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Thursday, January 3, 2008
America's best anti-poverty program

HEAD UP TOWARDS HILLSBOROUGH (just about up to I-85), or over towards Durham (just across I-40), and you will find something quite interesting. It is a privately owned, nationally operated anti-poverty program. It's called Wal-Mart.

During the last two Christmas seasons I did some extensive research into the consumer base of Wal-Mart. As a member of the Durham Civitan Club, I stood for two hours ringing the bell in front of a red Salvation Army kettle at the main entrance to the Wal-Mart at New Hope Commons.

Based on superficial observation (which is where I get a great portion of my most valid and reliable data), the majority of Wal-Mart's clientele are not rich. Based on the people going in, Durham Wal-Mart shoppers are like a fancy mocha drink from Starbucks: a rich swirl of browns and blacks mixed with fluffs of white.

Based on the shopping carts coming out, the poorer you look, the more you buy.

This parade confused me. I could understand why the few seemingly well-to-do were coming to shop there: to exploit the oppressed Wal-Mart employees here and the sweatshop workers overseas by buying under-priced goods. What I couldn't understand is why the poor people were coming to shop there, or for that matter why the employees that I have seen working there for years continue to do so. Haven't they gotten the memo about how evil Wal-Mart is? Apparently not.

Well, we can certainly understand that. Most of these people are poor, ignorant and uneducated. They wouldn't know a low price when they see one, would they? And of course they wouldn't recognize a bad job if it was offered to them. That may be why they apply for these jobs, take them and keep them. That may explain why when one Wal-Mart opened in 2004 in Arizona, 8,000 people applied for 525 jobs. Such stories abound.

Besides ignorant poor people, who else thinks Wal-Mart is good for the poor? Economists. Jerry Hausman and Ephraim Leibtag did a study showing that consumers benefit from having a Wal-Mart in their area, as its competitive pressure makes food and consumer goods as a whole cheaper, with low income households benefiting the most.

Also, Jason Furman, an economist who advised the Kerry/Edwards campaign, estimates that Wal-Mart's discounting on food alone saves American shoppers at least $50 billion a year, and possibly five times that much across all retail goods it sells. Using federal anti-poverty programs as a point of reference, in 2005, food stamps were worth $33 billion, and the earned-income tax credit was worth $40 billion.

While making a multi-billion dollar profit, earned solely from freely offered consumer dollars, Wal-Mart may do more for the poor than the federal government does using tax dollars it extracts from us. It's a pretty nifty trick what private enterprise, entrepreneurial initiative and accumulated capital can do. You can call it the greedy search for filthy lucre; I call it the miracle of the free market.

But what about the poor exploited workers in China? I've been to places, such as Cameroon in West Africa, where the workers weren't being exploited by companies supplying goods to Wal-Mart -- they just wish they were.

Even the liberal economist and columnist Paul Krugman says that "bad jobs at bad wages are better than no jobs at all" -- which is the real "choice" for most "sweatshop" laborers in the Third World. Many of these Third World peons would no doubt be Ivy League economics professors or New York Times columnists if they could, but those options just don't seem to be open to them, so they work in crummy factories at poor wages -- just like many Americans did 50 to 100 years ago, as they built the American dream.

Is everything Wal-Mart does wonderful? Hardly. They look out for themselves not everyone else. Is outsourcing good for everybody? Nope, at least not in the short run. But globalization wasn't started by Wal-Mart (actually I think it was Marco Polo) and it can no more be stopped than the incoming ocean tide. And it is unequivocally good for the world as a whole in the long run.

So, Chapel Hillians, and Carrborundians as well, you are now free to shop at Wal-Mart -- and you don't have to feel bad about it. You can even feel good about helping poor people because, well, you will be.

If you just can't bring yourself to feel like that, despite all logic and evidence, then one day succumb to the temptation to selfishly hang on to some of your money by shopping at Wal-Mart -- if it's Christmas time -- you can just drop some of the bucks you save in the Salvation Army kettle. We'll both feel better.


Gary D. Gaddy, a regular Wal-Mart shopper, uses investments in big box retailers to support his writing habit.

A version of this article was published in the Chapel Hill Herald Thursday January 3, 2008.

Copyright  2007  Gary D. Gaddy

Authored by Gary G. Gaddy at 9:00 PM EST
Updated: Thursday, February 21, 2008 10:15 AM EST
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