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)

 

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.

 

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:

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.”