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Shopping for Support Down the Wrong Aisle

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By Sebastian Mallaby
Monday, August 28, 2006

Once upon a time, smart Democrats defended globalization, open trade and the companies that thrive within this system. They were wary of tethering themselves to an anti-trade labor movement that represents a dwindling fraction of the electorate. They understood the danger in bashing corporations: Voters don't hate corporations, because many of them work for one.

Then dot-bombs and Enron punctured corporate America's prestige, and Democrats bolted. Rather than hammer legitimately on real instances of corporate malfeasance -- accounting scandals, out-of-control executive compensation and the like -- Democrats swallowed the whole anti-corporate playbook.

To see the difference between then and now, just look at the Clintons. In the late 1980s and early 1990s, Hillary Clinton sat on Wal-Mart's board; and when Sam Walton died in 1992, Bill Clinton lauded him as "a wonderful family man and one of the greatest citizens in the history of the state of Arkansas.'' Campaigning in the New Hampshire primary that year, Bill Clinton came proudly to the rescue of a local company called American Brush Co. by helping it become a Wal-Mart supplier.

Times change. Last year Hillary Clinton returned a campaign contribution from Wal-Mart, even though she had no compunction in banking a check from Jerry Springer. The nation's most successful retailer, which has seized the opportunities created by globalization to boost the buying power of ordinary Americans, is now seen as too toxic to touch. But a trash-talking TV host is acceptable.

Clinton is not alone in this. The stiff-necked Joe Lieberman, who holds fast to his principles on the Iraq war, recently abandoned his centrist economic credentials by appearing at an anti-Wal-Mart rally. No matter that Lieberman once served as chairman of the business-friendly Democratic Leadership Council. Now he proclaims his determination "to wake up Wal-Mart and say, 'Treat your workers fairly.' "

After Lieberman, a senator from Connecticut, stepped down as chairman of the DLC, he was succeeded by Sen. Evan Bayh of Indiana. Well, Bayh recently showed up at an anti-Wal-Mart rally, too, as has Iowa Gov. Tom Vilsack, who is the current DLC chairman. The Wake Up Wal-Mart campaign bus, which is trundling across the country on a 35-day tour, ensnares prominent Democrats in almost every state it passes through. Harry Reid, the Democrats' Senate leader, appeared at an anti-Wal-Mart event on Saturday, and Sen. Joe Biden and Gov. Bill Richardson popped up at earlier stops. When the campaign bus reaches Washington state on Labor Day, both Washington's Democratic senators are expected to greet it.

How can supposedly centrist Democrats defend this betrayal of their principles? Some claim that their beliefs are consistent, but that the company has changed: The Wal-Mart of the early 1990s mainly bought American, whereas today's irresponsible monster buys cheap stuff from China. But this argument merely illustrates how far Democrats have come. Since when did the party's centrists believe that trading with China is evil? It was the Clinton administration that brought China into the World Trade Organization.

Other Democrats reaffirm their centrist credentials while calling upon Wal-Mart to pay workers more. "We are not here today because we are anti-business," Bayh asserted in Iowa recently as he demonstrated against Wal-Mart -- a contention that the retailer's shareholders, who have spent millions defending their brand against Wake-Up Wal-Mart, may have a hard time swallowing. But the idea that Wal-Mart pays below-market wages is false. Otherwise nobody would work there.

Hillary Clinton and Sen. John Kerry have attacked Wal-Mart for offering health coverage to too few workers. But Kerry's former economic adviser, Jason Furman of New York University, concluded in a paper last year that Wal-Mart's health benefits are about as generous as those of comparable employers. Moreover, Clinton and Kerry know perfectly well that market pressures limit the health coverage that companies can provide. After all, both senators have proposed expansions in government health provision precisely on the premise that the private sector can't pay for all of it.

The truth is that none of these Democrats can resist dumb economic populism. Even though we are not in a recession, and even though the presidential primaries are more than a year away, the DLC crowd is pandering shamelessly to the left of the party -- perhaps in the knowledge that the grocery workers union, which launched the anti-Wal-Mart campaign, is strong in the key state of Iowa.

For a party that needs the votes of Wal-Mart's customers, this is a questionable strategy. But there is more than politics at stake. According to a paper for the National Bureau of Economic Research by Jerry Hausman and Ephraim Leibtag, neither of whom received funding from Wal-Mart, big-box stores led by Wal-Mart reduce families' food bills by one-fourth. Because Wal-Mart's price-cutting also has a big impact on the non-food stuff it peddles, it saves U.S. consumers upward of $200 billion a year, making it a larger booster of family welfare than the federal government's $33 billion food-stamp program.

How can centrist Democrats respond to that? By beating up Wal-Mart and forcing it to focus on public relations rather than opening new stores, Democrats are harming the poor Americans they claim to speak for.

smallaby@washpost.com


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