Starbucks' Howard Schultz Owes The U.S. Nothing, And Is Too Good For Politics

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Posted: Jun 14, 2018 10:32 AM
Starbucks' Howard Schultz Owes The U.S. Nothing, And Is Too Good For Politics

Howard Schultz’s decision to step down from the Starbucks board recently naturally led to speculation about his future plans.  Most of it centered on politics, and whether Schultz would offer himself up as a 2020 Democratic CEO alternative to President Trump.  Let’s hope Schultz stays out of politics.  He’s too good for what’s seedy.

Up front, this is not an endorsement of Trump.  While there’s good and bad with every president, the hope with all presidents is that separation of powers limits their ability to do much of anything.  No doubt all of us, including yours truly, have policy ideas that we think would have a positive impact on the country.  That’s all well and good, but logic tells us that the American people will benefit the most from the president who does the least.  To err is human, and when presidents invariably err, their mistakes are often felt around the country, and sometimes around the world.  Inaction in the White House is the ultimate virtue.

The above speaks to the obvious problem with Schultz. He’s expressed interest in public service.  He wants to do something.  That’s dangerous.  And it runs counter to the Founders’ vision of a limited federal government whereby most legislation is local.  With it local, people can choose their policy bliss based on city or state lived in.

If Schultz wants to do something, he should run for local office.  And try his policy ideas out locally. Schultz’s businesses experiences recommend the latter.  Figure that Starbucks regularly experimented over the years on the way to various successes and failures; the crucial point here that Starbucks’ failures were its own. What works well in business will also work in policymaking.  Let’s keep it local.  More to the point, let’s not nationalize bad ideas.

Up front, Schultz has already floated a questionable idea.  Interesting about what's questionable is that it’s something that would appeal to many on the right.  Getting more specific, the leftward drift of the Democratic party concerns Schultz.  Thumbs up. Schultz wonders how some of the fringe Dems plan to pay for their silly ideas that include single-payer healthcare along with a job guarantee program.  Big thumbs up.  As this column recently pointed out, Democrats like Bernie Sanders and Corey Booker have few peers when it comes to ridiculous policy views.  Schultz seems to agree. Schultz would seemingly run as a different kind of Democrat, one focused on economic growth.  Amen to that.

Where he gets off track is in his elevation of entitlement reform. About this, most on the right would say his willingness to be honest about federal waste is a good thing.  And in a sense it is.  Every dollar the federal government spends amounts to that same federal government having more control over the economy.  Federal spending is the ultimate tax.  The problem is that Schultz assumes, as some Republicans do, that reform of Social Security, Medicare and other entitlement programs will immediately shrink the size and future cost of government.  Lots of luck there.

Indeed, the reason why entitlement reform is a fool’s errand is revealed through the other boneheaded ideas offered up by Booker, Sanders, plus Republicans who’ve similarly reveled in spending the money of others over the years. Assuming so-called “savings” from reduced spending on Social Security and Medicare, the political class will rapidly find all new ways to waste the money.  To be blunt, Social Security reform will make what’s even more ridiculous and costly (a jobs guarantee program, for instance, or a guaranteed income) more likely.

So while Social Security and Medicare were and are comically bad ideas, the paradoxical genius of their high and rising cost is that they somewhat limit the ability of the political class to introduce even dumber replacements.  This is too easily forgotten amid the clamor for reform.  The latter is not the same as shrinking government.  More likely it just frees politicians to divine new ways to waste our money in size fashion.  Schultz sees reform as an issue to run on, but it’s actually a reminder of his amateurism: not only is major reform of anything unlikely in Washington, the result of such grand policy-making likely wouldn’t be so grand.

Shultz should instead stay retired, and revel in all the immense good that he did.  As the New York Times reported, $10,000 invested in Starbucks in 1992 is worth $2 million today.  It’s a reminder that Schultz minted many millionaires on the way to his billions.

But Schultz’s bigger achievement is what Starbucks became, and what it will continue to be.  It’s community all over the U.S., and around the world.  It’s long been said that countries with McDonald’s in them don’t invade one another, and if true, think about what Starbucks means for world peace.  There are more Starbucks in Shanghai (double) than there are in New York City.  Starbucks doesn’t just bring people together, it’s a symbol and brand that brings the world together. Starbucks is where people meet to talk, and it’s also of course where people meet to do business.  In short, Schultz didn’t just create a great global business, he also created a concept that will be the starting point of all manner of other businesses.

To walk by a Starbucks in an airport, or walk into one anywhere in the world, is to invariably see a big crowd.  That Starbucks are invariably full and bustling is a sign that Schultz built something that continues to meet the needs of billions.

All that, plus Schultz forever redefined the nature of entry-level work.  Starbucks doesn’t have employees; rather it has baristas.  And those baristas provide a great customer experience precisely because Schultz realized what every wise CEO has always known: poorly paid workers are very expensive.  Figure that the poorly paid aren’t invested in the job, in knowing their customers, their orders, the names of their kids, and their pets. And the customers suffer this low pay.  Schultz not only pays well, but wanting his baristas to create community in his stores over the long term through fully-invested-in-the-concept employees, he offers health insurance and college education.  Entry-level compensation will never be the same thanks to this visionary. Thinking about all this, Schultz is way too good for politics.

Worse, his success as a businessman signals high odds of failure in the White House for the same reasons that he's accomplished so much in business.  Schultz is a builder, he’s a fixer, and because he is, he thinks that he can bring his business expertise to Washington in ways that will benefit us.  Except that he can’t.  Washington is all about doing what the private sector could do much better, and then when the previous truth is revealed in bright colors, it’s all about handing what is wasteful, ineffective and unnecessary even more money.

Washington is not a business, and it cannot be.  Washington just breaks things, and that’s why doers are so dangerous.  It’s also why Howard Schultz would be dangerous.  Problem solvers are bad in Washington because their bureaucratic solutions to problems that would never cut it in the real world never die.  Schultz shouldn’t sully his good name while doing things that, because they’re done in Washington will almost certainly hurt us.

This article originally appeared on Forbes.com.