Why Do People Hate Wal-Mart?
Reuters has a "news" story about a "study" done by the so-called Economic Policy Institute that shows that Wal-Mart could pay their employees higher salaries and still make a profit--albeit a smaller one.

Why does junk like this masquerade as news? You get the impression that the EPI is some neutral thinks tank, but apparently the people over at Reuters don't think ordinary people know how to use Google. Although EPI bills itself as "a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy," a smattering of quotations from their website seem to prove otherwise:

"Income and wages are down, debt is way up, and poverty is on the rise to name a few things."

"Read EPI economist Jared Bernstein's interview for the blog Daily Kos in Viewpoints."

"Despite the Bush Administration's failed run at dismantling Social Security, it hasn't abandoned its attempts to shift the risks and costs of retirement savings onto some retirees."

"[In his book, All Together Now: Common Sense for a Fair Economy] Jared Bernstein, senior economist of the Economic Policy Institute, explores how modern-day hyper-individualism has trumped a sense of collaboration and joint responsibility and thus, distorted America's current political and economic debate. The book shows how runaway self-reliance not only has unbalanced the economic and political discourse, but also, and more importantly, has hamstrung efforts to develop effective solutions to shared social and economic problems."

Let's see. They're against individualism, they contribute to DailyKos, they oppose any form of privatization in Social Security and they think the economy is in the tank in spite of record-breaking economic growth (see yesterday's entry about tax revenues). I don't see that as being non-partisan. I guess Reuters does.

And I guess the "economists" over at EPI failed to read this story about Wal-Mart's now store in New Jersey that will create 350 new jobs, and the fact that over 8000 people applied for these 350 positions.

Finally, economists know that forcing down prices for consumer goods is, well, good. The measurement of this benefit is called consumer surplus. In other words, if I am willing to pay $10 for an item and I can buy it for $5, in effect I have $5 extra dollars I can use for other purposes. Doesn't Wal-Mart provide some consumer surplus? Indeed, by forcing competitors to keep prices low, it should even provide surplus for those that do not shop there. Do we have an estimate? Indeed, those wacky folks over at NBER (the National Bureau of Economic Affairs--a true non-partisan thinktank) estimate that the "compensating variation" (the fancy-schmancy technical term for consumer surplus) to be 25% in the market for food. In other words, if I you took Wal-Mart out of my market, you would need 25% more more money to spend on food to be as equally well-off. Click here for the citation. Figures quoted here.

Note that I will disclose information against my position. There is some evidence that Wal-Mart reduces local wages in the retail sector in the markets that they enter. It should be noted though that there is also evidence that Wal-Mart increases overall employment in those markets. You see, economists are not supposed to come to their conclusions before they do their studies.
- posted by Base10 @ 12:33 PM