British-based philosopher and sociologist Roman Krznaric advises Oxfam and the United Nations on the nature of “empathy,” and in a blog-essay “Six Habits of Highly Empathetic People” he provides some possible insight on how we might bring silos of thought together to achieve rules change that help the U.S. economy, government and business work better for all of us.
He says challenging prejudices and discovering commonalities is an important way of overcoming hatred and changing minds. So is making an attempt to appreciate or live within the experience of others. We need to empathize with people whose believes we don’t share or who may be enemies in some way, write Krznaric, who is on the faculty of London’s “School of Life.”
“The 21st century should become the Age of Empathy,” he writes. “When we discover ourselves not simply through self-reflection, but by becoming interested in the lives of others. We need empathy to create a new kind of revolution. Not an old-fashioned revolution built on new laws, institutions, or policies, but a radical revolution in human relationships.”
If the opinions of a sample of U.S. college students are to be trusted, American politics will need to become decidedly less partisan in the decades ahead. That’s according to research undertaken by Omar H. Ali, a University of North Carolina-Greensboro professor.
Ali polled 1,246 college students at 16 North Carolina campuses over two months who self-identified as neither Democrat nor Republican and asked them 21 questions. “A plurality of college students self-identify as independent regardless of how they are registered to vote,” says Ali. Nearly two-thirds expressed being anti-party and said they don’t want to be labeled as partisan.
“College independents say they strongly favor structural political reforms that would reduce partisanship in the political process,” Ali also wrote in an analysis of his research, adding: “The overall results suggest the emergency of a non-partisan politics among younger voters.”
The survey was conducted over eight weeks from September through November 2012.
The survey report, released in August, can be downloaded from HERE.
“Inequality for All, ” a 90-minute documentary featuring former Labor Secretary Robert Reich, is framed within a lecture hall at the University of California Berkeley. Here we see Reich lecturing to 700 students in his “Wealth and Poverty” class.
The filmmakers focus on the real-world financial plight of some of the students in the class, mixing clips of Reich’s lecturing, with parts of an extended office interview, historical footage of Reich in government service, and graphical charts showing important economic trends.
“Many people have a feeling that the game is rigged,” Reich told Democracy Now’s Amy Goodman in an interview broadcast Sept. 13. “But they don’t really understand why, how it’s happened and why it’s dangerous, or what they can do about it. I mean, this film also provides a kind of guide to people. There’s a social-action movement that is connected to the film. So we hope that the film really spurs a—not just a different discussion in this country, but also a movement to take back our economy and democracy.”
“An economy is just a bunch of rules. We can change the rules so that the economy works for more of us not just for a select few,” Reich said in an Oct. 3, interview with Time Magazine.
JB: One of the strengths of Inequality for Allis the use of animated graphics, for example, the suspension bridge imagery. Can you give some of the facts that the bridge graphic so vividly illustrates?
RR: “ The two peak years for income inequality over the past century were 1928 and 2007 — in which the top 1 percent received over 23 percent of total income. In 1929 and 2008, the economy crashed. Why? Because when so much income is concentrated at the top, the vast middle class (and all those who aspire to join it) simply don’t have the purchasing power to keep the economy going, without them going deep into debt. Eventually those debt bubbles burst (1929 and 2008), and when they do so, the economy goes into deep recession. The only reason the Great Recession wasn’t as deep or as long as the Great Depression was we knew enough to stimulate the economy, and the Fed kept interest rates down. But these were and are only temporary band-aids. The underlying structural problem remains.”
Some other points Reich makes in the film:
Instead of the “trickle down” economics popularized Republicans and supply-side economists for two decades from the 1980s, Reich coins the phrase “middle-out” economics. He says prosperity can only result when there is a prosperous middle class – because 70 percent of American economic activity results from consumer purchasing, and only a large middle class will purchase enough goods to keep the economy humming. The “great regression” that hollowed out the American middle class started in the 1980s, he says.
The government “sets the rules by which markets function” and in order to shift to restoring a vibrant middle class, he argues, “the rules governing our markets have to shift as well.” Says Reich to film viewers midway through the documentary: “Remember, we make the rules of the economy, and we have the power to change those rules.”
Two trends have affected the American economy above all others – globalization and technology. He asks his students at Berkeley – how much of the value in an Apple iPhone manufacturing process benefits American firms? The answer is a single-digit percentage, he says, with the largest chunks of value going to Japan and Germany, where some of the most high-tech parts inside the phone are made. Although the phone is assembled in China, on the low-wage labor costs stay there.
Amazon Inc. employees about 60,000 workers globally. But the mom-and-pop retailers Amazon has displaced might have employed 10 times that many people to sell the same amount of goods. Such relentless retail efficiency has kept retail prices low, but has also cost millions of jobs.
In the 1970s, a U.S. meatpacker made $40,000 a year; now they make $24,000 a year.
Republicans perpetrate a “big lie” that government is always bad.
Since World War II, wages, productivity rose in lockstep through the 1970s, he argues, and the ratio of average-American wages to income of the rich stayed about the same, Reich argues. Since 1980, productive has continued to rise, wages adjusted for inflation have dropped, and the radio of average-American wages to those of the rich has skyrocketed.
To cope with having less purchasing power, American middle-class families copied in three ways: (1) Mothers went to work to supplement their husband’s salary then, (2) Both parents started working longer hours, or two jobs and finally, (3) They began borrowing money against their home equity.
Throughout the film, Reich is heard to make self-deprecating fun of his short stature, which is says results for a genetic trait. He says bullies in school often beat him up, and he learned to connect with older boys as protectors. His life was changed as a young adult, when one of the boys who has protected him in his youth, then a civil rights worker, Michael Schwerner, was brutally tortured and murdered by the Ku Klux Klan in Mississippi in 1964. By then, Reich was working for Atty. Gen. Robert F. Kennedy and, he became determined: “I had to protect the people from the bullies.”
In the end, he says, “the rich do better when we do better.” The alternative, he says, is a zero sum game where all eventually lose – a shrinking middle class may benefit some wealthy people for some time, but in the end the result is social unrest and a broken economy that will leave everyone poorer. For that reason, he says, “History is on the side of positive social change.”
Of rising inequality, Reich tells interviewer Lizzy Ratner at The Nation: “We fixed it in the 1930s; we made great headway in the ’40s, ’50s and ’60s; but beginning in 1978, we turned our backs on the problem. Mothers flooded into paid work, and we all worked more hours—and then, beginning in the late 1990s, we borrowed against the rising value of our homes. All of those coping mechanisms for maintaining living standards in the face of stagnant or declining wages are now exhausted. So we have no choice but to face reality.”
Annie Leonard, originator of the “Story of Stuff” series of policy videos, is using the “change the rules of the game” frame to describe her latest work.
“Just like a game, our economy was designed by people to get everybody to play by certain rules and like a game it comes with instructions telling us what the goal is,” Leonard says in a preview of The Story of Solutions, out Oct. 1. “And that goal is more.”
She adds: “Five years ago, when we made The Story of Stuff we started building a community of people who sensed that something was really wrong with this old game. We agreed there was a problem. Now it’s time to build the solutions. Solutions that won’t just change a few of the rules, but will change the entire game.”
“The boundaries between corporations, the environment, and society continue to blur,” said Ted Grant, global-research head at AccountAbility. “This blurring has made identifying and focusing on what is truly important to long-term company performance, impact, and sustainability even more critical as a governance and management discipline.”
On September 5, 2013, at 11:00am EDT, AccountAbility will host a webinar with report author Murninghan, Grant, and private-sector representatives. The discussion will focus on current developments in sustainability and materiality and their implications for private-sector institutions.
In a post on his blog, Economist Gar Alperovitz describes his surprise at the growing amount of mainstream interest in changing how capitalism works. He describes it in the context of an invitation to speak in Orlando, Fla., on Aug. 11 to the Academy of Management which has made “Capitalism in Question” the theme of its annual conference. The AOM is a professional association for scholars of management and organizations that was established in 1936. You can also listen to Apperovitz in a talk (recorded by New Hampshire Public Radio) at the Monadnock Lyceum: “Is There an America Beyond Capitalism?”
The program overview for the AOM’s annual meeting reads:
The Academy of Management’s vision statement says that we aim “to inspire and enable a better world through our scholarship and teaching about management and organizations.” The recent economic and financial crises, austerity, and unemployment, and the emergence of many economic, social, and environmental protest movements around the world have put back on the agenda some big questions about this vision: What kind of economic system would this better world be built on? Would it be a capitalist one? If so, what kind of capitalism? If not, what are the alternatives? Although most of our work does not usually ask such “big” questions, the assumptions we make about the corresponding answers deeply influence our research, teaching, and service.
Newspapers across American who take The Associated Press are carrying an AP story based on census data and interviews with poverty-research experts by the ubiquitous wire service. “Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives,” says the story’s lead. Mark R. Rank, a sociology professor at Washington University in St. Louis, did number-crunching for The AP that produced the story’s findings. Rank’s data compilations show, for example, more than 19 million whites now fall below the poverty line of $23,021 for a family of four.
Pundit Tom Blumer on the “liberal-media” bashing blog site NewsBusters essentially replies: “So what,” everyone faces adversity at some point in their lives. Then the libertarian blog “The Rio Norte Line” juxtaposes text of President Obama’s speech in Galesburg, Ill., over the weekend with the AP’s reporting and implies a disconnect between Obama’s expressions of faith that the economy is recovering and the reality portrayed in the AP story published Sunday, July 28 and written by AP staffer Hope Yen. Excerpting from her story:
“Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” says Mark Rank, a professor at Washington University in St. Louis who calculated the numbers. “Only when poverty is thought of as a mainstream event, rather than a fringe experience that just affects blacks and Hispanics, can we really begin to build broader support for programs that lift people in need.”The numbers come from Rank’s analysis being published by the Oxford University Press. They are supplemented with interviews and figures provided to the AP by Tom Hirschl, a professor at Cornell University; John Iceland, a sociology professor at Penn State University; the University of New Hampshire’s Carsey Institute; the Census Bureau; and the Population Reference Bureau.
So the news-literacy challenge here is figuring out to what degree The AP’s findings represent a fundamental shift in American’s perceptions or reality, and how important an impact that has on our ability to sustain participatory democracy. But what’s remarkable is that this debate is breaking out in the main stream media — a debate about, in effect, what has happened to the American Dream.
Nine Massachusetts advocacy groups, including three co-convenors of the May Rules Change Summit at UMass Amherst, have penned a letter to the state’s two United States senators asking them to sponsor “sponsor constitutional amendments to get big money out of our elections, and affirm constitution rights for people, not corporations.”
The Democracy Amendment Coalition of Massachusetts (DACMA) is a group of advocacy organizations and activists in Massachusetts working toward an amendment to the U.S. Constitution affirming (1) the power of Congress and the States to limit political contributions and spending, and (2) constitutional rights for natural persons, not corporations.
The groups include Common Cause, BEAT, Free Speech for People, Massvote, Massachusetts Senior Action Council, MassPIRG, Move to Amend, United for a Fair Economy and WILPF Cape Cod.
This was an issue discussed at the Rules Change Summit and is contained in its mission statement (“We support: …
Electoral reforms that restore faith in our democratic process.”)
The Rules Change Project is an initiative to support action ideas for capitalism and the common good. America is not working for all of us. The Rules Change Project is an open coalition to spotlight, amplify and support existing efforts at economic “rules change.” It is an informal, non-partisan collaboration of individuals and independent groups seeking to help launch a national conversation.
The Rules Change Project is an initiative to support action ideas for capitalism and the common good. It began with a small leadership summit at UMass Amherst in May, 2013: “Rules Change: Resetting the Playing Field for Corporations, People and Democracy.”
When the elite Founding Fathers met in Philadelphia to craft the U.S. Constitution, American communities were relatively small. You could walk the town common, attend a meeting house or a town meeting, know and converse with your fellow citizens face to face. Government was a tiny influence on your daily life and what corporations existed were generally small and local.
Today, the two greatest forces in the American public square are government, and corporations. While each provides important services and benefits to people, much of the American public are worried about the potential for unchecked influence. Changes in the way we govern and interact with corporations are required to revitalize participatory democracy in the United States. One barrier may be a perception that proposed changes are new or radical. In fact, dozens of books have been written over 20 years that address key principles of policy rules changes. These changes could lead to a more just and sustainable, free-market, capitalist democracy.
The Rules Change Project is in formation. It is for people concerned about inadequate oversight of large public corporations and financial institutions, and big-money domination of Washington politics.
Through writing, discussion and gathering, we provide a forum for the latest thought and action plans for promising changes in the way America makes and plays the rules of economic, social and community collaboration, including a rethinking of what we mean by global “competition.”. As a collaborative, or group, we do not lobby. We seek common ground on:
Rules change citizens can inspire in policies and governance and
Behavior changes they can make to foster more just and sustainable communities and marketplaces.
Our’s is a deliberative process to identify consensus on action steps that will adjust the rules of the game, not completely change the game. Our approach is to collaborate and build connections among existing initiatives.
Our unemotional, rational consideration of policy benefits and losses includes consideration of (a) limiting, via constitutional amendment, some corporate political campaign spending, and (b) enacting non-partisan methods for establishing congressional voting districts.
“Rules Change: Resetting the Playing Field for Corporations, People and Democracy,” kicked off with a three-day gathering May 3-5 (2013) organized by the UMass Donahue Institute at the request of U.S. Rep. James P. McGovern, D-Mass., and four other non-profit policy groups, and with Pulitzer Prize-winner author Hedrick Smith as keynote speaker.
Participation in “Rules Change” is open to anyone, including public officials, authors, policy analysts, researchers, scholars and concerned citizens who are concerned about inadequate oversight of large public corporations and financial institutions and big-money domination of Washington politics, this gathering will provide a forum for consider rules changes, and assessing possibilities for consensus.
In November, 2012, an anonymous videographer with the YouTube account name “politizane,” posted a remarkable six-minute video visualizing with charts a set of data about income and inequality in America. Here’s the link: http://www.youtube.com/watch?v=QPKKQnijnsM.
In March, 2013, another anonymous YouTube account, “Learn Liberty” posted a response, using video featuring Brandon Turner, a visiting assistant professor at American University. Link: http://www.youtube.com/watch?v=44LHBViTZI0. It also features Steven Horwitz, a St. Lawrence University economics professor. It had garnered 123,000 views as of November, 2013.
The “Wealth In America” videographer apparently remains anonymous, although this post indicates he lives in Texas, and credits most of the underlying data analysis to Mother Jones magazine.
In boardrooms and think tanks, private efforts are brewing – largely behind-the-scenes at this point — to bring America’s corporate leaders to the realization that they must help reinvent American capitalism, or risk losing its star role on the world stage — if not its outright collapse.
“American capitalism is falling short of the aspirations of many of the system’s participants,” declared the agenda for an Aspen-Brookings gathering of 20 corporate leaders held Jan. 10 in a private, 10th-floor Madison Avenue boardroom. “Historically, the United States has responded to periods of dissatisfaction with business and capitalism with innovative vigor buttressed by sensible policy to address the deepest concerns with the system.”
For a half day, high-level executives in banking, finance, consumer products, advertising, accounting and fund management considered corporate purpose, investment advocacy and tax policies seeking an answer to this question: “Where might few find common ground in the current political environment?”
New generation employee drivers?
Brookings made public a white-paper by Steven Pearlstein, Pulitzer Prize-winning economics columnist for The Washington Post, in conjunction with the Jan. 10 gathering, entitled: “Social Capital, Corporate Purpose and the Revival of American Capitalism.” Pearlstein was among participants. A key conclusion of his 22-page paper: A new generation of younger employee-managers will push corporations away from the “straighjacket of shareholder value” because they will only stay with workplaces that offer “meaning and social value.” (DOWNLOAD PAPER)
In the end, roundtable participants adjourned having kicked around multiple concrete ideas, but without explicitly seeking consensus on the question which began their meeting: “What problems are we trying to solve in corporate governance reform?” However, organizers pledged that the meeting was the first of several planned.
“Chatham House Rule”
The basis for the roundtable discussion was the “Chatham House Rule” — No public quotation of individuals by name without their permission, a rule made in hopes of promoting uninhibited dialogue. Social-media tweeting was permitted. “How can we restore public confidence in business?” tweeted Elaine C. Kamarck, director of the Brookings Center for Effective Policy Management, a Harvard Kennedy School lecturer, and a co-convenor of the Madison Avenue gathering.
One participant wondered: Is a 50-year-trend toward a single-minded boardroom focus on increasing short-term stock price, so-called “shareholder capitalism” the reason why the public in polls has the lowest-ever respect for American corporations? Declared another participant: “If business doesn’t take the lead, this country is going to be harmed and disadvantaged.” A third asked: “How can we design policies that enhance America’s global competitiveness?”
“What policies can help reduce incentives for short-termism and corporate tax avoidance,” tweeted Judith F. Samuelson, head of Aspen’s Business & Society Program, who co-convened and lead the discussion. Asked another participant: “How do we give corporations the flexibility & incentives to do the right thing over the long-term?”
The idea of curbing management for the short term is advanced by the Drucker Institute, which held its own invitation-only gathering at Claremont Graduate Institute near Los Angeles in September, 2013. Yet: “The term ‘short-termism’ has never come up in government,” said one participant who formerly worked in the U.S. White House. “Corporate governance comes up on the periphere.”
One manifestation of “short termism” is profits generated by passing environmental or social costs on to others, said one summit participant. This undermines capitalism’s moral high ground and erodes faith in the system, the participant added.
Among ideas discussed by the Aspen-Brookings group:
Whatever consensus can be developed within corporate America for change should be documented and “socialized more broadly.”
Focus on policy changes that will modify the behavior of corporate managers, in part through a tax system which encourages good behavior and discourages bad behavior. “Is there a fiduciary duty of Apple to reduce their tax to zero?” asked one participant.
Adopt a more uniform approach to taxing stock trading across all Organization for Economic Co-operation and Development (http://www.oecd.org ) countries, as a way of raising revenue and discouraging “in-and-out” trading. One participant said the U.S. Treasury Department continues to oppose this, and asked why?
Adjust the influence of institutional fund managers on boardroom decision-making by forcing them to vote and conduct shareholder advocacy from the perspective of their long-term retirement-savings investors rather than the short-term earnings incentives of the fund managers themselves. “What policies can help elevate the interests of the end investor above the short-term interests of intermediaries?” asked one participant.
Develop a information resource which measures and publicizes corporate performance using “total return to society” metrics much like a food nutritional label, and which also judges the performance of fund managers in the same way. “Have we done the work of putting measurement of corporate governance and performance in a little box and posting it?” asked one participant.
Require public corporations to include a concise, uniform statement of their mission in each annual report, a statement of the metrics they are using the measure its achievement, and how their mission is affecting multiple stakeholders, such as employees, customers, communities and the environment – in addition to stockholders and executives. This could be used by investors to pick-and-choose on an apples-to-apples basis investment in companies based on their total returns to society and operational strategies.
Develop public “stewardship codes” for fund managers and a “governance codes” for executive boards and managers. This could help individual investors to make decisions about where to put their money.
Roundtable participant Stephen Davis, of the Program on Corporate Governance at Harvard Law School, cited his own 2012 Brookings paper noting there is no single federal regulator for protecting the retirement savings investments of American workers. “Who should mind the industry? Oversight of long-term savings has become a regulatory orphan,” he wrote in 2012.
A prevailing theme at the Aspen-Brookings gathering was the role and impact of activist investors on turning the attention of corporate CEOs to inflating stock prices rather than managing for the long term.
“Companies should say how they are run and for what purposes they are run and should be held accountable for it,” said one participant. Companies who do so forthrightly aren’t as likely to be takeover targets, the participant added. “Nobody messes with people like Warren Buffett or Steve Jobs.”
On taxes, one tax-policy expert declared: “We heed more tax revenues – we have a revenue problem not a spending problem.” Much discussion centered on the impact of raising the U.S. tax on capital gains, extending the holding period to three years or more for capital-gains treatment, or eliminating completely the distinction between capital-gains and ordinary income or retained earnings. There was no obvious consensus, however.
“Long-Term Value Creation: Guiding Principles for Corporations and Investors,” an Aspen report: http://t.co/NJhObfLChv“Darden’s dilemma shows us bitter truths about boardroom behavior,” by Steven Pearstein, the Washington Post, Jan. 2, 2014. http://t.co/rjXsw1KiJO
A common view of economic theorists and political activists is that public companies respond to pressure for ever-rising quarterly earnings with management decisions that underweight the corporation’s impact on long-term values like ecological stewardship, ethics, or social equity.
Sixteen participants in a two-day gathering at Drucker discussed how to encourage more long-term thinking in the corporate community. You can hear some of their thinking in a “Drucker on the Dial” podcast.
“Our agenda was threefold: to learn what each other is doing to counter corporate myopia,” writes project leader Rick Wartzman, Drucker’s executive director, and a former journalist. “To see where we might be able to form natural alliances and support each other’s work, and to determine whether our various actions might somehow add up into a larger movement.”
Now the group is considering whether to continue to pursue a long-termism movement, especially through changes in the way business schools teach decision theory. For example, is the decades-old mantra – “the purpose of a corporation is to maximize shareholder value” – still unchallengeable?
One of the participants in the September gathering, Cornell University law professor Lynn Stout thinks not. Her book, “The Shareholder Value Myth,” argues there are at least three other corporate stakeholders – employees, communities and customers — who should be given major if not equal consideration. (VIDEO)
Drucker, in dozens of books through his lifetime, was a master of pithy advice for the corporate managers. In a series of web-site “knowledge nuggets,” begun since the September gathering, the Drucker Institute is offering some of his best, along with current intelligence in similar form.
“The ultimate irony may be that the allegiance to shareholder value has caused the very problem it was intended to cure: enriching senior executives at the shareholders’ expense.” —Mark Kramer, Managing Director of FSG