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A lot more than you probably think. But if you plan to get one, you have to finesse the degree’s lingering image problem.

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Reason Foundation - Policy Areas >

• Dumbest Government Policies? Sarbanes-Oxley Act of 2002
  
• Whole Foods Health Care
  

  On August 11, 2009, Whole Foods co-founder and chief executive officer John Mackey published an op-ed in TheWall Street Journal recommending “eight things we can do to improve health care without adding to the deficit.” The ideas, many of them familiar to market-oriented health policy wonks, ranged from malpractice reform to eliminating the tax incentives that tie insurance to employment. “The last thing our country needs,” Mackey warned, “is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system.”

  It was as if a bomb had gone off in the arugula line. Some of Mackey’s customers, who tend to be urban, upscale, and left of the political center, went ballistic. Protests were held outside and occasionally even inside several Whole Foods outlets. A Boycott Whole Foods group on Facebook attracted more than 34,000 members. “Mackey’s campaign,” warned one boycott leader, “results in the deaths of 60 Americans every day due to lack of health insurance. Mackey is responsible for these deaths as much as anyone.”

  The “intense” reaction took the soft-spoken 56-year-old by surprise, but the protests quickly faded away. What remained after the hubbub died down was a contentious White House health care plan still very much up in the air and a businessman still eager to have a calm policy conversation with people who now regarded him as a libertarian traitor to his customers’ political beliefs.

  John Mackey is used to confounding conventional political categories. A cutting-edge entrepreneur who is comfortable quoting both Ludwig von Mises and astrology, who both practices veganism and sells some of the best meat in America, and who both chases profits and is an outspoken advocate of charitable giving, Mackey is an advocate of what he calls “conscious capitalism.” He is that rarest of businessmen: an articulate and passionate defender of free enterprise and free individuals.

  Mackey—who has contributed in the past to the Reason Foundation, the nonprofit organization that publishes this magazine—sat down with reason Editor in Chief Matt Welch and reason.tv Editor Nick Gillespie in September. For a video version of the interview, go to reason.tv/mackey.

  reason: In your Wall Street Journal op-ed, you wrote, “While we clearly need health care reform, we should be trying to achieve reforms by moving in the opposite direction of more government control toward less government control and more individual empowerment.” Why do we need health care reform and why should the government not be a part of health care?

  John Mackey: We need health care reform because the current system, in the way it’s structured and regulated, is becoming more and more expensive. We’ve gone from spending 4 percent of our gross domestic product on health care in 1960 to almost 17 percent today, and the trend lines aren’t really slowing down.

  reason: Were you surprised by the vociferous reaction to your op-ed?

  Mackey: I was surprised. I mean, CEOs write op-ed pieces all the time. Steven Burd, the CEO of Safeway, had written an op-ed piece in The Wall Street Journal on health care reform just a month or two before I did, and nobody reacted at all to it. So it was rather bizarre.

  reason: Do you think employer-based health care is a right, or even a good idea?

  Mackey: Well, if you look at the history of it, it came about in World War II when the government put wage and price controls on but exempted insurance. So employers began paying for insurance because that was a way they could compensate people. After World War II, it continued to be a special tax exemption that encouraged employers to be picking up the insurance. It sort of spread through the culture.

  I’m not sure that’s the best way to do it, primarily because as long as you work for Whole Foods, we’ve got this great health insurance program, but what if you want to leave? What if you get a better job offer someplace else, or you’re ready to do something else? It’s not portable. So that restrains people from maybe leaving because they’re not sure they can get as good a health care program. I think it’d be better if individuals did it themselves.

  reason: Let’s say you suffer from Down syndrome. You’re going to live to age 50; you probably won’t work very well. Where do you get your health insurance under the John Mackey plan?

  Mackey: Obviously, there are always the tough cases, the marginal cases, and what we’re suggesting for reform wouldn’t necessarily be a solution for them. The reforms that I advocated would help tens of millions of people have better health care and health insurance. It may not solve everyone’s problem, and so maybe those need to be solutions that are provided elsewhere, either through the not-for-profit sector or through some type of government voucher program.

  reason: You started out in 1978 as Safer Way in Austin, Texas. What were your goals in creating that original outlet and then becoming Whole Foods in 1980?

  Mackey: That question kind of assumes I knew what the heck I was doing back then. I mean, I had just turned 25 when we opened Safer Way. My girlfriend who co-founded the company with me, Renee, was 21, and we didn’t have any grandiose plan. We thought opening our own store would be fun. We could make money to support ourselves and we’d be providing food that would nurture and help people be healthier.

  Safer Way was a vegetarian store; we didn’t sell any meat. We sold a lot of bulk foods, produce. We had a little vegetarian cafe on the second floor. We had an office on the third floor which also served as where Renee and I lived because the office couch was a futon that we could fold out at night. So we literally lived above the store, and it was fun.

  reason: What were the guiding principles or ethics as they evolved in the first couple of years?

  Mackey: We were selling food that you couldn’t find in conventional supermarkets back then. We were selling lots of organic produce. We did a huge business in bulk foods in the early days. We had tofu. I mean, nobody sold tofu in Austin, Texas, in the 1970s.

  We sold bulk honey and maple syrup. You have to remember that in the late ’70s the industrialization of the food process was pretty well complete, and most people just ate foods out of frozen dinners, TV dinners, and macaroni and cheese out of boxes or cans. The whole idea of eating a whole food natural diet was kind of a revolutionary act back in the late ’70s and early ’80s.

  Now that’s changed as we’ve become more successful. All our competitors picked up a lot of the foods that we sell, which forces us to innovate and come up with new value propositions for our customers.

  reason: How do you decide to site a store?

  Mackey: Well, there’s no more important decision that you’re going to make than where you locate a store. If we’re going to invest, depending on the size of the store, anywhere from $8 million to $20-plus million in capital for a new store, and sign a lease of usually 20 years or longer, we’re making a long-term commitment and putting up a lot of capital. So we spend a lot of time and energy sorting through that. We do site analysis. We analyze our competition in an area. We look at the demographics of who’s living there. We look at education levels, income. There’s a whole bunch of variables, but I think by far the most important variable is the number of college graduates within a 16-minute drive time.

  reason: Why is that?

  Mackey: I don’t know exactly why. I can tell you that about 80 percent of our customers have college degrees. I can speculate that our customers, on average, are better educated and better informed. And a college degree, while not a perfect proxy for that, is the best we have in terms of demographic data that we can get. If people are going to change their diets and become more health conscious, they need to be generally better informed. Otherwise, you tend to eat the diets that you ate when you were a child. Most Americans don’t eat diets that are particularly healthy, so it takes conscious effort to alter your diet and your eating and shopping patterns. And that correlates with education.

  reason: You recently completed a merger with Wild Oats, another national chain of organic stores. You had to go through the Federal Trade Commission, and they blocked it. Why?

  Mackey: The FTC argued that Whole Foods Market had a monopoly position in a narrow market, which they called the “premium natural and organic supermarket market,” and that if Whole Foods and Wild Oats merged, there really would be hardly anybody left in that