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See Inside November 2007

Profit Tears

Some may cry about cleaning up spilled milk



MATT COLLINS

Here’s what she said: “If China were to revalue its currency, or China is to start making, say, toys that don’t have lead in them or food that isn’t poisonous, their costs of production are going to go up, and that means prices at Wal-Mart here in the United States are going to go up, too.”

That was CNBC’s Erin Burnett, apparently a graduate of the Milo Minderbinder School of Business, speaking on the air on August 10. For anyone unacquainted with Milo, he was the man responsible for making sure that World War II was good business in Joseph Heller’s masterwork Catch-22. Milo’s grand free-trade organization is called M&M Enterprises. The first M is for Milo, the second M is for Minderbinder and the ampersand is “to nullify any impression that the syndicate is a one-man operation.”

M&M Enterprises is a true multinational conglomerate—Minderbinder even makes a deal with the Germans to have Americans bomb their own base, to save money on all sides. Of course, such an action is so outrageous that there are inevitable consequences. “This time Milo had gone too far.... High-ranking government officials poured in to investigate and Congressmen denounced the atrocity in stentorian wrath and clamored for punishment. Mothers with children in the service organized into militant groups and demanded revenge. Not one voice was raised in his defense. Decent people everywhere were affronted, and Milo was all washed up until he opened his books to the public and disclosed the tremendous profit he had made.”

In another venture, Minderbinder corners the market on Egyptian cotton. Then he finds that he can’t sell off the bumper crop for conventional use in textiles. He approaches Catch-22’s central character, Yossarian, and asks him to taste something soft, round and brown. “What is it?” Yossarian asks, while taking a bite. “Chocolate-covered cotton,” Milo replies. Yossarian gags, spits and asks, “Have you gone crazy?” To which Milo responds, “Give it a chance ... it can’t be that bad.” “It’s even worse,” Yossarian says. Later, Milo tries one more time. “I was joking,” he says. “It’s really cotton candy, delicious cotton candy.” But no matter what he calls it, it’s still indigestible.

Back to the indigestible comments of Ms. Burnett, who later attempted a clarification of her warning that nontoxic toys and nonpoisonous foods might eat into the profit margin: “Nobody wants children to play with toys that are not safe. Nobody wants that. I don’t want that. You don’t want that. But safety and quality come with a price.” Note for future damage control: the sentiment rings truer without the “but.” As in, simply, “safety and quality come with a price.”

In an admittedly nonscientific poll, 100 percent of people I surveyed were indeed willing to pay a bit extra for food that wasn’t poisoned. As for the toddler toxicity—as I write in early September, yet another three quarters of a million tainted toys were just recalled by Mattel—it’s not entirely clear that safety would actually even cost more. Lead is added to paint to make the colors brighter and shinier. So it’s possible that an unleaded dog for Barbie’s Dream Puppy House might actually be cheaper, albeit the possessor of a slightly less lustrous coat. Which would make the fake dog that much more realistic—real dogs were recently treated to pet food laced with an additive produced in China that included melamine. That chemical is a fire retardant that has the added benefit of making food appear to have more protein content.

Lenin famously said, “The Capitalists will sell us the rope with which we will hang them.” Even he might have been impressed by economics gurus warning us about the fiscal dangers of not poisoning our children with products from a communist country. But business is business. As when Milo buys eggs for seven cents each, sells them at five cents each and still somehow makes a profit. “I don’t make the profit,” he explains. “The syndicate makes the profit. And everybody has a share.”

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