The American Spectator

The Public Policy

Chuck Colson's Short Circuit

By Doug Bandow on 5.4.07 @ 12:07AM

The 2004 election caused many vote-minded Democrats to start thinking about how to attract so-called "values voters." It wasn't expected to be an easy task. But now evangelical leaders seem to be trending left, almost running after Democratic politicians.

In the news recently has been growing concern among religious conservatives about environmental issues. Christian theology always has held that mankind was to act as a good steward of God's creation. The danger of newfound evangelical environmental enthusiasms is that religious believers with better intentions than knowledge will mistake command-and-control government regulations with good stewardship.

Even more curious is the emergence of Chuck Colson, former Nixon aide and founder of Prison Fellowship, as corporate scourge. In a column entitled "Disposable Workers," he recently denounced "rapacious unrestrained economic power." He added, "With all due respect to the late Milton Friedman, corporations' social responsibility goes beyond maximizing shareholders' returns."

What set off this tirade? Electronics seller Circuit City announced that it was letting go 3,400 employees. Complained Colson: "There is no consideration of an employee's productivity or quality of work. Nor is there any claim that the company can't afford to pay what the workers are currently making -- only that it doesn't have to."

To read Colson's column, one might think that Circuit City's president simply got up one morning and said: I feel like being a little "rapacious" today. But that's not the case.

The consumer electronics industry has taken a serious hit because greedy, amoral capitalists have been discounting flat-panel TVs. Prices have fallen far more swiftly than industry analysts had expected. As a result, Fred Hickey, editor of High-Tech Strategist newsletter, told the Wall Street Journal -- in an article dated two days before Colson released his column -- that Hickey was bearish on both Best Buy and Circuit City, the industry behemoths.

Moreover, Circuit City is lagging behind its rival. Pali Research analyst Stacey Widlitz told the Journal that "Best Buy is certainly able to navigate a difficult environment much better than Circuit City," which, she added, remained "in transition."

Indeed, the day before Colson's column the Journal ran a story entitled, "Best Buy Strategy Pays Off as Circuit City Falters." Reported the Journal:

Both of the leading U.S. consumer-electronics retailers continue to face pressure on profits from plummeting flat-screen-TV prices this year. But Best Buy's rapid expansion in recent years and its better grip on retailing basics have helped it offset the impact of TV price wars. Meanwhile, its smaller rival's turnaround efforts have boosted costs without yet showing a similar increase in sales.

Circuit City's revenue increase was anemic while expenses rose eight percent over a year ago. The company ran a net loss in the last quarter of 2006 after taking a charge for restructuring costs. Share prices fell.

Nor is Circuit City alone in its troubles. Reported the Journal: "Other consumer-electronics retailers are also battling a tough environment. Tweeter Home Entertainment Group Inc., RadioShack Corp. and CompUSA are among retailers that have announced store closings recently." RadioShack fired 400 employees to cut costs.

In this business environment Circuit City was under, shall we say, some pressure to reduce expenditures. So it cut 3,400 workers whom, it explained, were "paid well above the market-based salary range" for similar positions locally.

THIS UNDOUBTEDLY WAS QUITE PAINFUL for the employees involved. No one enjoys being fired. But was it really, as Colson claimed, "degrading and dehumanizing"? To lose your job because you are overpaid relative to the competition?

If so, then presumably a company that dropped its delivery service because the latter was "paid well above the market-based price range" would be committing a "degrading and dehumanizing" act. So too if a business shifted its advertising account. And changed caterers. Presumably even if the firm moved its employees to a discount airline. After all, overpriced messenger services, advertising agencies, restaurants, and airlines that lose business would have to lay off workers as well.

Circuit City does not claim to hire people because of their moral worth. People don't go to work for Circuit City to gain moral uplift and transformation. Circuit City is neither a family nor a church.

Rather, electronic retailing is a business in which all sides -- employers, workers, and consumers -- are attempting to get the best of the bargain. Firms and employees strike an economic agreement thought to benefit both sides. Customers shop around, looking for the lowest price and best service (hence the corporate name "Best Buy"). The relevant question all around is not what can you afford to pay, but how much will you pay?

Does this mean that businessmen have no responsibilities beyond the financial bottom line? Of course not. Company executives, like everyone else, must respect the lives and dignity of those around them, including their employees.

Letter to the Editor

topics:
Trade, Economics, Business, Environment, Energy