Jim Ledbetter, it’s very easy to avoid getting into idiotic arguments with Dennis Kneale on CNBC: just stop going on CNBC. But at the same time, it’s worth pushing back much more on the ludicrous claim that Wal-Mart (WMT) saves the average American family $3,100 a year:
Beginning in 2005, Wal-Mart commissioned the research firm Global Insight to produce a report measuring the impact of Wal-Mart on the overall American economy. Its methodology is, of course, open to debate, but the study tested 26 markets and measured the impact of a variety of economic factors on prices, going back to 1985. Not surprisingly, the study found that the widespread existence of Wal-Mart dating back to 1985 has resulted in about a 3 percent reduction of prices (3.6 percent in the most recent study, which is where the $3,100 figure comes from).
Ledbetter responds:
I don’t reject that finding. But it doesn’t mean that Wal-Mart is the only, or even the largest, economic force responsible for lower prices. As you would guess, the study also measured the impact on prices of many things that have little to do with Wal-Mart: energy costs, population growth, and unemployment. As I read the study, those factors combined are responsible for 89 percent of price variation. Wal-Mart and other factors are crumbs by comparison.
He should reject the finding. Because it’s only Ledbetter himself — and CNBC — who is saying that Wal-Mart is claiming to save the average American family $3,100 a year. If you look closely at the report, it never actually says that. Instead, Global Insight talks about measuring the “cumulative price impact” of Wal-Mart since 1985. If the average American family has saved $3,100 over that time, that’s about $129 a year, not $3,100. Big difference.
Here’s the CNBC screengrab:
If Wal-Mart were honest, they would have phoned up CNBC and said that the bit about $3,100 a year was completely untrue, by a factor of 24 (the number of years since 1985, which is the base year from which the cumulative savings are being calculated). But of course they didn’t. Which is just another reason not to give them the Nobel peace prize.
