Chuck Colson's Short Circuit - The American Spectator | USA News and Politics
Chuck Colson’s Short Circuit

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.

Doug Bandow
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Doug Bandow is a Senior Fellow at the Cato Institute.
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