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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (177863)	8/30/2006 1:44:47 PM
From: Lane3	Read Replies (1) \| Respond to of 793798

And the amazing thing is that it is TRUE. Dunno about that. In my googling yesterday, when I discovered the underlying study, I also found some criticism. Here's one: >>Wal-Mart recently convened a seminar to discuss academic studies that examined its impact on local (and the national) economies. Wal-Mart also commissioned a study from the consulting firm Global Insight (GI). Of all the studies done on this topic, the GI report found by far the largest positive impacts of Wal-Mart on the economy, and defenders of the company cite GI's results most often. We find, however, that GI's estimate of Wal-Mart's dampening effect on in?ation is indefensibly large and is contradicted by more careful research reviewed in the EPI Working Paper, Wrestling With Wal-Mart: Tradeoffs Between Profits, Prices, and Wages. While the statistical fragility of the GI results requires long explication, there is a more fundamental problem with GI's results—they are internally inconsistent. GI reports that Wal-Mart lowered overall prices (as measured by the overall consumer price index (CPI)) by a total of 3.1% from 1985 to 2004. They also report that Wal-Mart has lowered commodity (goods) prices by 4.2% over this period. However, in an unrelated portion of the text, GI correctly notes that "consumer prices for services are dominated by rents, imputed rents, utilities, medical services, and transportation—all areas outside of Wal-Mart's product offerings." The GI report bases its findings on the overall CPI. Yet fully 60% of the items in the CPI are services, not commodities.2 Thus, if the impact of Wal-Mart on service in?ation is zero, then the GI numbers on Wal-Mart's impact on prices are inconsistent. GI's finding that Wal-Mart's expansion led to a 4.2% decline in goods prices translates to only a 1.7% decline (not the reported 3.1%) in overall prices (4.2 * 0.4 = 1.7). In short, the two top-line findings of the GI report (Wal-Mart's effect on overall prices and goods prices) are internally inconsistent with each other. Overall, we find that the Global Insight research methodology is fraught with problems. Some of the results it yields—such as that Wal-Mart lowers housing rents and that its greatest effect on food prices occurred before its expansion—make no sense. Our analysis argues against using any estimate of consumer savings from Wal-Mart's expansion that is derived from the Global Insight study.<< epi.org I briefly considered getting the full report... very briefly. I don't really care if their numbers are right. Surely Wal-Mart has introduced a model that has cut prices for you and me. That's a major contribution regardless of the exact value of it. But it's more than a bit iffy to take credit for all the price reductions in the system regardless of who implemented them over time. And it's even more iffy to frame it in a way that suggests that shopping at Wal-Mart is how you acquire the savings.