the firm from opening new branches, they will prevent ordinary families 
from sharing in those gains. Poor Americans will be chief among the 
casualties.

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/27/AR2005112700687.html?nav=hcmodule
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