Monday, November 15, 2010

NY Post Fronts for Wal-Mart

It's becoming quite clear that the NY Post is totally in the tank for Wal-Mart-almost like it was for mayoral control of NYC schools. We noticed the similarities when examining the last "article" that the paper put out on the Walmonster-when it simply replicated the real estate giant's press release, just as it did with those coming out of the mayor's office and the DOE on school governance.

Here's Wal-Mart's view of the retail landscape-courtesy of the NY Post's own Paladin Carl Campanile (for those of you too young to remember Richard Boone in "Have Gun Will Travel"): "City shoppers are voting with their wallets. Big Apple residents spent $165 million last year to buy low-cost products at Walmart's suburban stores because there aren't any outlets in the five boroughs, according to an analysis obtained by The Post. The massive money drain costs the city millions of dollars in tax revenues and hundreds of jobs."

Let's take a step back from all of this flackery. In the first place, folks are leaving the city in droves because it is simply a very expensive place to shop-groceries, clothes, whatever. This has been going on forever-or at least since NYC decided that constantly raising the sales tax was a good business decision. We remember what the late Lou Powsner of the Kings County Boards of Trade used to say: "Every time the city raises the sales tax a quarter of a point, they build another new mall in Bergen County."

When Rudy Giuliani proposed his small business-killing mega store plan, we argued successfully that building scores of giant stores in the city wouldn't stem the efflux of shoppers, but would only cannibalize the existing small business base-something that the Post apparently couldn't give a rat's ass about.  And what about the alleged, "massive" money drain?

Matt Chabon over at the Observer put pencil to paper: "The Post acquired (was given?) an analysis that says New York City residents spent $165 million last year shopping at Walmart's handful of stores bordering the five boroughs.The tab argues that that money could be better spent here in the city, where it would provide tax revenue. And the stores could potentially provide other benefits, too. Maybe.Yet it is just as possible that Walmart could undermine other city retailers who pay better wages, which gives people more money to spend at other stores, which also helps drive the economy. Less disposable income, less taxes, a greater housing burden, more welfare and so on."

Ah, gee Matt, don't expect the flacks to actually report on this-as Chabon has the effrontery to do: "Also, the Post only gives that one data point, that $165 million has purportedly been spent. But by whom? This could just be people on the border of Queens and the Bronx for whom this might simply be the closest store. Considering so few New Yorkers drive, picturing people taking mass transit from Manhattan, or even Brooklyn, seems like a stretch. and don't forget many billions of dollars are spent on comparable retail in the city already, so these apparent losses could be meager and habitual."

And in a follow up post, Chabon deconstructs the "massive" Wall-Mart benefits: "While working on our Walmart post earlier today, The Observer wondered just how much that impressive sounding $165 million was actually draining from the city's tax coffers. We did a little poking around but to no avail. Enter our heroes at the Drum Major Institute. They point out that the city's total taxable retail expenditures in New York City from 2008 to 2009 was $31.3 billion. Walmart's share of that would come out to less than one-half of 1 percent."

Chabon goes on to question whether alleged benefits ignore commensurate cost: "At the same time, if you crunch the numbers, at the current 8.875 percent sale tax, Walmart would make the city and state $14,643,750 per year. That's money that could be desperately put to good use. This neglects the fact that unions and politicians are fighting Walmart so hard because they believe the store will put competing retailers and their better-paid employees out of business. So once again, while it seems like Walmart could be a boon for the city, the costs still appear to be much higher than the rewards.

Which is precisely why there is a dire need to deconstruct this entire Wal-Mart is Good for New York narrative-it lacks a grounding in the economic realities of this city and its over two hundred diverse neighborhood shopping strips. And furthermore, the NY Post adopted narrative ignores how Wal-Mart will be more destructive of job grwoth-particularly good job growth and entrepreneurism: "Walmart is still not welcome," said Stuart Appelbaum, of the national Retail and Wholesale Workers union. "They provide a model for others to follow. Their model is a destructive force. The jobs they create keep people in poverty." But Walmart backers -- citing the shaky economy and high unemployment rate -- said New Yorkers are craving job opportunities and affordable goods that Walmart provides in other labor-friendly cities, including Philadelphia, LA, Atlanta and Chicago."

Let's put all of this to the test-as we have requested in a previous commentary on the supposed benefits of the Walmonster. Will the company have a net positive job impact? Or will it, as we believe, inflict much more collateral damage on the city than any possible benefits it would confer? That's why the city council should create an economic impact barrier to entry that, independently from the fraudsters at EDC, would gauge the costs and benefits of allowing a 180,000 foot Wal-Mart superstore into New York.

One thing's being a doubt, both EDC and the mayor would never allow an unbiased and independent review of their class-based worldviews. Which is precisely why the city's legislature needs to forcefully stand up on this and deliver for the small businesses, workers and diverse neighborhoods of NY.