[Reader-list] John Tierney Compares Wal-Mart To Grameen

[NAEEM MOHAIEMEN]

The New York Times
October 17, 2006
Op-Ed Columnist
Shopping for a Nobel
By JOHN TIERNEY

I don’t want to begrudge the Nobel Peace Prize won
last week by the Grameen Bank and its founder,
Muhammad Yunus. They deserve it. The Grameen Bank has
done more than the World Bank to help the poor, and
Yunus has done more than Jimmy Carter or Bono or any
philanthropist.

But has he done more good than someone who never got
the prize: Sam Walton? Has any organization in the
world lifted more people out of poverty than Wal-Mart?

The Grameen Bank is both an inspiration and a lesson
in limits. Compared with other development programs,
it’s remarkable for its large scale. Since it was
started three decades ago in Bangladesh, it has
expanded to more than 2,000 branches. Its micro-loans,
typically less than $150, have helped millions of
villagers start small businesses, like peddling
incense or handicrafts at the local market, or selling
milk and eggs.

The economist William Easterly, who was afraid Bono
was going to get this year’s Nobel, calls the bank’s
prize “a victory for the one-step-at-a-time homegrown
bottom-up approach” to development. That approach is a
welcome contrast to the grandiose foreign-aid schemes
that do more harm than good, as Easterly documents in
his book, “The White Man’s Burden.”

But there’s a limit to how much money villagers can
make selling eggs to one another — a thatched ceiling,
as Michael Strong calls it. Strong, the head of Flow,
a nonprofit group promoting entrepreneurship abroad,
is a fan of the Grameen Bank, but he figures that
villagers can lift themselves out of poverty much
faster by getting a job in a factory.

The best way for third world villagers to tap “the
vast pipeline of wealth from the developed world,” he
argued in a recent TCSDaily.com article, is to sell
their products to the world’s largest retailer,
Wal-Mart. Strong challenged anyone to name an
organization that is doing more to alleviate third
world poverty than Wal-Mart.

So far he’s gotten a lot of angry responses from
Wal-Mart’s critics, but nobody has come up with a
convincing nomination for a more effective antipoverty
organization. And certainly none that saves money for
Americans at the same time it’s helping foreigners.

Making toys or shoes for Wal-Mart in a Chinese or
Latin American factory may sound like hell to American
college students — and some factories should treat
their workers much better, as Strong readily concedes.
But there are good reasons that villagers will move
hundreds of miles for a job.

Most “sweatshop” jobs — even ones paying just $2 per
day — provide enough to lift a worker above the
poverty level, and often far above it, according to a
study of 10 Asian and Latin American countries by
Benjamin Powell and David Skarbek. In Honduras, the
economists note, the average apparel worker makes $13
a day, while nearly half the population makes less
than $2 a day.

In America, the economic debate on Wal-Mart mostly
concerns its effect on American workers. The best
evidence is that, while Wal-Mart’s competition might
(or might not) depress the wages of some workers, on
balance Americans come out well ahead because they
save so much money by shopping there.

Some critics, particularly ones allied with American
labor unions, argue that the consumer savings don’t
justify the social dislocations caused by Wal-Mart’s
relentless cost-cutting. They’d rather see Wal-Mart
and other retailers paying higher wages to their
employees, and selling more products made by Americans
instead of foreigners.

But this argument makes moral sense only if your
overriding concern is saving the jobs and protecting
the salaries of American workers who are already far
better off than most of the planet’s population. If
you’re committed to Bono’s vision of “making poverty
history,” shouldn’t you take a less parochial view?
Shouldn’t you be more worried about villagers overseas
subsisting on a dollar a day?

Some of them prefer to keep farming or to run small
local businesses, and they’re lucky to get loans from
the Grameen Bank and its many emulators. But other
villagers would prefer to make more money by working
in a factory. If you want to help them, remember the
new social justice slogan proposed by Strong: “Act
locally, think globally: Shop Wal-Mart.” 

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