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McGovern on Corporate Responsibility

Posted By Russ Roberts On May 24, 2006 @ 2:05 pm In Wal-Mart,Work | Comments Disabled

In this LA Times op-ed [1] (HT: It Shines For All [2]), 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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[1] this LA Times op-ed: http://www.latimes.com/news/opinion/commentary/la-oe-mcgovern22may22,0,5962975.story?coll=la-news-comment-opinions

[2] It Shines For All: http://www.shinesforall.com/

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