The American Spectator

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.

Firms must pay what is due their workers. The Apostle James denounced those with wealth who “failed to pay the workmen who mowed your fields” and warned that “The cries of the harvesters have reached the ears of the Lord Almighty.” (James 5:4)

There surely are other moral responsibilities that grow out of people’s shared humanity, rather than their employment relationship. Plant safety mixes moral and economic concerns, for instance. Moreover, the intimacy of a small enterprise with long-term employees may yield some bonds akin to family ties. These almost certainly will vary by enterprise and circumstance.

However, none of this justifies concocting a moral duty of a large, national retailer in a highly competitive industry to pay inflated wages to workers prepared to leave at the hint of a better offer elsewhere. However friendly the working environment at a store like Circuit City, no one would confuse it with a family.

YET COLSON SEEMS TO BELIEVE in an expansive duty of companies to care for their workers. Assume Circuit City does owe its employees a higher than market wage. Must it pay such a wage forever? Does it matter how much higher the salary is compared to that received by others doing comparable work? Do salesmen have reciprocal moral responsibilities to Circuit City: if someone offers them a higher wage, should they stay with the electronics retailer? Must they do so forever? Under this philosophy feudalism was the perfect Christian social system.

Perhaps the most disconcerting aspect to Colson’s attack is the failure to consider the trade-offs facing Circuit City. A company under competitive pressure can’t simply waive away its economic troubles. The jury remains out on whether the layoffs were a good decision — some analysts blame the company’s expected loss during the first quarter of 2007 on the departure of so many skilled sales personnel. However, any alternative strategy to cutting salaries will have adverse consequences on people.

First, shareholders who have invested in the company — including pension funds and retirees living on investment income — could receive less return. Without them there would be no enterprise, and thus no jobs. Moreover, the lower the return, the less the incentive for others to invest in the firm, harming its long-term prospects, and ultimate ability to pay highly remunerative wages.

Second, Circuit City could charge consumers higher prices. Maybe not for flat-screen TVs, where the competition is so intense, but for other products. Moreover, though many electronic goods might be considered luxuries, Colson’s principle applies to producers of necessities as well. Should poor people pay more for food, clothes, housing, and energy to finance artificially high wages for workers in those industries? Should Wal-Mart, for instance, turn transform itself from a discount to a luxury chain for the benefit of its workers, leaving low-income consumers behind?

Third, since corporate executives can’t banish high costs by simply citing a magic incantation or too, they could fire other employees and/or not hire other people. Like its smaller competitors, Circuit City could close stores. Or cut back outside purchases, which could cause some of Circuit City’s suppliers to lay off employees. In a worst case Circuit City could go out of business, putting all of its workers in the unemployment line.

There simply ain’t no such thing as a free lunch.