WLTX.com reports:

According to Senator Obama, “Wal-Mart is making a large profit and they don’t have foreign competition. What they are doing though is driving wages down significantly for not only workers at Wal-Mart, they’re also driving down wages for competitors."

Hat tip: Greg Mankiw

A few comments, based on the simplest principles of economics:

1. Wal-Mart’s large profit comes from combining resources – for which they pay competitive prices -- in a way that substantially enhances their value (turns them into higher-valued outputs). Good for them. Making a large profit isn’t a cause for scorn. Absent a legal monopoly privilege, making a large profit is the sign of a large contribution. Making losses is the thing to scorn.

2. Wal-Mart doesn’t have foreign competition? Wal-Mart is a retailer. What would “foreign competition” mean – Target is owned by a European firm? K-Mart is owned by an Asian firm? IKEA is owned by a Swedish firm? (Oh wait – it is.) Wal-Mart faces plenty of competition. There’s no artificial barrier against anyone entering the business of putting up a big-box store.

3. Wal-Mart is driving down wages? Consider the following thought experiment. Wal-Mart closes its doors and lays off all its 1.7 million employees. Would those employees then move to higher-paying jobs? Presumably they work at Wal-Mart because it offers them a better package then other jobs available to them. Would ex-Wal-Mart employees swamping the hiring counter make wages at Target rise? Hardly. By hiring millions, Wal-Mart bids up wages.