Greed isn’t necessarily morally wrong. Heck I’ve argued the wonderfulness of greed before on these boards. Let’s just not act like Wal Mart is evil and horrible because of their greed, when everyone in the story is just angling for the bucks.
Okay, let’s agree that there’s an equivalence of greed on all sides. It’s the foundation of economics.
On the other hand, I do think that Wal-Mart and its insurers have acted in a morally wrong fashion. They understood the basis of the scam.
Now we’re going to get into a legality/morality argument. I walk away.
The wronged party is me, who doesn’t use the insurance company in question and doesn’t shop at Wal-Mart, but does pay taxes.
The federal goverment costs X to run every year. If Wal-Mart manages to scam (legally, except in Texas, but its still kind of a scam) $20,000 out of the federal government, someone (i.e. other taxpayers) make up the difference. Or we see additional deficit spending.
It isn’t like the federal government says, “gee, we are going to loose $20k in revenue from Wal-Mart, lets not drape to breasts Ashcroft has to stand in front of.” They continue to spend the money.
Okay. I’ll accept that my premise and subsequent analysis was incorrect.
[serious question]
Okay, it wasn’t tax. What the fuck was the basis of the scam?
Was it about the loan from the insurer to Wal-Mart?
[/serious question]
Note: I’ve used the f-word, so I don’t need to post in GQ.
Maybe it’s a sort-of terrorism insurance. If an entire store were destroyed by a terrorist attack (or some other calamity) there would be enormous costs in replacing the store, finding and training new employees, etc. This insurance might help in that event.
Of course, this would be very incomplete complete coverage, but it might be quite cheap in comparison with real terrorism insurance.
I don’t think that the family has a right to the money from the Wal-Mart life insurance policy. They too could have taken out a policy for their loved one and paid for it. Although I don’t think that Wal-Mart should be able to take out a policy for an employee. It has nothing to do with the family. They paid for the policy, of course they are going to get the benefits.
I know that generally, what Wal-Mart did was against the law, not just morally wrong. A third party without an insurable interest in a person can’t obtain a life insurance policy in that person, especially without notifying them. Unfortunately I’m in the middle of exams and don’t have time to find the section in the Texas code, so if another lawyer would like to do so, that would be great.
These workers only get $15,000 a year or thereabouts anyway. We’re not talking major irreplacables from the corporate perspective.
jl replied to Desmostylus: *“If it’s tax-free, and I suspect that’s the case, then they’ve paid a tax-deductible premium …”
Not True.*
From the article: “Wal-Mart borrowed money from the insurers to pay the premiums, which the company was able to write off as a business expense on its federal taxes. […] A Houston lawyer representing the workers said those policies are used as an ‘elaborate tax dodge.’”
So it looks like the premium was, effectively, tax-deductible and Desmostylus’s math is valid. After all, they had to be making money on the deal somehow or they wouldn’t have taken out the policies in the first place.
(december, our indefatigable champion of the big guy, suggests instead that they were using the policies as a form of “terrorism insurance” in case all their peasants got wiped out at once. Uh-huh. Yes, the cost-cutting obsessives at Wal-Mart consider the risk of terrorist attacks on Wal-Mart stores so high that they’re willing to buy hundreds of thousands of life insurance policies on near-minimum-wage employees. And it’s sheer coincidence that they happen to make money from the policies in tax savings. Uh-huh. Sure, december.)
Not so fast Kimstu, I think december is onto something. If we invade Iraq and eliminate the scourge of terrorism, then Wal-Mart would be able to get insurance coverage for less, which would reduce the price of canned peaches and styrofoam coolers, which would then stimulate the economy in addition to reducing our reliance on foreign peach imports, which would…
…wait, I lost it.
Sounds plausible, Dumbguy, but you left out the obligatory Clinton reference. 
And what is wrong with the family suing and getting the money? lawsuits are the only thing WalMart will listen to.
But now we know why they keep hiring old dudes at Wal-Mart as greeters, they are all insured for big bucks, and those old dudes die left and right, so Wal-Mart is raking in the dough! It’s all so clear to me now!
To those defending Wal-Mart’s actions here, did any of you think about the implications of this, cited in the OP’s linked article:
At a time when OSHA is subject to constant budget cuts, and workplace health and sfaety laws are being rolled back by government and flouted by companies, should we really allow these corporations such direct financial incentive to kill off their low-paid, expendable workforce?
Because insurance companies aren’t stupid.
I’m willing to bet that there are clauses in the agreement that take care of those situations. Kind of like arson or suicide protections in homeowners or normal life insurance policies.
Tars if the actions of the companies are illegal, then the gov’t should step in, void all of the contracts, and fine both Wal Mart and the Insurance companies. If the actions are legal, then the families have no right to sue for anything since they were not harmed in any way by Wal Mart. If Wal Mart provided poor working conditions that contributed to the early death of the worker, sue them for that, have the gov’t fine them, and have the Ins. co. cancel the contract as being in bad faith.
The families are not doing any of this, they’re just trying to get some of the bucks in their pocket.
Is this why Wal-Mart hires really old people to be greaters?
We’ve discussed this a couple of times before, and I’ve always found it a bit curious that people think the practice is that distasteful or victimizing the employee in some way. It’s partially a tax loophole that there have been movements to plug in the last few years, hence some of the quoted legislation. If you like, you can view the taxpayer as a victim. At the end of the day, it simply makes very little difference to me if an employer wishes to take out a life insurance policy on me, provided they are not taking active steps to collect on it.
I wonder what people who find this practice repugnant think of “viaticals”:
http://www.lifepartnersinc.com/Viaticals.htm
Something makes me hope that there are a few people who bought the life insurance policies of terminal AIDS victims at a discount whose annualized returns are dwindling to a level below the average passbook account.