Saturday, January 14, 2006

Median Voter

In responding to a law passed at the Maryland legislature that requires Wal-mart to raise its spending on employee health care, Arnold Kling at Econlog wrote:

"Economics says that ultimately this 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.

How can the state of Maryland justify this interference with how Wal-Mart chooses to compensate workers?

1. The legislators may believe that they know better than workers what is good for them." Read the post here.

My response is, what about the role of voters here? Afterall, aren't legislators' actions merely a reflection of what their voters want? So Arnold's justification no.1 cited above may be rephrased as follows.

The voters may believe that they know better than Walmart employees what is good for them.


1. This may imply that the median voter does not work for Walmart. For if he does work for Walmart, presumably he will not support a restriction on freedom of contract that will harm himself. The median voter may even think that he has done a good job in helping push for a law that will improve the welfare of unskilled workers (expressive voting?).

2. Voters are stupid. That is to say even if the median worker does work for Walmart, not equipped with the knowledge of economics, he may mistakenly believe that by asking the government to press for Walmart to raise its medical spending, Walmart will not do anything to offset this and his overall compensation package will indeed rise.

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