Sunday, January 15, 2006

Wal-Mart and Maryland, Think Again

Dont chase business away

I guess alot of people dont like Wal-Mart because they think the company doesnt pay its fair share of the healthcare costs in places it does business, forcing its employees to use state-provided health coverage. The state of Maryland is now working to implement legislation that would require Wal-mart to pay the state for these additional costs.

Lets examine. Yes, healthcare costs in the US are growing at thrice inflation and are now some families' biggest budget item, even more than housing in some instances. This is not Wal-mart's fault. We have a half-regulated health care system that discourages innovation in provision and allows companies to write-off healthcare coverage for their employees; this makes prices rise unfairly for the rest of the economy eg the self-employed and small business (which of course is the base of the real America). Good for Wal-mart for not taking this wealth-distorting write-off!

Maryland wants the company to pay the state the difference if their healthcare costs dont meet 8% of payroll. This is bad economics. It sends alot of bad signals. First off, who is the state to collect directly medical costs? Is this not the very definition of the failed system of socialism? Why 8% and not 15% like the percentage of healthcare costs to some American families?

If a bureacracy is going to have to be created anyway to monitor this why not then just require mandated healthcost percentages for all companies, not just those with more than 10,000 employees? Wont just paying off the state in the longterm just give Wal-mart an "out" and prevent them from looking for ways to help their employees through innovative paypackage methods, just like they have provided lowcost goods to people through innovatative sourcing and distribution methods?

Doing this type of stuff just chases businesses away from your locality, making people pay more for the things they need. How does this help anyway, just in some, "ha i got you just because you are succesful" way. This is populism not rationality, and is no doubt being pushed-through by people that dont depend on Wal-mart for their life's essentials. And its not even populism because Wal-mart wouldnt be the number one retailer if they werent popular. Maryland's move is just bad shortsighted policy and will hurt the people of the state as other wealth-creating businesses shy away as well.