Are firms political animals?

Are firms political animals? In other words, what is the relationship between business and politics? Some used to think that business and political operate in two different realms. Politicians care about the general good and receive a popular mandate to do so. Business, on the other hand, would simply system oriented to achieve certain economic objectives.

But, it is easy to find many instances in which business engage in politics. First, many businesses try to influence politics to obtain, for example, favorable regulatory outcomes. But, sometimes business takes the role of government developing standards that preempt the development of new regulation. Or, businesses decide to address social and economic problems that one would have thought were to be addressed by government, e.g. child labor prevention in Asia.

But, to these examples, today I came across a new interesting one. Today, some US multinationals had reacted to President Trump order to ban entry into the US of citizens of seven (majoritarian Muslim) countries by offering some countermeasures:

• Starbucks is to hire 10,000 refugees
• Airbnb service is offering free housing to banned passengers
• Lyft is donating $1 million over the next 4 years to the American Civil Liberties Union

One can probably still find some economic rationale behind these actions, but nonetheless coming come out publicly at a moment where Trump’s order is being discussed all over the world, shouldn’t that be classified as a political action?

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Brexit and Trump: the wrong move

I was reading the excellent article “Can Democracy Survive Globalization” by Benjamin Barber. It is an excellent paper, which I recommend. I share many of his concerns. Barber makes very clear the point that business, to survive needs and well articulated and functioning system of public governance. The best system we know so far, with all its pitfalls, is the democracy. Without a strong counter balance, business move, by its very natures, into the wild side. Barber put the example of the new Russian capitalism as an undesired example of where things can take us.

When business were essentially constrained to the jurisdiction of nation states, there was a balance and things, more or less worked. But now, globalization has screwed it all. There is a clear unbalance.

I with many others share this view and this is one of the reasons why advocate for nurturing a moral concern in managers. But, things move too quickly and this is probably not enough. So we need more. We need some strong and efficient multinational institutions that act as the counterpart of business.

Many of the voter pro-Brexit and pro-Trump were, in some intuitive way, probably feeling the risk of this imbalance and opted for an attempt to turn the clock back and move back to the “good old times”. But, they were wrong, there is no turning back. History evolves. Globalization will not go away, no matter Tramp or Brexit, and the decission made in the UK and the US will weakn our system of multilateral goverment. It is clear a decission that will make things worse, not better, at least for the majority of people in this planet.

Sixty-Second Sermon

The Meaning of Life TV (a website that I strongly recommend) has just published a short video of mine. In the video, I encourage business managers not to differentiate between their personal lives and their business lives, in so far morality is concerned.

This is the link

Sixty-Second Sermon

I thank the Meaning of Life TV for this opportunity to reach their wide audience.

The future is here

A couple of posts away I discussed in general terms, the need to rethink our economics in view of the upcoming inevitable increase of Artificial Intelligence (AI) and Robotics. Today I read an article about the newly announced Amazon Go supermarkets. These supermarkets need no cashiers. The technology they will have will allow automatic identification of what we buy and they will seamless charge our Amazon accounts. It is great in many respect, except that, if generalized (as one can expect) it will terminate millions of jobs all over the world. These are the type of  jobs that while being generally low pay, and maybe not too interesting help many families make ends meet.And, it is hard to imagine that those millions of people can recycle themselves to do higher added value jobs.

The future is already here, and we might not have the luxury of time to think about how to best adapt. A debate for real about how to make AI work for all is needed among political and economic leaders in the advanced nations of the world.

Morality & Profits

Sometimes (but not always) an adequate corporate moral response does not go against profit making. On the contrary, it can lead to improved results in some time horizon, and a positive net present value.

A student of mine pointed me to a relatively recent article by John Browne, ex-CEO of BP Group which talks about this in compelling terms. Browne has a lot of credibility in this respect. For example, he made BP the first major oil company to develop and implement greenhouse emission policies even before the Kyoto protocol was signed. And, during his time at BP, the company started to engage with local communities in improved respectful terms.

After leaving BP he wrote a book of memoirs which provides interesting insights, but the article below provides an excellent summary of his approach.

John’s Brown article

 

It was the best of times, it was the worst of times, …

The institution of business is responsible for most of the wealth creation we see in the world. This is being produced mostly by innovation, information diffusion and increasing efficiency. Joseph Schumpeter famously elaborated about this.

These days we are at the onset of a technological revolution, Artificial Intelligence (AI), that will enormously multiply all these factors and possibly lead to, as economists like to put it, a surge of productivity and wealth creation.

But, unless we diligently work to solve first the big problems of the world: world economic inequality and  environmental degradation this wealth creation process will only benefit a minority and might end up being bad news for billions of people. There is a big risk that AI will just be seen, within the usually narrow perspective of Corporate Boards,  as a new tool to make P&Ls look better.

We ought to work creating and nurturing ethical values and meaningful wide human caring objectives within our companies to make this new revolution work for the benefit of the many.

If we do not do something like this, some will paraphrase Dickens again:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”

An interesting thinker

I came across a thinker and author I did not know and that I had found interesting. Gad Saad (born 1964) is a Lebanese-Canadian e evolutionary behavioral scientist. He has what appears to be an interesting podcast located in Soundcloud, here goes the link

 

A few very valid words

In a few words, Facebook founder Mark Zuckerberg provides an excellent description of what globalization means today. Watch the short video if you can (ignore the Spanish text around it)

http://internacional.elpais.com/internacional/2016/11/19/america/1479570324_067343.html

I agree 100%, and it is important stuff.

 

 

What’s a Pharma company for?

This is a question I frequently present to many of my students? The underlying issue here is, of course, to what extend the inevitable search for profit should be moderated by complementary social ends.

The responses usually vary but, a majority seem to think that Pharmaceutical companies should work to make their important life-saving drugs more accessible to the poor.

In relation to this question, a student of mine just pointed me to this interesting study, which reflects a tendency that could be detected a few years ago.

Can we say there’s hope for a better corporate world?

New online: 2016 Access to Medicine Index