A Stitch in Haste

Back when the Maryland Legislature was debating requiring Wal-Mart, and only Wal-Mart, to devote at least 8% of its total compensation expense to health care, I made two observations.

---

First, I suggested that Wal-Mart threaten to simply pack up and leave the state. They ignored my advice, but others did not:

Montgomery County [Maryland] residents in the process of buying, selling or refinancing a home are finding themselves in a tight spot as at least 50 mortgage lenders have pulled their services out of the county as a result of a discriminatory lending law scheduled to go into effect [today].
...
The ordinance, which was passed by a vote of 7-2 and bans discriminatory lending on the basis of national origin, race or sex, increases the maximum fine from $5,000 to $500,000. Mortgage lenders have limited or suspended their loan businesses in the county rather than risk being punished for violations such as "abusive prepayment penalties" or "excessive points and fees."

If I faced a $500,000 fine for -- well, for anything -- I'd be reluctant to do business too, regardless of how confident I was that I was in fact obeying the law and acting ethically.

Not to sound too much like a Randroid (or, worse, an economist), but the "business elasticity of regulation" is not zero. Indeed, it's often far greater than one than most hack politicians are willing to admit.

Stated differently, in any abusive relationship, when the abuse gets bad enough the abused partner will, eventually, flee the abuser.

(Via Division of Labour.)

---

I also noted the following quote from a Wal-Mart executive regarding the "bill of attainder" nature of Maryland's anti-Wal-Mart law:

Next time around ... it might not be 10,000 employees, it might be 200. Then you are talking about a very different scenario that involves everyone in the business community, not just Wal-Mart...

He was off by a factor of two:

[A] bill would make New York one of the first states requiring companies to provide health insurance for full-time employees. The legislation, which has bipartisan support in the state Legislature, would apply to businesses with more than 100 employees and could affect 450,000 workers in the state.
...
Under the bill, companies would have to spend an average of at least $3 per hour for health benefits for their work force. State Sen. Nicholas Spano, a Westchester Republican and sponsor of the bill in the Legislature's upper house, compared the legislation to setting minimum-wage standards.

And, since we all took introductory economics, we all know how increasing the minimum wage -- a disequilibrium-creating price floor on wages -- affects the working poor: by turning many of them into the non-working poor. Lovely.