As a dedicated
believer in the free market, I can say that one of the hardest things to
explain to people is that a capitalist isn't necessarily pro-business. A
business aims to look after it's bottom-line, and occasionally these alleged
supporters of the free market team up with the state to reach their own
short-term goals. The newest example of this involves Nike and Apple.
It was pretty big
news in many circles when these companies recently resigned from the U.S.
Chamber of Commerce. The Huffington Post and others were thrilled, apparently
believing this to be over those firms' new-found belief in climate change and
their support for cap and tax legislation.
The Chamber needs
"a more progressive stance" on climate change, declared Apple Vice
President Catherine Novelli in a letter of resignation to the business lobby on
Nike echoed those
sentiments when it resigned from the group Sept. 30.
corporations don't make these decisions without considering their own interests,
and you can bet your bottom dollar that these companies wouldn't support
legislation unless it helped their profits. So what's the real story?
legislation that would appear (on the surface) to be against their best
interests is nothing new. Three big examples come from some of the world's
largest companies; the tobacco giant Philip Morris, the world's largest
soda-maker, Coca-Cola and Wal-Mart.
Just a few months
ago, Philip Morris teamed up with the Obama administration and supported a
bill that would allow the Food and Drug
Administration to regulate tobacco. In late September, Coca-Cola announced a "world-wide
commitment" to support putting energy
information on all products. And Wal-Mart has consistently favored legislation in
support of a higher
Is this all done out
of the goodness of their hearts? Is this just capitalism becoming more socially
conscious? Of course not; all three companies know that supporting these
regulations would increase their bottom-line by locking out competition. Tobacco
Lorillard more than Philip Morris. Small
bottling plants have less to spend on packaging than Coke, and Wal-Mart already
pays an average wage much higher than the federal minimum. Such regulations
significantly hurt the smaller mom and pop shops while only denting these major
And that is exactly
what Nike and Apple are doing now.
According to The
Wall St. Journal, "Both companies may figure they can afford a U.S.
carbon tax because most of their manufacturing is done outside the U.S. Apple
has an enormous 'carbon footprint' of some 10 million annual tons of emissions
to make and use its power-hungry gadgets. But nearly all of those products are
made in China
and other Asian countries where there are no carbon limits and aren't likely to
be any time soon, if ever." If these operations were done in the United States,
the pending cap-and-tax legislation would cost Apple between $43 and $100
million per year.
Meanwhile, most of
Nike's operations are in Southeast Asia. Does
anyone think South Korea and
will sign up in support of carbon-cutting regulations anytime soon?
Leaving the Chamber
over a single dispute is silly and childish of these companies. As The Wall
Street Journal notes, "The Chamber's
job isn't to favor one company's agenda over another but to stand broadly for
free trade, low taxes and limited regulation — principles that help U.S.
business as a whole."
One of the Mackinac Center's
Principles of Sound Public Policy "requires that we consider long-run effects and all
people, not simply short-run effects and a few people." Most companies believe these things — but only as long as it helps their
Skorup is a 2009 graduate of Grove City
College with a dual major in
history and political science. He is a research intern at the Mackinac
Center for Public Policy, a research and
educational institute headquartered in Midland,
Mich. Permission to reprint in whole
or in part is hereby granted, provided that the author and the Center are