Unequal unfairness

Maryland has passed a law aimed specifically at corporations with more than 10,000 employees that fail to provide health benefits to fiscally significant portions of their workforce (and thus burden the state's real welfare system). Not surprisingly, of the four corporations that fall under the new law, only Wal-Mart falls short. According to the *Washington Post*:

Wal-Mart says that more than three-quarters of its sales associates have health insurance but acknowledged that some of its low-wage workers are on Medicaid, the state insurance program for the poor. Wal-Mart's not providing even the 21st Century version of benefits (that is to say, extremely reduced) to some of its workforce, constitutes, according to the Maryland legislature, a kind of corporate welfare; they are receiving a benefit but doing nothing to earn it. The state has to pick up the cost of Wal-Mart doing business (or figure out some other way of paying for the healthcare of those of Wal-Mart's workers and their children). Under the new law, passed over a veto, they have asked that Wal-Mart pick up the slack.

Maybe it's wrong to treat some corporate monoliths less equally than others, as George Will today writes, but the frothy eagerness with which he presses his case makes that argument hard to assess. He responds to the Maryland legislature by claiming that Wal-Mart's benefits are substantial and generous: a fact he had already denied–it's not a welfare state (i.e., a corporation that pays out benefits)–and not even Wal-Mart is willing to assert. Rather than dwell on the generosity of the benefits, or the principled view that low wage workers do not deserve benefits, Will opts for the ridiculous libertarian classic: the slippery slope:

Maryland's new law is, The Post says, "a legislative mugging masquerading as an act of benevolent social engineering." And the mugging of profitable businesses may be just beginning. The threshold of 10,000 employees can be lowered by knocking off a zero. Then two. The 8 percent requirement can be raised. It might be raised in Maryland if, as is possible, Wal-Mart's current policies almost reach it.

The dumb thing about this argument is that it's just one tweak away from being cogent. Rather than alleging that any law aimed at a corporate monolith could one day be aimed at the small businessman, Will could argue that as a matter of fairness, other employers ought to be required to bear healthcare costs.

Even dumber, however, is the claim that such a taxing of a corporate giant is somehow on par with actual illegal corruption:

 Meanwhile, people who are disgusted — and properly so — about corruption inside the Beltway should ask themselves this: Is it really worse than the kind of rent-seeking, and theft tarted up as compassion, just witnessed 20 miles east of the Beltway, in Annapolis?

No. It is not worse. The behavior of an elected body even in the perhaps imprudent exercise of its power to tax is quite unlike the demonstrably corrupt and illegal behavior of leading Republican politicians and lobbyists. Quite unlike it indeed.

8 thoughts on “Unequal unfairness”

  1. Not only does the state of Maryland bear the cost of Wal Mart doing business, but very nearly the entire ecopnomy. I don’t know if you have seen “Frontline”‘s neat little expose of Wal Mart’s business practices, but it is rather eye-opening; there is rampant price-fixing and outsourcing and little or no regard, save for some annual lipservice at the annual employee hoedown in Dallas, for the epmloyess outside of their corporate complexes. Now, having driven stateside manufacturing giants such as Rubbermaid and Phillips into bankruptcy and buyouts, Wal Mart has trunued its ominous glare to the Chinese market, with equal success and similar tactics. If it is unfair of Maryland’s state government to act in the protection of its markets and its poorer citizens, then what constitutes a fair exercise of its power. I know Will would never make this argument, but there are times when civic and state authorities need to act for the benfit of their constituencies. This is such a case. As for the “slippery slope” claim, the constitutional system is perpetually on the slippery slope; the danger of any ruling being taken too far is omnipresent.

  2. The government enacts legislation to protect the rights and welfare of its citizens. I always thought that the libertarian credo of small government and more freedom limited itself when the freedom of one individual impinged on the freedom or well-being of another. Presumably, this would be an instance where a libertarian would be inclined to enact some sort of protection against this act. Clearly, Wal-Mart’s social practices are impinging on the well-being of its employees, so I don’t see why the people that are affected by the practices of Wal-Mart should not be allowed to protect their own interests. My question for Will would be, what are the sufficient conditions for a governmental body to step in and limit the “freedom” of one individual so as to protect the interests of another? If people don’t want smaller government in some instances, then the government is obligated to respond to those wishes.

  3. I think the good gentleman from Cork and I are in concordance on this issue.

  4. The Walmart question: Special interests, special privilege, and the necessity of reform

    Excess of every kind is followed by reaction; a fact which should be pondered by reformer and reactionary alike.

    We are face to face with new conceptions of the relations of property to human welfare, chiefly because certain advocates of the rights of property as against the rights of men have been pushing their claims too far.

    The man who wrongly holds that every human right is secondary to his profit must now give way to the advocate of human welfare, who rightly maintains that every man holds his property subject to the general right of the community to regulate its use to whatever degree the public welfare may require it.

    But I think we may go still further. The right to regulate the use of wealth in the public interest is universally admitted.

    Let us admit also the right to regulate the terms and conditions of labor, which is the chief element of wealth, directly in the interest of the common good.

    The fundamental thing to do for every man is to give him a chance to reach a place in which he will make the greatest possible contribution to the public welfare.

    But the absence of effective state, and, especially, national, restraint upon unfair money getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.

    The prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise.

    We should grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows.

    We should grudge no man a fortune in civil life if it is honorably obtained and well used.

    But it is not even enough that it should have been gained without doing damage to the community.

    We should permit it to be gained only so long as the gaining represents benefit to the community.

    This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary.

    No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered not gambling in stocks, but service rendered.

    The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means.

    Therefore, I believe in a return to a properly graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective: the graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.

    Abraham Lincoln said:

    “I hold that while man exists it is his duty to improve not only his own condition, but to assist in ameliorating mankind.”

    And again:

    “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

    If that remark was original with me, I should be denounced as a communist agitator. It is Lincoln’s. I am only quoting it; and that is one side; that is the side the capitalist should hear. Now, let the workingman hear what Lincoln said of his side:

    “Capital has its rights, which are as worthy of protection as any other rights… Nor should this lead to a war upon the owners of property. Property is the fruit of labor;… property is desirable; is a positive good in the world.”

    And then comes a thoroughly Lincolnlike sentence:

    “Let not him who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.”

    It seems to me that, in these words, Lincoln took substantially the attitude that we ought to take; he showed the proper sense of proportion in his relative estimates of capital and labor, of human rights and property rights.

    Above all, in this speech, as in many others, he taught a lesson in wise kindliness and charity; an indispensable lesson to us of today. But this wise kindliness and charity never weakened his arm or numbed his heart.

    We cannot afford weakly to blind ourselves to the actual conflict which faces us to day. The issue is joined, and we must fight or fail.

    In every wise struggle for human betterment one of the main objects, and often the only object, has been to achieve in large measure equality of opportunity.

    In the struggle for this great end, nations rise from barbarism to civilization, and through it people press forward from one stage of enlightenment to the next.

    One of the chief factors in progress is the destruction of special privilege.

    The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows.

    At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress.

    In our day it appears as the struggle of free men to gain and hold the right of self government as against the special interests, who twist the methods of free government into machinery for defeating the popular will.

    At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth. That is nothing new.

    I stand for fair play under the present rules of the game and for having those rules changed so as to work for a more substantial equality of opportunity and of reward for equally good service.

    Now, this means that our government, national and state, must be freed from the sinister influence or control of special interests.

    Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit.

    We must drive the special interests out of politics. That is one of our tasks to day.

    Every special interest is entitled to justice full, fair, and complete, and, now, mind you, if there were any attempt by mob violence to plunder and work harm to the special interest, whatever it may be, that I most dislike, and the wealthy man, whomsoever he may be, for whom I have the greatest contempt, I would fight for him, and you would if you were worth your salt. He should have justice.

    For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office.

    The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation.

    The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man’s making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being.

    There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done.

    We must have complete and effective publicity of corporate affairs, so that the people may know beyond peradventure whether the corporations obey the law and whether their management entitles them to the confidence of the public.

    It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced.

    Corporate expenditures for political purposes, and especially such expenditures by public service corporations, have supplied one of the principal sources of corruption in our political affairs.

    It has become entirely clear that we must have government supervision of the capitalization of all corporations doing an interstate business.

    The same kind and degree of control and supervision which should be exercised over public service corporations should be extended also to combinations which control necessaries of life, such as meat, oil, and fuels, or which deal in them on an important scale.

    I have no doubt that the ordinary man who has control of them is much like ourselves. I have no doubt he would like to do well, but I want to have enough supervision to help him realize that desire to do well.

    I believe that the officers, and, especially, the directors, of corporations should be held personally responsible when any corporation breaks the law.

    Combinations in industry are the result of an imperative economic law which cannot be repealed by political legislation. The effort at prohibiting all combination has substantially failed. The way out lies, not in attempting to prevent such combinations, but in completely controlling them in the interest of the public welfare.

    We should insist on these values and work to bring about necessary reforms to make clear that the duty of Congress is to provide a method by which the interest of the whole people shall be all that receives consideration.

    One of the fundamental necessities in a representative government such as ours is to make certain that the men to whom the people delegate their power shall serve the people by whom they are elected, and not the special interests.

    I believe that every national officer, elected or appointed, should be forbidden to perform any service or receive any service or compensation, directly or indirectly, from interstate corporations; and a similar provision could not fail to be useful within the states.

  5. Hi, just ran across your blog while searching for a Buchanan quote. 

    Libertarians are always trying to move certain public goods over to the free-market.  The advantage of the free-market is that, because of competition, goods are produced more efficiently.  On the other hand…the advantage of government is that, because of coercion, public goods receive greater funding.  How come there's never been any discussion about applying free-market principles to public goods?

    What would happen if we allowed tax payers to decide which public goods their taxes funded?  Government organizations would be forced to compete for revenue….the result of which would be greater efficiency.  Not only that but supply would be more responsive to demand.  There's no doubt that there is a demand for national healthcare but the supply is blocked by the rent-seeking behaviors of politicians. 

    Your critiques are pretty hard-hitting so I'd be interesting in hearing your no holds barred critique of this idea…which I've labeled "pragmatarianism".  http://www.politicalforum.com/political-opinions-beliefs/150055-pragmatarianism.html

  6. Hi Carlos,

    Thanks for the comment on a very old post (sorry also about the formatting, I fixed it).  Short answer–there has long been discussion and implementation of your view.  Many government agencies function as private ones.  And Government agencies have to function in competition with each other.  Sometimes this helps, sometimes it doesn't.

    We've had private health care for a long time in this country.  Our dollar to health efficiency is half that of allegedly "socialist" systems.  Perhaps we should start the conversation there.

    Nonetheless, as the Wal Mart example shows.  Someone has to pay for health care.  Private citizens working Wal Mart jobs can't.  Wal Mart doesn't want to.

    Finally, right now we have a mechanism for doing what you want–i.e., taxpayers choosing where their dollars go.  It's the constitutionally-mandated one called "Congress."

  7. Hi John,

    Thanks for sharing your thoughts.  Chairman Mao killing 20 million as a direct result of long term economic planning really drove home the difference between a command economy and a free-market economy.

    Yet, right now we have a command economy for public goods.  We rely on "Congress" to decide the most efficient allocation of public goods.  Congress, with its rent-seeking behaviors, offers nothing more than a distortion in the public goods market.  Congressmen will always choose (re)election over "optimal" provision of public goods.

    A perfect example of that distortion is how, as you pointed out,  "socialist" systems can produce health care for half the cost.  We pay tons of  money for health care and that's tons of profit based motive for the private sector to engage in rent-seeking behavior to block competition from the public sector.

    It's an extremely useful exercise to imagine the outcome if we completely removed congress from the picture…at least in terms of deciding funding for public goods.   Not that I would recommend completely removing congress though….there will always be people that A. completely trust their congressmen or B. are too lazy to decide how to allocate their taxes.  Well…so far I haven't met anybody that falls into either of those two categories…but I'm sure they exist.  So far everybody I've talked to is certain that some public goods are over funded while other public goods are under funded.

    Deng Xiaoping said he didn't care if the cat was black or white…as long as it caught mice.  Right now our system is focused more on ideology than results.

  8. Hey Carlos.  Not really my area of expertise here, but Congress is how represent our common interests.  Seems like we ought to try to get it to work better.  The privately-run system (of health care for instance) failed at providing adequate health care for everyone; the one we chose (because of an irrational fear of communism, fascism, socialism, or Kenyaism) is mostly market driven. 

    In generaly, you'd have a more fruitful discussion if fear of Chinese communism (something we are very very far from) wasn't your lead off point.

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