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Little Tyrannies

by @ 5:10 pm on January 19, 2006. Filed under General

George Will, who has been writing frequently about the corruption and rent-seeking at the national level (see here and here) finds the same behavior at work in Maryland’s recent decision to force Wal-Mart to pay for employee health care.

Something not easily distinguished from theft recently occurred in Annapolis. In legislation ostensibly concerned with any company that has 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’s 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.

Wal-Mart’s enemies on the left have, as Will notes, been quite successful in portraying the company as one that exploits its workers, and consumers, in the name of profit.

Wal-Mart’s enemies say Maryland is justified in expropriating some of the company’s revenue because the company’s pay and medical benefits are insufficient to prevent some employees from being eligible for Medicaid.

The facts, of course, are quite different:

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, which hire many entry-level and part-time workers. In the past 12 months, Wal-Mart, the largest private employer in the nation and in 25 states, estimates that 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 revenue 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.

Facts don’t matter, of course, because this is politics. Organized labor was able to accomplish in Maryland something that it probably wouldn’t be able to accomplish nationally because, as James Madison pointed out, Maryland provided a smaller playing field in which it was able to exert enough influence, and pass out enough favors, to get what it wanted. It is unlikely that they could do that on a national level, at least not right now.

Several years ago, Clint Bolick, one of the founders of the libertarian Institute of Justice wrote a book called Leviathan: The Growth of Local Government and the Erosion of Liberty. Bolick’s basic point was that state and local governments pose a greater threat to individual liberty than the Federal Government does, for the precise reasons that Madison mentioned 200 years ago. What we saw in Maryland last week was a prime example of one of those little tyrannies.

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2 Responses to “Little Tyrannies”

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