Cross-posted at the Writing on the Wal
Remember when I told you that the Wal-Mart scholarly conference was a disaster before it started? Well, it's still a disaster now that it's over. Here is Alan Reynolds, a Senior Fellow at the Cato Institute:
Wal-Mart recently sponsored a Washington, D.C., conference about the firm's "economic impact." Public relations stunts that rely on groveling and capitulating invariably backfire, and this was no exception.
Yet this kind of criticism does not prevent Reynolds from defending Wal-Mart:
Employers don't pay wages -- consumers do. The "high cost of low prices" means what it says -- that Wal-Mart offers too many bargains and does not gouge consumers nearly enough.
[emphasis added]
Think about that one for a second. Do consumers sign paychecks? Reynolds has so completely internalized the notion that businesses have no choice but to pass their labor costs on to consumers that he ends up writing a sentence that is patently absurd.
His article gets even sadder when he begins to attack one of the papers from the conference written by economist David Neumark and two associates:
As for the Neumark study, Wal-Mart Watch quotes the part that says: "The representative Wal-Mart presence (about eight years) reduces employment by 2 to 4 percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust." It's all "less robust," actually.
Do such claims even begin to make sense? Total U.S. employment is 144 million, including those in military service. Wal-Mart accounts for 1.2 million workers, or eight-tenths of one percent of all U.S. jobs. To believe marginal relocations of such a tiny fraction of U.S. jobs from one county to another could have a measurable impact on total employment or average compensation is to believe tails can wag dogs.
I can tell that Reynolds is arguing about method rather than conclusions, but I don't have the background to argue this point in that manner. However, I do know this: Wal-Mart spends millions of dollars each year to convince communities to give it tax breaks to build stores because of the alleged positive economic impact these facilities have on local economies, especially because of the new jobs the company claims they bring. As Greg LeRoy explains in a fine new article on that subject:
A national survey by Good Jobs First in 2004 looked at 160 stores and all of the company's distribution centers--and found that more than 90 percent of them have been subsidized. Altogether, 244 subsidized facilities in 35 states received taxpayer deals of more than $1 billion.
If Wal-Mart can be sure its stores improve total employment in a region in a measurably positive direction, it is also than possible that Wal-Marts can impact employment in a negative direction.
I'll make Reynolds a deal: I'll stop talking about Wal-Mart destroying communities if Wal-Mart refuses to take another dollar in public subsidies for building its stores and distribution centers. Isn't that an arrangement that a libertarian think-tank like the Cato Institute should embrace?
JR
