<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=Content-Type content="text/html; charset=iso-8859-1"> <STYLE></STYLE> <META content="MSHTML 6.00.2600.0" name=GENERATOR></HEAD> <BODY id=MailContainerBody style="PADDING-LEFT: 10px; FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: #000000; BORDER-TOP-STYLE: none; PADDING-TOP: 15px; FONT-STYLE: normal; FONT-FAMILY: Verdana; BORDER-RIGHT-STYLE: none; BORDER-LEFT-STYLE: none; TEXT-DECORATION: none; BORDER-BOTTOM-STYLE: none" leftMargin=0 topMargin=0 acc_role="text" CanvasTabStop="true" name="Compose message area"><?xml:namespace prefix="v" /><?xml:namespace prefix="o" /> <DIV> <DIV>Max is right that WalMart will do what it is doing just as long as it is powerful enough to do it.  If it were possible to imagine that there could be universal health insurance without any increase in the power of workers, then WalMart will still pay low wages and continue to be a corporate scofflaw. I might mention that there are unionized workers in the U.S. who qualify for food stamps.</DIV> <DIV> </DIV> <DIV>Michael Yates</DIV> <BLOCKQUOTE style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style="FONT: 10pt arial">----- Original Message ----- </DIV> <DIV style="FONT: 10pt arial"><B>From:</B> <A href="mailto:sawicky@bellatlantic.net">Max B. Sawicky</A> </DIV> <DIV style="FONT: 10pt arial"><B>To:</B> <A href="mailto:lbo-talk@lbo-talk.org">lbo-talk@lbo-talk.org</A> </DIV> <DIV style="FONT: 10pt arial"><B>Sent:</B> Monday, March 08, 2004 9:23 PM</DIV> <DIV style="FONT: 10pt arial"><B>Subject:</B> RE: [lbo-talk] Hidden subsidies to Wal-Mart</DIV> <DIV><BR></DIV>This discussion depends on assumptions on the following<BR>that nobody has indicated, one way or the other:<BR><BR>is the labor market competitive for the sector in question<BR>do employers hire based on the value of the marginal hour or marginal worker<BR>do workers supply labor based on the returns to the marginal hour or<BR>otherwise<BR>what are the elasticities of supply and demand<BR><BR>You may think that econ theory is b.s., but the fact is<BR>that a coherent answer to the question of who is subsidizing<BR>who depends on the implicit answers to the above.<BR>No theory is worse than mainstream theory.<BR><BR>For instance, suppose two firms<BR>selling the same product are located next door to<BR>each other, with equal costs of labor, one providing<BR>health insurance, the other not.  It does not follow<BR>that the no-fringe firm must have an advantage over<BR>the other.  The opposite could be the case.  The<BR>workers' with the untaxed fringe benefit have greater<BR>after-tax income if they value a dollar spent on their<BR>health insurance the same as cash, and this could induce<BR>more work effort for the same cost to the boss.<BR><BR>You might say that's the wrong comparison.  The right<BR>one is two firms paying the same money wage, with<BR>one providing a fringe in addition.  But why would<BR>that happen.  Is there a different species of boss<BR>in each firm?  Why did the older firm provide the<BR>fringe?  Because its owners were less interested in<BR>making money?  Bosses used to be less rapacious, in<BR>the good old days?<BR><BR>Alternatively, if there is a range of feasible wages for<BR>the employer and employee, with the balance of power<BR>determining who gets what, then public benefits are<BR>just gravy for those fortunate enough to get them.<BR><BR>Another factor is that Medicaid is not work-conditioned.<BR>You don't have to work to get it, hence the employer<BR>has no leverage from it.  If your work is worth X to the<BR>employer, you can hold out for X or find somebody else<BR>who will pay X.  The only way you could not get X is if<BR>employers conspired to pay you no more than X minus your<BR>cost for an equivalent to Medicaid.<BR><BR>Other stories are possible too.  I don't know which one is right.<BR>I do know that empirical research shows work-conditioned<BR>benefits like the EITC raise worker income.  If they don't,<BR>then as somebody said there is no value to them for the<BR>worker.  By the same token, some economists think a<BR>minimum wage increase just gets washed away in price<BR>increases, so why bother.<BR><BR>I think it's possible to mistake the dog's tail from<BR>its teeth.  Walmart chooses cheap labor standards and<BR>an anti-union environment.  Absent sufficient labor<BR>resistance, it will keep things that way.  I doubt<BR>that public benefits or the relative beneficence of<BR>other firms makes any difference.<BR><BR>Walmart is not competing with walmart-sub-two.  Walmart<BR>is replacing an mixed array of different business firms<BR>because people will buy their shit, communities will<BR>tolerate their introduction, and the gov tolerates their<BR>abuse of labor law.  I think comparisons of<BR>Walmart with Ralph's and such are apples-to-oranges.<BR>Methinks if health had already been completely socialized,<BR>or if nobody provided health insurance,<BR>Walmart would still be steamrolling its way forward on the<BR>backs of other firms.<BR><BR>People seem to be looking for a gadget fix, when the<BR>only solution is political power.<BR><BR>mbs<BR><BR><BR>___________________________________<BR><A href="http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk">http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk</A><BR></BLOCKQUOTE></DIV></BODY></HTML>