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Guest Editorial

System works if you let consumers decide

BY DON C. BRUNELL

At first blush, it sounds like something out of the old Soviet Union in the 1950s. "You must sign this pledge, or you will not be allowed to do business."

But it's not Russia, it's happening right here in Washington, and Thurston County Democrats are drawing national attention in 2005. In their October newsletter, they highlight an effort by so-called social justice activists to pass a "community values" ordinance for businesses in Olympia and Tumwater.

This Orwellian ordinance would create a values report card for "large corporations" on everything from the environment and labor law to "employees' and customers' civil rights." Companies would be forced to pay a fee for the privilege of being graded against these standards, and businesses that fail to measure up would be denied permission to locate in the city or forced to leave town. The ordinance would also allow activists to file lawsuits if the standards are not enforced to their satisfaction.

Proponents admit that this is their latest salvo against Wal-Mart. Labor unions have tried unsuccessfully for years to convince Wal-Mart employees to join a union. This latest gimmick is just a scheme to use government to accomplish what they could not.

In a recent letter to the editor published in The Olympian, activist Susan Bee writes, "The community values ordinance asserts citizen authority over corporate actions and is an exercise of our democratic right of self-determination." Bee claims the ordinance is the only way individual citizens can have leverage over big corporations.

Not true.

Under capitalism, consumers have the ultimate power over businesses. If they don't like how a company operates or the products it produces, they "vote with their feet" and shop elsewhere. A company without customers will go out of business. In fact, some of America's industrial giants have learned that lesson well when consumers started buying from their foreign competitors.

The fact is, it's in a company's best interests to provide good pay and benefits in order to attract and keep good employees. Jim Senegal of Costco says paying good wages and benefits isn't altruism, "It's just good business." That's true. Happy, productive employees work harder and provide better customer service, and that translates into higher sales. Companies that pay poorly lose money because of higher employee turnover and lose customers because of poor service. That's how the system works.

Despite a multi-year "education" effort, so-called social justice activists and union leaders have failed to mobilize consumers to support their campaign against Wal-Mart. Now, they want to use the power of government to do what they could not. These people seem to have forgotten that it was Wal-Mart and its foundation that contributed $26 million cash and millions in products and services to Hurricane Katrina victims, despite several of its stores being looted and ransacked in New Orleans.

But this is not about Wal-Mart.

This so-called values ordinance may be aimed at Wal-Mart, but it's a shotgun blast that will cause a lot of collateral damage. Businesses are already required to comply with thousands of laws and regulations. In fact, the cost to American businesses to comply with just federal regulations exceeded $1.1 trillion in 2004. Establishing a set of nebulous standards, ever-moving goal posts, and the constant threat of lawsuits is a recipe for disaster.

Frankly, this concept of government-approved values is scary. Which bureaucrat decides the values that business owners must follow? Which businesses should be required to comply? Today, Wal-Mart. Tomorrow...? And why not adopt a set of "values" that individual citizens must comply with or be run out of town?

The activists pushing the values ordinance are not trying to give the people a say. The people (consumers) have already spoken - the activists just don't like the answer.

Don C. Brunell is President of the Association of Washington Business.

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