Obama economist: Wal-Mart a ‘progressive force,’ not anti-poor

May 3, 2013

By Chris Reed

As Dan Walters notes, unions are once again pushing for onerous new restrictions on Wal-Mart selling groceries in California, and once again Gov. Jerry Brown will have to end up playing the role of Mr. Sanity by vetoing a bill carried by Assemblyman Roger Hernández, D-West Covina, that would make Wal-Mart jump through numerous hoops to be allowed to compete with union grocers.

With this renewed debate, we’re again hearing the bizarre claim that Wal-Mart is bad for poor people. Why? Because its jobs don’t pay that well and don’t have great benefits. But lots of jobs don’t pay that well and don’t have great benefits. So why do Democrats (read: unions) single out Wal-Mart? Because it is gigantic and it is firmly and implacably against unions.

Meanwhile, one of the most prominent Democratic economists in the U.S. completely disagrees with the union narrative, calling Wal-Mart a “progressive force.” How prominent is he? Jason Furman happens to be, per whitehouse.gov, “Assistant to the President for Economic Policy and the Principal Deputy Director of the National Economic Council.” Sebastian Mallaby of the Washington Post wrote about Furman and Wal-Mart in 2005:

“Furman advised [John] 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.”

Called a ‘parasite’ for doing what other firms do

Furman’s and Mallaby’s anti-anti-Wal-Mart case doesn’t end there:

“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.”

Anyone who doubts Wal-Mart is good for poor people should go to one and compare the cars in the parking lot with the cars one sees at Ralphs, Vons or Albertsons. Poor people believe Wal-Mart is good for them.

More from Mallaby with specific pertinence to the efforts to block Wal-Mart “Supercenters” in California:

“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.”

Yeah, right, Wal-Mart is bad for poor people. Cheap groceries are evil!

Roger Hernández isn’t D-West Covina. He’s D-UFCW.