Robert Reich’s op-ed in today’s NYTimes on Wal-Mart has turned some heads. Reich argues that ultimately the consumers have chosen Wal-Mart, and no one forced them to do so. It’s an interestingly balanced argument from someone as staunchly pro-labor as Reich.
He gets at the heart of the debate here:
But you and I aren’t just consumers. We’re also workers and citizens. How do we strike the right balance? To claim that people shouldn’t have access to Wal-Mart or to cut-rate airfares or services from India or to Internet shopping, because these somehow reduce their quality of life, is paternalistic tripe. No one is a better judge of what people want than they themselves.
The problem is, the choices we make in the market don’t fully reflect our values as workers or as citizens. I didn’t want our community bookstore in Cambridge, Mass., to close (as it did last fall) yet I still bought lots of books from Amazon.com. In addition, we may not see the larger bargain when our own job or community isn’t directly at stake. I don’t like what’s happening to airline workers, but I still try for the cheapest fare I can get.
The only way for the workers or citizens in us to trump the consumers in us is through laws and regulations that make our purchases a social choice as well as a personal one.
What I think he means is that we need to use government to balance the social lever with the individual lever. He’s arguing, in a sense, that there’s a market failure and therefore it’s appropriate for government to balance.
There’s a term in economics called Perfect Competition, a theoretical holy grail. It’s like how high-school physics problems ignore the effects of air resistance on gravity. It makes it easier to model. For Perfect Competition to exist, consumers must have “Sufficient Knowledge.” But how many of them know that Wal-Mart is increasing their tax burden by forcing more working poor onto the welfare rolls? That seems like a key piece of knowledge.
Until every consumer is informed as classical economics asks them to be, I’ll stick with allowing the government to regulate behemoths like Wal-Mart.
Now Playing: Episode 350
Al Gore’s plan for energy independence, Obama’s trip overseas, and finally, the bailout of Fannie and Freddie.
Links Mentioned: Al Gore’s plan … articles on carbon-neutral communities in The New Yorker and the NYT.
I’ve been debating making a comment on this, but after a day of thinking about it I just want to add something to this discussion. Keep in mind this is coming from someone who does medical billing for a pediatric environment. When ever medical benefits are effected by the federal government the kids are the first to feel it. Most of what is covered by insurance is federally governed. A bunch benefits for kids were cut last year, I’d just hate to see it continue.
The reason I’ve been so apprehesive of making a comment though is that Jonathan Weismen didn’t really define exactly what benefits would be reduced. Or if he did I missed it. So if I misunderstood, please feel free to correct me.
And thanks for bringing back comments!
Rachel — to answer your question, I think the Diamond/Orszag plan to which Weisman refers would cut social security benefits more for the wealthy. He writes, “nd under a complex formula, cuts would hit more affluent retirees the hardest, while benefits for low-wage workers would rise.”
About children, he says, the plan would be, “more generous for poor workers, widows, the disabled and children who survive the death of their parents.”
But nothing’s going to affect kids directly… it’s all about old people.