CAPITALISM II

We First Book Video: "We-defining Me" from We First on Vimeo.

Some of you may have been confused by the last post on capitalism. You wonder how is it possible that companies are not doing enough.

Without giving you all the facts and figures, the main point is that the world is facing staggering problems in areas of global health, global homelessness, global climate change, global conflict, food security and agricultural development problems, energy instability or deficiency, water scarcity, gender disempowerment, unemployment, underemployment, education, youth leadership, etc. The list goes on. Yes, it’s true that most countries give a small percentage of their budget to help with foreign assistance, foreign aid, or international development. But this is not the same as the 1% of pretax profits the average company gives to charity.

To explain, let’s use the U.S. as an example. It is true that less than 1% of its budget goes to foreign aid, so it seems similar to the average corporation, on first glance. But remember, much of what countries do is domestic. If the US works on shelter and housing domestically, it’s the Department of Housing and Urban Development (HUD); if they work on it in foreign countries, it’s the U.S. Agency for International Development (USAID) or Department of State. If the U.S. works on energy security domestically, it’s the Department of Energy (DoE); in foreign countries, it’s USAID or State. If the U.S. works on public health domestically, it’s the Department of Health and Human Services (HHS) and the National Institutes of Health (NIH); in foreign countries, USAID or State (or the international parts of NIH, HHS, and a bit of Homeland Security). So when you say that the U.S. spends less than 1% on international development, remember the key word is international. They are also doing local or domestic development all the time.

Still, I do believe the government could do more. Generally, countries that spend a greater proportion of their budget on effective education and health have higher standards of living (Norway, Sweden, etc.). So I do want the government (around the world) to do more. However, I’m specifically speaking about corporations due to the limitations of government. Before talking about corporations, let’s think about the benefits the government has. It has 60 years of knowledge in foreign aid and over 80 years of knowledge since the New Deal (U.S. government). It has guaranteed income—the tax base. It can create legislation or use executive power. And it has existing administrative, programming, and financial infrastructure at the local and state levels. However, the government is limited by fraud, corruption, bipartisan politics, jarring bureaucracy. In trying to solve problems of global and domestic poverty alleviation, the government struggles (or doesn’t struggle) with national interests versus global need, disagreements about where the poverty line should be, lack of enthusiasm towards social programs for the poor (in the U.S.), and feelings that the non-profit sector, families, and churches should handle poverty efforts.

The non-profit sector also faces great advantages and limitations. Remember, when I say non-profit sector I’m including philanthropies/foundations, NGOs, charities (501c3 status) and non-profits which can have other tax exempt status. Generally non-profits enjoy being seen as credible and neutral. More generally, non-profits have the advantage of super-motivated volunteers and staff, potential ability to attract big contributions, field expertise (many NGOs have feet on the ground in various countries around the world or in local communities), and limited staffing, bureaucracy, and overhead. Obviously this does not apply to all NGOs, however, the big large NGOs are not most NGOs. Unfortunately, NGOs and the non-profit sector also deal with fraud and corruption like the government. There can be policy conflicts between headquarters and people out in the field. Money is always a problem. A lack of coordination between NGOs working on the same or related problems diminishes impact. And NGOs are always subject to the agendas or requirements of donors and host country governments.

And that leaves . . . you guessed it—corporations. Of course, social enterprises (the 4^th sector), NGOs and the non-profit sector are doing all they can. They can continue to improve efficiency, but they are doing a lot. Governments need to do more. However, corporations have not really scratched the surface of their potential to contribute to solutions to the major problems plaguing the world, today.

We looked at the short history of corporate charitable giving, Corporate Social Responsibility (CSR) movement, and Cause-related Marketing (CRM). So yes, to summarise, U.S. corporations went from 0 charitable giving in the early 1900s when they were barred from making such contributions to giving to arts and culture in the 1950s and 1960s. In the 1970s they began to give to civic causes, and then moved to national and global issues of poverty and social justice in the 1990s and 2000s. And yes, contributions grew from 0, then, to $14 billion in 2009. Still it’s a small percentage of the profits that companies pull in annually. Most importantly, CSR is still somewhat of a second thought and operates with problems and deficiencies in many companies. Here are few of the problems according to Simon Mainwaring.

• Giving is disproportionate to profits and salaries – The $14 billion in 2009 is small compared to money (billions) made by investors and top executives not to mention bonuses.

• Top executives are uninvolved and insincere – In a 2010 McKinsey survey of 1800 respondents, more than 50% considered sustainability to be “very” or “extremely” important. Contrast that with the fact that only 30% say their company invests in sustainability and embeds it in business practices, while only 25% said that it is a top priority for their CEO.

• Companies fail to understand CSR – According to the same survey, 20% of executives claimed their company has no definition of sustainability. Fifty-five percent thought that CSR related to management of environmental issues; 48% thought it was related to governance issues like ethics, regulations, and compliance; 41% thought it was related to social issues like worker rights and labour standards.

• CSR efforts are just window dressing – The great majority of companies still use CSR as a tool for public relations and their public image. Simon Mainwaring even quotes the Economist as saying “ . . . for most public companies CSR is little more than a cosmetic treatment. The human face that CSR applies to capitalism goes on each morning, gets increasingly smeared by day, and washes off at night.”

• Companies spin their CSR and CRM – Companies have been exposed for green-washing, cause-washing, and local-washing in order to market themselves.

• CSR results and measurements are scattershot – There really are no national or international standards of achievement in CSR. So few companies measure their results. Most of us use various watchdog agencies to watch, analyse, rate, and rank corporations on their socially conscious good work.

When I say “it’s not enough,” this is what I mean.

I’ll close with a report mentioned in We First. One of my favourite people is Paul Newman (God rest his soul). When he was alive he convened a group of CEOs and founded the Committee Encouraging Corporate Philanthropy (CECP). The CECP commissioned a report from McKinsey to project 10 years into the future to see if social responsibility was important for the future of corporations. The report predicted 5 important trends between 2010 and 2020: (1) a rise in the power of emerging nations, like China; (2) a shrinking of the labour force and talent pool due to demographic changes; (3) a global integration of capital markets, trade, and technology; (4) natural resource scarcities; and (5) competition among nations to attract work.

The report mentioned 4 scenarios based on how extensively corporations adopt true social responsibility.

Scenario 1 – People put greater demand on companies for social change and corporations react positively. Consumers began to trust corporations that they will agree to enact social change. Consumers and corporations become partners in actually improving the world. And governments allow corporations to voluntarily meet these social expectations.

Scenario 2 – Corporations try to adopt some social changes, but citizens fail to trust them. As a result, government and NGOs stop partnering with corporations to enact social change, and we are left with a “patchwork” of international laws and standards and a “bifurcated system of capitalism.”

Scenario 3 – Society’s expectations of businesses continues to rise, but companies refuse to enact changes for positive global impact. Governments enforce regulations reducing capital and increases expenses for companies. Citizens (who are also consumers) distrust companies creating a problem of expectations.

Scenario 4 – Societies and companies cannot match their expectations or their engagement levels so there is an ever-downward spiral of social responsibility. Trust in business drops low enough that the economy suffers exacerbating the very global social problems we are trying to solve.

The report says that only the first scenario is the logical and preferred scenario. Each of the rest does not have a beneficial outcome for corporations.  Which of the scenarios do you think is likely to happen? Do you see any other options or scenarios not listed?

CURRENT JOB

I have two roles. I am a Science and Technology Policy Advisor and a Development Engineer. If you remember, I’m in a fellowship program, I’ve decided to include a speech by the boss of my boss, so you can see her mention what it is we do. If you lack the interest or patience for the video, you can skip to the 10 minute mark to see her briefly mention the 23 of us who are doing such advising work.

Here are Secretary Clinton’s remarks. I would listen to the whole thing for context, but I and a few others are mentioned around 10:00.



In my dual role as Development Engineer and Science & Technology Policy Advisor, I have day-to-day activities, and I run two large projects. I advise on any type of infrastructure and construction projects in our international development work (roads, bridges, hospitals, schools, clinics, power plants, shelters/housing) including irrigation systems and water and sanitation projects. Since I’m in Washington, I work in a supportive role for work done overseas helping to give comments and review on proposed projects or the proposals of people seeking to win competitive grants, contracts, or cooperative agreements.

Because this work is often few and far between, I also run two large projects. I have been in charge of the agency’s carbon neutrality efforts with the hope of becoming carbon neutral sometime in the future and eventually broadening that into environmental neutrality. I’ve been working on setting up pilots for this around the world for both operational carbon neutrality (our own energy bills, commuting, flights, cars and buildings we own, etc.) and programmatic carbon neutrality (zeroing the carbon footprint of our development projects, activities, and programs in countries around the world, such as an anti-corruption campaign, building a school, a vaccination program, or training program on disaster risk reduction).

Also I head the agency’s post-disaster/post-conflict initiative, smoothening the transition between our emergency response (post-conflict and post-disaster) and long-term recovery and reconstruction. In this work, I build coalitions and run a network of 54 professionals from academia, private industry, NGOs, and other government agencies.


Play the Budget Game:

TODAY’S FATHERS

And so all the political theorists and scientists and historians tell us day in and day out in orientation that the government is slow and it was designed that way. It’s supposed to be that way. Our founding fathers created it as such. I disagree.

Our founding fathers designed it not to have to much centralized power or unbalanced power. Yes. That is true. But the concept that their intent was for the government to be slow does not make any sense to me and is not connected at all by documents. Slowness might be a side-effect of a balance of powers but it was not their intent. That’s different.

Moreover many people in DC seem to think that we’re supposed to do things according to how the original fathers wanted it. They wanted a right to bear arms so we should have it. They wanted a very weak federal government that does very little so we should oppose a federal government intervening too much.

I also doubt this. What is it that is supposed to be (or was) the greatest strength of the US Constitution? At that time it was its flexibility. The writers new they didn’t know everything, that it was an experiment and that, quite frankly, there would be bumps along the way. So allowing an amendment process allows you to fix and change the document so that it was both flexible and adaptable and hopefully would stand the test of time. I think that’s what they understood more than anything else, more than supposedly wanting a slow government or everything to be the same.

I’m confident that they would adjust to the times and when more government was needed for problems that states are not able to handle or for problems that are national problems, they would support and allow it with much debate and talk, of course. They were men that knew the document and its meaning must change as the times, the demands, the problems, the obstacles, and the needs changed in time. That’s the founding fathers.

Have you never wondered how amazingly ironic it is that the founding fathers used such perfect, ideal language to originally include themselves and exclude others, but paradoxically allowing, later, for the full interpretation of those words to include everyone? I mean ethnic minorities and women, for instance, fulfill the words they wrote, when they said that


“All men are created equal” [Declaration of Independence]

POLITICKING from AMERICA II

I think some people might have been confused. My best friend told me that US involvement in international relations is not that simple. Nothing is black and white. So let me go back over the basics.

This is not a conspiracy theory at all. I’m not talking about any particular type of collusion or conspiring to do anything to take over the world or secure US domination. Now, some of our government documents openly use this language (where in the past I don’t think it would have been so open) so if one does the research, one must come to terms with that. But if there are any people conspiring it is not something that all people are tied into.

Companies have an uncanny ability to make employees fight for its own goals. What I mean is that the goal and the bottom line of a company is to make a profit. Companies then have a great ability to make the employees fight to make a profit. Companies do this by tying incentives of employees to the profit of the company so that every employee from the person who cleans the floors to the CEO is doing what it takes for the company to make a profit. Haven’t you seen this? Haven’t we all been in situations when dealing with an employee of an organization or company and we’re amazed at how emotional the employee gets about the work when in reality it doesn’t really matter at all, in the big scheme of things? Yes, sometimes the passion is due to the fact that the person is passionate about the work, but usually the person has incentive to do well in the job. And doing well usually means enhancing or growing the business of the company. And enhancing the business of the company usually means more profit. It’s quite amazing, actually. So everyone in the company is working to increase profit, like members of an impersonal entity, the movements of a large machine. And it works.




The lone goal of a traditional company is profit and increasing it.

Companies have disproportionate influence over our government. This is not an opinion or biased or conspiracy theory. It’s just true. We have politicians who are elected into office. They need large amounts of money to run for office. The only people that can sway them on how to vote or what to fight for are people who vote for them and people who can give them money so they can campaign for votes. Companies can give money. They hire lobbyists who go to politicians and sway them to do what they want and politicians listen. In fact, a single lobbyist is more powerful than a single citizen. DC people will tell you this is only because lobbyist know the system and how to get what they want, but as it stands, it is true. With increasing mergers of companies in today’s age, there is a decrease in the amount of corporate voices heard. Regardless, the message of a corporation is always the same: help me increase my profits and don’t pass laws that reduce my profits. Corporations have risen to a point of being given the benefits of citizens but don’t have the responsibilities of citizens (the tide is slowly changing as people are trying to hold them to more and more responsibility). The problem is that voting is not required by law. So MANY citizens do not vote. The least participative is the lower class. This is why you never see anyone campaigning for “lower class values” and “the poor” and winning a presidency. No, Clinton (both) campaigned for the middle class which is great but it doesn’t help “the least of these.” A single mother working multiple jobs to take care of multiple kids is unlikely to make it to the poll station to voice her opinion. So it has the affect of diluting the democracy to a point where it isn’t a democracy. The salient feature of a democracy is the multiplicity of voices and choices. But you never really have a choice of a candidate campaigning for the lower class. You never really have a choice of a candidate who is not supported by the top companies in the country. In other words, we tend to lack a multiplicity of voices; every voice is not heard. People are free to choose who they want. But we don’t have choices that represent all peoples. And to top it off, a single lobbyist has more potential and power in a senator’s office than a single citizen, on average. This is not new to anyone in DC. This is how the system works.

The lone goal of a traditional company is profit and increasing it.

Companies have disproportionate influence over our government.

The government therefore works, in many cases, to increase the profits of its companies. This comes from the logical progression. It ranges from subsidies for corn and strengthening of the insurance infrastructure to the favor of US companies for development and relief in war and peace and the opposing of nationalizing of resources of foreign countries.

That’s just math. But there is hope, it is true that Obama might be less beholden to corporate interests since he had the largest campaign with individual donors than I’ve ever seen, but he is still beholden to them as is the Congress with whom he works. But it does indicate that another way is possible. And I look forward to a day, however impossible it may be, when such a campaign is fully and only funded by individual donors.

Politicians used to be quite cordial in earlier times (maybe when I was kid?). In public they were political enemies, but they would share a drink and laugh after the debate was over. They knew and understood how the game works and who funded whom. But these days it seems to have increased in vitriol and personal intensity.
Africa has been ravaged by such economic imperialism. The Middle East was controlled by it. We saw last time how effects of it were felt in Latin America, but there has been a rising tide of “leftist” governments (left from our perspective) and leaders are trying to take resources into the hands of their people, rid themselves of the IMF, and keep their land free of American military bases. This is not in every Latin American country but there is a definitely a noticeable trend. Next time (because this is a little long I’ll talk about trends in Asia.