The Morals Of Costco, The Ethics Of Walmart

What’s
Wrong Today:

Our politics are in an
ethical crisis. From Ian Welsh:

Morals are how you
treat people you know. Ethics are how you treat people you don’t know.

Your
morality is what makes you a good wife or husband, dad or mother, even a good
employee or boss to the people you know personally in your place of work.

Ethics is
what makes you a good politician. It is also what makes you a humane CEO. Whether you are a politician or a CEO, most of what you do will affect
people you don’t know, people who are simply statistics.

Change
Social Security or welfare, and people will live or die, suffer or
prosper. Change the tax structure, healthcare mandates, trade laws, infrastructure
spending—virtually everything politicians do means some people will win and
some people will lose.

Our
political system ensures that politicians will do harm to people they don’t
know. But that doesn’t give them the right to protect the people they do know. If they protect their friends and family, they will act
unethically. In the Great Recession of 2008, millions of homeowners and
employees unknown to politicians were hurt and the people (companies) the politicians
and treasury officials did know were bailed out.

Today’s politicians
also ignore future consequences: They refuse to build or repair infrastructure, to
invest in basic science or education. They refuse to deal with global warming.
These decisions overwhelmingly affect people they don’t know: Odds are, any
individual bridge collapse won’t hit the politicians. Global warming will hurt
most of its victims in the future. The rich and powerful in particular,
believe that they will be able to avoid the consequences of these things. Welsh concludes: (emphasis by the Wrongologist)

To put the needs of
the few before the needs of the many, in public life, is to be a monster. If we all put only ourselves and those we
love first, and damn the cost to everyone else, our societies cannot and will
not be prosperous, safe, or kind.

So, our
politics are in an ethical crisis, while
capitalism is in both an ethical and moral crisis:

The current
structure of our economy is designed to impoverish people we don’t know. For the
rich this means cutting the wages of the middle class. CEOs are obsessed
with “lowering costs” and making profits, and both of those are meant to
extract maximum value from people while giving them as little as possible in
wages, goods and services in return.

Capitalism was originally thought of as a materialistic, utilitarian philosophy
in which the alpha and omega was the maximization of aggregate
utility.

Somewhere along the way, the alpha and omega of capitalism seems to have
morphed from maximizing aggregate utility to maximizing profits for the tiny minority who
possess “capital.”

In April, Forbes
wrote an article comparing Costco with Walmart:

Costco’s most
recent quarterly earnings report reveals a fairly healthy 8% rate of
growth in year-on-year sales—including a 5% rise in same store sales.

Meanwhile,
Costco’s primary competitor, Walmart, saw an anemic 1.2% rise in sales, while
other competitors such as J.C. Penny and Target experienced even greater
problems with their sales results.

In an
identical economy, how do we explain Costco’s growth vis-à-vis the failures at
Walmart? Forbes asks:

Might it have
something to do with the fact that Costco pays nearly all of its employees a
decent living (well in excess of the minimum wage) while Wal-Mart continues to
pay its workers as if their employees don’t actually need to eat more than once
a week, live in an enclosed space and, on occasion, take their kids to see a
doctor?

Harold
Myerson in WaPo:

One lesson that
emerges from the experience of low-end retailers is that putting workers in
crummy, low-wage jobs tends to yield crummy service as well. McDonald’s
earnings have fallen, the Wall
Street Journal reports, and a management webcast to franchise owners
acknowledged that customer dissatisfaction is rising in part because service is
broken.

Myerson
adds: (Emphasis by the Wrongologist)

Costco
and Trader Joe’s pay their workers far more than many of their competitors,
offer their employees opportunities for promotion and enjoy markedly lower
worker turnover and far higher sales per employee than their low-road
counterparts. Sales per employee at Costco are
nearly double that at Sam’s Club.

Maybe you
can pay employees well, serve the public and still make money. The Wrongologist
called this the
happy talk theory of business ethics in a recent post.

But Costco
isn’t a feel good story for today’s capitalists, who point out that Wal-Mart is
better because it just hit a 52-week high for its stock.

Isn’t that what really matters?

Few capitalists these days speak about their morality, which boils down
to “more for me and less for you”.

They talk about how we’re going to have to learn to
live with less. Invoking this thought opens capitalists up to hypocrisy since
they have made it very clear that curtailing consumption is not something they
themselves are willing to do

They talk about the profit imperative rather than moral
or ethical actions. They
say that they have a fiduciary responsibility to maximize profit. To do
anything less than that is to cheat their investors

So, when the
ethics of our politics and morality of our business practices are taken together,
we see that we are slowly disinvesting from society’s bedrock institutions.

Republicans
beat a steady drum about how and why we can no longer trust our government. Their
efforts are aimed at drawing funding away from those institutions, so that dismantling them
is easier.

Analogous
to our bridges, roads and ports, our heritage of public institutions
is what allows a fair, democratic and educated society to function. Disinvesting from them should be a crime.

We can
replace incandescent light bulbs with LEDs, but weakening democratic
institutions and replacing the egalitarian rule of law with plutocracy, tolerating
poverty for nearly 50% of our people, while enduring a creeping surveillance
state, is changing the character of our society.

Neo-feudalism,
like the original, will be very ugly for the average Joe.

Terry McKenna

We romanticize Feudalism but the reality was far from romantic. If you were a regular guy, you were beholden to superiors, and they beholden to others superior to them.

It sucked.

The way we treat entrepreneurs is not all that different from the romanticism of the knights (bullies) and ladies of the feudal era. It sucks now too.

The Wrongologist

Geopolitics, Power and Political Economy

The Morals Of Costco, The Ethics Of Walmart

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