Saving Capitalism, For the Many, Not the Few

This title attracted my attention when I read it, and I purchased the book written by Robert B. Reich, a professor at the University of California, Berkeley, and a former member of the Clinton administration.

Reich starts by reminding us of the time in  his childhood when middle –class people from the US, like his own parents, had a very decent standard of living and were able to provide their children with a good education. He continues by evoking the everlasting debate in America between the supporters of the “free market”, supposed to solve all the problems in society, and the advocates of more governmental intrusions in the market. This debate according to him is not relevant, because the “free market” is a myth, a “screen of smoke” used by the people who take advantage of the current situation. The rules of the game are strongly determined by governmental regulations, and the real issue is about  knowing who has the power to establish, modify or suppress these regulations, and in whose interest this will be done.

He defines the five buildings blocks of capitalism as follows:

  • Property: what can be owned
  • Monopoly: what degree of market power is permissible
  • Contract: what can be bought and sold and on what terms
  • Bankruptcy: what happens when purchasers can’t pay .
  • Enforcement: how to make sure that no one cheats on any of the rules.

The book then gives a detailed account of how the big corporations and their CEOs, and Wall Street with the big banks and the hedge funds’ managers,  now have the lion’s share in the decision-making process of regulation. It also shows  how they influence legislative activity to increase their benefits through lobbying, the financing of political campaigns and “revolving doors” for retiring US officials.

To give just a few examples of the evolution which has taken place in the last decades, it is useful to mention:

  • The extension of copyrights for corporations like Disney to 95 years (duration of copyright was 14 years when it first appeared in US)
  • The extension of patents and the so-called-pay-for delay to postpone the introduction of generics in the pharmaceutical industry, which is perfectly legal in the US
  • The bail out of banks “too big to fail” sponsored by the tax-payers and
  • Stratospheric stock options packages for CEOs not taxed as income but as gain in capital.

A factor contributing to this evolution is the decline of countervailing powers, like trade unions.

This recent evolution results in an increasing number of working poor (47 million in the US) and of the non-working rich (the Walmart heirs possess the same fortune as the bottom 40 % of American citizens) and the huge disparities in income (the CEOs of big corporations earning in average 300 times the median salary in their company compared to 20 times a few decades ago). Another consequence of this trend is the lower confidence felt by citizens with regards to banks, corporations and government.

This situation, characterized by a huge level of inequality, is not sustainable and has a very negative impact on society.

That Spirit Level, Why Equality is Better for Everyone

An insightful book “The Spirit Level, Why Equality is Better for Everyone”, by Richard Wilkinson and Kate Pickett is based on statistical analysis: if one considers such issues as life expectancy, violence, rates of imprisonment, drug use, teenage births, etc., America fares worse than more egalitarian countries such as Japan or the Scandinavian countries.

So, it is high time, according to Reich, to restore countervailing power to shift to a more equitable situation in the US. As he says: “The bottom 90 % of Americans – regardless of whether they are owners of small businesses or working poor, entrepreneurs or student debtors, small investors or homeowners, white or black or Latino, men or women – have far more in common economically with each other, than they have with the top executives of large corporations, the Wall Street crowd, or America’s wealthy. The bottom 90 %are losing ground mostly because of upward pre-distributions embedded inside the “free market”, rules over which those at the top have great influence. If the smaller players understood this dynamic, presumably they would seek to gain greater influence by becoming allies. This alliance, or set of alliances, would form the new countervailing power.” (OC, page 185)

I can only encourage you to read these two great books as  they are both eye-openers.

Philippe Du Pasquier, President of the Board

 

Business and Human rights – an NGO perspective

A visit from Danièle Gosteli Hauser, head of the Business and Human Rights group Amnesty International, Switzerland, gave an opportunity to Professor Marina Curran’s Masters class (and a few interested alumni and MBA students) to hear about the latest news in the field of corporate accountability.

A presentation of the debate taking place at UN and national level allowed our students to understand more clearly the importance of the discussion underway globally right now.  Amnesty International has led the way in the discussion on Business and Human Rights from the end of the 90s, the students discovered.

UN Guiding Principles on Business and Human Rights

The work of John Ruggie, Special Rapporteur on Business and Human Rights, appointed by former UN General Secretary, Kofi Annan, and the unanimous agreement of the UN Human Rights Council on the UN Guiding Principles on Business and Human Rights in 2011 was very central to the presentation.  Students were given a narrative of the discussion on these issues from someone who participated in this step by step.

Who is responsible for Human Rights violations?

A short trailer of the movie “Blood in the Mobile” helped us understand the complexity of business for companies, the responsibility of everyone was highlighted.  Students in small groups gave their feedback following this horrifying film.  The importance of awareness building, the complexity of supply chain management and the difficulty of fighting against the status quo (people want to have the latest in technology) were all discussed. Gosteli Hauser pointed out that that all resources are being fought over today- a sad truth.  She further explained that Amnesty international, for this reason, concentrates a lot of time and research on the extractive industry.

In response to the question of who has responsibility for human rights violations, our students and participants clearly saw that everyone is responsible for what is happening in the world today- consumers, governments, companies and their suppliers, as well as investors, shareholders, intergovernmental organizations, international finance and academic institutions.  Gosteli Hauser gave an example of how companies could take responsibility with regards to their supply chains; they could begin by putting human rights clauses into their contracts with their suppliers – what better way to control your supply chain?

Voluntary Initiatives v Binding Legislation

A discussion on the many voluntary initiatives in place and their limited efficiency was followed by an explanation of the move toward more binding regulation by governments with regards to their corporations, wherever they might operate.

Here in Switzerland the Responsible Business Initiative,  and its intention of making Swiss and Swiss based companies legally obliged to incorporate the protection of human rights and the environment in all their business activities globally, was explained.  The aim of this initiative is to reinforce preventative measures to avoid abuses, through a mandatory due diligence.

The fact that Swiss companies are also liable for damage caused abroad by companies under their control (unless they can demonstrate that they carried out appropriate due diligence) is a new discussion.

New approaches in terms of international law, national law and the regulation of business have become a hot topic in corporate circles and also for governments and NGOs.

For more information on this topic please read more on the BSL blog on Business and Human Rights.

Author: Mary Mayenfisch-Tobin, BCL, LL.M, Solicitor
marymayenfish

The International Young Leaders Club came to BSL

In February 2015, BSL welcomed the charismatic team of Elena Kaplun and Simon Parker from the International Young Leaders Club (Geneva) who were kind enough to conduct a practical, exciting, and thought provoking workshop which aimed at the development of 3 skills; self-awareness, skillset, and leadership. With tactful people skills, warm personalities, and a wealth of expertise, Elena and Simon brought a highly enjoyable and thoroughly beneficial learning experience to all students and faculty that participated.

On a day-to-day basis, be it with friends, family, or professional colleagues, it’s no secret that communication can often seem like a nightmare of a challenge. How can one person say something with the best of intensions, however, what the recipient hears may be seen as arrogant, distant, cold, and sometimes, even an outright attack on another’s identity?
Continue reading

The Fragrances of the World

The Fragrances and Flavors of the World : Guest Speaker Pascal Becker, Global Sustainability Manager at Givaudan, takes BSL students on a trip around the world of sustainable sourcing

Givaudan

Givaudan is the market leader in fragrances and aromas. Since it is a “business to business” company, the name Givaudan is not very well known by the average consumer. Nevertheless, chances are high that you are in contact with Givaudan’s substances several times a day. This is because their fragrances and flavors are ingredients in many, many consumer goods like shampoo, drinks, food and, yes, of course, perfume and cosmetics.
Continue reading

Occupying the Collective Space

by Dr. Katrin Muff

Different ways of occupying…

As we will consider in this month’s blog, there are different ways of occupying that middle ground between the personal space each of us feel responsible for, and societal best interests. The collective space called “we” can be used to uplift individuals to act together for a better common future, or it can be hijacked by individuals or special interest groups to occupy or “blockupy” the collective space pressing their issues – for better, or worse, as we shall see below, and not necessarily in the interest of the greater common good.

View original post 1,017 more words

The Dodd Frank Act in a Nutshell

In response to the financial crisis, the Dodd Frank Act was signed by the US Administration in 2010. By affecting all the federal financial regulatory agencies and almost every part of the financial services industry, it reshaped the entire financial regulation in the US.

Its main objective is to fight systemic risk by identifying, evaluating and managing threats to the stability of the American financial system.

It has therefore created two new agencies, which are the Financial Stability Oversight Council and the Office of Financial Research. The authority of the Federal Reserve Board of Directors has been reinforced. Continue reading

Poverty and Obesity – Not a paradox

“A lot of people think there is a yawning gap between hunger on the one end and obesity on the other. In fact, they’re neighbors…They are both signs of having insufficient funds to be able to buy the food that you need to stay healthy.” Raj Patel[1]

Tiffany[2] lives with her two young children in social housing in a low-income neighbourhood to the North of Washington DC. While the bureaucrats and consultants are dining out in the smart restaurants of the city, Tiffany is wondering what she is going to give her children for dinner. She works a low-wage job, and is not eligible for food stamps (SNAP – Supplemental Nutrition Assistance Program)[3], and barely makes enough money each week to pay the basic bills. Continue reading

The Legal Aspects of Halloween

Halloween night 2013 is now history, at least in this part of the world. Having seen the traditions “here” (in various parts of Europe) and “there” (in WI and NY, US), I might suggest a clear difference in approaches and “ambitions”. Nevertheless, globalization evens some of the differences out, as small “gangs” of young witches and devils are approaching neighbors in Geneva and Lausanne, making the latter get involved in search for sweets, nuts, fruits and candies, if any, in their apartments; as the companies and schools, in promoting diversity and enriching their “social” (or “entertainment”) programs, incorporate Halloween elements in their agendas; or as friends gather together, having found a new, creative reason to party. Continue reading