A tick­ing bomb

Panay News - - OPINION -

JAN­UARY 2016, Ox­fam re­leased a report say­ing that the huge gap be­tween the rich and the poor has reached new ex­tremes with the world’s top one per­cent al­ready own­ing more wealth than the re­main­ing 99 per­cent com­bined. Last Jan­uary, the World Eco­nomic Fo­rum (WEF) re­ported the in­come and wealth in­equal­ity is one of the top risks faced by the global econ­omy.

Dr. Niceto Poblador, Pro­fes­sor Emer­i­tus of the UP Col­lege of Busi­ness Ad­min­is­tra­tion, pointed to that desta­bi­liz­ing fact in a pa­per en­ti­tled “Western Cap­i­tal­ism at the Cross­roads: Find­ing a New Role for Busi­ness.” The theme was dis­cussed in a re­cent round­table dis­cus­sion (RTD) or­ga­nized by the UP Cen­ter for In­te­gra­tive and De­vel­op­ment Stud­ies (UP-CIDS), the Man­age­ment As­so­ci­a­tion of the Philip­pines (MAP), Cen­tre In­ter­na­tional de For­ma­tion des Au­torites et Lead­ers (CIFAL) Philip­pines, and the United Na­tions In­sti­tute for Train­ing and Re­search (UNITAR).

Dr. Poblador states that cap­i­tal­ism is in cri­sis to­day mainly be­cause of its “fail­ure to dis­trib­ute the ben­e­fits of eco­nomic pros­per­ity eq­ui­tably to all seg­ments of so­ci­ety, and its in­abil­ity to make eco­nomic op­por­tu­ni­ties equally ac­ces­si­ble to ev­ery­one.” In sum, the non-in­clu­sive growth al­lows the few to ac­cu­mu­late so much wealth while those at the “bot­tom of the pyra­mid” lan­guish in poverty.

He cites in­ef­fec­tual govern­ment agen­cies, cor­rup­tion in public of­fice, poor po­lit­i­cal dy­nam­ics, and an­ti­quated tax laws as the pri­mary causes for the gross in­equal­ity.

He didn’t spare busi­ness from the in­dict­ment: “The sin­gle-minded pur­suit of profit is, in our think­ing, a ma­jor rea­son, if not in­deed the prin­ci­pal one, for the dis­par­ity in the eco­nomic for­tunes of the dif­fer­ent seg­ments of so­ci­ety to­day. By be­ing to­tally ab­sorbed in pur­su­ing the eco­nomic in­ter­ests of their own­ers to the ex­clu­sion of ev­ery­one else, busi­nesses have been mainly re­spon­si­ble for the con­cen­tra­tion of wealth and eco­nomic op­por­tu­ni­ties among a very small mi­nor­ity of the mem­bers of so­ci­ety — the cap­i­tal­ist class.”

He ar­gues thus: “The sus­tain­abil­ity of a busi­ness can only be achieved in a sus­tain­able com­mu­nity; a com­mu­nity char­ac­ter­ized by wide­spread poverty and great in­come in­equal­ity is NOT sus­tain­able; there­fore, ad­dress­ing the so­cial and eco­nomic needs of so­ci­ety is in the strate­gic (i.e., long-run) in­ter­est of a busi­ness.”

Fe­limon Berba, a suc­cess­ful busi­ness ex­ec­u­tive stated that busi­ness must un­avoid­ably max­i­mize prof­its. For the owner-in­vestors and its firm’s man­agers and em­ploy­ees. It would be hard to at­tract in­vestors who will as­sume the risk without an as­sur­ance of a re­turn. It’s equally hard to re­cruit good man­agers and loyal staff without a de­cent com­pen­sa­tion pack­age. That’s what en­ables a firm to max­i­mize prof­its. And hav­ing made money it can then af­ford to dis­charge its Cor­po­rate So­cial Re­spon­si­bil­ity (CSR).

One can see from the en­tire ex­change the dif­fer­ence in per­spec­tives and view­points be­tween an aca­demic economist and a hands-on en­tre­pre­neur.

I fully agree that the sin­gu­lar so­cio-po­lit­i­cal risk the global econ­omy faces is the ever grow­ing gap in wealth and in­come in our so­ci­ety.

The so­lu­tion Dr. Poblador pre­scribes: A “bot­tom-of-the-pyra­mid” strat­egy, an in­clu­sive busi­ness model (IBM)

The big ques­tion is, who will be the agent of change and by what man­ner of changeover? Dr. Poblador sug­gests busi­ness, par­tic­u­larly big tech firms like Facebook, Google or big groups like Ay­ala. I dis­agree.

Busi­ness as an in­sti­tu­tion is not in­tended to be a re­former. On the con­trary, many of them are largely so­cially and eco­nom­i­cally con­ser­va­tive. And in the Philip­pines, they are mostly family – dom­i­nated. The change can only be ini­ti­ated and cham­pi­oned by the State, gov­erned and headed by a “sys­tems” leader. A con­sul­ta­tive chief ex­ec­u­tive who can draw in busi­ness, civil so­ci­ety and academia to work in a col­lab­o­ra­tive mode.

Re­form can be­gin with re­form­ing the busi­ness and man­age­ment ed­u­ca­tion cur­ricu­lum so that busi­ness schools will pro­duce busi­ness en­trepreneurs or ex­ec­u­tives con­scious of its firm’s CSR. And for those who had al­ready made it, an ex­em­plary busi­ness be­hav­ior. edan­gara)/

(Email: an­gara.ed@gmail.com| Facebook & Twit­ter: @ PN

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