Yves here. The prospect that Jason Furman was being elevated to chairman of the Council of Economic Advisers elicited cheers from members of the Vichy Left, such as Jared Bernstein. It’s worth noting that Bernstein with Josh Bivens did a full bore takedown of the Furman paper that tried spinning Walmart as a benefactor of lower income groups.
By Lynn Parramore, a senior editor at Alternet. Cross posted from Alternet
On June 10, 2013, President Obama announced his intention to nominate Jason Furman to become the next chairman of the Council of Economic Advisers. This is a big-time, highly influential post. So what kind of economist is Furman?
One who thinks Walmart is the best thing since sliced bread.
For Furman, Walmart is nothing short of a miracle for America’s poor and working-class folks. For him, progressives should be cheering the firm: he even wrote a 16-page paper titled, “Wal-Mart: A Progressive Success Story,” which was posted on the Center for American Progress website. Here’s a sample of Furmanomics:
By acting in the interests of its shareholders, Wal-Mart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans.
Furman has championed the company’s low prices as a big boost to lower-income folks, and views Walmart jobs as good opportunities, never mind the low wages. In 2006, Jason Furman wrote a letter to author Barbara Ehrenreich, published on Slate, in which he extolled the Walmart business model:
A range of studies has found that Wal-Mart’s prices are 8 percent to 39 percent below the prices of its competitors. The single most careful economic study, co-authored by the well-respected MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn’t mean much for those of us in the top fifth of the income distribution—we spend only about 3.5 percent of our income on food at home and, at least in my case, most of that shopping is done at high-priced supermarkets like Whole Foods. But that’s a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food. In fact, it is equivalent to a 6.5 percent boost in household income—unless the family lives in New York City or one of the other places that have successfully kept Wal-Mart and its ilk away.
In Furman’s view, “the US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous.”
For the man who will have President Obama’s ear on vital matters like jobs, the evidence of whether Walmart’s wages and benefits are substandard is “murky.” And he doesn’t much care for those who question Walmart’s approach: In the 2006 dialogue with Ehrenreich on Slate, he upbraided activists who had pushed the firm to increase wages and offer better benefits:
The collateral damage from these efforts to get Wal-Mart to raise its wages and benefits is way too enormous and damaging to working people and the economy more broadly for me to sit by idly and sing ‘Kum-Ba-Ya’ in the interests of progressive harmony.
Unsurprisingly, most progressives do not share Furman’s rosy view of Walmart. As activist and philanthropist Leo Hindery, Jr. wrote in his article “WalMart’s Giant Sucking Sound,” the company’s business model has been detrimental to the American economy and sucks the vitality our of our communities. Yes, Walmart has lowered prices for American customers, though not as much as Furman claims, but it has also helped to kill the American labor movement which ensures workers a fair shake, it has helped to send jobs overseas, and it has instilled practices, like relying on part-time employees whose wages are so low they can’t sustain themselves without relying on government assistance, that spread misery everywhere. In the maniacal quest to lower prices, it has pioneered the use of ever-cheaper materials and lowered the quality of consumer goods. It has been accused of predatory pricing, a practice in which a business sets a price on an item very low, even incurring a loss, in order to drive a competitor out of business and establish a monopoly. In emphasizing shareholder value over all else, it has forgotten its responsibiltiy to other stakeholders in the company, like workers or taxpayers whose investments help the company succeed. The negative impact of Walmart’s business model impacts people whether or not they shop at the store, a phenomenon explored by Charles Fisher in his book, The Wal-Mart Effect.
Progressives may be unhappy about Obama’s choice, but conservatives are tickled pink. Over at the American Enterprise Institute, home to the country’s most fervent free-market fundamentalists, no fewer than 11 economists have announced their support for the Jason Furman nomination:
We are pleased that President Obama … nominated … Furman …Although we often disagree with the administration’s policies and differ with Jason on a number of issues, we respect him as a superb analytical economist. If the Senate confirms his nomination to be the president’s chief economic adviser, we are confident that he will serve the president and the nation with distinction.