If I have a pet peeve with economists, it's arguments like this:
Economics says that ultimately this [the Maryland law forcing Wal-Mart to pay 8 percent payroll into health benefits] will reduce the wage income of low-skilled workers in Maryland. That is, Wal-Mart is not going to suddenly increase compensation for low-skilled workers. It either has to cut wages, cut hiring, or both.
Bull. Wal-Mart could also pay executives less money or raise prices on certain items by a couple pennies. This is the same argument made by tax-cutting Republicans against entitlement programs: given our revenue situation, we've got no choice but to cut benefits. It's as if the only way to bring revenues and spending into line is fiddle with spending, revenues being an immutable fact of nature handed down by God at Sinai.
But so far as I know, nothing Moses got dictated the price for pickles or the percent of GDP going towards taxes. You can increase revenues, you can raise taxes, you can hike prices. And considering the minimal difference between Wal-Mart's current spending on health benefits and the 8 percent mandate, the price hike required would be minimal. Meanwhile, economists seem unable to even countenance the idea, much less argue against its wisdom. But their strange economic aphasia aside, Wal-Mart doesn't have to cut employee compensation. They can just -- gasp! -- make a bit less in profits, or increases prices imperceptibly. If they take the more punitive route, that's their decision, not a law of nature.
Also, I should probably direct you to my post on the actual Maryland law, which I think atrocious policy but very smart politics. You're all going to disagree with me, so feel free to flame me in comments.
