Saturday, March 17, 2012

Nocera and Winning Progressive

In today's Times, columnist Joe Nocera has some bad things to say about Goldman-Sachs (see The Good, Bad and Ugly of Capitalsim) -- and rightfully so -- but also some good things to say about Starbucks, whose CEO Howard Schultz has been touting his company's brand of do-gooder capitalism (investing in socially responsible causes and companies -- even some not related to coffee).

The first reader comment to Nocera's column came from the blog WinningProgressive, which pointed out that there are severe limits to this kind of do-gooderism -- limits set by the very nature of capitalism. Yes, a company's stock price might go up as a result of investors favoring its social policies, but ultimately, profit-making is the great unequalizer. Any financial weakness of a company that it detected by the great cut-throat system will be exploited sooner or later. If it costs a nickel a share for company to "do the right thing" socially, another company will use that as an economic tool to edge them -- maybe out. This is less likely to hold for coffee companies, whose clientele probably includes many progressives, but can't be expected to hold for the mainstream "big boys": oil, gas, manufacturing and high-tech. We've just seen that Apple is not so very squeaky-clean when it comes to saving money on manufacturing its sleek pads and pods. Check out WP's response which follows Nocera's piece.

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