Big bad firms and the poor

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I had been meaning to write about Sebastian Mallaby’s excellent article on the 'progressiveness' of the evil Wal-Mart empire, but Peter Timmer beat me to it:

I continue to be astonished by how the debate over the impact of supermarkets always ignores the huge gains in welfare of consumers, especially poor consumers… the gains to poor people from lower prices dwarf any losses to workers or suppliers.

Mallaby adds:

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.

While caveats should be added and every one of these numbers could probably be disputed, the underlying message that the impacts of multinationals go far beyond wages is important.

For example, from the Unilever article that Tim discussed last week:

[Unilver] indirectly provides the equivalent of 300,000 full-time jobs, in addition to its 5,000 direct employees. More than half of this indirect employment is in distribution and retail, including up to 1.8m small shops, street hawkers, kiosks and warung, outlets that operate from family homes.

Timmer ends his post by saying that more research is needed. Agreed. A good place to start might be a comparative look at the macro and micro impacts of Wal-Mart and Carrefour in Argentina, Brazil, China and Mexico - where they play a very different role than in the US and Europe.

Update: Lots of discussion out there. Via Ben Muse see Hausman and Leibtag on Wal-Mart's impact. Meanwhile, Mark Thoma discusses today's Krugman article on 'Wal-Mart's Excuse' and links to Neumark et al. on 'The Effects of Wal-Mart on Local Labor Markets.' Daniel Drezner likes Jason Furman's take and points us to a Global Insight report and study. Finally, Russel Roberts is shocked at the results of a recent Zogby poll.

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