The Business Consequences of Challenging Obama's Statist Policies

tbBy Tom Borelli

The politics of business is getting perilous for CEOs trying to traverse the ideological battle between capitalism and socialism.

Whole Foods CEO John Mackey is under fire for offering free-market solutions to health care while GE CEO Jeff Immelt is benefiting from adopting a strategy in which the government is his partner.

Indeed, the contrasting approaches to Obama’s political agenda offered by Mackey and Immelt illustrate the risks and benefits of dealing with the president’s statist policies.

Whole Foods – the organic grocery retailer – is in the midst of a public relations crisis stemming from a commentary on health care reform by Mackey.

In his strongly worded opinion piece, “The Whole Foods Alternative to ObamaCare,” published in the Wall Street Journal, Mackey rejects Obama’s proposal because it would result in “a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system.”

As an alternative, Mackey recommends a series of free-market ideas, including high-deductible health insurance plans and health savings accounts (HSAs), which his company has adopted.

Mackey also seeks to reduce health care demand by encouraging personal responsibility, “with the realization that every American adult is responsible for his or her own health.”

Mackey’s push for personal responsibility and a free-market solution is not an altruist endeavor, but good business. Mackey built Whole Foods by capitalizing on consumers seeking healthier food, and now he senses another opportunity: in this case, the opportunity to profit from selling foods that help combat obesity and chronic diseases.

Prior to the publication of his commentary, Mackey told the Wall Street Journal he wants the company “to encourage customers and employees to attack the nation’s obesity rate, the prevalence of heart disease, diabetes and cancer.”

He envisions meeting that goal by increasing his company’s offering of healthy foods and to educate consumers on having better diets by initiating a Healthy Eating Education program in his stores.

Obviously, this business model could prosper under policies that encourage individual incentives to improve diets.

Mackey’s views spurred outrage among Obama’s left-wing supporters. A Facebook group dedicated to boycotting Whole Foods was created in record time, numerous blogs railed against Mackey and there were protests outside stores in several locations.

With Mackey on the ropes, a union pension fund advocacy group is calling for Whole Foods’ board of directors to dismiss him from the company he founded.

Although Mackey is far from a right-winger, his free-market view of health care and labor made him a target of Obama’s supporters.

In contrast, GE’s Immelt is “all in” with Obama’s policy agenda and it’s paying off handsomely.

Immelt embraces the notion of a new era of capitalism where companies coordinate their efforts with the government. In a speech to the Detroit Economic Club in June, Immelt said, “We should welcome the government as a catalyst for leadership and change.” He added, “America should get busy addressing the two biggest global challenges – clean energy and affordable health care.”

Immelt is doing more than echoing Obama’s campaign rhetoric of “change”: He has GE actively advancing the president’s policies, especially cap-and-trade.

Through its participation in the United States Climate Action Partnership – a cap-and-trade lobbying group – GE helped push the Waxman-Markey bill over the goal line in the House of Representatives. In doing so, the company was able to load the bill with provisions that will boost GE’s sales in “clean energy” products.

Even more disturbing, if true, GE’s support of Obama may have positively influenced the terms of a settlement with the Securities and Exchange Commission (SEC) over allegations the company was “cooking the books” to meet quarterly earnings expectations.

For a mere $50 million, GE settled four instances of accounting irregularities including engineering fake sales of locomotives to accelerate end-of-year earnings.

Following Enron, Sarbanes-Oxley and concerns of Wall Street greed, it’s amazing that GE escaped stiffer penalties from the SEC and show trial inquiries from the anti-business Congress.

But then again, Immelt is on Obama’s Economic Recovery Advisory Board and the last thing the president needs is to draw public attention to the possibility that a Bernie Madoff-type CEO serves as a presidential adviser.

Unfortunately, it appears that CEOs whose business strategies are in sync with Obama’s calls for greater government control will be rewarded while those who confront Obama’s plans for America will be punished.

This observation may explain why drug companies are lining up to cut a deal with Obama on health care and energy and utility companies are cutting deals with Congress on cap-and-trade.

Because of the critical role corporations play in public policy, liberty-minded citizens need to be willing to engage CEOs as they do elected officials. Participation at shareholder meetings and tea party rallies at corporate headquarters should be on the agenda.

Otherwise, business leaders will take the path of least resistance. They will join Obama and selling all of us out.

Thomas J. Borelli, PhD. is the editor of FreeEnterpriser.com and Director of the Free Enterprise Project at the National Center for Public Policy Research.

3 responses

  1. Paul

    Back in 2008, this Whole Foods, CEO John Mackey (how old is this kid?), was caught posting negative comments (trash talk) about a competitor on Yahoo Finance message boards in an effort to push down the stock price. So now I am suppose to take this loser seriously? Please, snore, snore.

    It’s funny we hear Republicans say that they do not want “faceless bureaucrats” making medical decisions but they have no problem with “private sector” “faceless bureaucrats” daily declining medical coverage and financially ruining good hard working people (honestly where can they go with a pre-condition). And who says that the “private sector” is always right, do we forget failures like Long-Term Capital, WorldCom, Global Crossing, Enron, Tyco, AIG and Lehman Brothers. Of course the federal government will destroy heathcare by getting involved, Oh but wait, Medicare and Medicaid and our military men and women and the Senate and Congress get the best heathcare in the world, and oh, that’s right, its run by our federal government. I can understand why some may think that the federal government will fail, if you look at the past eight years as a current history, with failures like the financial meltdown and Katrina but the facts is they can and if we support them they will succeed.

    How does shouting down to stop the conversation of the healthcare debate at town hall meetings, endears them to anyone. Especially when the organizations that are telling them where to go and what to do and say are Republicans political operatives, not real grassroots. How does shouting someone down or chasing them out like a “lynch mob” advanced the debate, it does not. So I think the American people will see through all of this and know, like the teabagger, the birthers, these lynch mobs types AKA “screamers” are just the same, people who have to resort to these tactics because they have no leadership to articulate what they real want. It’s easy to pickup a bus load of people who hate, and that’s all I been seeing, they hate and can’t debate. Too bad.

    August 31, 2009 at 3:48 pm

  2. Chaplain Ayesha Pursglove

    If enough of them stand up though in 4 years those who get shafted for doing what is right will be vindicated. If the rest of us do what is right as well. Mostly those in politics they must be willing to fall on the sword so to speak, they must be willing to stand up and sacrifice their careers in politics for the sake of America and as long as those on the Hill can do that the rest of us will be victorious, I think G.W is a perfect example of the that (although he did cater to the democrats way to much, but hey he did his thing)

    September 8, 2009 at 11:36 am

  3. Chaplain Ayesha Pursglove

    OH and I have such disdain for GE at this point it is not even funny. They are the thing the Left says they ate the most and yet there they are right in bed with them. All for the money and power, Cap and Trade will destroy America but hey it will make GE even richer

    September 8, 2009 at 11:40 am

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