Saturday, July 23, 2005

Plutocracy Now!

Costco, you naughty company, you pay your workers too much!

But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco's customers but to its workers as well.

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."


Despite Costco's impressive record, Mr. Sinegal's salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.

"I've been very well rewarded," said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. "I just think that if you're going to try to run an organization that's very cost-conscious, then you can't have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong."

How dare you pay them a living wage! Why, sure, you're making money at your business, and good money, but where's the Gordon Gekko attitude? Don't you know you have to squeeze the last drop of blood from them? Goddamnit, you're making Wal-Mart look bad, and that's bad for capitalism and bad for America. What would Tom Friedman think of you? You're gonna make him cry. Is that what you want, Costco? Fire all your union workers, outsource your customer service department to India, put every other worker on a part-time schedule, and cut your wages by 40 percent. Also, for God's sake give your CEO a 1,000 percent pay raise.

He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers' expense. "This is not altruistic," he said. "This is good business."

He also dismisses calls to increase Costco's product markups. Mr. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.

What a great article.

Mr. Sinegal, whose father was a coal miner and steelworker, gave a simple explanation. "On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."

Ahh, that's why. Well, I'll try to shop there soon, and pay him back for treating his employees well (while sticking it to Wal-Mart in the process) as soon as I can. And while I can: when this guy is gone, some Wharton-type fucktard will take the place over and make it another Wal-Mart.


Don't you love it when business is more powerful than government? It's an American tradition, after all: and it always, always means that business joins with the government to fuck you, the individual, over. There used to be a thing called populism that did some good work, despite enourmous obstacles, in opposing the nasty symbiotic business-government relationship, but as a movement it's as dead as fried chicken now -- look! there's Tom Friedman scraping its bones off the plate into the trashcan! And he's smiling!

(Libertarians always pretended to oppose the symbiotic relationship -- many even in good faith believed that they were doing so. But in reality they are enablers of it, and are consequently rightly known as useful idiots.)

Dell sucks another 7 million out of North Carolina. In addition to the 240 million it already pocketed:

The North Carolina Senate recently approved a measure that will allow the state to continue offering such incentive packages to companies for the next two years. The state has suffered from job losses in key tobacco farming and textile industries and is trying to build out an already sturdy technology sector. One of Dell's closest allies - Red Hat - calls North Carolina home.

It's good to see such staunch Republicans as Chairman Michael Dell and CEO Kevin Rollins, who donated in 2004 to the Every Republican is Crucial PAC, the Longhorn PAC, Tom DeLay, the Republican National Committee and George W. Bush, so happily take enormous government handouts. Dell is one of the most profitable computer makers on the planet, making $3.3bn net income last year.