Wal-Mart Exposes The Corruption Of Power

Wal-Mart’s (WMT) “surprise” announcement earlier this week that it supports a law mandating employer-based health insurance continues to elicit wonder and awe.

When did the Bentonville Behemoth become one of the good guys?

As we argued earlier, they’re not. Employer-based health insurance continues to be a terrible idea, and the only reason Wal-Mart supports it is because it’s a way of raising costs on their competitors (80% of Wal-Mart’s own employees are currently eligible for some kind of coverage).

But beyond Wal-Mart’s own intentions, the whole episode really exposes the corruption of power — or more specifically, the way those in power become ideologically corrupted. For example, we were really stunned that the far-left centre for American Progress decided to lend its imprimatur to Wal-Mart, but then they’re an interest group and their job is to play politics.

But look at this post from highly-regarded and liberal WaPo blogger Ezra Klein, which is just so tortured in its attempt not to address the meat of the issue, which is Wal-Mart’s main motivations:

This is his reasoning for thinking that it’s a “huge deal” and a breakthrough that Wal-Mart has taken this stance

Take it from the Chamber of Commerce, which bitterly opposes the policy and released a statement blasting Wal-Mart. “Some businesses make the decision to use the government as a weapon against their competition,” said James Gelfand, the chamber’s senior manager for health policy. “We do not agree with this method — the government is a blunt instrument and taxes have extreme unintended consequences, negatively affecting the economy as a whole. We also recognise that momentum is moving against an employer mandate. The business community will be stepping up our advocacy as necessary, too.”

In otherwords, because a mainstream business group opposes this policy, it’s really a sign of progress that Wal-Mart supports it.

Klein doesn’t stop to wonder whether the Chamber might have a point, that using the government as “blunt instrument” and that the law might have “unintended consequences.”

But then he kind of acknowledges that Wal-Mart’s intentions aren’t exactly lily white, but for a weird reason:

This isn’t, of course, a story of altruism. By being of use to the administration, Wal-Mart ensures that its concerns will be heard and heeded. By publicly associating itself with health reform, the company repairs some of the damage SEIU and others have done to its reputation in recent years.

Yes, there is athe PR angle and obviously it wants its voice to be heard, but this is really the secondary issue.

He concludes with this howler:

But health reform isn’t supposed to be about altruism. And that’s arguably the most important message of this letter. Reforming health reform isn’t just some liberal president’s agenda item. It’s good business.

Yes, for sure it’s “good business” to use the law to raise your competitors’ costs (per the CoC’s complaint), but on a large scale, this isn’t the kind of good business we want to see. Good business is competing based on quality, price and whatever else. A system where “good business” is defined as getting the laws tailored to your competitors’ detriment is a horrible broken system.

Now granted, it’s an age-old one. Rent seeking and influence-buying is a problem that long precedes Obama; what’s fresh is that the left is embracing it full-throatedly. It’s a function of their being the power brokers, once again.

Meanwhile, you have right-libertarian types now taking aim at Wal-Mart (WMT) from all angles. UCLA law prof Stephen Bainbridge argues that the company was never the laissez-faire success story its supporters and detractors made them out to be. The company has always used government for its advantage:

I examined Wal-Mart’s dependence on government subsidies back in 2006 for TCS Daily, writing that:

… both the left and right implicitly cast Wal-Mart in the role of free market capitalist. What’s missing from the debate is the extent to which the Wal-Mart story really is the antithesis of laissez-faire capitalism. When you look under the rug, it turns out that Wal-Mart is a beneficiary of corporate welfare.

Infrastructure assistance in the form of new or expanded roads and utilities servicing the store location. Sales tax abatements. Property tax abatements. Income tax credits. Enterprise zone treatment for the store location. Eligibility for job training programs. Eligibility for tax exempt industrial revenue bond financing. Economic development loans and grants.In some cases, Wal-Mart benefits directly from such subsidies. In others, the benefits initially go to the real estate developer who owns the land on which the store is built, but are then passed on to Wal-Mart in the form of reduced rents or a lower land sale price. In 2005, for example, the Dallas City Council approved a plan “to grant the developer half of the sales tax revenue that the Lake Highlands Wal-Mart produces specifically for the city of Dallas, up to $1 million.” …

This is the new order, folks. It’s not really about who’s right or wrong (though that’s interesting), but about who’s in power. The current winners are eager to laud Wal-Mart when they’re helping to further an administration aim, and those out of power are dusting off old chestnuts about how the company is such a scoundrel. Switch the labels on the parties in a few year, and you’ll get the same thing, no doubt.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.