LA, Wal Mart, And Dynamism

I’m really glad that Kevin Brancato has written this post on how the city of Los Angeles is going to try to keep WalMart from building within the city limits. I also absolutely love his opening two sentences:

In contrast to The Washington Post, T&B believes that people living inside the City of Los Angeles have diverse and conflicting voices; it is the ruling class who has the power and desire to tell Wal-Mart to get lost. In particular, it is the city government that wants to ban Wal-Mart Supercenters; we have little idea what the people outside of government actually want.

Amen, brother! After lobbing a well-deserved flame at economists who will sell their credentials, he follows up with a truism if ever I heard one:

This calls for a reminder: Governments are not populated by truth-seekers.

Kevin’s done a great job of skewering the whole thing, and I recommend his post to you without reservation. I think he’s right, that if LA succeeds in keeping out Wal-Mart, the neighboring communities will benefit, because the Wal-Marts will get built there, and Angelenos will shop there. Either way, high-cost competitors with Wal-Mart will be facing competition. If LA wants to cut off their tax revenue nose to spite their union-sycophantic face, then they should not be surprised when Angelenos shop elsewhere.

3 thoughts on “LA, Wal Mart, And Dynamism

  1. Generally, I agree with Kevin Brancato’s analysis. But, isn’t their some truth to WalMart (McDonald’s etc) not paying health insurance benefits?

    Why should the rest of the country subsidize WalMart so that they can refuse to pay health insurance for their workers? Shouldn’t WalMart be including the cost of government paid health care in the price of the products they sell?


  2. [John, the following is substantially the same comment I made to this post on Businesspundit]

    WM does provide health insurance to its employees; this plan is described on page 23 of this study.

    WM pays 2/3 of healthcare premia, but requires employees to pay range of medium to high deductibles. This coverage has no limit on catastrophic care (which is capped under many plans).

    Even with such a large discount on health insurance, many WM employees opt for cash instead of health insurance.

    But note that approximately 90% of WM associates have coverage either through the WM plan or through a family member’s plan. The other 10% might be on the public dole, but I’d want confirmation of that before I accuse a wide swath of WM employees of refusing to pay doctors.

    But see also page 25 of this report (warning , BIG file), which states that employees must pay the full marginal cost of switching from an individual to a family plan–i.e. they pay for dependents themselves.


    Perhaps WM should increase the amount it pays from 2/3 to say 9/10, and cover dependents at that rate too? But shouldn’t WM then DECREASE wages for employees correspondingly, so as to keep profits and prices stable? If WM does so, are workers who previously refused to take health insurance better off if they now receive more of their wages in health insurance and less in cash?

  3. See also this excellent post by Dan Weintraub–“Health care for Wal-Martians“:

    [WM] does offer benefits, and it says that about half of its workers subscribe to them, which is about average for retail operations in America… A company VP quoted in the piece says Wal-Mart typically covers medical bills exceeding $100,000 for at least 800 employees a year, and 20,000 cases cost the firm more than $10,000 each. Wal-Mart has paid for more than 300 organ transplants in the past five years, each costing more than $1 million… The idea of health insurance, after all, is to prevent unexpected medical bills from bankrupting and devastating an individual. In this regard Wal-Martís coverage might be on the cutting edge. While it leaves individual workers responsible for routine expenses, Wal-Martís coverage steps in when things get serious and then covers everything, forever. Doesnít sound so bad.

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