Walmart Coming to DC

walmart-movie-posters.jpgWalmart is planning to open several new “urban” stores in the District, and I’m pretty excited about it. (viaOne of them will be just two blocks away from me, and I plan to shop there. Right now, I do most of my shopping at the rundown, overpriced Safeway or at the Costco off the 495 Beltway: Walmart will give me and my neighbors more options.

DC has a major “food desert” problem, and Walmart will close these gaps. Don’t get me wrong, I’d love to have scored a Trader Joe’s or a Wegman’s, but this part of the city is predominantly middle-class public employees and retirees, so I don’t think we quite fit the yuppie/hipster grocery demographic.

Of course, I’ve long been a [cautious, caveated] Walmart booster, just check out “Walmart: A sufficiently advanced capitalism is indistinguishable from socialism.” I’d change a few things I wrote back then, but the point basically stands. Most people who shop at Target and Whole Foods are participating in the same supply-chain and wage decisions that plague Walmart, but they justify it to themselves because of the status bump that Target borrows from designers. Whereas there’s ample evidence that cheaper food is beneficial to the urban poor.

My [cautious, caveated] celebration of Walmart is all about Kaldor-Hicks optimality: let’s say you can lower the cost of an item by $20/year for 100,000 people but 90 people will lose their jobs paying $20,000/year. The job losers lose* $1,800,000/year, while the purchasers gain $2,000,000. This is what we call a good move: in aggregate, we’ve gained $200,000. Of course, the gains are small per family, and the losses are large for the few who suffer them, but as a society, we’re better off, and we can take our gains and spend them on job retraining and unemployment insurance and there’s still some left over.

The idea is that the economy is better in aggregate and we worry about distributional problems at the state level through taxation, transfer payments, and welfare institutions. It hasn’t always worked out that way, but that’s the theory and it can be very effective if executed correctly. Our experience over the last three decades shows that it works out more often than not: while income inequality is at an all-time high, the standard of living for the poorest is significantly higher. We’ve decreased the rates of domestic childhood undernutrition, to the point that we’re worried about childhood obesity! At the margins, all those different decisions that add $20/year to a family’s budget make the difference between poor people breaking even or failing to put food on the table, and now we can start working on the malnutrition attributable to food deserts.

*(It also helps that those jobs don’t just disappear, they move to China, where they help people who had been living on less than the local equivalent of a dollar a day move up to the middle class, making the local equivalent of five or ten dollars a day and avoiding poverty-related mortality from easily preventable diseases like diarrhea, asthma, or malaria. Many of Walmart’s detractors seem to genuinely favor protectionism, but to my mind that’s a grossly irresponsible, jingoistic, and just plain selfish position to take.)

Second Opinions