Toward the end of a discussion of Wal-Mart’s profits and its worker’s wages Donald Johnson, posting at Body and Soul, makes an important point:
Reductio ad absurdums aside, maybe it is possible that there’s a multiplier effect of some kind here, but it apparently involves government social programs stepping in to take care of Wal-Mart’s inadequately-paid workers. So again, should the government go into the business of picking out efficient businesses and subsidizing them, or should it give health benefits to everyone?
Well, it should do neither.
First, if folks are choosing to stay employed at a low wage operation like Wal-Mart because, inter alia, the sum of their wages plus health maintenance provided by Medicaid disincents them to find more remunerative work then end the subsidy. You and I should not be supporting Wal-Mart’s low wages via tax supported health maintenance programs.
Second, Wal-Mart is not the only business receiving this wage subsidy they just happen to be the large easy target. Others are both small and large. In addition, there are plenty of other business subsidies many of which are much more direct such as sugar price supports, import restrictions, tarriffs, etc.
Third, government should not be taking the fruits of your or my labor and using it to subsidize either directly or indirectly any business using any criteria.
So let’s stop it now: no more sugar subsidies, no more tarriffs, no more Medicaid, real free trade, and so on.
Surely all those highly paid K-street folks who now make their living persuading our elected represrentatives their minions that their business should be subsidized with money that would be better used buying food, shoes and health care for our families can find useful work elsewhere at a wage appropriate to their productivity.