Soccer Dad

No such thing as free health care

Emoldened by the recent successful efforts of the U.S. Senate to demagogue the oil industry to lower prices and save American consumers, both houses of the Maryland Legislature are preparing to fight lower prices and cost Maryland consumers!

At issue is a bill that would require that all businesses operating in Maryland that employ over 10000 people spend at least 8% of their payrolls on health benefits for their employees or pay protection money to the state contribute to a state fund to insure the poor. This law, as it turns out affects just one company, Wal-Mart. This legislation, already vetoed by Governor Ehrlich, might discourage Wal-Mart from building a distribution center in depressed Somerset County. With the upcoming session of Maryland's legislature scheduled to start in January, Maryland legislators are anxious to show that they are uncorruptible as the Washington Post recent reported:

"They've hired the largest cadre of lobbyists in recent history in Annapolis to try to influence this legislation," said House Speaker Michael E. Busch (D-Anne Arundel). "It really comes down to whether the legislature is going to succumb to the money and the special interests."

Glad to hear it.

And what is Wal-Mart doing to counter the possible veto override? Why they're hiring lobbyists! The horror:

State Ethics Commission records showed Wal-Mart retaining 12 lobbyists as of last month, nine of whom registered in October. Among the new recruits were Joseph A. Schwartz III and J. William Pitcher, both among the 10 highest-paid lobbyists in Annapolis last year, receiving more than $500,000 each from clients.

Whereas the noble forces arrayed against this major employer don't have to dirty their hands so:

The legislation is strongly backed by union officials and health care advocates, who are gearing up lobbying operations that they say will rely more on grass-roots activists than hired guns.

Wal-Mart is doing something else also that raise the alarums:

Del. Joanne C. Benson (D-Prince George's) said it will be hard to get caucus members, who voted overwhelmingly for the bill in April, to switch their votes. "More than likely, it will not happen," she said. "We are adamant that anybody who comes into Maryland ensure that people who work for them get adequate health care."

That has not deterred the company from making friendly gestures. Wal-Mart promised a $10,000 donation to help underwrite the legislative conference late last month, according to company officials and Del. Rudolph C. Cane (D-Wicomico), the caucus chairman, who was involved in discussions with a Wal-Mart representative.

"I explained to the gentleman he's not buying votes," Cane said. "I made it perfectly clear."

Several other corporations and Annapolis lobbying firms were financial sponsors of the event. Still, Wal-Mart's donation and tomorrow's meeting have made some lawmakers uncomfortable.

I should add that it doesn't hurt the effort to override the governor's veto is also being aided by the Washington Post. The article from which I've been quoting is so well written that it has been reproduced (with or without permision) in its entirety at Wake-Up Walmart an advocacy site opposed to Wal-Mart's business practices.

Of course if you'd like a nice factual account of Wal-Mart's business practices you might want to turn away from the Washington Post's news pages and read its op-ed page.

Central to the news article is this paragraph:

The clash has coincided with a national public relations push by Wal-Mart, which has tapped former presidential advisers to counter its reputation as a low-wage employer with benefits so stingy that some workers rely on public assistance. The company recently announced an expansion of health insurance options for employees, more than 15,000 of whom work in Maryland.

In "Progressive Wal-Mart. Really" Post columnist Sebastian Mallaby couters:

Wal-Mart's critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid. Actually that's a typical level for large retail firms, and the national average for all firms is 4 percent. Moreover, it's ironic that Wal-Mart's enemies, who are mainly progressives, should even raise this issue. In the 1990s progressives argued loudly for the reform that allowed poor Americans to keep Medicaid benefits even if they had a job. Now that this policy is helping workers at Wal-Mart, progressives shouldn't blame the company. Besides, many progressives favor a national health system. In other words, they attack Wal-Mart for having 5 percent of its workers receive health care courtesy of taxpayers when the policy that they support would increase that share to 100 percent.

But what's at issue is not just how much Wal-Mart contributes to healthcare, what matters is what Wal-Mart contributes to the economy as a whole. And for that Mallaby brings support for Wal-Mart from a surprising source:

Wal-Mart's critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is "a progressive success story." Furman advised John "Benedict Arnold" Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart's products.

These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's "every day low prices" make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart's $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.

Yikes, that's really bad. A private enterprise that possible does the government's job better than the government itself.

(Indeed, this isn't the first this has been noted. In "From FEMA to WEMA" (Sept 20, 2005) NY Times columnist John Tierney noted:

I don't think Washington needs any more czars. But if President Bush feels compelled to put someone in charge of rebuilding the Gulf Coast, let me suggest a name: Lee Scott.

Scott is the chief executive of Wal-Mart, one of the few institutions to improve its image here after Katrina sent a 15-foot wave across the north shore of Lake Pontchartrain. If you mention the Red Cross or FEMA to people in Slidell, you hear rants about help that didn't arrive and phone lines that are always busy. If you mention state or national politicians, you hear obscenities.

But if you visit the Wal-Mart and the Sam's Club stores here, you hear shoppers who have been without power for weeks marveling that there are still generators in stock (and priced at $304.04). You hear about the trucks that rolled in right after the hurricane and the stuff the stores gave away: chain saws and boots for rescue workers, sheets and clothes for shelters, water and ice for the public.

''This was the only place we could find water those first days,'' said Rashan Smith, who was shopping with her three children at Wal-Mart on Saturday. ''I still haven't managed to get through to FEMA. It's hard to say, but you get more justice at Wal-Mart.''

Who'd have thunk it.)

The real scandal here is not that Wal-Mart is diverting its resources to hire lobbyists. The scandal, that the Washington Post's John Wagner doesn't seem to understand, is that Wal-Mart has to hire lobbyists. Instead of employing people and providing reasonably priced merchandise, Wal-Mart has to respond to a shakedown by Maryland's legislature. And if Wal-Mart's employment practics are so poor, they'd have trouble hiring.

But as Mallaby notes:

When Wal-Mart opened a store in Glendale, Ariz., last year, it received 8,000 applications for 525 jobs, suggesting that not everyone believes the pay and benefits are unattractive.

Thankfully Maryland consumers have the Maryland legislature looking out for us. Because, clearly, regular people like these don't know what's good for them. Fortunately, Maryland's legislatures, populated by PhD in economics and finance and MBA's, are looking out for us. (And if the legislature fails to override Governor Ehrlich's veto and he is defeated next fall, his two Democratic challengers - both experts in business, finance and economice, Baltimore City Mayor Martin O'Malley and Montgomery County Executive Doug Duncan - have promised to sign the bill.)

The point isn't that Wal-Mart is populated by saints. Mallaby notes:

Companies like Wal-Mart are not run by saints. They can treat workers and competitors roughly. They may be poor stewards of the environment. When they break the law they must be punished. Wal-Mart is at the center of the globalized, technology-driven economy that's radically increased American inequality, so it's not surprising that it has critics. But globalization and business innovation are nonetheless the engines of progress; and if that sounds too abstract, think of the $200 billion-plus that Wal-Mart consumers gain annually. If critics prevent the firm from opening new branches, they will prevent ordinary families from sharing in those gains. Poor Americans will be chief among the casualties.

UPDATE: Daled Amos e-mailed me this article that an anti-Wal Mart poll conducted by John Zogby was tainted. I'm so surprised. Selected highlights:

When the national press devoured a new union-sponsored poll released last week by uber-pollster John Zogby claiming that a majority of Americans believe that "Wal-Mart is bad for America," not reported were serious ethical issues which call into question the integrity of the much-ballyhooed survey.
...
But what no journalist would have known without digging is that Mr. Zogby cannot be considered an objective third-party when it comes to Wal-Mart. Without the presumption that the pollster was working solely to gauge scientifically the attitudes of the public, the poll loses much of its luster and becomes just another cog in Big Labor's coordinated campaign against the retailer.
In recent years, Mr. Zogby has pocketed roughly $90,000 to serve as an expert witness for individuals suing Wal-Mart, according to testimony he gave in a deposition last year in an Arizona case. Nowhere is Mr. Zogby's prior work on behalf of plaintiffs mentioned in the press release announcing the poll results.
...
Though Mr. Zogby insisted that being paid tens of thousands by people suing the retailer did not compromise his objectivity, he was careful to note that the press release announcing the poll results was drafted by the client, Big Labor-backed WakeUpWalMart.com. But when reached the following morning, Mr. Zogby conceded that his staff "heavily edited" the release and even posted it on the group's Web site and put the release out over its wire.

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