Megan McArdle: Not a great writer or economist
By Ben Cohen: The Daily Beast’s Megan McArdle is not a very good economist – or writer for that matter. Despite her impressive resume (she was a senior editor at the Atlantic and a writer for the Economist), if you try to draw logical conclusions from her confusing articles, you’d come out believing mankind had no other alternative than deregulated, trickle down capitalism. I noticed McArdle’s writing several years back, mostly because I could never understand exactly what she was trying to say, and when I did, it was abundantly clear she had no idea what she was talking about.
McArdle has a long and well documented history of Libertarian PR – so much so that it is impossible to take her seriously as a journalist. Yasha Levine and Mark Ames over at The Exiled ran a devastating piece as part of their S.H.A.M.E media transparency project detailing McArdle’s extremely murky links to the Koch brothers and her persistent defense of Wall St throughout the financial crisis. It’s worth reading in full as it uncovers a worrying trend in the US media – the promotion of PR hacks to prominent positions within respected media institutions.
A few days back, McArdle predictably waded in to the Walmart union protest debate, making a subtle defense of the corporate perspective, arguing that by paying workers more money, they would be unable to compete when it comes to offering low cost products. She wrote:
Recessions are also a time when employers don’t necessarily have a lot of profits to give up. Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat–between 3% to 3.5%. If they cut that down by a percentage point–about what retailers like Costco and Macy’s have been bringing in–that would give each Walmart employee about $2850 a year, which is substantial but far from life-changing. Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers. Which might be difficult, given how many product categories Amazon is pushing into.
Firstly, McArdle’s assertion that $2850 is ‘far from life-changing’ is completely ridiculous. When you’re talking about workers who earn under or around $20,000 a year, $2850 is a lot of money. The extra $240 per month would make a significant contribution to groceries, childcare costs, transportation and health care costs – all expenses that the working poor struggle to balance.
Secondly, McArdle’s argument that wage improvements would have to come out of consumer’s pockets makes literally no sense given she already accepts that Walmart would still be profitable if it cut its profit margin by a percentage point. Let’s do the math with McArdle’s own figures – if Walmart is bringing in $446 billion in revenue and let’s say 3.25% of that is profit, it is still netting around $14.5 billion. I’m not sure whether McArdle is trying to say that wage increases on top of the hypothetical extra percentage point would have to come out of consumer’s pockets, but given the company would still be bringing in billions of dollars of profit, it could certainly afford to do so without hitting customers.
Of course McArdle omits mention of the corporate pay structure in Walmart – in her world the notion that management would incur modest cuts is completely unthinkable. CEO Mike Duke earns $18.1 million a year, making over 900 times what an average employee does.
What McArdle is really saying here is that workers should be grateful to be existing on wages that barely scrape past federal poverty lines (and in some cases don’t if families only have one parent working) and should understand that Walmart does not exist for their benefit, but the benefit of its CEO and shareholders. Of course this is technically correct – Walmart is legally bound to deliver maximum profit to its shareholders, making the needs of employees close to irrelevant. But then that is why unions are so important; they protect workers rights and ensure employees make enough money to feed their families.
For McArdle, these rights are frivolous luxuries that corporations can ill afford when their profit margins are at stake – even if they are still massively profitable.
I wouldn’t mind McArdle’s writing if she was honest about her motivations – to promote libertarian ideology and further the efforts to erode what is left of the labor movement in the US. But she isn’t. Her writing is deceptively masked in a light hearted, chatty style that betrays her far more cynical objectives. I’m not saying McArdle doesn’t believe what she is saying, but it’s worth noting that what she is saying has propelled her career far beyond her abilities as an economist and a writer.
McArdle can’t even be bothered to make her own numbers add up, so why she is regarded as an authority on business and economics is anyone’s guess. The truth is that there is an entire industry built around promoting an economic ideology that is mathematically impossible, and McArdle has carved a very nice niche for herself inside of it.