Oped on Maryland health care tax on WMT

[southsider2k5]

Now for a little bit of a right turn on WMT, I know we have all argued about its economic effects on a community. Well it turns out there are studies that say some of the claims might not be true afterall. I know the author here has it out for Krugman, but there are links to the studies he sites in the article.

 

http://nationalreview.com/nrof_luskin/luskin200512220928.asp

 

Consider Krugman’s column on Wal-Mart last week [subscription link via New York Times; free link via ReclaimDemocracy]. Krugman doesn’t find anything corrupt about the “union-supported group, Wake Up Wal-Mart” that has run television ads demonizing the non-union retail giant. Would Wake Up Wal-Mart have run those ads anyway, without union money? Probably not, but Krugman would likely have written the same column, in which he makes the absurd claim that Wal-Mart — by far America’s largest employer — destroys jobs. He even goes so far as to call Wal-Mart’s claims to the contrary “the worst economic argument of 2005.” Considering some of the loony economic arguments Krugman himself has made this year, that’s quite a claim.

 

Who’s paying Krugman to make such claims other than the New York Times? No one that I’m aware of, at least not directly. But unions supply a large fraction of the filthy lucre that fills the war chest of the Democratic party. So, naturally, Krugman will take up their cause — however absurd, and however hypocritical. Back in 1993, when Krugman used to write as an economist, not a political hack, he called Wal-Mart “the most significant American business success story of the late 20th century,” celebrating its application of “extensive computerization and a home-grown version of Japan’s ‘just in time’ inventory methods to revolutionize retailing.”

 

To back up his claims that Wal-Mart destroys jobs, Krugman cites the “sophisticated statistical analysis” in a paper by a University of California professor and two associates at the Public Policy Institute of California. But that paper only claims that Wal-Mart causes a drop in retail employment when it opens a store in a new community. Overall, it finds “there is some evidence that Wal-Mart stores increase total employment on the order of two percent.”

 

A study by Global Insight goes further, but Krugman doesn’t mention it. It says that Wal-Mart is “responsible for 210,000 net jobs, a level of total factor productivity (general economic efficiency of the economy) that is 0.75% higher by 2004 than it would have been” and that “real disposable income is 0.9% higher than it would have been in a world without Wal-Mart.” Why Krugman’s silence on this study? The unions wouldn’t be happy if he mentioned it.

[jackie hayes]

For my money, DeLong has done a fine job discrediting Luskin. He's not a good one to cite. Krugman will probably win a Nobel Prize someday, Luskin doesn't believe in statistics. No contest.

 

The overall effect on total employment is estimated to be about +2%. But the estimates for the South show a decrease in total employment. Since the damage that Walmart can do is probably only realized over time (driving out other businesses takes a while), and since Walmart has been longer established in the South, that's worrisome.

 

Krugman didn't cite the Global Insight study because it's garbage. They just seem to look at overall averages, making it biased in all the ways that the Neumark study controls for.

 

Neumark (UC Davis) paper

Global Insight paper

 

And for good measure, a more credible study arguing that Walmart is very beneficial, albeit in a different way:

 

Hausman paper

 

Hausman is an MIT economist who looks at food prices (lower food prices being a big boon to the poor in any community).