A Stitch in Haste

NOTE: See major update below.

Some intellectual finger-food in the form of an Time interview with Wal-Mart CEO H. Lee Scott Jr. Not peer-review quality, but sometimes it helps to reduce down to first principles, just like a marathon runner can enjoy a leisurely stroll through the park every now and then:

WAL-MART'S IMAGE SEEMED TO MORPH FROM CHARMING SOUTHERN DISCOUNT STORE TO A RETAIL BULLY FULL OF DEAD-END JOBS. WHY DID THAT HAPPEN?

Our size really does bring with it some disadvantages. And in some ways being in Arkansas was a disadvantage in that we thought you could ignore the rest of the country. We let other people define who Wal-Mart is. Now we're telling the Wal-Mart story, about the quality of jobs we have and about the 1.5 million Wal-Mart associates who have a lot of pride in the company.

WHAT DO YOU OWE WAL-MART EMPLOYEES?

We owe them fairness, respect, and I think we owe them opportunity. The fact that we have thousands of people lined up for 500 jobs [at a new supercenter] tells you that people will improve their lives when they can. They will join a company that has good benefits, that pays better and that provides opportunity for promotion. You could find yourself pushing carts in Mississippi and then find yourself managing in Germany.

...
YOU'RE GOING TO BUILD 250 NEW SUPERCENTERS NEXT YEAR. SOME COMMUNITIES HAVE FOUGHT AGAINST THEM. DO WE REALLY NEED THAT MANY SUPERSTORES?

Customers decide that, don't they? If they're not shopping, you wouldn't build them. Many of the stores that you assume are controversial are some of our best stores. We just opened a store in Stockton [Calif., where some towns have blocked new Wal-Marts] that's done fabulously well. Some people within communities don't want us, but the shoppers sure as heck do.

WHAT'S WAL-MART'S BEST-SELLING ITEM?

Bananas.

...
WHAT ARE YOUR FAVORITE NON-WAL-MART STORES?

I do not have favorite stores. This week I've been in Target, Best Buy, Meijer and Wal-Mart. I really enjoy walking stores, seeing what the competition is selling. The new Bloomingdale's in New York is so well done. It's a great place to look at handbag merchandising. Their men's socks are amazing too — kind of expensive, though.

...
SO WILL CONSUMERS HAVE A MERRY CHRISTMAS?

Christmas will come. It comes every year. But it comes later every year as people take that last paycheck and go shopping. That means retailers have to be sharper in their offerings, so I think it will be very good for the consumer.

BE HONEST. HAVE YOU EVER EATEN HALF A BAG OF COOKIES IN TARGET AND THEN JUST LEFT IT THERE?

No. At Target or anywhere else, if there's a shopping cart blocking a parking space, I'll push it into the store. Retailing is already hard enough.

I wonder how much attention was paid to men's sock displays in, say, the former Soviet Union, or Castro's Cuba, or Saddam Hussein's Iraq. And what does it say about American and global capitalism that what was once an "exotic" fruit is now the best-selling item in the largest retail chain in America?

It bears repeating -- over and over and over. Companies that are successful are successful for a reason. Yes, sometimes the success is nefarious (e.g., sweetheart deals with government, corrupt business practices, even outright criminal conduct), but they never last long and have more to do with human nature generally than with any inherent defect in capitalism. The real success stories, the Wal-Marts, Microsofts, Apples, McDonalds, etc., got where they are by making the world a better place.

There is something wrong, seriously wrong, with anyone who would want to fight that.

MAJOR UPDATE: ...anyone like this fool --

[T]he real story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices." It's the story of what that pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.

Wal-Mart is not just the world's largest retailer. It's the world's largest company -- bigger than ExxonMobil, General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last year. It sells in three months what number-two retailer Home Depot sells in a year. And in its own category of general merchandise and groceries, Wal-Mart no longer has any real rivals. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined. "Clearly," says Edward Fox, head of Southern Methodist University's J.C. Penney Center for Retailing Excellence, "Wal-Mart is more powerful than any retailer has ever been." It is, in fact, so big and so furtively powerful as to have become an entirely different order of corporate being.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

Some hasty stitches:

1. To claim that Wal-Mart is in any way the most powerful corporation ever, or "an entirely different order of corporate being" is to demonstrate such a profound ignorance of business history that one must question the "expert's" educational credentials. Standard Oil wielded far more power in its time than Wal-Mart does today. Heck, J.P. Morgan (the man, not the company) essentially controlled the entire American economy at the zenith of his career).

2. Keep in mind what the author is lamenting -- oh those evil low prices Wal-Mart makes possible! Pure Broken Window Fallacy! Yes, Vlasic loses some of its historical profits -- which, incidentally, go, according to the socialists, to greedy lazy stockholders, not workers. Meanwhile, the savings the consumer reaps go to -- other businesses! The lost Vlasic profit finds its way to some other company that is providing some other good or service (or perhaps it goes into the consumer's bank account, which even a socialist cannot argue is a bad thing).

3. Another huge fallacy is exhibited in this piece: Just because Wal-Mart may have no "real competitors" today (a misrepresentation, incidentally -- besides Costco, Target, etc., Wal-Mart has millions of competitors...they just happen to be small), that does not mean it won't have competitors tomorrow if it suddenly stops doing what it does (and remember exactly what Wal-Mart does: it give us lots and lots of cheap stuff!). People often fail to remember that market power without barriers to entry means absolutely nothing in the long run. We are so conditioned to seeing monopolies imposed by government (the Postal Service, defense contractors, pharmaceutical patents) that we forget that those barriers to entry are a pre-requisite to sustained market power. Either that, or the company that reached the top can only stay at the top by continuing to satisfy its customers in a way no one else does as well.

Compare and contrast: There was a time when Woolworth's was a near-monopoly in discount retailing. The chain no longer exists (although the company does...it morped into Foot Locker). There was a time when Montgomery Ward was a near monopoly in its niche. It went bankrupt. There was a time when Sears had a near-monopoly in what today we call the "superstore" concept. It got kicked out of the Dow Jones Industrials Average. "Monopoly power"? Feh!

4. The piece proceeds to invoke -- surprise -- offshoring. More broken windows! How many domestic jobs were saved by Wal-Mart helping keep prices low throughout the economy? (Keep in mind, Wal-Mart, mostly through its Sam's Club subsidiary, sells -- sells a lot -- to businesses, especially small businesses.) Lowering supply costs to those businesses makes it easier for them not to go offshore, or not go bankrupt either.)

Of all the socialist logical-pretzel-twisting arguments one is likely to see, the notion that it's good for consumers to pay higher prices has to be the single most perverse. Perhaps even evil. People who advocate such nonsense are not motivated by concern for workers or small businesses...they are motivated by hatred of the successful.

Hat tip to Marginal Revolution. Meanwhile, here's another response to some more anti-Wal-Mart drivel.

Related Posts:
Many Happy Returns
Capitalists 'R' Us
E.U. to Force Microsoft to Sell a Product It Doesn't Make?
What Channel? What Station?

(Cross-linked at Outside the Beltway.)

To review, here is my previous definition of the "Reverse-Poletown Doctrine" (I'm starting to think I should have called it the "Inverse-Poletown Doctrine" -- oh well):

Aggressive zoning generally, targeted zoning against a particular company, environmental impact statements, etc., are all bad enough. But to require a property owner to in essence "win back" his property rights a priori by having to prove a negative (i.e., no net economic harm) is exactly the same kind of perverse reasoning that was just soundly rejected in Wayne County v. Hathcock, the Michigan case that overturned Poletown. "Heads, we win -- tails, you lose."

In Part One I described an example of the attempt to circumvent eminent domain (as properly applied -- i.e., as a check on government) by quashing property rights through the use of the "historic landmark" maneuver. In other words, one common way that property rights are infringed is by blocking the creative destruction of property to make way for better uses ("better" defined in the only objective way possible -- by the free market).

Meanwhile, some New Yorkers are now gearing up to block the creative construction of property. The target (no pun intended) is that company people love to hate -- Wal-Mart:

While Wal-Mart plans to make its New York City debut in Rego Park, Queens, its second city store could wind up in Downtown Brooklyn's Fulton Street shopping district. The world's largest retailer is in talks about building a store in The Gallery at Fulton Street shopping mall, sources told the Daily News.
...
Wal-Mart's Rego Park plan is starting to stir controversy. If the discounter winds up selecting the Downtown Brooklyn site as well, similar backlash is predicted there from area merchants, community groups, unions and politicians.

"Wal-Mart should expect significant opposition," said Michael Burke, director of the Downtown Brooklyn Council.

Opposition like this:

Democratic Queens Assemblyman Brian McLaughlin, president of the New York City Central Labor Council, called for a moratorium on all big-box stores like Wal-Mart until the City Council can "come up with a smart strategy that examines the impact on other jobs." Democratic City Councilwoman Letitia James, a member of the Economic Development Committee, said she supports the moratorium and believes there's a consensus among City Council members to institute one.
...
"This red store does not belong in a blue city," she said, adding that the health care plan for its employees is inadequate and its pay falls beneath competitors' standards.
...
No Wal-Mart representative attended the City Council meeting, but company spokeswoman Mia T. Masten prepared a letter for the meeting that said, "We believe that Wal-Mart would be an extraordinary asset to the local economy."

Or this:

"Wal-Mart's low prices come with a very high price tag," said [a union leader]. "Should Wal-Mart succeed with their plan to open a mega-store in Queens, it will prove to be an economic disaster for our entire city. The ongoing national and international union battle against Wal-Mart is about maintaining quality community living standards.

The true legacy of Wal-Mart isn't lower prices. The true legacy of Wal-Mart is lower living standards for hard working Americans and those overseas. The fact is for every Wal-Mart store that opens, jobs are lost to the community, the tax base shrinks, the number of workers with health benefits declines, and the number of workers eligible for welfare increases.

Of course, that last sentence is a flat-out lie, as Wal-Mart now feels compelled to demonstrate via a massive "fact-checking" campaign.

More important is the undertone of the opposition. Opposition to Wal-Marts in New York City has nothing to do with New York City and everything to do with Wal-Mart.

Wal-Mart means lower prices for New Yorkers -- blank that out! No, Wal-Mart "drives out" (higher-priced or lower-variety) "local" businesses in other parts of the country.

Wal-Mart will employ New Yorkers -- blank that out! No, Wal-Marts outside the city employ -- gasp! -- non-union workers. (Of course, with the exception of supermarket workers, the New Yorkers who would go to work for Wal-Mart are not currently unionized anyway -- I don't think there's a "bodega union." And supermarkets are hardly "small, community-based family businesses." No, they're just union shops, which, at the end of the day, is why the opponents are, um, opposed to Wal-Mart.)

Wal-Mart will pay significant property taxes -- blank that out! No, it's a "red store in a blue city."

Wal-Mart is a leader in part-time employment, youth employment, flex-time employment, management training -- more opportunities for disadvantaged people with special employment needs -- blank that out! No, they won't be union jobs, so they can't possibly be "good jobs."

Wherever a Wal-Mart springs up, smaller, often local businesses tend to locate nearby (think the old "anchor tenant" concept in a mall). Also, a significant portion of Wal-Mart's sales (especially its "Sam's Club" chain) are to small businesses, the very businesses critics contend that Wal-Mart destroys -- blank that out! No, it's bad because a (unionized) supermarket might shut down.

As I blogged previously: Companies that are successful are successful for a reason. Yes, sometimes the success is nefarious (e.g., sweetheart deals with government, corrupt business practices, even outright criminal conduct), but they never last long and have more to do with human nature generally than with any inherent defect in capitalism. The real success stories, the Wal-Marts, Microsofts, Apples, McDonalds, etc., got where they are by making the world a better place.

Of all the socialist logical-pretzel-twisting arguments one is likely to see, the notion that it's good for consumers to pay higher prices has to be the single most perverse. Perhaps even evil. People who advocate such nonsense are not motivated by concern for workers or small businesses -- they are motivated by hatred of the successful.

UPDATE: Ryan Sager has more.

Wal-Mart Archive:
"Men's Socks are Amazing..."
Political Child Abuse Update: Targeting Wal-Mart

Eminent Domain Archive:
Eminent Domain: Are We Seeing a Paradigm Shift?
The Other Supreme Court Property Case
Will the Supreme Court Extend the Poletown Reversal?
"Kill Poletown, Vol. 2"
But What About "Reverse-Poletown"?
The End of "Mow"-Town

"I am leaving it as I found it. Take over. It's yours."
--Ellis Wyatt, Atlas Shrugged.

Bravo to Wal-Mart for having the courage to Just Say No to the most vicious form of rights infringement still considered legitimate in the modern era:

Wal-Mart Canada will close one of its two Quebec stores that won union certification last year after failing to reach a labor agreement, the retailer said on Wednesday.
...
Wal-Mart Canada said it advised the union last year when the bargaining process began that the store's financial situation was precarious.

"Despite this fact and nine separate days of meetings over a period of more than three months, the company has been unsuccessful in reaching an agreement with the union that would allow the store to operate efficiently and profitably," the company said in a release.
...
In January, a Wal-Mart Canada store in Saint-Hyacinthe, Quebec, won union certification and said it hoped to deliver contract proposals by mid-February. ... Wal-Mart Canada said the decision to automatically certify the Saint-Hyacinthe store was undemocratic and seriously flawed as employees were not offered a secret ballot vote.

By what right does an employee, or any number of employees, or a government, dare try to insist that a company operate a store at a loss?

What kind of union leadership would engage in such reckless collective bargaining brinksmanship?

What kind of government allows unionization votes without a secret ballot?

How many more lessons does Big Labor need? You are collectively bargaining yourselves into oblivion. Which, by itself, is fine with me. But must you inflict so much collateral damage in the process? What expenses did Wal-Mart incur in this fiasco? What burdens of higher prices and lower variety will consumers have to incur?

Sheer madness.

ADDENDUM: Speaking of sheer madness, Wal-Mart is also facing abuse from champions of higher prices and lower variety in Queens, New York, as I have blogged about previously:

Small businesses, union leaders, City Council members and even some mayoral candidates are gearing up to prevent Wal-Mart from setting foot in town, now that the world's largest retailer has acknowledged it wants to open its first New York City store, planned for Rego Park, Queens, in 2008.
...
Wal-Mart's opponents plan to pressure every government body that will consider the application -- the community board, the City Planning Commission and the City Council -- to reject it.
...
"There will never be a more diverse and comprehensive coalition than this effort against Wal-Mart," said Richard Lipsky, spokesman for the Neighborhood Retail Alliance, an anti-Wal-Mart coalition in New York. "It will include small-business people, labor people, environmental groups, women's groups, immigrant groups and community groups."

Of course, it is sheer madness just that there are so many "government bodies" for the anti-consumer Luddites to "pressure." But that's another rant.

Be careful what you protest against, you of the "diverse and comprehensive coalition" -- you just might kill it. Just ask your now-unemployed union comrades in Canada.

More thoughts at PolicyGuy and Miscellaneous Objections.

Related Posts (Wal-Mart):
"Men's Socks are Amazing..."
New York's Embrace of "Reverse-Poletown" -- Part Two
Political Child Abuse Update: Targeting Wal-Mart

Related Posts (Labor Unions):
Why Doesn't Antitrust Apply to Labor Unions?
"Mr. Gettelfinger, You're Trying to Seduce Me..."
In Honor of Labor Day: Where the Heck is Beck?
Fly the Friendly Skies, Damnit!
A Labor Union Christmas

"I am leaving it as I found it. Take over. It's yours."
--Ellis Wyatt, Atlas Shrugged.

The owner of a site intended for the first Wal-Mart in New York City has abandoned those plans in the face of central planner opposition:

A Wal-Mart spokeswoman said the company was still exploring other sites in the city, but the possibility that the company would open a 132,000-square-foot store in Queens had immediately stirred a storm of opposition by neighborhood, labor and environmental groups as well as small businesses. Wal-Mart also faced opposition from many City Council members.

Labor unions fought Wal-Mart with a special intensity because they believe its wage levels and benefits are pulling down standards for workers through the United States.
...
[S]aid Richard Lipsky, spokesman for the Neighborhood Retail Alliance, an anti-Wal-Mart coalition in New York[,] "We stopped Wal-Mart this time, but they are going to continue their efforts to open in New York and we will be sure to meet that with significant opposition wherever else they try to locate."
...
Several shoppers interviewed yesterday in Rego Park said they were disappointed that a Wal-Mart would not be coming to the neighborhood, noting that many residents now travel to Long Island to take advantage of the store's low prices.

"It would've been good if we had a Wal-Mart near by because then we wouldn't have to travel outside the area," said Rolando Sands, 21, a soft drink deliverer. "We'd be able to keep the money in the Queens community instead of Long Island."

Perhaps for their next "achievement" the City Council will make it illegal for New York City residents to shop on Long Island. Or from walmart.com.

As I blogged previously:

Wal-Mart means lower prices for New Yorkers -- blank that out! No, Wal-Mart "drives out" (higher-priced or lower-variety) "local" businesses in other parts of the country.

Wal-Mart will employ New Yorkers -- blank that out! No, Wal-Marts outside the city employ -- gasp! -- non-union workers.
...
Wal-Mart will pay significant property taxes -- blank that out! No, it's a "red store in a blue city."

Wal-Mart is a leader in part-time employment, youth employment, flex-time employment, management training -- more opportunities for disadvantaged people with special employment needs -- blank that out! No, they won't be union jobs, so they can't possibly be "good jobs."

Wherever a Wal-Mart springs up, smaller, often local businesses tend to locate nearby (think the old "anchor tenant" concept in a mall). Also, a significant portion of Wal-Mart's sales (especially its "Sam's Club" chain) are to small businesses, the very businesses critics contend that Wal-Mart destroys -- blank that out! No, it's bad because a (unionized) supermarket might shut down.

It's amazing -- everywhere the free market wants to build, it can't. Everywhere the free market wants to prevent building, it can't. As Javert says in the musical version of Les Miserables, "The law is inside-out! The world is upside-down!"

At what point do you stop screaming and start weeping? Or do you manage to do both simultaneously?

Or do you just become numb to it all -- as you climb into the car and drive off to the Long Island Wal-Mart?

Related Posts:
Wyatt-Mart Closes Shop
"Men's Socks are Amazing..."
New York's Embrace of "Reverse-Poletown" -- Part Two
Eminent Domain: Are We Seeing a Paradigm Shift?
Kelo and Marxist Class-Based Schadenfreude

Back in April I blogged about an obnoxious legislative maneuver to keep Wal-Mart out of Maryland:

Lawmakers said they did not set out to single out Wal-Mart when they drafted a bill requiring organizations with more than 10,000 employees to spend at least 8 percent of their payroll on health benefits — or put the money directly into the state's health program for the poor.

Guess how many employers there were in Maryland with more than 10,000 employees.

Fortunately Maryland's governor vetoed the act — see my follow-up post.

A Wal-Mart executive ended the incident with an prescient warning:

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...

In New York City the number turned out not to be 200, but 35. The City Council is considering a bill that would require any grocery store (not all employers, mind you, but just grocery stores) with more than 35 employees (I guess bodega workers don't need health care) to offer some gobbledygook called the "prevailing rate" for healthcare (PDF — 4 pages):

Int. 468-A will require employers in the City's grocery and food retail industries to provide health care to their employees, thereby stemming the growing trend of not offering such coverage. The legislation will also [sic!] apply to so-called "big box" stores, such as Wal-Mart, which sell groceries.
...
Requiring supermarkets to spend the industry's prevailing amount on health care is a pro-business response [sic!] that protects responsible employers as well as the taxpayers of our City.

The "prevailing rate" is of course currently determined by unionized supermarket chains.

Just as in Maryland, how many potential employers might be contemplating setting up shop in New York City, would "also" qualify as grocery stores under the bill, would employ more than 35 workers and, based on worker preferences, not offer the "prevailing rate" of healthcare benefits?

I suspect the answer is somewhere in the neighborhood of "one."

I called the Maryland proposal a bill of attainder, and I think the term is warranted in New York as well.

Is it really better to be unemployed full-time than to be employed part-time at Wal-Mart, even with little or no health care coverage?

Is it really in the interests of all New Yorkers (as opposed to a politically favored constituency) to have less retail competition, and with it higher prices, especially for groceries (the prices of which are far more important to the poor than to the wealthy)?

Is it really necessary for local hack activist politicians to invent problems just so they can "cure" them?

What kind of sick, twisted politicking is this, where legal businesses are declared persona non grata, where preventing the creation of new jobs is celebrated as "worker empowerment," where employees are de facto unionized against their will, and where constituents are told that paying higher prices is in their best interests?

Sheer madness.

More thoughts from Ryan Sager and Out of Control. Also, Eclectic Econoclast notes that Target, which does not sell groceries and would therefore be exempt from this bill of attainder, is launching an ad blitz to capitalize on the City Council's anti-Wal-Mart bias.

New York's activist City Council has overridden a mayoral veto and declared Wal-Mart illegal within the city limits. I previously blogged about the Health Care Security Act here.

The bill, which applies to exactly one potential employer — Wal-Mart — requires that employees be offered union-level health benefits, notwithstanding the fact that Wal-Mart employees are, voluntarily, non-union.

Given that the City Council knew beforehand that the legislation would unquestionably keep Wal-Mart out of New York City and crafted it for that very purpose, the Act codifies three simple principles of legislative intent:

--It is better to be unemployed than employed.

--It is better to pay higher prices than lower prices.

--It is better to have less variety than more variety.

This is the unbridled democratic process (not to mention the unbridled Democrat process) in action: A willing employer and willing employees, a willing seller and willing buyers, all told to go f*ck themselves, because labor unions were able to buy enough local hack politicians.

Always Low Standards. Always.

UPDATE: Factually and logically flawed, but damn funny.

Back in April I briefly noted an obnoxious bill of attainder passed by the Maryland Legislature against Wal-Mart that would have required it, and it alone, to offer certain health care benefits to its workers. Governor Robert L. Ehrlich Jr. vetoed the bill. It is now up for an override vote in January.

Wal-Mart is lobbying, quite intensely, to defeat the veto override, as the Washington Post documents.

I have no doubt that Wal-Mart executives are undertaking this intense lobbying campaign because they think it's worth it (i.e., the benefit of the lobbying will exceed the cost). Still, I wonder what would happen if Wal-Mart took a different approach, something closer to the nuclear option:

Dear Maryland Legislature,

If you override this veto, then we will close all our stores in your state 24 hours before the law takes effect. We will lock our doors and lay off all our employees. We will not return unless and until you revoke all legislation specifically and exclusively targeted at our company.

Love,
Wal-Mart

It's not as if Wal-Mart hasn't done it before. And it would be oh so refreshing.

Businesses need to stop apologizing for their own existence and asking permission to employ people, pay taxes and provide goods and services. The Maryland economy is not a plaything for local hack politicians to kick around like a soccer ball.

More thoughts at defcon:blog.

You can't claim not to have already known about the atrocious legislation in Maryland requiring every private employer — all one of them — with 10,000 or more employees to divert at 8% of total compensation to healthcare, regardless of whether the employees actually want such a forced reallocation.

Because I already blogged about it back in November. To save you a mouseclick I'm reposting it here, with an update.

---

Back in April I briefly noted an obnoxious bill of attainder passed by the Maryland Legislature against Wal-Mart that would have required it, and it alone, to offer certain health care benefits to its workers. Governor Robert L. Ehrlich Jr. vetoed the bill. It is now up for an override vote in January.

Wal-Mart is lobbying, quite intensely, to defeat the veto override, as the Washington Post documents.

I have no doubt that Wal-Mart executives are undertaking this intense lobbying campaign because they think it's worth it (i.e., the benefit of the lobbying will exceed the cost). Still, I wonder what would happen if Wal-Mart took a different approach, something closer to the nuclear option:

Dear Maryland Legislature,

If you override this veto, then we will close all our stores in your state 24 hours before the law takes effect. We will lock our doors and lay off all our employees. We will not return unless and until you revoke all legislation specifically and exclusively targeted at our company.

Love,
Wal-Mart

It's not as if Wal-Mart hasn't done it before. And it would be oh so refreshing.

Businesses need to stop apologizing for their own existence and asking permission to employ people, pay taxes and provide goods and services. The Maryland economy is not a plaything for local hack politicians to kick around like a soccer ball.

---

Every advocate of central planning always — always — envisions himself as the central planner. These hack politicians are of course no different.

All these socialists are so busy patting themselves on the back over their attitude toward "big, evil" Wal-Mart that they forget the complement of that attitude, namely to "little, stupid" Wal-Mart employees. Because that's essentially what the Maryland has said: "You are too stupid not to work for Wal-Mart, so we have to babysit you and ensure that you are not taken advantage of. And if a few hundred, or thousand, of you lose your jobs today or are not hired tomorrow — well, too bad so sad."

In the end, I think I Bryan Caplan's prediction is the most likely outcome. Wal-Mart will nominally comply and offer the higher total compensation — and nothing more — into the foreseeable future. So while nominal wages across other employers increase more or less in line with inflation, Wal-Mart will hold its nominal wage flat. In other words, Wal-Mart will let the rest of the Maryland economy inflate around it until the healthcare increase has been absorbed and Wal-Mart is paying the same real total compensation as before, just with a different wage-versus-healthcare mix. Which will of course still mean fewer people hired by Wal-Mart than would have been the case without the law, and a deadweight loss for those who do work for the company.

Meanwhile, labor leeches leaders are now plotting to introduce similar legislation in as many as 31 states. (UPDATE: First up -- West Virginia.)

Always Central Planning — Always.

More thoughts at Daily Kegger, Perfect Substitute.

When the Maryland legislature prepared to override a veto by the governor of an obnoxious bill to require Wal-Mart — and only Wal-Mart — to devote at least 8% of its compensation expense to healthcare, I blogged, tongue-in-cheek, that Wal-Mart should simply threaten to pack up and leave the state if the bill became law.

Well, the executives at Wal-Mart are a bit more level-headed than I am:

If we closed our doors in Maryland, a lot of things would happen, and none of them would be good for the working families of this state. Seventeen thousand associates work for us in Maryland. Every one of them — both full-time and part-time — can become eligible for health coverage that costs as little as $23 per month. Our stores here collect $112 million in sales taxes and generate $13 million more in tax revenue for state and local governments. We buy $678 million worth of goods and services from 667 Maryland suppliers. Thanks to our foundation and good works in our stores, we donate $3.7 million to local charities in Maryland. And when it comes to our customers, we save the average household more than $2,300 per year by offering the products people want at affordable prices in one convenient place.

Of course, Wal-Mart should not have to justify its existence, to Maryland's hack politicians or to anyone else. So long as Wal-Mart wasn't breaking any laws — any legitimate laws, that is — then they should have been left alone.

Meanwhile, retailers that are big, but not quite as big as Wal-Mart, have seen the writing on the wall and realize that "10,000 employees" can easily be lowered to "5,000 employees" or "1,000 employees" or even "100 employees" and are fighting the good fight, with or without Wal-Mart:

The suit was announced in Arlington, Va., by the Retail Industry Leaders Association, which represents companies that operate more than 100,000 stores with more than $1.4 trillion in annual sales.

The association, which also filed a lawsuit challenging a health care law passed in Suffolk County, N.Y., said the two laws illegally mandate specific health care expenditures and threaten to take away flexibility businesses need to deal with their employees.

"We all agree that access to health care is vital, but these spending mandates will drive away business and discourage job creation," Brad Anderson, chairman of the association and vice chairman and CEO of Best Buy Co. Inc., said in a written statement.

The association also said the two laws are invalid because they violate the federal Employee Retirement Income Security Act.

This post is not the forum to review ERISA, the Supremacy Clause or the so-called "pre-emption doctrine." Suffice it to say that the retailers' case is viable but not certain. More thoughts from W$J Blog, Workplace Prof Blog.

I want to follow up quickly on my previous post regarding the "War on Wal-Mart" in order to make a slight cognitive leap.

The Wall Street Journal ($) has an editorial today on the lawsuits in Maryland and Suffolk County, New York, by a retailer trade association, challenging laws that single out Wal-Mart by requiring it and it alone to spend a minimum amount on health care benefits for its employees --

It's unfortunate that so many companies now feel compelled to go to court, although it's hard to see any alternative when politicians enact punitive laws designed expressly to make companies less profitable and competitive. The Suffolk County Legislature was warned in a public hearing that its mandate likely violated federal laws; it passed it anyway, 17-1. Maryland legislators appear to have written their law in a cagey attempt to evade Erisa rules. Supporters argue that since employers have a "choice" between providing the new benefits or paying the state a fine, the law is not really a health-care mandate. The courts may question how much of a "choice" that really is.

I of course agree completely with the Journal in this instance. I just find it astounding — and annoying — that this same editorial board has no compunction whatsoever opposing "activist courts" and praising "federalism" and "legislative supremacy" when it comes to gay marriage. Retailers get to sue, in defiance of "the will of the majority," for fair and equal treatment, but gays don't? How does that work? If the Journal is going to have a double-standard, then they could at least try to be a bit more subtle about it.

Judicial review is either a valid endeavor or it isn't. Courts are either "co-equal" or they're not. Federalism is either checked by the Fourteenth Amendment or it isn't. Unbridled majoritarianism is either an illegitimate political worldview or it isn't. Minorities either have fundamental rights that transcend the will of the majority or they don't. One believes in the system as a whole or one doesn't.

"Judicial activism for me but not for thee" is hardly a coherent (or, I might add, a conservative) political viewpoint. One would expect more from the Journal.

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.

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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].
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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.)

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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.
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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.

Question: What do General Electric, General Motors and Target have in common?

Correct Answer #1: They each have a bank as a subsidiary.

Correct Answer #2: They are not Wal-Mart.

In a highly critical letter to the acting chairman of the Federal Deposit Insurance Corp., obtained by Reuters, a group of more than 30 Congress members asked the bank regulator to reject Wal-Mart's application to open a bank in Utah.

"Wal-Mart's plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation's payments system," the lawmakers wrote.

"Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system."

This is, of course, utter nonsense.

What difference does it make whether Wal-Mart clears its financial transactions internally or externally? If Wal-Mart were to have some sort of financial implosion (how that could happen is not addressed by the "highly critical" politicians), then wouldn't it be better that it affect Wal-Mart and only Wal-Mart?

This would be akin to saying: "It's too risky for Wal-Mart to issue its own paychecks to its workers -- what if something happened? We should force it to use Paychex or ADP."

The idea that Wal-Mart poses any threat to our financial system, let alone a greater threat than General Motors, is so preposterous as to surpass petty politics and enter into the realm of mental instability. One can almost hear Howard Dean screaming in the background.

More:

Consider the consequences if Enron or WorldCom had owned a bank," the group said.

Is there a "Godwin's Law" for Enron yet? In any event, the "consequences" if Enron and WorldCom had owned banks would have been that those companies and their executives would have been more heavily scrutinized by more regulatory bodies and probably never would have turned into the disasters that they did. Go figure.

And remember, by "bank" we are not talking here about Citibank, Chase, KipTrust or Diamond Federal Savings. We're talking about a so-called industrial bank -- which by law can only operate in the state where it is chartered (in this case Utah) and typically serves a single, specialized function (in Wal-Mart's case most likely to run its credit card operations). Grandma will not have her Christmas Club or IRA with "Bank of Wal-Mart" (and would it really be so bad if she did?).

This is brazen, sensationalist anti-Wal-Mart bias, pure and simple. In the wake of the Maryland debacle, it's almost like a feeding frenzy, or a Salem Witch Hunt sort of mass hysteria. Anything that Wal-Mart tries, anywhere, must by definition be the devil's work -- even in supposedly devil-free Utah.

In reality, the devil's work occurs mostly in the halls of Congress, not in a Wal-Mart store and especially not in a Wal-Mart bank.

I blogged recently about Wal-Mart's petition to establish an in-house bank, to be nominally based in Utah, in order to service its own credit-card operations and perform other "back-office" banking functions in order to reduce costs.

The extent of the opposition to the plan is as surprising as it is irrational and shrill.

Of course, people have been hating Wal-Mart for a while now, but something struck me about this particular version of antipathy toward the retailer:

Opponents are not convinced. They portray Wal-Mart's proposed in-house bank ... as leading eventually to full-scale banking with retail branches that would destroy local banks.
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"Wal-Mart is a company that does not play by the rules," Robert E. McGarrah Jr., a corporate governance official with the AFL-CIO, said in a statement prepared for Monday's hearing.

"That factor alone makes its proposed bank a threat to the taxpayers and the nation's banking system. ... Wal-Mart's record in communities across America reveals a company that ruthlessly wipes out important community businesses," McGarrah said.

Does any of this sound familiar? "Leading to," "destroy," "rules," "threat," "community"?

That's right: It's the lexicon of anti-gay bigotry, particularly in the context of same-sex marriage.

Same-sex marriage will "lead to" polygamy and sex with dogs; Wal-Mart's plan will "lead to" full-scale retail banking. Same-sex marriage will "destroy" the institution of marriage; Wal-Mart's bank will "destroy" the institution of local banking. Same-sex marriage litigation ignores the "rules" of majoritarianism; Wal-Mart ignores the "rules" of agreeing to kowtow to labor unions. Same-sex marriage is a "threat" and so is Wal-Mart. Same-sex marriage ignores the wishes of the "community;" neither should Wal-Mart be allowed to so drastically impact the "community."

And remember, this is all coming from a pillar of the left, a labor leader.

The lyrics may change, the singer may change, but the song remains the same.

The Good News: A federal judge has struck down Maryland's obnoxious bill of attainder forcing Wal-Mart — and only Wal-Mart — to dedicate a minimum of 8% of its compensation budget to health care. I blogged about the law here, here and here.

The Bad News: In striking down the law, the judge ruled not that Wal-Mart is free to offer whatever compensation packages it sees fit, but merely that the state law was pre-empted by the federal version, generally known as ERISA.

So government interference in free markets and infringement of economic due process (i.e., freedom of contract) are alive and well — just only at the federal level.

I suppose that's something.

We must defeat the enemy!

Senator Joseph R. Biden Jr. of Delaware, a likely Democratic presidential candidate in 2008, delivered a 15-minute, blistering attack to warm applause from Democrats and union organizers here on Wednesday.
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It was [against] Wal-Mart, the nation's largest private employer.
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"My problem with Wal-Mart is that I don't see any indication that they care about the fate of middle-class people[.]"

Nope, no indication whatsoever. Except for the rock-bottom prices and staggering variety that Wal-Mart provides, mainly to middle-class Americans (the ultra-poor and ultra-rich generally do not shop at Wal-Mart.)

Or the starter jobs that Wal-Mart provides to young, inexperienced workers, including middle-class teens. Or the supplemental income to middle-class post-retirement seniors. Or the first employment opportunities for newly-arrived immigrant relatives of middle-class citizens. Or the part-time and flextime opportunities for middle-class employees with special circumstances.

Or the property taxes that Wal-Mart pays, primarily in middle-class communities.

Or the $2.8 billion per year in dividends that Wal-Mart pays on its common stock — most of which is held either directly by or for the benefit of middle-class Americans.

Nope, definitely no indication at all.

More thoughts from The Phalanx, Abuse of Discretion, Below the Beltway, Cato@Liberty.

Apparently there is quite a fierce price war going on among U.K. supermarkets --

The battle began when Asda promised cuts from this weekend of £250m to some 10,000 items spanning food and general merchandise.

Tesco then announced price reductions worth £270m on more than 3,000 products, from next week.

Asda, incidentally, is a wholly owned subsidiary of Wal-Mart.

Weird -- in the U.K. when Wal-Mart cuts prices it's praised. When it does so in the U.S., it's damned. Especially by those who claim to champion the working poor. Go figure.

On the other hand:

[Tesco] Commercial director Richard Brasher said: "We want to make sure that our customers don't start their summer worrying about how to balance the budget and cutting the cost of their weekly shop is the best way we can help."

Now that's damnable. Companies are, and ought to be, out to make a buck, not to worry about customers' budgets or to pretend that they "care." To best way to "care" about customers is to compete, fiercely. Perhaps by keeping prices as low as possible, perhaps by offering a wider variety, perhaps by offering value-added services.

In any case, leave the warm fuzzy "it takes a village" platitudes out of it.