January
19, 2006
Shoplifting as Governance
By George
Will
WASHINGTON -- In
1786 the Annapolis Convention, requested by Virginia and attended
by only four other states, called for a second gathering to revise
the Articles of Confederation in order to strengthen the federal
government. Some revision: The second meeting became the Constitutional
Convention. It scrapped the Articles, partly because the Founders
were alarmed by states legislating relief of debtors at the expense
of creditors, often in ways not easily distinguished from theft.
Something not easily
distinguished from theft recently occurred in Annapolis. In legislation
ostensibly concerned with any company with 10,000 employees but
pertaining only to one, Maryland has said Wal-Mart must spend
8 percent of its payroll on health care, or must give the difference
to the state.
The Constitution's
foremost framer, James Madison, understood the perils of democracy
at the state rather than the national level of an ``extensive
republic'': State legislatures have fewer factions competing for
favors than compete for Congress' favors. States, being smaller
than the nation, have legislatures more easily captured by overbearing
majorities. Madison would have understood what Maryland has done.
Organized labor,
having mightily tried and miserably failed to unionize even one
of Wal-Mart's 3,250 American stores, has turned to organizing
state legislators. Maryland was a natural place to begin because
it has lopsided Democratic majorities in both houses of its legislature.
Labor's allies include
the ``progressives'' who have made Wal-Mart the left's devil du
jour. Wal-Mart's supposed sin is this: One way it holds down prices
(when it enters a market, retail prices decline 5 percent to 8
percent; nationally, it saves consumers $16 billion annually)
is by not being a welfare state. That is, by not offering higher
wages and benefits than the labor market requires. Labor's other
allies are Wal-Mart's unionized competitors, such as, in Maryland,
Giant Food, a grocery chain. These allies are engaging in what
economists call rent-seeking -- using government to impose disadvantages
on competitors with whom they are competing and losing.
Wal-Mart's enemies
say Maryland is justified in expropriating some of the company's
revenues because the company's pay and medical benefits are insufficient
to prevent some employees from being eligible for Medicaid. Well.
Eighty-six
percent of Wal-Mart employees have health insurance, more than
half through the company, which offers 18 plans, one with $11
monthly premiums and another with $3 co-payments. Wal-Mart employees
are only slightly more likely to collect Medicaid than the average
among the nation's large retailers, who hire many entry-level
and part-time workers. In the last 12 months, Wal-Mart, the largest
private employer in the nation and in 25 states, estimates it
has paid its 1.3 million employees $4.7 billion in benefits. That
sum is almost half as large as the company's profits, which last
fiscal year were $10.3 billion -- just 3.6 percent -- on revenues
of $285 billion. Wal-Mart earns just $6,000 per employee, one-third
below the national average. Anyway, Wal-Mart's pay and
benefits are sufficient to attract hordes of job applicants whenever
it opens a new American store, which it does once every three
days.
Maryland's
new law is, The Washington 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.
This is part of the
tawdry drama of state politics as governments grasp for novel
sources of money. Forty-eight states are to varying degrees dependent
on revenues from gambling. Forty-six states are addicted to their
cut, to be paid out over decades, from the $246 billion coerced
from the tobacco industry by using the specious argument that
smoking costs their governments huge sums. As a result, 46 states
have a stake in the long-term profitability of tobacco companies.
Maryland's grasping
for Wal-Mart's revenues opens a new chapter in the degeneracy
of state governments that are eager to spend more money than they
have the nerve to collect straightforwardly in taxes. Fortunately,
as labor unions and allied rent-seekers in 30 or so other states
contemplate mimicking Maryland, Wal-Mart can contemplate an advantage
of federalism.
States engage in
``entrepreneurial federalism,'' competing to be especially attractive
to businesses. A Wal-Mart distribution center, creating at least
800 jobs, that has been planned for Maryland could be located
instead in more hospitable Delaware.
Meanwhile, people
who are disgusted -- and properly so -- about corruption inside
Washington's 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?
©
2005, Washington Post Writers Group
