Mercury Rising

To: Mail@democracynow.org cc: Ron@galloway.tv Wal-Mart Watch (by webform) While I would agree with Ron Galloway that the Wal-Mart debate is more nuanced than many opponents would like, and while I think Ms. Sefl did a notably bad job of presenting the case for her side, I wanted to draw to attention figures used by Mr. Galloway. At least one is simply incorrect. Others are doubtful. Mr. Galloway said: "Wal-Mart pays $22 billion – let's accept the number that is bandied about, which is that Wal-Mart costs taxpayers between $1.5 billion and $2 billion. Well, let's accept that, but Wal-Mart pays $22 billion in federal taxes, collects $11 billion in state and local taxes, and through their vendors – and this is sort of the unrecognized story – their vendor-suppliers, they also are responsible for another $40 billion in income tax. Wal-Mart is a complete cash cow, so if you add those three up, that's $73 billion. So sort of a flip side of looking at it is if Wal-Mart is paying or costing $2 billion, $73 billion is coming back into the treasury." These are some very interesting figures. They bear no relationship to the financial statements that Wal-Mart issues to the investment world. Wal-Mart paid $5.6B in total taxes in the year ending in 2005. Not $22B as claimed by Mr. Galloway. Now, it's theoretically possible --and highly doubtful--that Wal-Mart's employees could have paid the $16.4B difference between claimed and actual Total Sales, General, and Administrative costs (listed as $51B for the year ending in 2005). But as the Republican Party is so fond of saying, it's their money. Not Wal-Mart's. And then there's the figure of $40B Mr. Galloway claims for taxes paid by vendor-suppliers. This is very doubtful. Neither Chinese suppliers nor Liberian shippers are likely to be paying taxes to the United States, so we're left with American truckers and longshoremen and American manufacturers, such as Tyndale House. I could spend the time over at the SEC's Edgar site or reading the detailed S&P reports available to any Business Week subscriber to figure out what the true salary and tax figures are, but the fact is that Mr. Galloway and Ms. Sefl should do serious and skeptical research as the minimum courtesy for the privilege of accessing the public airwaves. While radio talk is probably not the format for providing sources, Mr. Galloway has a website where he could provide them. I went there. They are absent. Mr. Galloway is correct to paint the issue as a balance between taxes paid and services received, something that Ms. Sefl should pay attention to. A case can be made that some Wal-Mart employees (notably the elderly, but perhaps also the illegal immigrants Wal-Mart seems to accidentally hire so often) have no alternative jobs to go to and would not even if Wal-Mart closed its doors. But if Wal-Mart closed its doors, other retailers would open new shops and life would go on. Americans might buy fewer goods if prices were higher. It's not clear that would be a net loss. A few decades ago, we bought an expensive telephone expecting to have it for many years years. Now we seem to buy a cheap one every year. Higher costs of appliances, to take one retail category, might mean higher quality items or new jobs in appliance repair and lower landfill costs. It's a more complicated story than Mr. Galloway wants to make it. Also, if Mr. Galloway wants to do cost-benefit analysis, he ought to count Industrial Revenue Bonds and other incentives the company received. Wal-Mart also relies on roads and cheap gas to get consumers to their stores, the Securities and Exchange Commission to provide it the credibility in financial markets to raise capital, American courts to enforce the contracts it makes, and so on. Those are benefits it receives from society. Other corporations might well ask why Wal-Mart deserves what amounts to a special tax rebate in the form of Medicaid. Why shouldn't the government pay for their employees's health costs, too? Mr. Galloway should also study the debate that arose over a study by Alan Blinder on the minimum wage. Whatever the Wall Street Journal thinks, Blinder pretty well proved to people who understand finance and economics that raising the minimum wage has small, but positive effects on business profitability. Look at Costco. It presents a business model that pays employees more and costs consumers about the same as Wal-Mart. It seems to being doing fine. Henry Ford discovered the virtues of paying a living wage almost 100 years ago. How stupid we are to have forgotten. While hard data are very hard to come by, a case can be made that Wal-Mart is economically inefficient, existing only because of market distortions either created or abetted by the government. It is not unreasonable to suspect Wal-Mart has a long term strategy of creating a monopoly through predatory business practices that exploit such distortions. It's not as if this has not been tried before, with varying outcomes. These are the questions that needed to be debated on Democracy Now! Instead, we heard what are at best gross oversimplifications, and a moderator who let them slide by. Sincerely etc.