Gender & Equal Pay

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The left hates gaps. First it was the income gap. Now it’s the gender pay gap.

The argument goes like this. Women make 77 cents (or fill in any amount less than a dollar) compared to men. The 77 cents figure recently cited by the White House is erroneous according to strict numbers reported by the Bureau of Labor Statistics. Nonetheless, the inference is that of an unfair, male-dominated private sector that arbitrarily and systematically pays women less than men. But even if you want to make the broad generalization that women are victims of discrimination in the workforce, you have to be intellectually honest about the details. Proponents of legislation designed to combat this ostensible discrimination are not, because the facts just don’t work for them.

The first problem is with the calculation of the numbers. Without even considering job categories, it’s obvious that some people work longer hours than others. Historically, men tend to work more hours than women because women typically bear more of the childrearing and home responsibilities. I’m not suggesting that ALL men work longer hours than ALL women—we all know exceptions—but if we are comparing one group to another, we need only consider the averages. When you compare men working 40 hours a week with women also working 40 hours a week, the gap (according to the BLS) is 87 percent.

The second problem is job category. While most jobs are open to both men and women, the two sexes are not equally distributed. Women are disproportionately represented as grade school teachers, secretaries, nurses, and cashiers. Men are more likely to hold positions as firefighters, police officers, soldiers, and auto mechanics. Any serious look at pay differences should be within the same field and should account for obvious individual differences such as experience, education/training, and specific job-related skills. If you do not, you’re just comparing apples to oranges.

The third problem is that of individual choices, such as time off during a career. Studies suggest that pay gaps typically do not exist at the beginning of a career, but can emerge over time. Women are more likely to take time off to bear and raise children, and typically lose ground when they return to the work force. Others choose positions that require fewer hours or “job hassles”—distance from work, overnight travel required with the job, etc.—to accommodate this choice.  These jobs are more “family-friendly” and may pay a little less.

When all is said and done, women and men in the same jobs, working the same hours, with the same experience, and making the same types of career choices earn roughly the same. This should end the argument but it doesn’t. Many on the left claim a form of institutionalized sexism is still at work. For example, they claim that teachers and office workers earn less than many other professionals because most are women. While this theory is impossible to prove, it defies logic. If auto mechanics are paid too much and cashiers too little given the demands of their positions, then more women can train to be mechanics and cash in on the excess wages. Good mechanics are always in demand, and female job applicants with the right skills can have a rewarding career. Most women don’t make this choice, however. The differences in wages across jobs can be attributed to market forces.

But wouldn’t many auto repair shops discriminate against female applicants? I’m sure some in the industry might not give women a fair shot, but this could work the other way around as well. At the end of the day, devoid of government interference, the most successful businesses are the ones that find the best people. Any repair shop owner will tell you that competence drives performance, so anyone who discriminates gets what he or she deserves, less qualified workers.

The gender wage gap argument is easy to counter, but it still has an emotional appeal to many who would rather blame society and/or free markets for various job woes. “Equal pay” legislation is really about government control of employment decisions in the private sector. It’s but a leftist solution searching for a problem to solve. Talking about fixing the “problem” is a powerful political tool without a clear basis in economic reality.

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Is a college degree worth the investment?

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Most academics and politicians say yes and call for more funding and student aid to educate more students. They point to big income gaps between groups of Americans with various levels of education. But with record student loan debt and insufficient jobs in a lackluster economy, it’s difficult to justify the expense in all situations. More and more Americans are asking this question than ever before and for good reason, but the answer is not simple.

So why go to college in the first place? A college education consists of a combination of general education and career preparation. The general education part should help you understand the world in which you live and enable you to make more out of life regardless of your income. The career preparation part should give you the skills you need to enter a chosen field. General education is very important and is not done equally well at all schools. The general left-leaning bias inherent in many courses in arts and sciences is a real problem, but I’ll deal with that on another day. For now, let’s think about the career preparation part as the financial investment.

You can’t evaluate career preparation without considering majors. To put it bluntly, different majors prepare students for different jobs with different market prospects. Majors in areas such as science, business, and engineering offer relatively strong prospects—on average—while majors in the liberal arts are less likely to lead to more lucrative careers. I’m not suggesting that you major only in certain fields, but that you understand the likely outcomes after graduation. My point here is that you can’t consider the value of a college degree without considering the area of study. You’re not comparing apples to apples.

Is the degree worth the cost in time and money? Many recent studies attempt to calculate the average return on degrees from various colleges and universities. The April 5, 2014 issue of The Economist examines costs and job placement statistics, and reports that a degree from the University of Virginia leads the pack with an estimated annual return on investment of 17.6%. Shaw University is the lowest on the list, with an estimated annual loss of 10.9%. Read the story at www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better.

While it is true that some colleges are—on average—a better “investment” than others, there are two major flaws to studies like this. First, the amount a student actually pays to attend a given school can vary greatly, depending on scholarships, grants, and the like. Second, students who are better prepared for college academically and are better connected are more likely to earn more after school regardless of where they go. In other words, many Ivy League students come from connected families and are destined for a good job after graduation regardless of what they learn in school. Because there are more of these students at some schools than others, it can lead one to conclude that those schools represent a better “investment.” Again, you’re not really comparing apples to apples.

So what do we conclude? Some of my academic colleagues might shoot me, but I’ll say it anyway. Given economic reality, college isn’t for everyone. A good education can be a real asset in both your personal and career lives, but a mediocre one can leave you with false expectations and a lot of debt. College is really an individualized decision. What’s best for you is not best for someone else.

I didn’t answer a burning question, however. Why was a college degree a stronger investment in the past than it is today? The answer has a lot to do with government efforts to increase the number of college graduates, including increases in student aid. Subsidies always raise prices, and this has certainly been the case for tuition. In an era of technology that should improve the efficiency of course delivery, costs have skyrocketed, making it more difficult for students to justify the expense. I’ll get into this on another day.

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GM vs NHTSA

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GM CEO Marry Barra addressed Congress today concerning the ignition switch scandal. Details are still emerging, but the GM crisis strategy remains unchanged:

1. Apologize and “accept full responsibility.”

2. Subtly deflect all of this responsibility to the old, pre-bailout GM.

Both parts of this strategy are critical. The facts cannot be ignored, so GM certainly can’t be seen making excuses. But all of this is complicated by the NHTSA, and this is where it gets interesting.

The general public is not only interested in learning why GM did what it did, but also in learning why the taxpayer-funded regulator appeared to look the other way for years. On the surface, this looks like a battle between two entities that reflect what has gone awry in our economic system–a firm that should have never been bailed out vs. an inept government agency. But there’s a third party involved as well, OLD GM.

OLD GM is the perfect scapegoat. It was run by evil corporatists before Obama and the unions ran them off during the bailout. It is legally responsibility for any and all atrocities before bankruptcy. It shafted both the NHTSA by hiding information and the NEW GM by leaving this mess behind. This is why the second part of the strategy is so important, and it’s easy to detect if you pay attention. Barra uses the term WE when accepting responsibility but constantly refers to the need to figure out what executives in the past were doing. She told Congress that “we have to do a better job sifting through all of the information.” In other words, we need to find out what OLD GM did.

I’m not interested in piling on Barra at this point. We still don’t know all the facts, but things are getting worse and she should be held fully accountable for this crisis as it unfolds. It might be convenient to blame everything on OLD GM, but this is not acceptable. There’s only one GM and Ms. Barra is in charge of it.

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The Obamacare Alternative

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There might be one last chance to get rid of Obamacare IF the right people are elected and IF legislators are willing to take a bold stance. When I state my opposition to Obamacare, I am frequently asked what I would do to “solve the problem.” I put a proposal on the table before the Affordable Care Act was passed, but it’s time to address it again. You might not like everything I have to say, but don’t decide until you read the entire post. I’ll try to keep it as short as possible.

First things first…we must identify the problem, and it must be significant enough to warrant government action. It’s a problem when Americans without insurance get hit with a huge medical bill. They get treated anyway (EMTALA), so either the bill either destroys them financially or gets passed along to the taxpayer, or both. This problem is substantial and it MIGHT warrant government action IF the action actually helps solve it.

It’s also a problem when Americans do not take care of day-to-day health issues because they choose not to. The CHOICE to which I refer includes those who “cannot afford” to go to the doctor but seem to find a way to pay for their cars, cell phones, and cable TV. This is an unfortunate situation, but it is not a problem that warrants government action. As a matter of fact, Washington is already doing too much harm in this area already.

Distinguishing between these two types of problems is important because those on the left emphasize the first kind when proposing alleged solutions to the second kind. In other words, they carp about the $100,000 cancer bill that wipes out a family and offer all-inclusive Obamacare as the solution. If you have a mouse loose in your kitchen you need a mousetrap, not complete fumigation of your entire property.

So let’s talk about the first problem, catastrophic health care. Even if you don’t like the idea of the government paying for anyone’s healthcare, EMTALA already guarantees it and this policy is not going to change. Besides, this is the problem that concerns many Americans. If you don’t address it, you won’t gain enough momentum to win the battle. I suggest that we do the following legislatively as a package:

  1. Repeal Obamacare.
  2. Provide a government-financed, basic catastrophic healthcare plan to all American citizens not on Medicare. For example, it might pay 75% of medical bills in excess of $15,000 per individual per year. The plan would be administered by insurance companies base don a bidding process. You don’t choose your doctor or your hospital. The idea here is to make a catastrophe manageable, NOT pay the entire bill or provide special benefits. If that’s not good enough for you, then you need to purchase an additional policy on your own.
  3. Finance the catastrophic plan with a payroll tax added to Social Security. This means that ALL WAGE EARNERS must pay for it up to the current wage limit.
  4. Americans who buys their own policies get a credit for the average basic catastrophic healthcare cost. For the sake of argument, let’s assume that this is $1500 per person per year. When someone purchases a more complete policy (i.e., lower limits, choose your own doctor, etc.), this $1500 is transferred to the new insurance company and reduces the cost accordingly, so those who buy their own insurance aren’t paying twice.
  5. Other provisions, such as the ability to purchase health insurance across state lines, flexibility for health savings accounts, etc, would also be included.

This type of plan offers many benefits, including:

  1. It addresses the trauma of catastrophic healthcare coverage and removes it from political debate.
  2. It requires ALL wage earners to pay for the program, although low wage earners will pay less.
  3. It makes the issue of pre-existing conditions less relevant because everyone receives catastrophic care.
  4. It reduces the amount of unpaid hospital bills passed along to those who are insured because a significant portion would be covered by the catastrophic plan.

This plan isn’t ideal. For example, some will argue that a government-financed catastrophic plan can easily expand, but this expansion is already happening anyway. Some (like me) who want to eliminate payroll and income taxes altogether would argue that this plan expands the roll of the IRS. I would prefer a complete replacement of income taxes with a sales tax, in which case the catastrophic care tax could be rolled into the sales tax. Those on the left would argue that it still leaves unpaid bills for those who receive catastrophic care. This is true, but it’s their responsibility to purchase their own policy or budget accordingly if they want additional coverage. They will argue that we’re creating a two-tier healthcare system. I agree, but there’s no alternative unless you are willing to merge both tiers in the middle. I’m not.

If you still have doubts, ask yourself why such a simple, limited, and clearly defined approach like mine was rarely if ever discussed by those on the left before Obamacare came along. The answer is twofold. First, by addressing the real problem and nothing more, it removes much of the emotional appeal for national healthcare—what socialists really want. Second, this plan requires that all wage earners pay for it through payroll taxes; on net, it doesn’t add to wealth redistribution.

I believe we can only get rid of Obamacare if we offer a package deal that takes the catastrophic card off the table in a simple and efficient manner. This is one way to do it.

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Update on the GM Crisis

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Details on the GM crisis are continuing to unfold. According to the Wall Street Journal, it appears that the entire ignition problem can be traced to a $2-5 part. Transportation Secretary Anthony Foxx is insisting that the NHTSA would have acted sooner, but its investigation of 3 of the crashes in question were inconclusive. Here are the 3 key issues at this point.

1. GM knew there was an ignition problem–probably for 10+ years–and could have fixed it but did not. GM has immunity for pre-2009 cases because of the bankruptcy deal and is not commenting on calls to waive it. The company insists that it’s committed to doing the right thing, but that currently includes $500 for unhappy customers towards the lease or sale of a new GM vehicle. Just imagine if Toyota had suggested this as the fix for it’s brake crisis.

2. The NHTSA either chose not to pursue the case or lacked the ability to investigate complaints properly, or both. Our taxpayer funded “watchdog” is demanding answers from GM but it is unclear what will be done if the answers are not satisfactory. A serious, independent investigation of the NHTSA is in order.

3. At least some of the GM executives involved in the bankruptcy restructuring negotiations had to have known at the time this would probably be made public at some point, but they said nothing. That deal was pushed by President Obama and the UAW. It allowed the “new GM” to obtain tax benefits by counting some future profits against some “old GM” losses, but did not require the “new GM” to accept product liability linked to the “old GM.”

A few Democrats are calling for more investigations, but none have called for GM to waive its immunity and accept all legal responsibility. In the end, GM might very well be pressured into establishing a “fund” for the victims, but my guess is nothing more. The goal now is the pin the problem on the “old (pre-bailout) GM.” It’s still difficult to tell exactly how this case will end, but it has already raiseed serious questions about GM, the NHTSA, and the entire bailout process. There’s still more to come.

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GM is back…

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It hasn’t been long since President Obama proclaimed a bailout victory for General Motors, but the automaker is back in the news. It seems that GM knew about an ignition switch defect for 9 years and did nothing about it. At least 13 Americans died driving Chevys as a result.

This revelation reminds me of the Toyota brake crisis in 2009-2010, when the company was accused of ignoring a faulty electronic throttle, ultimately causing some cars to accelerate out of control and klling drivers. The mainstream media, big labor, and the Democrats pounded the Japanese carmaker for months, even demanding that the CEO testify before Congress. Perhaps you remember that former Toyota attorney and self-described whistleblower Dimitrios Biller claimed to have evidence of widespread corporate negligence. You may recall when James Sikes claimed that his 2008 Prius began to accelerate on its own and could not be stopped. At one point, US Secretary of Transportation Ray LaHood declared, “We’re not finished with Toyota…” and even advised Toyota owners not to drive their cars.

In the end, Biller’s claims were dismissed and he was ordered to pay $2.6 million for confidentiality breaches. Sikes’ story turned about to be a fraud as well. And on February 8, 2011, the long-awaited US government investigation showed no link between electronic throttles and unintended acceleration in Toyota vehicles. Most of the customer complaints turned out to be driver error and the legitimate ones were tied to sticky floor mats, not a mechanical cover-up. Toyota’s long-term reputational and sales losses will never be fully known, but they were astronomical, and certainly not proportional to the company’s negligence in the case.

But now it’s GM’s turn. Amidst the current crisis, CEO Mary Barra claims she’s personally directing the recall of 1.37 million GM cars. According to a company spokesperson, “GM is focused on ensuring the safety and peace of mind of our customers involved in the recall. Our principle throughout this process has been to put the customer first, and that will continue to guide us.” All of this sounds nice, but terms of the Obama-brokered bankruptcy shield GM from liability stemming from incidents prior to 2009. This means that many or perhaps all of the families who lost loved ones as a result of GM’s negligence may recover nothing, even though some of the GM representatives negotiating the bankruptcy were probably aware of the problem.

What I don’t hear now is the NHTSA constantly demanding answers and massive recalls from GM. I don’t hear US Secretary of Transportation Anthony Foxx advising owners of GM vehicles not to drive them. Sure, the regulators are going through the motions. I see only modest coverage of this scandal in major print and television outlets.

Why the double standard? Toyota is a foreign-owned company and has built high quality cars in Japan and in the US for decades largely without union interference. On the other hand, the UAW owns a significant chunk of GM and the carmaker must succeed to justify the Obama bailout. The Administration has a personal stake in this debacle and will do all it can to minimize its effects.

It will be interesting to see how this case unfolds, but it already smells of cronyism.

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Who Decides…A Final Thought

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My previous post was apparently a bit controversial. Society programs us to think certain ways on certain issues. The same guy who demands his freedom on issue A is often unwilling to let you exercise yours on issue B. There’s a shortage of intellectual honesty.

The Constitution is an excellent philosophical and practical guide when individual rights are in question. I’m not interested in arguing the same sex marriage issue in this post, but IF there is such a thing as a legally recognized marriage between two members of the same sex, THEN individuals who pursue this course must understand that others might have serious moral concerns about the lifestyle. Those who object to the concept of same sex marriage are free to make their arguments in the public square, but they are NOT free to threaten or assault their opponents. But gay couples must recognize that when their lifestyle directly challenges a moral conviction, others should not be forced to engage in commerce they find offensive. Some tolerance is required on both sides.

It will be interesting to see what happens if a gay couple insists that an Islamic bakery prepare their wedding cake.

Pedro made an interesting point when he asked why businesses are not afforded the same rights as individuals? They should be, as businesses are merely individuals engaging in commercial activity. But the media and the political left constantly scapegoat firms as villains looking for opportunities to deprive employees of health care, pay people less than they should, and otherwise cheat the general public. But free exchange is moral and is largely responsible for the advanced society in which we live. Those running the country fail to understand this and are doomed to paddle upstream until they do.

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Who Decides?

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Discrimination against gays is a hot topic these days, whether it’s a bakery refusing to prepare a wedding cake for a same-sex couple or state legislators attempting to codify the rights of business owners to run their companies in accordance with their religious convictions. The political left and mainstream media are arguing that some individuals—homosexuals in this instance—have a right to demand services from other individuals in the name of “equal rights.” They’ve gone so far to label legislation that seeks to protect the right of businesses to decide who to do—or not to do—business as “anti-gay.”

They’re missing the point.

There’s a core Constitutional principle involved here. As Americans, we are free to say or print whatever we wish so long as it does not violate the rights of others. We are free to associate with whomever we choose and generally live our lives as we wish, again, as long as we don’t trample the rights of others. We do not, however, have a right to be heard when we speak or to force anyone to read what we publish. Others get to make those decisions.

I recognize that there are some close calls that challenge this basic principle. For example, is one’s drug use completely self-contained or should the state set restrictions because others will be affected by one’s abuse? This post does not seek to resolve such issues. My point is that the freedom to make business decisions in accordance with one’s personal moral convictions does not represent a close call.

As consumers, we cherish the right to shop wherever we want. For example, African-Americans are often implored to spend their money with “black-owned businesses” or shop “in their own communities.” Citizens in small towns are often encouraged to buy from locally owned businesses or purchase locally grown produce. Those of us who consider such factors when deciding where to shop are practicing discrimination. Whether or not others agree with the decisions, they are respected as individual choices.

But those on the other side of the transaction do not enjoy the same respect. Companies are told how to make hiring decisions, how much they have to pay, and what benefits they must offer. Catholic hospitals are told that they must include contraception as part of their health coverage. Private organizations cannot refuse to serve customers on the basis of race, color, religion or national origin. Now they are being told that they must transact business with individuals even when doing so violates their religious liberty.

If you think I’m overstating the issue, consider that the NFL threatened to move the 2015 Super Bowl out of Arizona if Governor Brewer signed SB-1062. Everyone seems to respect the NFL’s right to make such a decision. This is how individuals and corporations wield influence. I wouldn’t have agreed with the NFL, but I would have recognized it as their decision. I don’t have to watch the game if I don’t want to. That’s my decision.

I can understand some of the requirements placed on businesses, at least in context. Given that our laws once encouraged or required companies to discriminate against certain groups of individuals—namely Americans of African descent—one can argue that the Civil Rights Act was needed to shift society in the opposite direction. Nonetheless, anti-discrimination laws—no matter how well intended—are not the best way to address problems in a free, open, and informed society. They inevitably legalize and legitimize one form of discrimination in an attempt to mitigate another.

Consider the bakery example. If one bakery refuses to provide a wedding cake to a same-sex couple, this becomes a business opportunity for another bakery. The affected couple is free to share its experience with others, who are also free to factor this information into their future bakery decisions. In the end, each bakery is disciplined by the market and almost everyone gets they products and services they need.

It’s a shame that Governor Brewer didn’t sign SB-1062 and a greater shame such a bill became necessary in the first place. Anyone who refers to this type of legislation as anti-gay either doesn’t understand or is evading the real issue—liberty.

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Why the Venezuelan Government Pays Some Bonds But Not Others

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The socialist government in Venezuela is so short on foreign currency that it must decide which obligations to pay and which ones to forego. Caracas has been making payments to foreign bondholders on time, but hasn’t been paying the private companies that operate within the country. In fact, the government currently owes $14 billion to government partners and oil contractors, $9 billion to importers, and $4 billion to service companies. So why pay one group and not the other?

Foreign bondholders represent an ongoing source in capital for Venezuela. If payments to them are delayed, fewer investors will be willing to purchase the bonds and the government will have to offer higher returns in the future. In other words, Caracas MUST pay its debts to foreign bondholders or a key source of revenue will become more costly.

Firms operating within Venezuela are in desperate need of dollars and other currency they can spend abroad—not Venezuelan bolivares—but they don’t have much sway. Lacking a legitimate legal infrastructure and fearing a backlash from price controls to possible nationalization of their assets, local companies cannot fight back effectively. The government knows that these firms stand to lose a lot if they resist, so it takes advantage of the political situation and doesn’t pay.

This no-pay policy has already resulted in shortages and production slowdowns. Just recently, Toyota’s Venezuelan unit halted operations because it cannot get parts. President Nicolas Maduro did what Marxists always do in such circumstances. He accused Toyota of political motives and greed: “The only thing these little mangers want is dollars, dollars, and more dollars.”

There’s a lot we can learn from watching Venezuela. In this case, the lesson is about respect for private property. Free enterprise means that firms can make employ individuals and other resources as they choose. Enforceable contracts are essential; without them, bullies are free to rewrite the rules as they go along. Government is always the biggest bully because it has the power of force, and when it disrespects private property, firms and investors take note. They protect their assets as best they can, but pull back from development and further expansion. The result is a downward economic spiral.

Unlike Venezuela, the US has a vibrant, well-established economy based on a global currency. Our government need not make choices about which debt obligations to pay; it simply borrows more money. Nonetheless, the same bully tactic is at work in both nations. The list of examples is long but includes the President’s unilateral and frequent reinterpretation of Obamacare, the administration’s fixation with raising the minimum wage, and recent requirements that firms certify to the IRS that their workforce decisions are not based on health insurance mandates. All of these instances illustrate the same kind of disrespect for private property. And the President wonders why the economy just won’t move forward.

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Walmart Politics

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The National Labor Relations Board (NLRB) has accused Walmart of unfairly disciplining works who participated in recent demonstrations over the minimum wage and other working conditions. Wal-Mart is fighting the claim.

The Wagner Act of 1935 created the NLRB and granted workers the right to strike against their employers over pay, working conditions, and other job-related issues, but the demonstrations last year were really protests, not strikes. They were orchestrated by the SEIU and left-wing interests in an effort to influence public policy. Walmart did not recognize the demonstrations as “a strike” and warned workers that not showing up for work would be treated like any other absence.  Many were disciplined and some were even fired.

Wal-Mart is correct to fight the NLRB here. A strike is an employee-organized refusal to work in order to gain concessions from an employer. Actions that are organized and funded by outsiders or do not seek specific negotiations shouldn’t qualify as a strike. Legally, this is a battle over the definition of a strike. Politically, it’s a battle over the ability of deep-pocket leftist activists like George Soros to unduly influence the business practice of private firms by funding broad worker protests without recourse.

This fight illustrates an expanded progressive agenda. The right to strike was supposed to be about a balance of power between companies and workers. In recent years, an ever-expanding NLRB using tax dollars to fight on behalf of labor interests has tilted the balance in favor of workers. Now, Our Walmart and other activist groups want the right to jump in the fray as well. Make no mistake…the mid-term goal here is to unionize large, highly visible employers like Walmart, McDonald’s and Amazon, and control others through governmental mandates like higher minimum wages, protected leave, required health care, and the like.

While I certainly sympathize with Walmart on this issue, it’s ironic that the company just lowered its 2013 fourth quarter revenue and profit estimates in part because of deeper than expected cuts to Washington’s Supplemental Nutrition Assistance Program (SNAP). Walmart depends on welfare programs like SNAP, giving the firm a vested interested in maintaining big government. In other words, Walmart’s interests are best served through intrusive government in some areas and limited government in others. As true liberty-minded conservatives and libertarians, we should respect great companies but not accept their agendas without question.

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