McGovern on Corporate Responsibility

by Russ Roberts on May 24, 2006

in Wal-Mart, Work

In this LA Times op-ed (HT: It Shines For All), George McGovern takes labor union leaders to task for demonizing Wal-Mart and other unproductive strategies:

I understand the attraction of asking business — the perceived "deep
pockets" — to shoulder more of the responsibility for social welfare.
But there are plenty of businesses that don’t have deep pockets. And
many large corporations operate with razor-thin profit margins as
competitors, both foreign and domestic, strive to attract consumers by
offering lower prices.

The current frenzy over Wal-Mart is
instructive. Its size is unprecedented. Yet for all its billions in
profit, it still amounts to less than four cents on the dollar. Raise
the cost of employing people, and the company will eliminate jobs. Its
business model only works on low prices, which require low labor costs.
Whether that is fair or not is a debate for another time. It is
instructive, however, that consumers continue to enjoy these low prices
and that thousands of applicants continue to apply for those jobs.

Maryland
recently passed a law aimed at requiring Wal-Mart to spend more on
health insurance. This is an extremely flawed path to healthcare
reform. We need universal coverage, not piecemeal legislation designed
to punish companies because they operate differently than their
competitors.

The fact is, demanding more from business based on
sales or the number of employees is not always the best way to achieve
a just result.

I would have said "never" instead of "not always" in that last sentence. But who’s complaining. This is the second "pro-business" piece I’ve seen by McGovern. The first was written years ago after he had been running a business and found the regulatory requirements to be rather onerous. And of course it’s not really "pro-business," a label I despise when applied to thing I write. It’s just anti-anti-business, which is really not the same thing at all.

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{ 5 comments }

liberty May 24, 2006 at 7:18 pm

I hate the term pro-business. There are people who are pro-business, but those who favor the free market are not among them, and are usually accused of being so. Just as the "left" likes to lump the "right" in this country in with fascists, so do they lump together pro-business and free-market.

Fascists are "pro-business" in the sense that want government to have a heavy hand in it; but a hand that lifts it up and uses it against the people. The left call this "right-wing" and say that its "right-wing" because the right like business.

But the right in this country are free-market (old liberal). Free marketers are against the government having any influence on business. This may be good or bad for any particular business, but it good for business overall, just as it is good for workers; it is good for the economy overall.

The left wants government to have a hand in business too, though they want to squash it a lot and the extreme ones (socialist and communist) perhaps want government to take it over completely. They say this is "pro-worker" and even "anti-business." Of course being anti-business is ultimately anti-worker, but that is a separate issue.

In any case, both the fascist and the socialist want government to regulate business – just for different reasons and perhaps in slightly different ways. Whatever the motivation is, regulation is regulation. Any policy that regulates will have to do so in such a way as to allow the business and the workers to survive. It makes more sense to lump together all those who prefer regulation than to lump one of them together with a group that wants government to completely stay out of the market : the free marketers.

So please, do not say that free marketers are "pro-business" and please avoid using the term without a disclaimer.

Patrick May 24, 2006 at 8:09 pm

Sure, pro-business…except the bit about universal health care….wonder how that will be paid for……hmmm…corporate taxes maybe?

Keith May 25, 2006 at 11:27 am

Pro-business?

"Maryland recently passed a law aimed at requiring Wal-Mart to spend more on health insurance. This is an extremely flawed path to healthcare reform. We need universal coverage, not piecemeal legislation designed to punish companies because they operate differently than their competitors."

Hello? Socialism!

Trumpit May 27, 2006 at 5:11 pm

Corporate social responsibility is so Hayekian! It is certainly more efficient for successful corporations to deal with social needs within their purview than to expect bureaucratic government to do it. And do we want heavy-handed government to dictate to corporations what they have to do to be good, socially-aware corporate citizens? Of course, you want neither the government nor corporations to be involved in the business of social responsibility. You are at least consistent. When was the last time you wrote about the evils of corporate social/environmental exploitation? You seem to have no trouble with that for some mysterious reason. Do you remember Poletown? GM wiped it off the face of the earth as a result of its greed and overwhelming power and influence.

Lee October 1, 2007 at 5:25 pm

Global Warming Isn't A Threat

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