Are big box stores good for America? I thought about that last weekend during a panel where I spoke with fellow Millennials on issues facing our generation.
During the Q&A portion, a member of the audience asked how we balance the notion of corporate responsibility — specifically mentioning Apple’s labor practices in China — while in pursuit of success.
The event, the Millennial Success Conference, was hosted by GenFKD — FKD stands for “Financial Knowledge Development” — an organization funded in part by Home Depot founder Bernie Marcus, who beamed in a video message about entrepreneurship.
The panel, on “Millennial Identity,” was moderated by David DesRosiers of RealClearPolitics. I sat alongside fellow Millennials Elizabeth Plank, Spencer Carnes, and Gabrielle Jackson. We generally agreed the defining historical moments for Millennials were 9/11 and the financial crisis of 2008, profoundly turbulent events for our generation. Not much disagreement there, but on the question of corporate responsibility the floor proved more complex.
Jackson, a thoughtful, rising young Washington, D.C.-based entrepreneur and author, mentioned how she faced this quandary while working at a PR firm whose clients included Walmart. This flummoxed her a bit since she’d previously spoken out about the corporate behemoth’s labor practices. Walmart is a frequent target for critics who question the fairness of its wages and health care offerings and its ability to drive mom-and-pop stores out of business.
While cricized by many on the Left, super stores like Walmart save American families almost $50 billion a year.
While there wasn’t time, I wanted to bring in another economic consideration into the discussion — the significant “consumer surplus” wrought by Walmart driving down prices to consumers’ benefit. And since Walmart attracts a large share of low-income customers, this is a net benefit to society.
As I’ve noted elsewhere, as one of eight children in a low-income family early in my childhood, I saw firsthand how Walmart greatly enhanced the quality of our lives. My family’s story is one of millions that aggregates to some $50 billion in savings for American consumers each year, according a study highlighted by Gregory Mankiw, chairman of Harvard’s economics department. That means $50 billion more in Americans’ pockets that can be used for many other purposes, whether it be education, travel, business creation, you name it.
The study’s authors, economists at Massachusetts Institute of Technology and U.S. Department of Agriculture, write that “while we do not estimate the costs to workers who may receive lower wages and benefits, we find the effects of supercenter entry and expansion to be sufficiently large so that overall we find it to be extremely unlikely that the expansion of supercenters does not confer a significant overall benefit to consumers.”
They break out consumers by income bracket and show that supercenters have, in economist-speak, increased “compensating variation” toward the lower end of shoppers’ income scale. In plain English, that means the personal economic benefit grows in a powerful way—nearly 50 percent from the highest to the lowest brackets.
As a firm believer in free markets, I despise crony capitalism and unsafe, exploitative labor and environmental practices. But for every cherry-picked, soulless mogul, there’s also a Bill Gates curing diseases and alleviating poverty. But there’s more to the morality of capitalism and business.
We live in an imperfect world, though to cite Rev. Martin Luther King, Jr., “The arc of the moral universe is long, but it bends towards justice.” Millennials are infused with a profound reverence for social justice, and I would argue that globalization enhances social justice around the world.
If we take the world’s current GDP of roughly $85 trillion and divide that by 7 billion people, that’s a scant $121 per person per year, not enough to live well. We need to increase GDP rather than enacting redistributionist, sclerotic policies in the utopian hope of creating social justice.
Global poverty can be conquered through government reforms that allow free markets to flourish and increase global GDP. Yet some 1.5 billion people still live under communism, and India’s massive democracy continues to be plagued by cronyism and red tape. Yes, collapsing factories in Bangladesh are unacceptable, and we work to abolish them. Yet the developed world shows us the exciting possibilities. And Walmart is certainly one of them.