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.
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.
OF COURSE, SOME COMPANIES BETTER value employees than others, both
as human beings and as productive workers. Indeed, treating workers
well typically is cost-effective, since doing so attracts better
employees, reduces turnover, and so on. But the mere fact that a
firm fires for economic reasons an employee it originally hired for
economic reasons does not, in Colson’s words, leave “people as
disposable commodities and dehumanized.”
In any case, the best response to fear of the latter is never to
treat the economic realm as the be-all and end-all of life. It
isn’t. Our moral worth comes from being created in the image of
God, whatever our economic skills. Family and community remain the
most critical foundation of moral life.
Did Circuit City make the right decision in laying off 3,400
workers? It’s impossible for me, or Chuck Colson, to say. But
Circuit City had to act, lest the company face even more grievous
problems in the future.
Moreover, though the firings were unpleasant and unfortunate,
the workers had no moral claim to be paid above market wages. The
firm had no more obligation to pay them more than the market “said”
they were worth than they had a moral obligation to stay with
Circuit City if it paid them less than the market “said” they were
worth. A culture of “moral restraint,” as Colson puts it, does not
absolve employers and employees alike from having to make tough
decisions in a competitive marketplace.
There’s no Christian politics, whether right or left. Nor is
there any Christian economics, whether capitalist or socialist.
People should be moral because they are human beings, not because
they are businessmen.
