The Left is in Shock After Whole Foods Succumbs to the Free Market

I’ve been seeing a lot of these articles from left leaning sites, ripping into Whole Foods for their decision to “sell out” to Amazon. That decision is causing some to question Whole Food’s commitment to their mission of “conscious capitalism”.

Of course, any type of capitalism is about growth and Whole Foods’ key investors were getting anxious after multiple quarters of declining growth. As a stand alone entity, Whole Foods always had a limited upside. Their high standards are great for advancing sustainable farming practices and healthy eating, but not for penetrating markets where consumers are more concerned about making ends meat then about where their meat comes from.

Whole Food chains have the most presence (based on stores per 1,000,000 people) along the west coast (OR, CA, NV), in Southern New England (MA, CT, RI), and the Mountain West (NM, and CO where Whole Foods has the most stores per person in the country). In recent years, Whole Foods has also experienced considerable growth in New Jersey, Virginia, North Carolina, and Florida. These are all states with a high percentage of college graduates, an affluent population, or where Whole Foods’ brand in consistent with the state’s overall culture (there are plenty of starving artists in California willing to spend their last dime at a Whole Foods store).

Where you don’t see Whole Foods growing are in urban areas or middle class suburbs. Price was always the biggest obstacle to Whole Food’s growth, which is what makes Amazon such a suitable buyer. Their corporate culture of testing and innovating, along with their logistical and technological resources will help bring prices down (as will Amazon’s willingness to lose money in order to gain market share).

If a partnership with Amazon results in Whole Foods’ prices coming near parity with value oriented stores, more customers will open up to the Whole Foods experience (Even if the premium for shopping at Whole Foods can just be brought down significantly, at some point price conscious shoppers will be willing to be a little more for healthier alternatives). Ultimately, lower prices is the key to growing Whole Foods in new markets.

Of course, the real reason why Amazon’s acquisition of Whole Foods is making such an impact on the left is because it bursts an ideological bubble. No matter how noble of a mission they carry, companies do not exist for the public good. They exist to serve their shareholders. However, companies that do good are generally rewarded by the free market and are able to spread their mission as a result.

By most accounts, Whole Foods has been a good example of a responsible corporate citizen. They are recognized as one of the most environmentally friendly companies in America and pay all of their employees a living wage. Current CEO John Mackey founded the chain in 1978 with the stated mission to “make our country and world a better place to live” by recognizing “human rights, food safety, and environmental deterioration were major concerns.” The corporate mission may make Whole Foods sound like a leftist utopia, but the truth is John Mackey is an Ayn Rand loving libertarian and Whole Foods has never really been a “progressive” company. Some examples that the left prefers to sweep under the rug:

- Although, John Mackey has expressed appreciation for the historical role that unions have played in advancing workers’ rights, he’s steadfastly fought to keep Whole Foods union free (Recent history has shown Mackey to be correct as bad union contracts crippled and drove out former grocery power houses like A&P and Pathmark)

- In his book “Conscious Capitalism” Mackey wrote the following passage about Obamacare: “In fascism, the government doesn’t own the means of production but they do control it and that’s what’s happening with the health care program with these reforms and so I’d say the system is becoming more fascist.” Despite his company providing excellent health coverage, Mackey understands the risk involved from the federal government trying to manage 1/6 of the country’s economy.

- Perhaps most controversially, Mackey had the audacity to state the following about climate change legislation: “I believe we will be able to successfully adapt to gradually rising temperatures. What I am opposed to is trying to stop virtually all economic progress because of the fear of climate change. I would hate to see billions of people condemned to remain in poverty because of climate-change fears.” Far from being a climate change skeptic, Mackey detours from left’s climate change script by correctly pointing out nature’s role in climate change (the earth exited a mini ice-age in the 1870’s) and the dangers of the government trying to control something that they don’t fully understand or know how to control. Most importantly, he acknowledges man’s ability to adapt which is usually omitted from hysteria-filled climate change debates.

None of this is meant to detract from John Mackey’s accomplishments, in fact it’s the opposite. John Mackey managed to build a company that just sold for $13 billion with a progressive culture, that’s used the forces of the free market to fuel it’s success. Despite the complaints from the left, the two have proven to be quite compatible.