Saturday, October 16, 2010

Whole Foods and Home Depot

Twice before I've written about Jim Mackey, co-founder of Whole Foods, and about his views on profit and freedom and related topics. In the second post I quote from the first, and repeat that quote here:

I love profit. Profit is good and it is socially necessary... Profit is the most important purpose to the business owners. But owners do not exist in a vacuum. I believe the best way to think about business is as an interdependent system of constituencies connected together in a "harmony of interests..."

I believe that business has a much greater purpose. Business, working through free markets, is possibly the greatest force for good on the planet today.

Lefties try to convince people that supporters of capitalism want no government at all, want some form of anarcho-capitalism, and anyone who supports individualism or capitalism is against apple pie, puppies, and sunshine. Reality is a tad more complex than that, and Mackey has some intelligent, persuasive arguments in support of his positions. I remind the reader that Mackey co-founded Whole Foods, the Shangri-La of leftie food stores.

Enter Ken Langone, co-founder of Home Depot. Mr. Langone has recently published an opinion piece, what seems to be an open letter to the president, in the Wall Street Journal:

Although I was glad that you answered a question of mine at the Sept. 20 town-hall meeting you hosted in Washington, D.C., Mr. President, I must say that the event seemed more like a lecture than a dialogue. For more than two years the country has listened to your sharp rhetoric about how American businesses are short-changing workers, fleecing customers, cheating borrowers, and generally "driving the economy into a ditch," to borrow your oft-repeated phrase.

My question to you was why, during a time when investment and dynamism are so critical to our country, was it necessary to vilify the very people who deliver that growth? Instead of offering a straight answer, you informed me that I was part of a "reckless" group that had made "bad decisions" and now required your guidance, if only I'd stop "resisting" it.

I'm sure that kind of argument draws cheers from the partisan faithful. But to my ears it sounded patronizing. Of course, one of the chief conceits of centralized economic planning is that the planners know better than everybody else... (emphasis mine--Darren)

A little more than 30 years ago, Bernie Marcus, Arthur Blank, Pat Farrah and I got together and founded The Home Depot. Our dream was to create (memo to DNC activists: that's build, not take or coerce) a new kind of home-improvement center catering to do-it-yourselfers. The concept was to have a wide assortment, a high level of service, and the lowest pricing possible...

If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it's a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase—never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers...

It's not too late to include the voices of experienced business people in your efforts, small business owners in particular. Americans would be right to wonder why you haven't already.

I like this guy. He makes sense.


Bill said...

No, "Whole Foods" (a.k.a. Whole Paycheck) is the darling of the "more money than brains" crowd. Actual lefties buy from co-ops and local farmers. As far as the stock options, if you've paid the slightest bit of attention to the last twenty years (Clinton era dot-com bubble, or the more recent CDO/MBS debacle) you might notice that there's a damn good reason to regulate who receives stock options, and how they can trade them. For every Home Depot, there are also several Hechingers, but I'm sure no one lost money on that.

Ellen K said...

Whole Foods was vilified by Lefties for daring to let their employees decide their own expenditures. While I like the idea of Whole Foods, if it were not for upper income folks, they would not survive. Average families can barely afford Krogers or Walmart won't pay twice as much for meat or produce because we can't. As for the Home Depot commentary, it is right on target. The Obama administration has repeatedly blamed business for their own regulatory failures. You have to look no further than the exodus of businesses from California to other more business friendly states to see what happens when regulations go amok.