Costco and Trader Joe’s Prove that Capitalism Works

There is growing coverage in the media of Costco and Trader Joe’s demonstrating that it is possible to remain in the retail business in America while taking care of your people.

We applaud the sentiment, but we wonder if everyone hailing the labor practices of these companies recognizes a simple fact: both of these models prove that capitalism, properly managed, works well.

These companies are growing – and drawing business away from their less enlightened competitors – in no small part because their people are happier, and because of the difference that makes across the organization. And they did it all without being required to do so by law.

The road to a better form of capitalism is not through creating an entirely new, expensive, and self-interested regulatory infrastructure to guide it. Rather, it is through us directing our custom to companies that can set an example for the future, investing our funds accordingly, and by laying out codes of conduct to which we insist companies adhere.

3 thoughts on “Costco and Trader Joe’s Prove that Capitalism Works

  1. Yes, Costco and TJ’s are decent companies that take their social contract seriously, but I have to disagree with your contention that we don’t need regulation. Walmart is only one of the numerous corporations on the dark side, and it’s a place I will never set foot in. But millions do, and obviously they don’t give a damn about Walmart’s many sins. You say we should, in effect, make such companies behave by shopping at the better companies and investing in them. Obviously that hasn’t worked. Most people buy where it’s cheap, and don’t give a thought to how the corporation and its officers behave. Corporate capitalism as a whole only honors the social contract when required to do so by government control. We cannot rely on the good will of corporate billionaires to do the right thing.

  2. John, to be specific, I did not say we do not need regulation. On the contrary, I frequently upset many of my fellow Republicans by arguing that properly designed regulation ensures that business serves society without unnecessarily encumbering business or overly favoring large enterprise at the expense of the small. What I said was that we do not need “an entirely new, expensive, and self-interested regulatory infrastructure to guide it.”

    Further, while we recognize that there are some companies – many we never hear about – that flaunt the social contract, there are also many that embrace it. I keep a list of a hundred or so of the latter, but there are many more. The bad must be set to right, but the those companies making an earnest effort to do the right thing should not be punished in the process.

    At the very least you must acknowledge that heavy-handed regulation – particularly the kind of government micromanagement of enterprise that plagues countries like France – cannot by itself serve to keep business at the service of society. We as consumers, as shareholders, and as citizens have multiple roles to play in the process, and when we create laws to guide enterprise we always walk a fine line between wise regulation and gratuitous encumbrance.

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