Wal-Mart good for workers, NY Times says

The New York Times, as usual, gives op-ed space to right wing “free market” fundamentalists.

In The Price Is Right, August 3, 2005 Pankaj Ghemawat, a professor of business administration at Harvard and Ken A. Mark, a business consultant in Toronto, argue that Wal-Mart is good for workers.

According to one recent academic study, when Wal-Mart enters a market, prices decrease by 8 percent in rural areas and 5 percent in urban areas. With two-thirds of Wal-Mart stores in rural areas, this means that Wal-Mart saves its consumers something like $16 billion a year. And because Wal-Mart’s presence forces the store’s competitors to charge lower prices as well, this $16 billion figure understates the company’s real impact by at least half.

These kinds of savings to customers far exceed the costs that Wal-Mart supposedly imposes on society by securing subsidies, destroying jobs in competing stores, driving employees toward public welfare systems and creating urban sprawl. Even if these offenses could all be ascribed to Wal-Mart, their costs wouldn’t add up to anything like $16 billion.

….Wal-Mart’s customers tend to be the Americans who need the most help…..Without the much-maligned Wal-Mart, the rural poor, in particular, would pay several percentage points more for the food and other merchandise that after housing is their largest household expense.

Thus, the authors argue, “the debate around Wal-Mart isn’t really about a Marxist conflict between capital and labor”.

Bull. Marxism deals with systems, not companies. As long as labor lacks negotiating power, Wall Mart’s lowering cost of living contributes little to the living standards of the poor. It mostly enables other capitalist enterprises to pay less for unskilled labor. The “externalities” Wall-Mart imposes on society (health care costs, food stamps, etc.) do not subsidize Wal-Mart profits alone; they are a general subsidy to Corporate America as a whole.

Please tell the Times’ Public Editor that you would like to see some op-ed balance, for example, an op-ed response to this very fine application of neo-classical economics from a true Leftist economist, e.g. Jonathan Nitzan from York U., Gerard Dumenil from CNRS, Paris, David Harvey, etc.

Another point:

Notice the “supposedly” in the costs that Wal-Mart supposedly imposes on society.

Our economists are precise in measuring Wal-Mart benefits, $16 Billion, but cavalier about the costs, supposedly some lower figure, if at all.

Does Ken Mark advise his clients to do cost-benefit analysis with the same cavalier attitude towards costs?

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