Response to Whole Foods CEO WSJ op-ed – John Mackey calls for middle class austerity, more wealth for “job creators”

Whole Foods Market CEO and founder John Mackey wrote the editorial “To Increase Jobs, Increase Economic Freedom” which appeared in the Wall Street Journal on November 16, 2011. While Mackey is a self-proclaimed Independent Libertarian, his op-ed clearly demonstrates economic and political philosophies of a conservative corporatist. The policies espoused by Mackey are a study of all that is wrong with Corporatist economics, and continue to ignore a century of economic, social, and political history. This response from Badger Democracy to John Mackey’s op-ed is a broader response to the current free market, “job creator” policies that have held our economic system hostage for too long.

Mackey’s op-ed reads as an excerpt from current GOP talking points on the economy. Sources cited include studies by ultra-conservative think tanks Heritage Foundation and Cato Institute (largely funded by Koch Industries); articles in Forbes Magazine; and books by Deirdre McCloskey and Johan Norberg (Senior Fellow at Cato Institute). A brief synopsis of Mackey’s analysis:

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.” He cites the “success” of Russia in 2001 and Ukraine in 2004 as examples.

Each of these points precisely follow right-wing corporate economic ideology. This op-ed could have been written by Paul Ryan, Eric Cantor, or George W. Bush. The convergence of these ideas stem from a quasi-religious following of the economic philosophy of Milton Friedman, and the social philosophies of Ayn Rand. The followers of these ideologues are currently in power both economically and politically; and are responsible for the decay of our socio-economic system into a sort of “economic Darwinism” or survival of the richest. They are currently overseeing the decay of social and economic justice that was this nation’s basis for “life, liberty and the pursuit of happiness,” “all men are created equal,” and “liberty and justice for all.”

While it is true that the size and cost of government have grown, Mackey conveniently fails to point out that the Heritage Foundation table (first table after the introductory paragraph in the link), while drawn from Federal data, includes the cost of state and local spending for 2010, while the 1910 number is for Federal only. Mackey also fails to point out that in another Heritage Foundation table (same link, scroll down to “Government Spending as a percentage of GDP), the US is about in the middle compared to other world nations. The same article indicates the US is near the bottom in per capita spending compared to the rest of the G20 nations:

“In 2010, the Federal government of the USA spent an average of $11,041 per citizen (per capita). This compares to the 2010 World average spending of $2376 per citizen and an average of $16,110 per citizen for the World’s 20 largest economies (in terms of GDP). Of the 20 largest economies, only six spent less per citizen: South Korea ($4557), Brazil ($2813), Russia ($2458), China ($1010), and India ($226). Of the 13 that spent more, Norway and Sweden top the list with per citizen spending of $40908 and $26760 respectively.

The taxation and regulation cuts Mackey refers to are models of Friedman model economics which were indeed practiced in Chile , Russia, and the Ukraine. In each nation, while wealthy corporatists (and their aligned politicians) reaped and consolidated more wealth, the working class continue to suffer high unemployment, decreased wages, and corrupt privatized services – a fact that is often ignored by those in support of the Friedman Doctrine of “Economic Shock Therapy.” We are now beginning to see the effects of this type of economics in the United States. Privatization of services leads to less public accountability, higher cost for services to taxpayers, and increased corporate profit at taxpayer expense.

This type of socio-economic ideology ignores and represses emerging facts, through biased think-tank studies. Taxes paid by US Corporations are on a 30-year decline, a fact confirmed by a Federal Reserve Bank of St. Louis analysis:

Corporate income tax graph

There is an increasing wage gap in the US, and a corresponding pay disparity responsible for decreased purchasing power in the middle, working class:

After adjusting for inflation, the average male American worker has not seen an increase in real wages since 1969 while jobless rates have increased. All the while, wealth has been transferred to the top-tier income holders at the expense of the working class, creating a plutocracy:

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 $740bn this year, about $5,000 per worker, according to FT calculations.”

Income earned by labor has dropped from 63% post WWII, to 58% today, a difference of $740 billion. This decrease in labor wages corresponds with a decrease in real wages and a weakening of the middle class that had driven the economy for so long.

It is a complete myth, and disingenuous to continue to claim that “cutting taxes will create jobs.” When given the opportunity, the so-called “job creators” have taken their increase in wealth through tax breaks and deregulation and failed to create jobs – they have literally kept their money. The answer to our economic conundrum will come at a time when Mackey (and those who think like him) accept a simple fact of the economy – he is not a job creator, and capital does not drive labor. Labor drives capital, and those who labor are the job creators. When the focus is again on growing the economy through growing the middle class, the economy will respond.

The simple fact is this – when given the tax breaks and de-regulation, the so-called “job creators” have hoarded and kept their wealth to buy power and influence to increase their own power and influence, a basic human response called greed.  John Mackey did not create a single job on his own, he built stores with the help of publicly subsidized infrastructure, regulations, and safety protection (police and fire). He sold goods to consumers produced by hard-working “Team Members” and bought by predominately upper-middle class people. Without the labor of production and those who buy Whole Foods goods, there would be no jobs at Whole Foods. John Mackey would not be the Libertarian Texas billionaire that he is today.

John Mackey may be a self-proclaimed Libertarian, but his economic and political alignments are those of the far right. Until Corporatists like Mackey acknowledge the force of labor as the creator of capital, the powerful GOP elite will continue to decimate the middle class; and the US economy will resemble Russia, Chile, and the Ukraine – just as Mackey himself wishes. Plenty of workers willing to be cheap labor then, yes…

PS – If you read this, Mr. Mackey, a dose of Paul Krugman would be helpful. He has been right about this economy all along – a link to his blog can be found in the left margin “Blogroll.”