Monday, October 24, 2005


You often hear criticisms of government for being paternalistic. But then you read in the article about Wal-Mart's new health care plan that
Even as they commended Wal-Mart for offering a more affordable health insurance plan, some industry watchers expressed surprise that the company waited as long as it did to offer a more affordable option. "We have a health care system in this county that assumes people will be covered by their employer," said Mr. Kahn [president of the Federation of American Hospitals]. "If the biggest employer in the country isn't providing some kind of affordable and meaningful coverage, that is a problem."
Either government decides to be paternalistic, or companies choose whether or not to be paternalistic. We might reject the premise: can't people make it on their own? Why do we need paternalism? Which I ought to argue. But let us assume it. Given that we desire to have a paternalistic entity in society, do we want it to be relying on companies that are ultimately responsive to profit-motive, or government that is ultimately responsible to voters? And we have this odd moment in policy where we reject the role of government, yet still desire paternalism. Reject government and reject paternalism, but we can't reject government and still want paternalism; if we do, we are bound to be disappointed.

We might, though, question the disinteredness of Mr. Kahn's remarks, given his employer.


Blogger henry said...

In this case, a company's decision to be paternalistic is more a product of market forces than anything. When the labor market is tight, company's are more than willing to be paternalistic. Right now, there's an oversupply of unskilled labor; thus Wal-Mart is reducing their compensation. So maybe if we just get other economic policies right, the government won't have to worry about paternalism. If a lot of those unskilled laborers became skilled, for example, or if the labor market was tighter.

6:50 AM  
Blogger Isaac said...

But there's an oversupply of unskilled labor and Wal-Mart is expanding benefits. Sure these benefits may not be so good, but they are being expanded.

This would count as an example of non-economic considerations determining actions. It was the social pressure that eventually got to Wal-Mart, I'd posit. Though you may well be able to spin a story combining reputation and/or something else that explains it in an economic framework. But this would be a total "just-so" story, lacking in interest.

12:12 AM  

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