REVIEW & OUTLOOK
Andy Stern ♥ Wal-Mart
What's behind the new Big Labor-CEO health-care romance?
As unlikely romances go, the match between Wal-Mart CEO Lee Scott and union chief Andy Stern ranks with Rosie and the Donald, or Dick Cheney and Pat Leahy. So the press was understandably abuzz this week when the antagonists joined with other business and labor types in Washington to announce a new coalition to work toward "universal" health care. What's really going on here?
We can understand Mr. Stern's joyful presence on the stage. The Service workers chief has made it his life's ambition to pass "national" (i.e., government-run) health care, and enlisting a couple of big shot corporate executives to his side gives the effort a political boost. Mr. Stern is nothing if not a shrewd operator, and he all but laid out his business co-option strategy last year on these pages. The presence of Hillary Clinton supporter John Podesta was another sign of his political calculation.
What is less clear is what Mr. Scott, Intel Chairman Craig Barrett and AT&T hope to get out of this liaison. Like Mr. Stern, they all realize that today's employer-based health insurance system is showing signs of strain. And at the level of self-interest, they might also agree with Mr. Stern that someone other than their companies should pay for their workers' health-care costs. But if they think they're buying some larger political reprieve by joining Mr. Stern, they're surely mistaken.
We'd have thought Wal-Mart's Mr. Scott, of all people, would know this. Mr. Stern is the man behind Wal-Mart Watch, the union-financed harassment operation that has made life miserable for the company across the country. He's berated Wal-Mart in particular for its lack of health benefits for employees, even though its rate of insured workers, at 47%, is higher than the retail industry average (most of the rest are insured through spouses, parents and the like).
Mr. Scott has already tried to appease these critics, retaining a bevy of Beltway and former Clinton Administration PR operatives. One of their bright ideas was to have Mr. Scott endorse a minimum wage increase, which wouldn't hurt Wal-Mart but would hurt its smaller, less-profitable competitors who can't afford to pay more. And the company made a media splash out of inviting Al Gore to Arkansas to inspect its "green" initiatives--most of which save Wal-Mart money in any case. We haven't noticed any reduction in anti-Wal-Mart union animus as a result.
As for health care, the stakes are far higher. The country stands at a policy crossroads on health care, and the choices aren't merely between the status quo and some gauzy concept of "universal coverage." At issue are the policy choices that would best provide that coverage while maintaining the incentives for innovation and high-quality care.
And on that score the political and intellectual divide is very wide. Mr. Stern knows what he wants, which is a steady march toward a government-run system. The alternative is to move, via tax and regulatory reform, to a more consumer-friendly individual marketplace.
More than a few American businesses are tempted to go the government route because it would allow them to toss their liabilities on the taxpayer. The Big Three car makers were among HillaryCare's most vocal supporters in 1993 for precisely this reason. And some CEOs are toying with similar notions now on grounds that it would improve their global "competitiveness."
But any money government spends on health care has to come from somewhere (read: taxpayers). Health care is a big reason that the overall tax burden is as high as it is in most of Europe. According to the OECD, the "tax wedge" as a share of all labor costs was only 29.11% in the U.S. in 2005. It was above 40% in most of Europe, and above 50% in France and Germany. These countries spend little on defense, so "national health care" and other social services explain the high tax burden. We haven't noticed these economies being especially "competitive" of late.
To his credit, Intel's Mr. Barrett spoke in favor this week of precisely the kind of market reforms that are needed. But he and the rest of the business community could do far more good if they started to educate Americans about the virtues of plans that devolve more health-care control to individuals. Most workers are unaware that the cost of providing them with health insurance is keeping their wages lower than they would otherwise be. One of the beneficial effects of President Bush's recent, and innovative, proposal would be to make that trade-off transparent.
As for Mr. Scott and Wal-Mart, Mr. Stern freely admits that a major goal all along has been to pressure Mr. Scott into endorsing national health insurance. Given this week's love fest, the union maestro might be forgiven for concluding he'd finally gotten his man. We hope we're not seeing a case of business Stockholm Syndrome in Bentonville.
