Philanthropy is not enough

While global wealth has grown, there has been a frightening increase in income inequality all over the world. At the same time, the business sector has produced more billionaires even in less developed countries. Large corporations and conglomerates have become even larger at the expense of small businesses.

Malls have increasingly brought about the decline in public markets. Market vendors and small stores have been rapidly displaced by chain stores which are now giving way to online retail giants like Amazon. In this new environment, business has developed a public image of being part of the so-called “establishment.“The anti-establishment movement has given rise to the increasing popularity of populist leaders.

It has become much harder for businessmen to claim that a country can only become prosperous if business becomes more profitable. The increased mobility of the business sector has allowed manufacturers and service providers to move rapidly across borders. Filipino labor are forced to compete against workers in Bangladesh and Africa. For example, any demand for higher wages is immediately countered by businessmen who threaten to move to lower wage economies. These may contribute to the profitability of businesses but the ordinary worker has not reaped the benefits of increased productivity. The economic wealth of a country, measured in terms of Gross Domestic Product, may be increasing but the labor and peasant sectors have seen their share of national wealth continually declining.

The world is approaching a stage where the concept of capitalism is now under attack even in the richest economies of the world like the United States and the European Union. Pope Francis has said publicly that the idea of “trickle down” is not credible anymore. This is the idea that as the rich get richer, the wealth of the rich will begin to “trickle down” to the poor. Instead what we see is the increase in consumption by the very rich that does not benefit the poor. As someone relates, there is no significant increase in the number of shoes made that could increase jobs for the poor. Instead we see a significant increase in luxury brands for shoes, bags and apparel still produced by low cost labor.

Will this eventually spell the end of capitalism as we know it? The last Industrial Revolution gave rise to mass production and produced super rich individuals like the Fords, Rockefellers, and Carnegies. But the same Industrial Revolution produced worldwide labor and peasant unrest leading to the rise of Communism and Fascism. These revolutionary movements were supported by the masses and threatened the world order.

Today, we are seeing the rise of populism and state capitalism. Increasingly, even democracy has come under attack as the masses have begun to believe that democracy has been exploited by the rich ; and, has not led to any increase in tangible benefits for the poor. Even more worrisome is the global increase in fascism even in developed countries in Europe and North America.

What is a fascist? Former Secretary of State Madeleine Albright wrote that a fascist “...is someone who claims to speak for a whole nation or group, is utterly unconcerned with the right of others and is willing to use violence and whatever other means are necessary to achieve the goal he or she might have.”

Populism and the increasing trend away from democracy may not necessarily spell the end of capitalism; but, this will certainly give rise to the increase of “crony capitalism.” This is not a welcome trend for the business community especially those who truly believe in a meritocracy and competing in an even playing field. Another trend is the rise of state capitalism – an increase in the number of government-owned corporations.

Those businessmen who truly believe in responsible capitalism and who do not want to see the end of democracy must understand that they must take an active role in ensuring that the benefits of increased wealth must be concretely felt by all sectors of society. Individual contributions to society, like philanthropy or charity, are not enough. Livelihood projects, building homes for the poor and giving scholarships to the poor are not enough to change the growing inequality. It is not enough to set up foundations.

Corporate citizenship

For decades, business leaders have been involving their companies in philanthropic activities and donations to communities where their businesses operate. Corporate citizenship goes beyond business ethics and corporate social responsibility. Aristotle once said that being a citizen is to have the right to participate in the public life of the state with the duty and responsibility to look after the interest of the community as a whole. The concept of corporate citizenship assumes that the business firm will engage in social activities that are not mandated by law nor generally expected of business in an ethical sense.

Many times I hear businessmen say that they cheat on taxes because the government is corrupt or everyone “does it.” They say their corporation would be willing to pay the right taxes if the money would be used properly. But then I ask, what do they do with the money they saved from tax cheating? Do they put it back into the community by some other means or do they simply declare it as additional dividends or compensation?

Corporations need to accept that they have obligations that go beyond paying taxes, obeying the laws and making charitable donations. They are also obligated to produce higher standards of living and quality of life the community and nation. Creative writing classes for kids/teens and adults

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