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An economic warning
Posted by: McQ on Thursday, January 26, 2006

A couple of economics professors from Maryland, Steve Hanke (Johns Hopkins) and Stephen J.K. Walters (Loyola) did a little computing in an attempt to quantify the impact that Maryland's recent "Wal-Mart" bill will have on the state's economy.

As you recall, the Maryland legislature passed a bill over the governor's veto which required all companies in Maryland with 10,000 employees or more and not already doing so, to spend at least 8% of their payroll on health care or send any shortfall into a special state fund.

It was a collaboration between the Democratically controlled legislature and the labor unions. Since the latter had been singularly unsuccessful in unionizing Wal-Mart, they turned to the government to do what they weren't able to do themselves. In fact, the Service Employees International Union actually helped draft the legislation, officially known as the "Fair Share Health Care Act".

But now it comes time to pay the piper. Earlier today I pointed to an example of how the city of Chicago had outsmarted itself when it came to a new Wal-Mart in a particular area of the city.

As it stands now with Maryland, that was really small potatoes. Because of the new legislation, it seems all but certain a new distribution center slated for construction in Maryland will not be built. Let me let the good professors break down what that means to the people of Maryland:
Unfortunately, in Somerset, the new law looks more like a body blow than a "swipe." The rural county is Maryland's poorest, with per capita personal income 46% below the state average and a poverty rate 130% above it. Somerset's enduring problem is weak labor demand that greatly limits its 25,250 residents' economic opportunities.

There are just 0.8 jobs per household in Somerset, barely half the 1.5 figure that applies to the rest of the state. Somerset's top 10 list of employers features sectors like food services (average annual compensation per employee: $9,637), poultry and egg production ($14,320) and seafood preparation and packaging ($19,190).

It is hard to exaggerate how much the planned distribution center might have meant to Somerset's economy. Using an input-output model, we forecast the "ripple effects" of the new income and spending that could have emanated from Wal-Mart's facility as follows:

• The center's 800 employees would have created an additional 282 jobs among "upstream" suppliers and "downstream" retailers and service establishments; all told, the center would have boosted county employment by 14% and private-sector employment by 20%.

• Total annual employee compensation in Somerset would have risen by $46.5 million, or 19%.

• Annual output (or "gross county product") would have risen by $128.3 million, or 19%.

• State and local tax receipts would have increased by $19.2 million annually; this would include $8.5 million in property taxes, $5.6 million in sales taxes, and $1.4 million in personal income taxes.

Those losses, though dramatic, probably understate the full extent of the damage in this case. They do not include forgone employment and income from construction of the facility and related infrastructure improvements. What is more, Wal-Mart's tentative plans for a second distribution center in Garrett County, in mountainous western Maryland, also appear dead. Garrett, with a poverty rate that is 70% above the state's, is only slightly better off than Somerset.
Call it the wages of the law of unintended consequences, but it seems incredibly short-sighted to be taking shots at a company which, to date, has provided 15,000 jobs to the state and was promising 800-1600 more jobs, plus the upstream and downstream jobs Hanke and Walters mention.

But then, that's what often happens in the world of special interest politics where the business of the people the legislators are elected to represent is often ignored in favor of the lobbyists and political power brokers.

It doesn't just happen in Washington DC and it damn sure isn't exclusive to Republicans. And, as usual, its those who can stand it the least that the thoughtless politicians end up hurting the most.

Congratulations Maryland legislature. I understand the folks in Somerset County would like to throw a barbeque for you guys. They're planning on roasting a few pigs and it just won't work well if you don't show up.

Oh, and for the 33 states thinking about drafting similar bills?

Take heed.
 
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But then, that’s what often happens in the world of special interest politics where the business of the people the legislators are elected to represent is often ignored in favor of the lobbyists and political power brokers
You’re right, McQ. And while we are at it, what about those laws against child labor? What kind of sick person would be behind a law that says a 10 year-old can’t put in a 40 hour work weekk? After all, the business of the people is to survive - and if they need to take the kids out of school to make ends meet, what business does the government have in that decision?

Oh - and by the way - you are obviously mainlining heroin if you believe that Wal-Mart is concerned with the "business of the people" and the groups opposing Wal-Marts efforts represent the political power brokers.

Again, are you high?

Wal-Mart is the most ruthless corporation on earth. They don’t need the help of bloggers.

Seriously, what is going on, McQ? Are you despressed? Mad about something? You are literally being insane. You are literally suggesting that Wal-Mart - yes Wal-Mart - is some kind of victim.

That is crazy. And no, to answer your question, I do not believe that you are mainly concerned with the poor people who apply for jobs at Wal Mart. I have read your diatribes for years. I know the poor are not your main concern. You will of course contend otherwise.
 
Written By: mkultra
URL: http://
Since Wal-Mart won’t provide health care for its employees I assume you support national health care instead, right? Or at the very least you think the state of Maryland should pay for the healthcare of Wal-Mart workers, as other states are forced to do right now. Oh, wait a minute, I bet you support that wonderful Health Savings Account idea - well, until you actually need major surgery or something else that breaks the little HSA bank. Then there’s bankruptcy! Hooray!!!

 
Written By: Elrod
URL: http://
Even for Q&O this was a frothing rant McQ. You actually think the workers of Maryland are so short-sighted that they would prefer to have a McJob at Wal-Mart at any cost, rather than see their elected representatives promote their interests ?

As for your comment about the other 33 states - you miss the point by a country mile. What will Wal-Mart do when ALL states have the same legislation ? That’s right, they’ll slink back to Maryland, where they can hire folks for peanuts.
 
Written By: Blewyn
URL: http://
Actually this should serve as a warning to corporate interests who want nationalized healthcare to help level the playingfield internationally.

When Ontario eliminated an annual fee for its participants in its provincial healthcare, it did so by creating a payroll tax which just happen to triple the annual fee. The government (Democrats) will never put the tax burden for nationalized healthcare entirely on the US voter (although indirectly they still carry it one way or another). Employers will get as much if not more of the bill than they do now.
 
Written By: John
URL: http://
Strangely enough, neither mkultra, Elrod nor Blewyn actually addressed anything of substance in McQ’s post. Non-sequiturs and straw men all the way.
 
Written By: Martin A. Knight
URL: http://
My son worked for Walmart for 3 years while he went to college. It is a lie that they do not provide benefits. Their benefits are on a par with the rest of Cal. PART TIMERS get reduced or no benefits. A large minority (but still less than half) or their workers are part time. To extrapolate from a minority of the work force to the whole work force is a lie.


In the 3+ years my son worked there his pay went up 300%. When he left Walmart he had $20,000 worth of stock options. Options that were available to each and every worker. Not bad for a 20 year old kid with no prior work experience and no "skills".


Much of what the MSM/DNC says about Walmart is disingenuous. Fabricated to support the big union bosses. Again we can not trust the MSM/DNC to report the facts. Rathergate was not an aberration.
 
Written By: Rodney A Stanton
URL: http://
Right, having no job is better than a job without full benefits.

Better to live off the government teat, then work for a living.
 
Written By: Keith, Indy
URL: http://
So, MK...
Are you REALLY putting child labor to a contract of employment between a compitent adult and a company on the same level of evil? Seems a bit of an irrational, alarmist stretch.

Does the latter really need government intrusion?
Does it really need union intrusion?

Apparently, you want to see what is happening to the American auto makers to happen to all forms of busienss at the hands of an intrusive government and a union or three? I ask, MK, because frankly it looks from here like your biggest bitch is that those entities will lose power to the individual.

 
Written By: Bithead
URL: http://bitheads.blogspot.com
If I was Walmart the first thing I would have done is fire about half my employees, cut store hours appropriately and put big signs in the store that thanks to the MD legislature for the stab in the back.

 
Written By: retired military1
URL: http://
You’re right, McQ. And while we are at it, what about those laws against child labor? What kind of sick person would be behind a law that says a 10 year-old can’t put in a 40 hour work weekk?
None of which has anything to do with Wal-Mart. But then, it’s nothing less that what I’d expect from you.

The cleaners called, mk, your clown suit is ready for you to pick up.
 
Written By: Steverino
URL: http://steverino.journalspace.com
You’re right, McQ. And while we are at it, what about those laws against child labor?
What’s this ... red herring 540 or 541.

See this is what I mean, Pogue ... within the first few words of a comment, MK tries to divert attention from the subject to something which isn’t even under discussion. And then, I’m sure, wonders why, for the most part, I ignore his comments.
 
Written By: McQ
URL: http://www.qando.net/
Since Wal-Mart won’t provide health care for its employees I assume you support national health care instead, right?
Where does it say Wal-Mart won’t provide health care for it’s employees? And even if it didn’t why would that then mean I support national health care?
I bet you support that wonderful Health Savings Account idea
Actually I do. And you might as well if you read anything beside the negative propaganda from the left. Here, try this for a change.
 
Written By: McQ
URL: http://www.qando.net/
"What kind of sick person would be behind a law that says a 10 year-old can’t put in a 40 hour work weekk? After all, the business of the people is to survive - and if they need to take the kids out of school to make ends meet, what business does the government have in that decision?"

Uhhhhh, yeah....that’s precisely what would have happened if Wal-Mart had built that center isn’t it MK?

As long as you’re inventing things whole-cloth though, why not go for the throat?
"What kind of sick person would be behind a law that prevents plantation owners from sending their slaves down to Wal-Mart to work 40 hours more every week after they’ve done their full time out in the fields every day?. After all, the business runs best if we keep those slaves as productive as possible - and if a few of the weak ones die off from being driven too hard what does the government have to do with that decision?"

I suppose you’re in love with Ikea Corp though, and probably watch Captain Planet cartoons to reminded that the main goal of corporations is to rape, pillage, plunder and pollute the earth. Well, evil corporations of course, because I’m dead certain you do business with corporations every day, like perhaps your internet provider, or the guys who built your monitor, cpu, hard drive, wiring, deliver your electricty, own the trucks that send the groceries to the incorporated store where you buy your allegedly organic vegetables and gently killed fuzzy animal meat.
Only poor people work and shop at Wal-Mart. Screw them! They should get more goverment benefits and shop at better stores anyway! Damn ungrateful the way they show their thanks by getting a job at Evil Wal-Mart and advancing their standard of living without your handouts.
And it’s all Wal-Mart’s fault. Damn company is nearly as evil as George W. Bush and Carl (Satan) Rove.
 
Written By: looker
URL: http://
Even for Q&O this was a frothing rant McQ. You actually think the workers of Maryland are so short-sighted that they would prefer to have a McJob at Wal-Mart at any cost, rather than see their elected representatives promote their interests ?
Hilarious. Did you even bother to read the analysis by the economists in question?

Uh, the 800 in the county in which the plug would be pulled most certainly would (not to mention the 800 promised in a second county). And, you know, the fact that the county’s total compensation and annual output would have risen by 20% makes them a little more than McJobs, doesn’t it?

But it’s Wal-Mart ... the new bete noir of the left, the company that’s replaced McDonalds or KFC as the hated symbol of Corporate America (well unless you can work Haliburton into the conversation).

Just because you’d turn up your nose at employment at Wal-Mart doesn’t mean a whole bunch of others wouldn’t love the opportunity to work there ... see Chicago’s 25,000 applications for a single store.
What will Wal-Mart do when ALL states have the same legislation ? That’s right, they’ll slink back to Maryland, where they can hire folks for peanuts.
Or they’ll build their distribution sites in the remaining states which are friendlier to business and truck the stuff in. It’ll most likely be more costly for Marylanders but with Wal-Mart’s volume they’ll be able to keep it just below competition.

An all-around win-win for MD, huh Blewyn?

Speaking of missing things by a mile ... no problem at all by with special interest groups writing legislation if you agree with it huh?

I assume, based on that, you have no opinion on the Abramoff business.
 
Written By: McQ
URL: http://www.qando.net/
Strangely enough, neither mkultra, Elrod nor Blewyn actually addressed anything of substance in McQ’s post. Non-sequiturs and straw men all the way.
That’s business as usual here. They rarely are able to mount a strong counter argument so they usually try to immediately change the subject.
 
Written By: McQ
URL: http://www.qando.net/
Judging by the comments, I’m wondering how many of your readers realize this is a libertarian blog. Particularly the person who called Wal-Mart the "most ruthless corporation on earth." I find it amusing that most people completely miss the point on this whole topic. As soon as someone defends or attacks Wal-Mart as a corporation, they’ve already missed the point of the travesty that occurred in Maryland.

More debate on Wal-Mart:
http://www.atlasblogged.com/archives/2006/01/dragging_brown.php

 
Written By: rammage
URL: www.atlasblogged.com
Judging by the comments, I’m wondering how many of your readers realize this is a libertarian blog.
Oh, some leftists do indeed realize it’s a libertarian blog, and a relatively successful one at that. That’s why they’re doing their best to sludge up the comments with irrelevant nonsense. It’s an attempt to affect the quality and success of the blog.

There are plenty of valid criticisms to be made of WalMart. I think the quality of their merchandise is so poor that it’s a last resort for my shopping. And any company that wants to survive long term should think twice about being a vendor to WalMart, because when you become dependent on their business, they will squeeze you mercilessly. (It’s one of the ways they keep prices so low.)

But you don’t see the leftists talking about stuff like that. Because they don’t care if it’s another businessman that gets screwed.

And they don’t want to have anything resembling a relevant, balanced conversation. For example, they have no interest in even acknowledging the positive aspects of the WalMart. One of my employees married a Ukrainian immigrant a few years ago. She thought WalMart was heaven on earth. The idea that she could just push around a cart and buy pretty much whatever she wanted just astonished her.
 
Written By: Billy Hollis
URL: http://
The end result for me of my legislature’s actions against Walmart were to begin shopping there, a store I had never visited. I love it! Great prices and selection. The more my lefty neighbors bitch about the company, the more I expect to spend there. I have also noticed the Baltimore Walmarts get a lot of low-income shoppers, who I am sure are there for the good prices too, and don’t give a crap about this stupid health care issue.

Interestingly, in passing this legislation, the Maryland General Assembly seems to have exempted Johns Hopkins University, which is a gigantic employer in the state. They also missed the Giant food company, but that’s because it is unionized — and that probably is the real issue here. My left wing legislature cannot stand Walmart’s anti-union stance.

Steve Walters was my econ prof in college. I wonder how he can tow a right or libertarian line at liberal Loyola College these days.

Go Ravens!
 
Written By: chris
URL: http://
I wonder how he can tow a right or libertarian line at liberal Loyola College these days.
Economics is economics, Chris.
 
Written By: McQ
URL: http://www.qando.net/
Gee, someone else who doesn’t get the free-market...

http://www.indystar.com/apps/pbcs.dll/article?AID=/20060127/NEWS02/601270534/1006/NEWS01
Larry Griggers, the managing partner and majority owner of Indianapolis’ two Ruth’s Chris steakhouse franchises, had decided to ban smoking and keep children. But he feared he’d lose business to competitors that allowed smoking.
"The law today is unfair, because it would displace revenue from one place to another," Griggers said. He was worried enough to poll nearly two dozen restaurants. Griggers said he found they’d rather have a broader ban than try to choose one kind of customer over another. Then he approached Gibson with his idea for an amended statute.
 
Written By: Keith, Indy
URL: http://
MK - once again coming strong with his best Billy Madison impression - to which the priciple replies - At no point in your rambling, did you even come close to an intelligent thought. I award you no points, may God have mercy on your soul.
 
Written By: meagain
URL: http://
That is humorous Keith. Someday, some restaurant owner is going to decide he doesn’t want to be open past 8pm and rather than take the subsequent loss of business, he’ll urge the government to make every business close at the same time.
 
Written By: Unknown
URL: http://
Perhaps, Griggers would like to have a law passed that would normalize the amount of money any resteraunt could charge for its meals. I mean, then they don’t have to be in the pesky business of choosing to serve those with less income, or more income...

I feel a letter to the editor coming on... :)

And it would be humorous, if it weren’t entirely true.

This business owner is going to push through a policy so that he wont loose customers because of the business choices he was forced to make by the City Councilmen.
 
Written By: Keith, Indy
URL: http://
Yes, I wish he would spend his energy fighting the original ban instead. That is the real problem.
 
Written By: Unknown
URL: http://
retiredmilitary1
If I was Walmart the first thing I would have done is fire about half my employees, cut store hours appropriately and put big signs in the store that thanks to the MD legislature for the stab in the back.
Gotta agree with you on this one. Can you imagine the howls of anguish from Annapolis if Wally-world did just that? Or if cigarette companies started boycotting states / cities with very high tobacco taxes?

I don’t think the politicians and their supporters could even understand it if Wally-world pulled out of Maryland. After all, they seem to think that businesses exist for the sole purpose of providing people with jobs and benefits, and providing government with tax revenue. The idea that a company might pack up and leave (or even go out of business) due to excessive government regulations and taxation is beyond their comprehension.
 
Written By: docjim505
URL: http://
How does one reach adulthood and remain oblivious to the trade-offs that surround us every single day? MKultra, can you help me out?

Woody Allen used to do a stand-up routine. He said that one day he was walking home and a car pulled up next to him. The man in the car asked him if he wanted to go to a place where everybody was fairies and elves and he could have all the candy he could eat. Woody said he was home on break from NYU, so he said sure...
 
Written By: Joe Miller
URL: http://
Someday, some restaurant owner is going to decide he doesn’t want to be open past 8pm and rather than take the subsequent loss of business, he’ll urge the government to make every business close at the same time.
Over the last 20 years or so in the UK, the amount of trading allowed on a Sunday has steadily increased, and by today there is little difference for many people between Sunday and any other day of the week. Religion aside, many argue that it is unhealthy for a society to live in this ’always on’ manner, that a weekly ’day of rest’ lends a natural rhythm and sense of shared experience to people’s lives.

If we let business owners - who live according to their own timetables and work as much or as little as they want to - dictate the hours the rest of us must work, then we will work all the time, and have no lives.
 
Written By: Blewyn
URL: http://
Hilarious. Did you even bother to read the analysis by the economists in question?
What ’analysis’ ? I read the WSJ article, if that’s what you’re referring to, but it’s not an ’analysis’, it’s just an opinion piece. The only facts presented are those which support the opinion.
Uh, the 800 in the county in which the plug would be pulled most certainly would (not to mention the 800 promised in a second county). And, you know, the fact that the county’s total compensation and annual output would have risen by 20% makes them a little more than McJobs, doesn’t it?
Hardly. The vast majority of them will indeed be McJobs, with a few management jjobs skewing the wage bill higher. Why else would Wal-Mart want to be there ?
But it’s Wal-Mart ... the new bete noir of the left, the company that’s replaced McDonalds or KFC as the hated symbol of Corporate America (well unless you can work Haliburton into the conversation).
These companies are hated because they represent the failure of the American social contract - which is that you can dream to succeed. They each dominate markets that are effectively impenetrable to Joe Yank, and they each reduce the quality of American lives by homogenising the available product. Ironic that you should support companies that effectively make the American living experience more like communism, where everybody gets the same, low-quality product.

Answer me this - in what way is allowing the owners of large established corporations to dominate markets by leveraging their economies of scale and influence different to Stalin and his cronies living in luxury off the backs of the Russian people ?
Just because you’d turn up your nose at employment at Wal-Mart doesn’t mean a whole bunch of others wouldn’t love the opportunity to work there ... see Chicago’s 25,000 applications for a single store.
There are also many people who would love to work for themselves selling cocaine, heroin etc But we don’t let them. In a democratic society, the electorate have the right to dictate what goes on within their borders, and how businesses can operate. The fact that some Marylanders would have been glad of the Wal-Mart jobs doesn’t mean that everyone in Maryland must accept it as a done deal. Maybe they decided there were enough low-wage jobs in the state, that they needed to slow down the formation of a low-wage manufacturing economy in order to prevent the skewing of the economy towards low-cost services. Maybe they have a large white trash problem and don’t want to encourage it. Maybe Maryland has a healthy trucking distribution network that would have suffered as a result of the local distribution centre. Whatever it is, the people of Maryland have the right to dictate what goes on in their own state, and the WSJ article is simply a wail from a WS lapdog because the shareholders of Wal-Mart aren’t getting their own way.

No mention of where Wal-Mart eventually chose to put their distribution centre, or why.

 
Written By: Blewyn
URL: http://
I don’t think the politicians and their supporters could even understand it if Wally-world pulled out of Maryland. After all, they seem to think that businesses exist for the sole purpose of providing people with jobs and benefits, and providing government with tax revenue.
They DO. They are allowed to operate for these reasons alone, and as reward are permitted to make a profit for their owners.
 
Written By: Blewyn
URL: http://
"Whatever it is, the people of Maryland have the right to dictate what goes on in their own state, and the WSJ article is simply a wail from a WS lapdog because the shareholders of Wal-Mart aren’t getting their own way."

Then maybe they should have let ’the people’ write the legislation eh? Instead of "Service Employees International Union". Or are you here to be a lapdog of the Service Employees International Union defending their right to legislate what they cannot negotiate.

As for this kind of observation...
"Maybe they have a large white trash problem and don’t want to encourage it."
tell you what, change the color in that comment, see if it still sounds okay to you, and get back with me.

and this last bit is totally priceless -
I don’t think the politicians and their supporters could even understand it if Wally-world pulled out of Maryland. After all, they seem to think that businesses exist for the sole purpose of providing people with jobs and benefits, and providing government with tax revenue.
They DO. They are allowed to operate for these reasons alone, and as reward are permitted to make a profit for their owners
Ah, I see, city government is established, and then we bring in homeowners to provide workers and businesses to provide work. I was confused about how that worked. I thought small communities grew up in areas that lent themselves to producing goods and services and eventually enlarged their community government to provide services to the community. Silly me, obviously it’s the other way around.
 
Written By: looker
URL: http://
Me:
I don’t think the politicians and their supporters could even understand it if Wally-world pulled out of Maryland. After all, they seem to think that businesses exist for the sole purpose of providing people with jobs and benefits, and providing government with tax revenue.
Blewyn:
They DO. They are allowed to operate for these reasons alone, and as reward are permitted to make a profit for their owners.
I rest my case!

Businesses exist for the sole purpose of making a profit for the owner(s). Jobs are a by-product of this, simply because labor is required to produce goods or services that people want. If it was possible for a business to profitably provide a good or service without a single employee, this would happen. Indeed, it DOES happen: think of how many small businesses exist where the owner is the sole source of labor. They are under no obligation to hire other people, are they?

One can even make the argument that every person who works is a business: his "product" is his ability to perform labor, which he sells to an employer for the highest price (in terms of salary and benefits) he can get.

Government’s only role in this (except in command economies like communist countries) is, frankly, parasitic: it extorts some portion of the money made by each business in the form of taxes. We are accustomed to thinking of taxes as direct payment from business to government, but in the case of Maryland v. Wally-world, the "tax" is indirect. Nevertheless, Maryland is de facto extorting money from Wally-world by forcing the company to pay a higher price for labor than it otherwise would.

What is the natural result of higher prices? Less is bought. Maryland just made it MORE unlikely that Wally-world will hire more workers.
In a democratic society, the electorate have the right to dictate what goes on within their borders, and how businesses can operate.
You’re quite right. But the electorate’s right to demand regulation of businesses does not mean that such regulations are wise. For example, the people of Maryland could demand that EVERY business in the state pay its employees $15 per hour and provide full medical and dental insurance for the employee and all his immediate family members. The result would be a massive rise in bankruptcies... and a labor "black market".

There has been mention of child labor laws. These are a result of noble intentions (and I agree with them), but were only made possible by the wealth generated by "greedy" companies that were employing the children in the first place. Consider those laws in the light of a VERY poor country: they would be devastating. When families face a daily struggle just to put bread on the table, preventing them from selling the labor of their children cuts into the total amount of money the family unit can make, and hence may well prevent them from having enough money to even buy food. This is a harsh reality that exists all over the world.
 
Written By: docjim505
URL: http://
Answer me this - in what way is allowing the owners of large established corporations to dominate markets by leveraging their economies of scale and influence different to Stalin and his cronies living in luxury off the backs of the Russian people ?
Your ignorance is staggering...but amusing. The difference is that no one is forced to work for any of the "large established corporations". Wal-Mart wouldn’t be in business if no one wanted to work there, but clearly, many people do.
 
Written By: Steverino
URL: http://steverino.journalspace.com
Then maybe they should have let ’the people’ write the legislation eh? Instead of "Service Employees International Union". Or are you here to be a lapdog of the Service Employees International Union defending their right to legislate what they cannot negotiate.
Only one organisation makes law in Maryland, and whether they choose to take advice from other organisations or not, is up to them - but the government makes the law, no-one else.
As for this kind of observation...
"Maybe they have a large white trash problem and don’t want to encourage it."
tell you what, change the color in that comment, see if it still sounds okay to you, and get back with me.
Fair point, let’s just say they might not want to encourage an existing trash problem.
Ah, I see, city government is established, and then we bring in homeowners to provide workers and businesses to provide work. I was confused about how that worked. I thought small communities grew up in areas that lent themselves to producing goods and services and eventually enlarged their community government to provide services to the community. Silly me, obviously it’s the other way around.
Government rules ALL of the land, doesn’t matter who gets there first.
 
Written By: Blewyn
URL: http://
Businesses exist for the sole purpose of making a profit for the owner(s).
Wrong. They exist in order to facilitate trade and employment and taxation. Profit for the owner is the payoff, tolerated because it is currently the most effective method of incentivising people to work and innovate.
Jobs are a by-product of this, simply because labor is required to produce goods or services that people want. If it was possible for a business to profitably provide a good or service without a single employee, this would happen. Indeed, it DOES happen: think of how many small businesses exist where the owner is the sole source of labor. They are under no obligation to hire other people, are they?
On a case-by-case basis you are of course correct, but on a macroeconomic level, what do you think would happen if there was a sudden and severe drop in employment levels due to innovations that facilitated reductions in headcount ? Quite apart from the obvious fact that your customers have to be earning money in order to pay you, do you think people would stand for it ?
 
Written By: Blewyn
URL: http://
One can even make the argument that every person who works is a business: his "product" is his ability to perform labor, which he sells to an employer for the highest price (in terms of salary and benefits) he can get. Government’s only role in this (except in command economies like communist countries) is, frankly, parasitic: it extorts some portion of the money made by each business in the form of taxes. We are accustomed to thinking of taxes as direct payment from business to government, but in the case of Maryland v. Wally-world, the "tax" is indirect. Nevertheless, Maryland is de facto extorting money from Wally-world by forcing the company to pay a higher price for labor than it otherwise would.
If the labour market was fair and competitive, I’d agree with you to an extent, but it’s not. Wal-Mart shareholders bargain collectively with individual workers. It’s free market workers with socialist shareholders.

With regards to the extortion angle - you could make this flimsy argument with regards to any legislation at all that increases the labour cost, including all safety and anti-exploitation legislation. If Wal-Mart doesn’t want to pay, they don’t have to.
There has been mention of child labor laws. These are a result of noble intentions (and I agree with them), but were only made possible by the wealth generated by "greedy" companies that were employing the children in the first place. Consider those laws in the light of a VERY poor country: they would be devastating. When families face a daily struggle just to put bread on the table, preventing them from selling the labor of their children cuts into the total amount of money the family unit can make, and hence may well prevent them from having enough money to even buy food. This is a harsh reality that exists all over the world.
Unbelievable. You just argued that child labour is OK for poor people. Does it occur to you that if no child labour was made available, then business would have no option but to employ adults, if they want to operate ?
 
Written By: Blewyn
URL: http://
Wrong. They exist in order to facilitate trade and employment and taxation. Profit for the owner is the payoff, tolerated because it is currently the most effective method of incentivising people to work and innovate
You really are ignorant, Blewyn. Do you not understand how businesses are formed?

A business is formed by an individual or group of people who have come up with an idea to supply a product or service that other people need. The business then buys the resources it needs — either raw goods from other supliers or labor from its employees — to produce its product.

Businesses do NOT exist in order to facilitate trade and employment and taxation, but trade is facilitated by the existence of businesses.

Look at it this way: if there were no government, would people continue to provide services to others? (Hint: the answer is "yes".)
but on a macroeconomic level, what do you think would happen if there was a sudden and severe drop in employment levels due to innovations that facilitated reductions in headcount
You discount the ingenuity and industriousness of the individual. All the horse-drawn buggy manufacturers, farmers, slide-rule manufacturers, oil lamp producers, etc, found employment in other careers. The creation of one industry led to the destruction of others and the creation of yet more industries (the automobile destroyed the horse-drawn carriage industry but created a need for gasoline and tire production, as well as augmenting the need for hotels and inns for travellers). If there were a sudden drop in employment levels in one industry, the workers from that industry would find something else to do. If you are suggesting that there would be a sudden large drop in employment in ALL industries simultaneously, I say that such a thing is utterly impossible in the American economy, and there is no point in debating it.
 
Written By: Steverino
URL: http://steverino.journalspace.com
You really are ignorant, Blewyn. Do you not understand how businesses are formed?
The point, Steve, is not about how or why they are formed by the entrepreneur, but WHY they are tolerated by the people ie why we, as nations, perpetuate the system of which private business is a component.
Look at it this way: if there were no government, would people continue to provide services to others? (Hint: the answer is "yes".)
But there IS government.....and it rules.

When one says "the purpose of business is to...." it doesn’t mean an individual business’s purpose to its owners, it means the purpose of business, to the country.
 
Written By: Blewyn
URL: http://
You discount the ingenuity and ......that such a thing is utterly impossible in the American economy, and there is no point in debating it.
You misunderstand my point. What I’m trying to get through to you is that the people - through the government - have the ultimate power to decide what goes and what doesn’t within their borders. Of course people lose jobs every day - but on the whole the level of change and the base level of unemployment remains within limits that a society collectively deems acceptable. Cross the line and those who own find themselves in the company of Mr Guillotine.

In the modern democratic context - where the people rule via the ballot box - the purpose of business is to provide goods, services, work and tax. Profit is an incentivising tool, a stabilising influence on society (in moderation), but not the raison d’etre of business as a whole.
 
Written By: Blewyn
URL: http://
)," but not the raison d’etre of business as a whole"

So just how long will these businesses stay in business once they stop making a profit? Businesses need money to pay their employees, suppliers, and owners, so where will this money come from when they are not making a profit?
 
Written By: timactual
URL: http://
Business doesn’t need government to survive, but government needs business.
 
Written By: MikeJ
URL: http://
Blewyn,

You don’t have a point. The government gets power lent to it by the people.

NO, Blewyn, businesses do NOT exist to provide work nor taxes. Businesses exist to provide goods and services that people want to meet their needs for a price that people are willing to pay.

When you get a job, you are selling your ability to provide something the employer wants at the price the employer is willing to pay. IOW you get paid EXACTLY what you are worth for that job at that place in time and space; even when you don’t see everything that the employer is paying you for your services. Businesses DO NOT pay taxes. Taxes are paid by the owners, operators, and customers; which is you in one form or another.

Government is not God, and is not good; therefore, it must be strictly limited to its proper size and function.
 
Written By: Charles D. Quarles
URL: http://spaces.msn.com/members/cdquarles/

 
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