Some tiny creature, mad with wrath,

Is coming nearer on the path.

--Edward Gorey

Location: Pittsburgh, Pennsylvania, U.S. Outlying Islands

Writer, lawyer, cyclist, rock climber, wanderer of dark residential streets, friend.

Friday, September 30, 2005

Even If Profit is the Most Important Thing . . .

ReasonOnline hosts an entertaining, if not terribly deep, debate setting Whole Foods's prog-libertarian CEO, John Mackey, free market economist and public intellectual Milton Friedman, and T.J. Rodgers, the apparently insanely greedy CEO of Cypress Semiconductor to discuss the civic and social role corporations should play, and how best they should do so.

Mackey, for those who aren't familiar with Whole Foods, considers his corporation's mission to be a sort of global one, and he's prone to occasionally florid pronouncements like identifying "Whole Foods’ core business mission" as "improv[ing] the health and well-being of everyone on the planet through higher-quality foods and better nutrition." Ahem, uh, right buddy.

That said, while he and Friedman engage in a pretty intelligent, pretty straightforward discussion that reflects honest differences of opinion (and some issues regarding terminology and chicken / egg confusion (not literally)), Rodgers comes off sounding like a child, hotheaded, petty and ill-informed.

And I only post this whole thing, honestly, because of how well Mackey blasts Rodgers in rebuttal, something most people in such prominent positions tend to be way too polite to do. The following is only a short sample:

When Rodgers isn’t engaging in ad hominem attacks, he seems to be arguing against a leftist, socialist, and collectivist perspective that may exist in his own mind but does not appear in my article. Contrary to Rodgers’ claim, Whole Foods is running not a “hybrid business/charity” but an enormously profitable business that has created tremendous shareholder value.

Of all the food retailers in the Fortune 500 (including Wal-Mart), we have the highest profits as a percentage of sales, as well as the highest return on invested capital, sales per square foot, same-store sales, and growth rate. We are currently doubling in size every three and a half years. The bottom line is that Whole Foods stakeholder business philosophy works and has produced tremendous value for all of our stakeholders, including our investors.

In contrast, Cypress Semiconductor has struggled to be profitable for many years now, and their balance sheet shows negative retained earnings of over $408 million. This means that in its entire 23-year history, Cypress has lost far more money for its investors than it has made. Instead of calling my business philosophy Marxist, perhaps it is time for Rodgers to rethink his own.

Un-huh -- you just got served, computer boy.


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