Is the CEO of Whole Foods Nuts?
Why are libertarian policy solutions woefully inadequate in an increasingly complex world?
November 22, 2011
According to a recent op-ed in the Wall Street Journal by John Mackey, the co-founder and co-CEO of Whole Foods, it’s high time to rewind to the early 1980s and hit the Arthur Laffer repeat button. That’s what must have caused Mr. Mackey to roll out, in late 2011, a regurgitated list of stale policy ideas. For the most part, they have long been proven to be either false, deceptive, plain stupid or all of the above.
Seeking to address a noble cause — ways to resuscitate the stalling U.S. economy — Mr. Mackey, a wealthy man no doubt, hauls out the old war horse of a flat tax. In the process, he lauds Russia and Ukraine, which have personal income taxes at a very low 13% and 15%, respectively. In his zealous pursuit of a low-tax agenda, however, the supermarket CEO does not seem to realize the dangerous territory on which he treads.
Those two countries, with their kleptocratic and often criminal political and business elites, clearly are not something to aspire to. But who knows? Maybe some store openings there are under negotiation? That would at least explain the hero worshipping of Russia and Ukraine, two of the least likely countries in the world for any displays of exultation.
Nor is his statement any more useful or convincing that, at 40% of GDP, the total cost of government is far too high in the United States. The Whole Foods man makes it sound initially as if that’s the amount which all those bureaucrats steal personally, Soviet-style, out of hard-working Americans’ collective pockets.
Far from it. As he acknowledges later, two-thirds of that amount is accounted for by defense, Social Security, Medicare and Medicaid. Defense aside, those are services that people really depend on — and that, to a large extent, they have actually paid for.
But quite irrespective of doctrinaire fights about numbers, that popular Washington sport, the real falsehood of his ways lies in misleadingly holding out the assumption that these outlays could be dramatically reduced. Defense? Sure. But the rest? Not so much.
Here is why: As Mr. Mackey himself acknowledges, the number of beneficiaries is growing considerably, requiring cutbacks to ensure that everybody at least gets something. However, it is false to assume that trimming at the edges of entitlement programs could lead to any real reduction in the overall level of public spending. Not when the number of baby boomers in the United States is increasing so rapidly.
Under those circumstances, all that can be realistically hoped for is to keep the cost of “government” — by which he largely refers to various mechanisms that serve as basic insurance against calamities — at an acceptable level, i.e., 40% of GDP.
The United States can count itself lucky if it succeeds in that mission. But for Mr. Mackey in the Wall Street Journal to hold out the implicit expectation that Americans should return to the 8% of GDP for all levels of government of 100 years ago is downright dishonest. If he did his math at his stores that way, his company would have gone bankrupt long ago.
There are some useful suggestions few and far between in his opining in the Wall Street Journal. Means-testing of Social Security benefits may well come into play. But opting out of the Social Security retirement system? With financial “players” being so undisciplined and mostly self-serving? One must assume the man has locked himself away at some privately owned, communications-free Caribbean island for the last few years in order to come up with such poppycock.
And how about the sunsetting of all regulations after ten years? Clearly, this is the dreamworld of a man who has a hard time growing out of a state of eternal adolescence. Running away from managing complexity is no way to deal with the modern world.