Mackey the Maverick

By John Fund

Tuesday, February 19, 2013

 

John Mackey, the co-founder and co-CEO of Whole Foods Markets, says he doesn’t court controversy. But he also believes in speaking his mind. Last month he angered liberals by telling an NPR interviewer that Obamacare was “technically speaking” a form of fascism. “Socialism is where the government owns the means of production,” he explained. “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 backed off his comments later in a blog post. The F-word “stirs up too much negative emotion with its horrific associations in the 20th century,” he said. “I think for now I will simply call [the Obama law] government-controlled health care.”

 

It’s doubtful that most Whole Foods customers share Mackey’s libertarian critique, but they still love his stores (there are now more than 340). Whole Foods is paradise for crunchy-granola types and many others who just want healthy food. It engages in “socially responsible trade” and showcases vendors who practice humane treatment of animals and who endorse biodiversity and the use of “healthy soils.” When Mackey wrote an op-ed in 2009 for the Wall Street Journal suggesting President Obama’s health-care plan wouldn’t work, unions tried to start a boycott of Whole Foods, but their efforts quickly flopped.

 

Mackey thinks that the way Obamacare is playing out confirms his fears and that more people will come to agree with him. “Many companies are giving employees fewer than 30 hours a week of work to avoid the health-care mandate, or creating subsidiaries to avoid employing more than 50 people,” he told me last weekend at the annual conference of Students for Liberty, a nationwide libertarian youth organization. “That will only accelerate.” His own company has cut health costs and increased employee satisfaction by providing a high-deductible health-care plan combined with annual company contributions to a health savings account for each worker. Employees can use that money to cover routine medical expenses; or, if they don’t use the money in a year, they can roll it over to pay for expenses later on.

 

Mackey was a big hit with the SFL attendees, packing a ballroom with 1,400 people for a talk on his new book, Conscious Capitalism, in which he argues that business has a higher purpose beyond making money. “Many people claim business is fundamentally selfish and that the ultimate goal of all business is to maximize profits,” he told me in a conversation last year. “But that’s not most businesses. Just like doctors have a higher purpose to heal people, journalists write the truth, architects design buildings, hopefully businesses are creating value for their customers and their stakeholders.” This is not the usual message that young libertarians hear at their gatherings, but many seemed willing to integrate Mackey’s message into more traditional free-market celebrations of capitalism. Mackey himself drove the point home: “I love much of Ayn Rand’s message,” he told the students. “But her ethics are a mess.”

 

Mackey stresses that free markets have immeasurably helped poor people ever since Adam Smith’s disciples and the Industrial Revolution ushered in modern economies. “Two hundred years ago, the world’s population had an average living standard akin to Bangladesh’s,” he proclaimed. Today, overall global prosperity per capita has increased by ten times since then, with increases of 16 times in developing countries and 100 times in the United States.

 

The potential for dramatically reducing poverty further is what makes Mackey excited about free markets. But capitalism has a “branding problem,” he noted, and it’s time to go on the offensive in favor of free markets: “Capitalism is ending poverty on planet earth. The problem is not that there is an unequal distribution of wealth in the world. The problem is that there is an unequal distribution of capitalism.”

 

But it must be capitalism properly understood. In his book, which he co-authored with business professor Raj Sisodia, Mackey notes that crony capitalists and misguided governments have often been in an alliance to “use the coercive power of government to secure advantages not enjoyed by others: regulations that favor them but hinder competitors, laws that prevent market entry, and government-sanctioned cartels.”

 

Mackey told his audience that business leaders should understand that capitalism is threatened if it receives the brunt of the blame for disasters such as the 2008 financial crisis. “The recession was blamed on greedy financial corporations, deregulation, and capitalism — market failures — rather than on bad government regulations and monetary policies — government failures.”

 

It’s up to business to demonstrate and develop ways of explaining the good that it does. “Free-enterprise capitalism is an extraordinarily powerful system for eliciting, harnessing, and multiplying human ingenuity and industry to create value for others,” he writes in Conscious Capitalism. In an essay in an earlier book, Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World’s Problems, Mackey was similarly enthusiastic. Business is good, “because it creates value for many,” he wrote. “Profits are created through voluntary exchange, not through the exploitation of people.”

 

In his new book, Mackey claims that companies that practice his brand of “conscious capitalism” not only tend to have a better public image, but they also tend to outperform the stock market overall. His examples include firms such as Southwest Airlines, Amazon, UPS, Honda, eBay, Costco, and Caterpillar — and yes, Whole Foods.

 

“I believe business is on the threshold of great things,” he says. “But we have to take charge of our message and encourage responsible behavior.” John Mackey may have started out in the 1970s as a member of the counterculture, a long-haired resident of “an urban co-op/commune” who embraced “the ideology that corporations were essentially evil.” But he’s clearly changed his views. What remains constant are his idealism and his willingness to spread new ideas; these are wholly intact and on full display. If today’s young people are going to reject collectivism and appreciate free markets, they are far more likely to do so after listening to an entrepreneur on the model of John Mackey than to another mealy-mouthed corporate suit.