A message to businesses: Don’t kill your customers

Last week, I joined a coalition of investors and asset managers who sent a letter urging Costco, Walmart, Kroger, and other pharmacies to think long and hard before caving in to pressure tactics urging them to sell the abortion drug mifepristone. Chief among the pressure groups is New York City’s pension plan and its comptroller, Brad Lander, who has been using the assets of the city’s pensioners to cajole the companies to sell the controversial and risky pill.

According to Lander, investor “concerns include the company’s responsiveness to a growing market opportunity, its mitigation of potential reputational risks, and its commitment to maximizing sales and long-term shareholder value.” What investors is he talking about? All the pressure to sell the drug is coming from political actors, not financial ones. That’s because the business case for the drug is pitifully weak, and the case against it is strong.

That’s the point made in our letter, which was quarterbacked by Alliance Defending Freedom. According to financial adviser David Bahnsen, “Regardless of anyone’s personal stance on abortion, there can be no question that it’s a politically contentious and legally fraught issue that divides the American public. Just as important, selling chemical abortion drugs undermines a retail pharmacy’s bottom line. Instead of selling a lifetime supply of everyday goods like diapers, cough syrup, groceries, toys, food, and clothing, a store settles for a one-time purchase that undermines a lifetime of opportunity.”

Bahnsen is right. Killing customers is a bad business strategy. Let’s do a quick back-of-the-envelope calculation. Thanks to Walter Billingsley, the chief financial officer for the American Family Association, for providing the numbers. Mifepristone sells for roughly $200. That is, tragically, a one-time thing. Costco averages roughly $3,000 in revenue per customer per year. The average household is 2.5 people. So, for a Costco member, the average per capita spending is roughly $1,200. Over 10 years, that’s $12,000. The grim mathematics of abortifacients show that Costco can monetize one death for $200, or it can hope to enjoy revenues on $12,000 of sales over 10 years. Of course, to be conservative, one would discount the fact that a dollar revenue 10 years from now is not as valuable as a dollar now. Applying a 5 percent discount rate, the revenue of a child’s first decade of life has a present value of more than $7,000. In short, life is more financially valuable than death. How could it be otherwise? The data will vary somewhat from company to company, but the principle holds. A company can sell the stuff of death once or it can sell the stuff of life for many years: diapers, Pedialyte, baby aspirin, Vicks VapoRub, bigger diapers, antibiotics for toddlers’ ear infections, shoes, vaccinations, Halloween outfits, candy, Band-Aids, bigger shoes, Whiffle balls and bats, still bigger shoes, and on it goes. It doesn’t take a degree in finance to know that $7,000 in revenue is better than $200 in revenue, even if New York City’s chief financial officer fails to grasp it.

Retailers need to take a moment and think hard before stepping into the most divisive issue of our time. They need to consider the reality that the drug is entirely outlawed in many states and partly outlawed in others. And remember, mifepristone’s availability in the retail setting was rushed through the Food and Drug Administration approval process by the Biden administration despite serious health risks and so far has survived a Supreme Court challenge only on the technicality of legal standing, not the substance of the issue.

And business in general needs to adopt a pro-natal philosophy and resist surrender to the abortion culture. Capitalism needs people. People produce goods and services and people purchase goods and services. And the current labor shortage, quiet quitting, the Great Resignation, looming pension crises, and lackluster growth testify to the reality that family formation and childbearing and -rearing are the only proper foundations on which the capitalistic system can function.