Whole Foods CEO John Mackey and “Conscious Capitalism” – putting lipstick on a pig

John Mackey is the co-CEO of Whole Foods Market, its founder, and a self-proclaimed independent libertarian. Mackey has also recently authored a book, “Conscious Capitalism.” While he speaks in platitudes about corporations acting as conscientious citizens of the world, Mackey’s actions as CEO of a major corporation betray his real motivation.

Mackey was forced to back pedal from his comments on the Patient Affordable Care Act (“Obamacare”):

Technically speaking, it’s more like fascism. Socialism is where the government owns the means of production. In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.

Mackey is dead wrong on the government-corporate relationship under fascism. Italian historian and fascism authority Emilio Gentile gives the authoritative description:

Corporative organization of the economy that suppresses trade union liberty, broadens the sphere of state intervention, and seeks to achieve, by principles of technocracy and solidarity, the collaboration of the ‘productive sectors’ under control of the regime, to achieve its goals of power, yet preserving private property and class divisions. (Payne, Stanley G (A History of Fascism, 1914-1945). University of Wisconsin Press. pp. 5–6)

More importantly, it is time to call Mackey’s vision of capitalism (and Whole Foods Market) what it is, and this writer does not use this term loosely. “Corporate fascism” is an accurate and apt description of the Mackey philosophy. Consider Gentile’s definition. above, in light of Mackey’s actions and writings.

Mackey is a staunch proponent of a corporate-centric economy, with no government or regulatory intervention. Both Whole Foods Market and Mackey are anti-union, anti-worker’s rights. The Mackey philosophy would see a collaborative corporate control over the means of production, to achieve its own goals of power through corporate solidarity (WMC, US Chamber of Commerce, etc.). Preservation of private property and class division are a necessity for the Mackey vision, as there can be no cheap labor production without class division. Ironically, Mackey is a proponent of the expansion of state intervention, as long as it is on behalf of corporate welfare expansion. There is plenty of proof to support this assertion…

On November 16, 2011, Mackey penned an op-ed by invitation in the Wall Street Journal, titled “To Increase Jobs, Increase Economic Freedom.”  In a response to Mackey’s article written on February 1, 2012, Badger Democracy addressed the fundamental arguments in the op-ed:

1. Cut the size and cost of government - 100 years ago, government spending was 8% of GDP; today it is 40% of GDP. This additional money spent by the government could be used to “create jobs.”

2. Cuts should be made in Social Security, Medicare, Medicaid, and Defense – many of these services could be privatized, using the “success” of Chile and Singapore as models.

3. Stimulate the economy by cutting taxes and regulations - Mackey explains that cutting taxes would “increase revenue… as entrepreneurs create new businesses and new jobs and as people earn more money.”

In his own op-ed, Mackey supports further provisions which would continue the US economy down a dangerous path. Greater corporate consolidation of power, greater consolidation of wealth, greater class inequity, and greater corporate influence on policy which would regulate said power.

The dagger in Mackey’s theory is a recent report in the conservative-leaning Financial Times, also reported in the New York Times. The article cites a steady decline in earned wages and a steady rise in investor income through profit and interest:

“58%…is the share of US national income that goes to workers as wages rather than to investors as profits and interest. It has fallen to its lowest level since records began after the second world war and is part of the reason why incomes at the top – which tend to be earned from capital – have risen so much. If wages were at their postwar average share of 63 per cent, workers would earn an extra $740 billion this year, about $5,000 per worker, according to FT calculations.”

More power and wealth for the corporate fascists, with less taxes and accountability means more money to influence and drive politics and policy:

 

Corporate Taxes Paid by US Corporations, 1950-2010

(Federal Reserve Bank of St. Louis analysis)

Corporate income tax graph

 

Cheap labor production is possible due to the expansion of the wealth gap and class disparities:

 

 

John Mackey’s Whole Foods Market has also forced employees to “vote” to cut their own wages and benefits. Wages have been cut due to reduction in hours, and employees will be forced to contribute more in spite of enormous corporate growth:

In 2007, WFM profits (after taxes and expenses) totaled $182.7 million. Four years later, in 2011, profits totaled $342.6 million – nearly double in 4 years.  For the first sixteen weeks of 2011, total profits were $88.7 million; for the same period in 2012, profits totaled $118.3 million. Store expenses have decreased by 38 points in 2011, including 28 points due to wage cuts. In real numbers, most stores have executed 3% cuts in labor over the past fiscal year, resulting in most employees seeing a 5-8% cut in wages (due to hours being cut).

Of course, Mackey built Whole Foods with his own two hands, with no government help (sarcasm)…therefore, government should stay out of his business. This is the great lie of corporate fascism. Mackey and his ilk want the government to work for them. The doctrine of so-called “corporate conscious” follows in the words of Gentile:

…broadens the sphere of state intervention, and seeks to achieve, by principles of technocracy and solidarity, the collaboration of the ‘productive sectors’ under control of the regime, to achieve its goals of power.

The corporate fascists would have us believe the great lie of their own self-determination and success, that personal strength and sacrifice alone built their empires. Mackey is as guilty of this as any of them. Whole Foods is a prolific recipient of government intervention and welfare on its own behalf.

In 2011, an $8 million tax break for a new Washington DC Whole Foods development raised questions of return on public investment and why public money was even needed:

And why does this project require a special subsidy to move forward in the first place?  This Whole Foods already would qualify for a set of tax incentives for grocery store development, including a 10–year property tax break on the store itself.  Moreover, while some projects near Nationals Park have languished in the recession, this area is likely to be part of the emerging rebound, thanks in part to prior public investment by the District.  Finally, if a Whole Foods will revitalize this neighborhood as it did in Logan Circle, why won’t private market interests step up to make it happen?

In the same year, Whole Foods received $4.2 million in tax subsidies to open a Detroit area store, uncovered only by FOIA requests:

The documents, obtained by the Chaldean News under the Freedom of Information Act and provided toCrain’s, show that Whole Foods is asking for $4.2 million in city, state and federal incentives to open a store in downtown Detroit.

According to the exchanges, the 21,000-square-foot project is expected to get $1.5 million in local and community foundation funds, $1.2 million in federal tax credits under the New Market program and $1.5 million in state incentives.

Michael Sarafa, president of the Bank of Michigan and co-publisher of The Chaldean News, questions the use of incentives to lure a national grocery chain to Detroit. He said there are 83 independently-owned grocers in the city, many of them owned by Chaldeans, who did not receive incentives.

 

Controversial “TIF” funds are being used for construction of a Whole Foods-anchored development in St. Louis, hardly in a blighted area.

The new Whole Foods development in the Hyde Park neighborhood of Chicago is being partially funded by an $11.3 million “TIF” in an already well-developed area.

Mackey is now on the record confirming that Whole Foods will begin eliminating full-time employees as a result of “Obamacare” being fully enacted. This in an interview with Greta Van Susteren:

…there will be a strong temptation for businesses to keep people under 30 hours, so they don’t have to provide health care. And you will have a lot of part-time workers and fewer full-time workers, a lot of people underemployed.

Whole Foods prided itself, we’ve always had a higher mix of full-time to part-time workers like 80 percent full-time and 20 percent part-time, which is very rare in retail. But as I suspect as our health care costs are driven up by health care reforms then we’ll end up gradually lower our full-time ratio to a much lower number.

There is no fiscal truth to this statement. As proven in Whole Foods’ own financial statements and a previous Badger Democracy blog, the company’s health care costs per employee are actually lower than they were before “Obamacare’s” passage. The reason for Whole Foods’ higher total costs is simple – the company is growing. With government and public help.

It is time to take the lipstick off the pig. The philosophy of John Mackey should be called what it is. Corporate freedom, rights, and independence over all – even the individual. No worker’s rights, no government regulation or intervention EXCEPT on behalf of the corporation and its own interests. In short…corporate fascism.

And Mackey calling “Obamacare” fascism? Pure projection.

 

Wisconsin really is “Open for Business,” so where are all the jobs?

Give Scott Walker credit. He made his campaign slogan “Wisconsin is Open for Business” a reality. In an administration rife with incompetence, corruption, and political patronage, he got this right. According to data compiled by The New York Times from state and federal agencies, Wisconsin is now one of the top corporate welfare states in the nation, second in the Upper Midwest only to automobile bailout-heavy Michigan.

In spite of all these “job creating” incentives and programs, Forbes Magazine recently dropped Wisconsin from 40th to 42nd in the nation in their annual business rankings, making Wisconsin one of the worst states for business in the nation. Just what is going on? By the numbers, Wisconsin should be swimming in jobs. Based on the conservative theory that tax breaks for the job creators will…well…create jobs…

Let’s let the numbers tell the full story.

In total corporate incentives, Wisconsin ranks 14th overall in the nation. At least $1.53 billion went to corporate subsidies in the past year (the state cut $1 billion in public education funding in the 2011 – 2013 budget). These subsidies cost the average taxpayer $268 per year. Remember that number the next time you complain about a $30 per year property tax hike to fund public education. A full 10% of the state budget went to pay these corporate subsidies.

Of the 903 reported corporate grants listed in the Times report, 300 (nearly one-third) have come in 2011-2012 alone, during the Walker administration, primarily through the WEDC “Enterprise Zone Jobs Tax Credit.” In fact, seven of the top ten grant awards totaling over $270 million are 2011 or 2012 grants:

Corporate subsidies

Where has the $1.53 billion in “job creating” investment gone? Could this be the end of the myth surrounding corporate subsidies and incentives spurring job growth? Wisconsin under Scott Walker could be an example of an epic failure of this economic policy theory. Over the past two years, Wisconsin has been far behind the nation in employment recovery, and early 2013 is not looking any better.

Wisconsin employers will slow the pace of hiring in the first three months of 2013 even as the nationwide outlook for job creation is at the most promising levels since the recovery began nearly three years ago, a new survey says.

In Wisconsin, “employers are slightly less optimistic about their staffing plans,” said Manpower spokeswoman Mary Ann Lasky. Nationally, however, “optimism among U.S. hiring decision makers continues to improve,” according to the Milwaukee-based global staffing services company. (Milwaukee Journal Sentinel 12/10/12)

The December 1, 2012 unemployment report from the Bureau of Labor Statistics (BLS) showed Wisconsin with the most first time unemployment claims in the nation for the week ending December 1.

The largest increases in initial claims for the week ending November 24 were in Wisconsin (+5,876), Oregon (+2,328), Ohio (+2,252), Washington (+2,107), and Iowa (+1,262), while the largest decreases were in New Jersey (-23,966), California (-7,053), New York (-6,682), Texas (-6,425) and North Carolina (-2,609).

On December 12, 2012 Scott Walker appeared at a Waukesha County Business Alliance lunch and claimed to be “just under 100,000″  jobs created since he took office. It did not take long for Politifact to rate Walker’s claim “Pants on Fire.”

However, several within his own administration, including his primary spokesman, have said that is the wrong way to measure jobs — you can’t combine partial and full year data sets. As one aide said: It would be “misrepresenting the truth.”

By his administration’s own yardstick, his statement is false. We think it’s ridiculous to — after private admonitions — publicly present it this way. Pants on Fire.

Walker’s continued denial  of his policy failure is becoming sociopathic. In spite of his administration awarding literally billions of dollars to corporate subsidies, Wisconsin continues to lag behind in the recovery. The jobs crisis in Wisconsin is very real – and will not be cured with $10-$15/hour jobs, right-to-work legislation, or ideological social engineering.

Just how bad is it? Recent BLS data from measures the Walker Administration accepts (LAUS, QCEW) show that the money being given to corporations and “small business” to create jobs is not. The question remains…where is the money going?

First, the Quarterly Census (QCEW), Scott Walker’s favorite.

QCEW 1

Since 2010, there is a very moderate upward trend. The actual data show a non-existent job recovery in Wisconsin.

QCEW table

 

According to the latest verified QCEW data, Wisconsin has gained about 40,000 jobs January 2011-March 2012. The yellow highlights indicate the peak pre-recession employment in 2008 – 2,840,648. It is imperative to understand that Wisconsin still has a 200,000 job deficit just to get back to pre-recession employment levels, without accounting for population growth.

But this is December. The QCEW data is slow to be verified and released. The Local Area Unemployment Statistics (LAUS) gives a more current measure based on unemployment data – which the Walker Administration has accepted as an accurate measure. The LAUS paints a similar picture:

LAUS graph

Again, the actual LAUS data shows a jobless recovery:

LAUS table 1

 

The yellow again highlights peak employment, pre-recession. The green highlights the last QCEW data entry in March 2012. According to the LAUS data, from January 2011 – October 2012, less than 20,000 jobs were created since Walker took office. The same data shows a jobs deficit of only about 100,000 to get to pre-recession levels.

While the baseline for each measure is different, the result is the same. Since taking office, Scott Walker has only created 20% of the jobs needed to just get back to pre-recession levels, not accounting for population growth.

The untold story of Walker’s tremendous job failure in relation to corporate welfare is the anemic labor force. Since Scott Walker took office, the total labor force has been virtually stagnant:

labor force graph

 

Once again, the actual data show an anemic labor force – not what a recovery looks like with over $1 billion a year in corporate subsidies being granted.

LAUS table 2

 

Note the high point of the labor force shortly after the recession took hold, in yellow – nearly 3.14 million people. When Scott Walker took office in January 2011, the number had dropped to nearly 3.07 million. As of October 2012, there are only 3.06 million people in the labor force. While the adult population has grown since April 2009, the labor force has dropped by over 70,000.

An 80% deficit in job growth, coupled with a decline of 70,000 people in the labor force. Is this the employment climate over $1.5 billion per year in corporate subsidies gets us?

The people of Wisconsin would be better served investing that $1.5 billion back into public schools. Because the question still remains, what has Wisconsin received for that $1.5 billion “investment?”

 

Scott Walker Fast-Tracks Tax Dodging Bill for “Special Job Creation Session” with DOR and WMC Support

When Scott Walker released the agenda for his “Special Session” to create jobs in Wisconsin on Wednesday, September 28; there was a piece of Legislation near the bottom of the page which received little attention, but will have lasting effects on the Department of Revenue – and huge rewards for Banks and Corporations. Since the bill had yet to be completed, much less introduced, it was merely listed in the release as a “LRB” number – in this case LRB 2769. As the Bill had not yet been released, it was unavailable for public view, until now. Described as a bill for “Department of Revenue Procedural Changes,” in reality LRB 11-30441[1], and LRB 2769 will hinder the ability of The Wisconsin Department of Revenue to audit, assess penalties, or adopt Administrative Rules to enforce its own tax collection activities, and repeal current transparency statutes. The primary supporter of this bill (as it was in 2005, when a similar bill passed the Assembly, but failed in the senate) is Wisconsin Manufacturers and Commerce. 

An email sent by GOP Senator Rich Zipperer offers the bill to Legislators for co-sponsorship prior to its introduction:

From: Sen.Zipperer
Sent: Friday, September 30, 2011 2:59 PM
To: *Legislative Everyone
Subject: Co-Sponsorship of LRB 11-30441 & LRB 2769: DOR Procedural Changes

  TO:  Legislative Colleagues

  FROM:  Rep. Pat Strachota and Senator Rich Zipperer

 RE:  Co-Sponsorship of LRB 11-30441 & LRB 2769: Department of Revenue Procedural Changes 

DATE: September 30, 2011

 Deadline: Wednesday, October 5, 2011 

 A key component to a vibrant economy is tax certainty.  Wisconsin’s tax laws need to be updated in order to create more predictability for businesses and taxpayers.  This legislation was drafted in part in response to concerns about practices of the Department of Revenue (DOR) uncovered in a 2006 survey of Wisconsin businesses and tax professionals.  It is similar to Assembly Bill 968 of the 2005-2006 legislation session and is supported by DOR.   This bill makes numerous changes to the procedural statutes governing the actions of the Department of Revenue (DOR) in providing advice, conducting audits, imposing penalties, issuing refunds, promulgating administrative rules and litigating tax disputes.   If you would like to co-sponsor this legislation please contact Rep. Strachota (264-8486) Rep.Strachota@legis.wi.gov or Sen. Zipperer (266-9174) Sen.Zipperer@legis.wi.gov

The Legislative Fiscal Bureau Analysis Summary shows clearly that if this bill passes, the Department of Revenue will face greater obstacles to conducting audits, assessing penalties, and collecting taxes owed from previous years – a gift to Banks and Corporations looking to avoid such audits and actions by the State. It will also make it virtually impossible for any review of these records to be conducted – a significant rollback in tax transparency in Wisconsin. It appeared odd that Senator Zipperer states that this bill “…is supported by the DOR.” Until one considers the Secretary of The Department of Revenue is Richard Chandler.

Richard Chandler  previously served as Revenue Secretary from 2001-2003 (The McCallum years). After his 2 year stint as DOR Secretary, Chandler started his own Consulting firm in Madison, Chandler Consulting, LLC. As President of Chandler Consulting, LLC, he spent the next 7 years (2003-2010) as a Registered Lobbyist in Wisconsin. Chandler represented high-profile clients – Wisconsin Merchants Federation, Wisconsin Realtors Association, Wisconsin Energy, and Wisconsin Coalition of Virtual School Families (a private charter school advocacy group). As late as 2010, Chandler has advocated in other states (Georgia presentation  2010) for private charter school creation and funding. Chandler is a staunch advocate of Corporate tax “reform” and reducing the tax burden on Corporations as “job creators, ” as evidenced in a paper he wrote for the Wisconsin Policy Research Institute, the conservative think-tank based in Delafield. It should be pointed out that Chandler’s “study” is not peer-reviewed (as is typical for WPRI “studies”), and his references are from other conservative think tanks (such as The Pew Center), Legislative Fiscal Bureau data (for tax information) or newspaper op-ed pages (New York Times). It is no wonder that Chandler would support a bill which would give virtual “tax freedom” to Corporations against audits, penalties, and collections on back taxes to be “job creating,” while closing the door on transparency.

With the appointment of Richard Chandler to Secretary of the Department of Revenue, Scott Walker has a corporate-sympathizer in place who will allow his Department to be an open door for tax dodging. As this bill is not yet formally introduced, no Fiscal Impact Study has been released, but expect it to show a significant loss in revenue for the state. We can certainly expect the net job gain of this bill to be zero – as it is a proven fact that tax breaks for corporations have never created a single job. Walker’s “Special Session” promises more of the same – continued tax breaks and benefits for the Corporate Elite, and special favors expanding the influence of the Corporate Anarchists.

Badger Democracy will update as this bill is analyzed by the Legislative Counsel, and is scheduled for Committee hearings.