WED AUG 3 05

		Wal-Mart's Prices. The debate "around Wal-Mart isn't really about a Marxist conflict between capital and labor," but one that pits the poorest Americans and Wal-Mart "against a combination of labor unions, traditional retailers and community groups," write Pankaj Ghemawat and Ken A. Mark on The New York Times op-ed page. Pankaj and Ken start out by making two points. The first is that Wal-Mart's real contribution is not low-prices, per se, but rather productivity. They base this assertion on a McKinsey Global Institute study, and credit economist Robert Solow with the further observation that "because the study measured productivity per man hour rather than per payroll dollar, low hourly wages cannot explain the increase." Second point is, "most of the value created by the company is actually pocketed by its customers in the form of lower prices. According to one recent academic study, when Wal-Mart enters a market, prices decrease by 8 percent in rural areas and 5 percent in urban areas. With two-thirds of Wal-Mart stores in rural areas, this means that Wal-Mart saves its consumers something like $16 billion per year. And because Wal-Mart's presence forces the store's competitors to charge lower prices as well, this $16 billion figure understates the company's real impact by at least half." And $16 billion, say Pankaj and Ken, is way more than any costs Wal-mart might impose by destroying jobs, sending people into poverty or "creating urban sprawl." Pankaj and Ken instead suggest that Wal-Mart's low wages (and low prices) ultimately help the poorest Americans most: "Our research," they write, "shows that Wal-Mart operates two-and-a-half times as much selling space per inhabitant in the poorest third of states, 80 percent of Wal-mart's square footage is in the 25 percent of ZIP codes with the greatest number of poor households. Without the much-maligned Wal-Mart," they continue, "the rural poor, in particular, would pay several percentage points more for the food and other merchandise that after housing is their largest household expense." They conclude: "So in thinking about Wal-Mart, let's keep in mind who's reaping the benefits of those 'everyday low prices' -- and by extension, where the real conflict lies." Tim Manners, editor