Oh, that Wal-Mart!

Jonah Goldberg shows the folly of Democrats bashing Wal-mart. Pankaj Ghemawat of Harvard Business School does the same with some excellent statistics.

Consider the following from HBR:

First, there is hard evidence that Wal-Mart has grown the economic pie available to be divided among its various stakeholders, instead of just slicing up a fixed pie in a way that favors one group over another. Consider, for example, the conclusions of the McKinsey Global Institute's study of U.S. labor productivity growth between 1995 and 2000. In the words of Robert Solow, a Nobel laureate in economics and an adviser to the study, "By far the most important factor in that [growth] is Wal-Mart."

Second, most of the value created by the company is actually pocketed by its customers in the form of lower prices. There is general agreement that Wal-Mart prices are significantly lower than its competitors. Assuming that the company's prices are 8 percent lower - at the low end of the estimates from various studies summarized in a recent report by Global Insight - and applying that to Wal-Mart's domestic sales volume, U.S. consumers save on the order of $18 billion per year. And because Wal-Mart forces its competitors to charge lower prices as well, this figure is a fraction of the company's real impact.

Read both articles.

Ghemawat cites more research: "Thus, juxtaposing these customer savings against the estimate cited by Fishman and others that Wal-Mart destroyed 2,500 jobs (on a net basis) in 2005 yields customer savings of more than $7 million per year for each job lost. (Fishman actually works with higher numbers for customer savings, so if he had done this calculation, he would have come out in the $12–$60 million range.)"

Of course, Jonah has a great last liner: "It's horrific politics, silly public policy - but a joy to watch."