Retail giant Wal-Mart Stores
Many companies naturally oppose Wal-Mart's position; the National Retail Federation said it was "flabbergasted" by the retailer's move. Despite its historically bitter opposition to unions, Wal-Mart's even joined forces with the Service Employees International Union, sending a letter to President Obama in support of an employer mandate. Politics makes strange bedfellows, indeed.
Quit hogging the covers!
True, Wal-Mart's huge size can help it create big benefits for communities and the environment -- when it decides to do so. But let's apply a bit of healthy skepticism to the idea that Wal-Mart has suddenly taken an altruistic interest in its employees' health.
Wal-Mart says the mandate will only be effective if the government commits to reducing health-care costs for companies, so it's clearly hoping for favorable government intervention. Meanwhile, the Senate Finance Committee is considering an alternate plan that might result in more onerous health care requirements for companies hiring lower-wage workers. By backing "employer mandates" instead, Wal-Mart is rooting for the less costly of the two prospective plans.
Beyond its own bottom line, Wal-Mart may also hope that changes to the law will ultimately give it an advantage over its competitors. Consider Wal-Mart's massive size and annual revenue, then imagine the kind of squeeze an employer mandate for health care might place on smaller rivals' profitability and competitiveness. Bad news for them would be great news for Wal-Mart.
This sort of strategy, known as "regulatory capture," is an effective -- if sneaky -- way to get a leg up on rival businesses. For example, advocates of government regulation of tobacco hailed the recent signing of a landmark anti-smoking bill. But Altria
Tobacco's not the only business to benefit from some covert help from Uncle Sam. Witness the former attorney for Monsanto
Far less noble than it sounds
In my opinion, companies shouldn't need government prodding -- or handouts -- to improve their behavior. (More encouragement from consumers wouldn't hurt, though.) Happier employees do better at their jobs and create more satisfied customers, all of which enhances a company's competitive advantage in the long term. Starbucks
When Uncle Sam gets involved, even well-intentioned regulation can fall prey to favoritism toward the powerful and well-connected. That's not true competition, and however much it may boost favored companies' profits, I don't respect it. Despite its altruistic veneer, I think the Bentonville behemoth's being as ruthless as ever -- and hoping the government will lend it a hand.
Do you think Wal-Mart's finally turned toward the side of the angels, or is it just waiting to stick the knife in? Share your thoughts in the comment box below.
Celebrate Independence Day with some related Foolishness:
