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Steward's helper

Money | New York University economist Jason Furman says Wal-Mart is getting a bad rap from liberals and environmentalists

Issue: "Daniel of the Year," Dec. 17, 2005

It does more to help poor people financially than the Salvation Army; it is generally good for the environment; and, according to some studies, it increases overall employment almost everywhere it goes.

Yet, other than perhaps Halliburton, it is the single business most despised by the American left.

The company in question is Wal-Mart, and a Nov. 28 report by New York University economist Jason Furman concludes that the mammoth retailer is getting a bad rap from his fellow liberals. Wal-Mart, argues Mr. Furman, is a "progressive success story"-a business with razor-thin profit margins that nonetheless brings high productivity, low prices, and coveted jobs to the masses.

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He brings together several different studies to make his case, and the numbers he cites are staggering. Just considering food, Mr. Furman shows that big-box retailers like Wal-Mart save a typical family in the poorest fifth of U.S. incomes 25.8 percent on their grocery bills-or about 6.5 percent of their incomes. When all products are taken into account, Wal-Mart by itself saves American families about $263 billion, or about $895 per person and $2,329 per household. These savings mostly help poor and middle-class families, since the average Wal-Mart shopper earns about $35,000.

But doesn't Wal-Mart oppress workers, paying low wages and destroying good jobs in communities across America? An October study by Wal-Mart critics at the Institute of Industrial Relations found that Wal-Mart lowers retail wages by $4.7 billion across the nation. But that figure is swamped by the savings to consumers, so much so that Mr. Furman contends even retail workers with lower pay may have greater buying power because of Wal-Mart's effect on prices. Studies also show that the entry of a Wal-Mart into a community is generally followed by a small, long-term gain in overall employment.

It is also strange that environmentalists would hate Wal-Mart, according to a separate column last month on Greenbiz.com by environmentalist Daniel Akst. Wal-Mart, he argues, allows families to buy many goods at once, eliminating the need for multiple car trips. (Sam's Club, which sells in bulk and doesn't offer grocery bags, helps the environment even more.) Big chains are also easier than small stores for environmentalists to monitor and pressure into environmentally friendly behavior.

Even Wal-Mart's biggest sin in the eyes of environmentalists-that it sells products made in poor nations overseas-actually helps the environment. "The main reason is that, ecologically speaking, money really matters," Mr. Akst argues. Mass merchandisers like Wal-Mart help poorer countries develop and become wealthier, which lets them afford greater environmental protection.

Mr. Akst's suggestion for truly helping the environment: Shop at Wal-Mart or another big-box chain, estimate how much you save, and then at the end of the year "make a pretty nifty donation to the environmental cause of your choice."

The opposition to Wal-Mart, these analysts conclude, comes mainly from two sources: unionized grocers who don't like low-cost competition and those who think a big-box Wal-Mart store is just plain tacky. "Squatting dumbly behind their vast aprons of blacktop, America's suburban chain stores are as ugly as they are banal, together comprising a built environment that exemplifies Joni Mitchell's song about paving paradise for a parking lot," writes Mr. Akst.

That's a judgment that some would accept and others wouldn't, but only Wal-Mart's critics would force poor Americans to become poorer for the sake of their aesthetic sensibilities.

Timothy Lamer
Timothy Lamer

Tim is managing editor of WORLD magazine.

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