New York Times columnist Joe Nocera has an article this morning that runs under the headline "The Good, Bad and Ugly of Capitalism." It holds Starbucks and its CEO Howard Schultz out as an example of good capitalism and Goldman Sachs and its CEO Lloyd Blankfein out as an example of bad capitalism. "Maybe the time has come for Blankfein to watch what Howard Schultz is doing at Starbucks. Sometimes, the best way to do well really is to do good," Mr. Nocera writes. He says of Mr. Schultz, "Profitability is important, he believes, but so is treating customers, employees and coffee growers fairly."
At least two points are worth mentioning in response. The first is that the average annual compensation per employee at Goldman Sachs is reportedly about $400,000; at Starbucks, it is reportedly about $40,000. The company that is being praised by the New York Times columnist for treating its employees fairly and as an example of good rather than bad capitalism is paying its employees a tenth of what the "bad" capitalist company pays its employees. I don't know what Mr. Schultz's moral system is or what Mr. Nocera's is, but one reason that Goldman Sachs employees aren't quitting in droves to go work at Starbucks is that the Goldman employees' conception of morality and fairness when it comes to treatment of employees doesn't include getting paid a tenth of what they now earn.
The second point is that when one goes and looks at a prospectus for a recent Starbucks bond offering, one finds that when Starbucks wanted to raise $550 million in the bond market to fund the fair treatment of its customers, employees, and coffee growers, it turned to — you guessed it — Goldman Sachs, which was the lead book-running manager for the offering. So if the folks at Goldman are as terrible as Mr. Nocera would have readers believe, and the folks at Starbucks are as wonderful as Mr. Nocera would have readers believe, what are they doing in a business deal together? Sometimes, business is just business.