13th Century – Magna Carta; 21st – a new “Great Charter”?

‘to no one will we sell, to no one deny or delay right or justice’.

Magna carta

On 15th June, 2015, Magna Carta will be commemorated. It will be 800 years since King John of England affixed his royal seal to the document at Runnymede – alongside the Thames in southern England. Magna Carta was an agreement between King John and English nobles that sought to overturn the singular rule by a despotic monarch and set the scene for the gradualist changes that resulted in democracy.

Magna Carta emphasized the rights of the individual over the state (even if those individuals in 1215 were just a few nobles).

That fight between the state (and those who want to capture the state for themselves) and the individual is unresolved 800 years later despite successive waves of change.

While in the West we consider the balance between the State and individuals to be rational and where the rights of individuals are upheld by rules such as The Human Rights Act, there is a perpetual seeking after new balances when threats appear or when certain groups capture more of the State. In the USA, for example, this balancing resulted in the splitting of responsibility between Executive, Legislature (itself into two parts) and Judges – which Fukuyama now calls a “vetocracy” which is more and more in the pay of key sectors that know how to manipulate decisions.

More widely, nations like China and Russia have never allowed significance to a balance between the state and individual rights. China, especially, has for 2000 years emphasized rule by law rather than rule of law – where the State (or those that consider themselves to be the State) is above the law. Xi Jinping’s recent attack on corruption appears to be but the latest attempt by one person and his clique to dominate the state.

More recently, like a laser beam to the head, the murders in France of journalists at Charlie Hebdo, of a Muslim policewoman close by and, later, at a Kosher deli, have highlighted that the individual and the rights of any individual are consistently challenged by states and those purporting to act on behalf of a state (or, in this case, an entity that stood before the state or that, in some cases, acts as a state – here, a religion).

The death of King Abdullah of Saudi Arabia reminds us of the total submission of individual rights in that country beneath the rule of one family – under the aegis of the Wahhabi sect of Islam.

Individual Rights

The battle between the State (whether represented by an elite or an ideology headed by a group purportedly representing that ideology) and individuals is a battle that clearly still rages. The rights of the individual against such groups are key to the different mindsets that distinguish real freedom from all other forms of government and governance.

The spectrum is a wide one but State (with a wide definition of that word) “ownership” ranges from political or quasi-political (such as China) to dictatorial (Equitorial Guinea, Angola) to religious (ISIS) to monarchic / theocratic (Saudi Arabia) to such “democracies” where voting is rigged (such as Zimbabwe and Afghanistan) to enable elites to maintain themselves in power.

This is not a battle between different nations but one where the rights of individuals are challenged by state or state-like bodies.

Whereas we may not see the actions taken against journalists in Turkey by the Erdogan regime to be in any way similar to extreme violence as has just happened in France, it is on that spectrum. Between states that defend the rights of individuals and those which violently oppress them (and subsume them to the so-called state or a religion) lies many variations – but, all can slide in the wrong way to extremism.

The extremists who claimed to be Islamists are one extreme; Erdogan’s government is dangerously edging in that direction as freedom of the press is a crucial embodiment of individual freedom.

Corruption at the Heart

Sarah Chayes has just published “Thieves of State”. It is an extraordinary book that, through her own experiences as a journalist and then on the staff of various military commanders from the US and in places like Afghanistan, enables her to show clearly how corruption is at the heart of so many national and international upheavals. From Afghanistan to Egypt, from Tunisia to Nigeria, governance has been geared towards corruption and becomes the mechanism of government.

Sarah’s aim is to show how the corruption flow in those countries is not top-down, but bottom-up, where so-called “facilitation payments” lead up the chain to larger corruption at the top – whereby nations recast themselves as mafias but, now, emasculating nations.

She shows how Karzai was able to do this in Afghanistan; how the military do this in Egypt; why this was the norm in Tunisia.

Individualism and the right of individuals to have justice have no place in such states. The state is simply a mechanism to suck the benefits of society through corruption to a few at the top who become extremely wealthy and some further corrupt benefits to those further down to makes ends meet. The vast majority of society suffers through lack of funds and the thieving of funds meant for development – for policing, for security, for health services, for education and for the rest of what we in the West would call normality.

This is why the Arab Spring promised so much but gave so little. Only in Tunisia has the promise started to be met. The strength of people in such a country is to be applauded and the recent election of Beji Caid Essebsi in a free and open election to be warmly welcomed.

Similarly, the people of Sri Lanka made a momentous decision at the ballot box by throwing out President Rajapaska and electing Maithripala Sirisena – a man dedicated to fighting corruption and nepotism.

Yet, as Sarah Chayes has shown, outside of these countries, either corrupt states remain ruled by corrupt kleptocrats or the fight back is via religion. Boko Haram and ISIS claim to be against the ways of the West as they see it – the corruption that is embedded in Nigeria or Iraq. At this extreme, even education is seen as the mechanism by which individuals grab the capability to enter into the corrupt system. Chayes views the connivance of the USA in that corruption (she mentions the suitcases of cash that the CIA provided to Karzai as but one example) as leading to the success of terrorist organisations in gaining credibility amongst many people in countries like Iraq because they see this as the only way out of the corruption that wrecks their lives.

Working on the disease

Yet, it is 800 years since Magna Carta – an agreement between a king that believed in his own divinely-given rights as usurping all others and a group of wealthy noblemen that wished to garner some rights to themselves. From that time, many of us have progressed to where individual rights are now enshrined in law and also in practice.

Yet, as recently as the 17th Century, England was riven with corruption – it was endemic. Samuel Pepys, the renowned diarist of that time, spent six years to work corruption out of the Royal Navy – which was crumbling under the weight of bribery and nepotism – notably, the sale of position and procurement. Although Pepys was not innocent of corruption himself, as his biographer, Claire Tomalin has written, his own honesty went some way to right some wrongs. England gradually, through the 18th and 19th Centuries, eroded corruption from its core but it was not an overnight demolition. Chayes’ example of Singapore and its ability to eradicate corruption almost overnight is a good case of a small nation challenging itself and succeeding. Elsewhere, it takes longer

Chayes focuses sensibly on the role of not just organizations like the military within corrupt nations but organisations outside like the CIA in understanding the drivers against the halting the disease of corruption and the complete erosion of justice. However, as the West (via organisations like the OECD and the US FCPA) progressed after World War II to a consensus on governance and how governance would become part of the stated requirement for development assistance, this has, more recently, been unsettled by the rise of China – which has appeared to care little for such governance considerations – notably in its dealings with African states.

This unsettling of the post-WWII consensus (despite Xi Jingping’s drive to eradicate the disease in China – which many suggest is more politically motivated than anything else) is a major challenge that can be added to Sarah Chaye’s list of issues to be assessed when developing an anti-corruption programme.

A “Great Charter” for the 21st Century

Sarah Chaye’s book puts corruption at the heart of the problem that besets the world.

  • While climate change (with its own problems of solution and understanding) has been seen as a world-wide challenge that has to be resolved;
  • while health concerns are the subject of huge technological research and financial resolve;
  • while economic prosperity is the subject for everyone at all times;
  • while nature conservation and the future of human life on this planet is a central consideration of all;
  • while terrorism is dislocating masses, murdering thousands, displacing millions – often through the guise of extreme forms of religion – and requires regular government action;
  • corruption plays a role in all the world’s key areas of collapse but has far less formal acknoweldgment.

From small-scale facilitation payments to large scale national strangulation, corruption inhibits and destroys.

The world now needs a charter for the 21st Century that marries the rights of individuals and justice (started with the Magna Carta in 1215) to the rights of individuals and communities to be unhindered by corruption. We now need a formal acknowledgement of its central corrosive ability that destroys nations, destroys security and completely disallows individual and community justice to take place.

“To no one will we sell what is not ours to sell”

“From no one will we take what is not ours to take”

 

‘to no one will we sell, to no one deny or delay right or justice’.

Advertisements

Where the Wild things are – bribery at the edge of business

The Financial Times (http://www.ft.com/cms/s/0/e12e0efc-0d71-11e2-bfcb-00144feabdc0.html#axzz28VeYteen) reports that one third of Board members would happily bribe to win business despite the introduction and publicity over the Bribery Act that was enacted in 2010 and brought into law last year. FTI Consulting, which did the survey, believes that the Serious Fraud Office is showing no desire to investigate and prosecute low level crime and is only after the big boys (www.fticonsulting.com/…/the-realities-of-the-uk-bribery-act.pdf).

 

This is no surprise to those of us involved in agitating to bring the Act into being – 34 years after the FCPA in the US and years after we signed up to the OECD convention. Jack Straw advised that around 1.1 extra prosecutions a year would ensue from the Act – so, no real surprise.

 

The Grown-ups get it

 

The report from FTI shows that businesses are being divided into those (usually large and quoted) that comply and other who are becoming the “risk takers” – willing to go for business in whatever way and hope they don’t get caught.

 

Like tax evasion and using deep and difficult schemes to evade tax, these organizations are willing to act outside the law and depend on the SFO’s inability to implement the law.

 

The grown-ups get it, the kids don’t – but, we have insufficient numbers of grown-ups in the SFO (many of whom left to go to private industry when the Bribery Act came into effect).

 

Just like Maurice Sendak’s children’s book, our small and medium companies wander into places and get transfixed by the wilder side of business. It wasn’t that long ago that the costs of bribery overseas were tax deductible in the UK and big companies (especially in defence and aerospace, construction and energy routinely bribed to get business and keep business.

 

Now, most large UK-based businesses act like their American and European cousins and have mainly (not completely) forsaken large-scale bribery. The SFO has said it will prosecute those who threaten the stability and reputation of the UK.

 

ITV’s Exposure on Wednesday, 10th March at 10.35 (UK) – “No Bribes Please, We’re British” – takes a look at the UK one year on. I spent some time helping with this documentary made by Ed Harriman and was interviewed for it – http://www.radiotimes.com/episode/sgzfv/exposure–no-bribes-please-were-british and it looks back at how we did business before the Act – and how many still do such business now.

 

 

This leaves the kids – SME’s / SMB’s.

 

Should we worry about the children?

 

Winning business overseas (especially in the BRICs – where methods of business may be different) in any recession is tough. Competition from those who don’t worry about giving bribes (and that is much more of a norm in the rapidly growing nations of Asia, Russia and South America) is enormous and business leaders want a level playing field.

 

The OECD Anti-Bribery Convention was signed by 39 nations – all the OECD countries plus Argentina, Brazil, Bulgaria, South Africa and Russia (China has not signed) and aims to tackle the “supply-side” of bribery. This is where the money comes from – the wealthy nations that enable bribes to take place. It was on this basis that the UK eventually enacted the Bribery Act.

 

The question asked is now that the Act is in force and most very large businesses comply, does it matter that the smaller ones don’t? Shouldn’t we only concern ourselves with large-scale bribery and corruption?

 

While we don’t want to go back to the 18th Century when you could get sent to Australia for stealing a loaf of bread, the impact of bribery is substantial. From small-scale “facilitation payments” upwards, bribery impoverishes and kills. This sounds overly fraught maybe – but, funds diverted to projects that a country does not need means less is spent where it does – on doctors, hospitals, safety measures and the like. As bad, poor construction of buildings and bridges in China (as an example) causes death each year – the contractors are normally found to have won the work through bribery.

 

In the 21st Century and in our global economy where we are all much closer to each other economically (as customers and suppliers), we need to ratchet up the standards not diminish them. The UK is a wealthy nation that can do without involvement in helping to destroy developing nations. Bribery is a constant threat at any level as Transparency International constantly shows in their annual Corruption Perception Index. Even in industries like Defence which have been subject to anti-bribery investigations for many years, the picture is unclear as TI have recently shown: http://www.transparency.org.uk/news-room/press-releases/13-press-release/375-defence-companies-fail-anti-corruption-test

 

Now countries like Greece, whose economy has been based on corruption, are paying the price. Countries like Mexico are likewise – http://www.nytimes.com/2012/04/24/world/americas/bribery-tolerated-even-as-it-hurts-mexican-economy.html?_r=0

 

Bribery hurts those countries receiving the bribes. If we let our kids (the SME’s) run amok, then the hurt just grows. We have to keep our neighbours safe.

 

Getting an ASBO

 

In the UK, Anti-social Behaviour Orders (ASBO’s) are now routinely given out by police to kids who run riot in the streets and disturb neighbours. The UK was close to receiving the equivalent from the OECD before the Bribery Act was enacted. The UK had to be pushed to enact it – although all party support was eventually forthcoming.

 

Now, a year on, we see that lack of implementation (always feared by those most supportive of the Act) looks like it is providing those with more risk attuned attitudes to buck the system here and enter into the system overseas. Our neighbours (our trading partners) often don’t help – bribery takes a long time to eradicate and often governments are implicit in it. But, countries like the UK managed to stop slavery, made drug running illegal (although after we grew rich on both) and campaign to stop child-labour improve safety standards worldwide. Bribery seems a softer crime to many yet studies have continuously shown that the impact can be as horrific.

 

The UK is in recession but a get-rich-quick attitude that admires tax evasion (and tax havens) and tolerates bribery is not a modern society – it is a throwback to the 19th Century. We deserve credit for enacting Bribery legislation and we deserve an ASBO for tolerating bribery and for tolerating the use by foreign businesses especially in the energy sector that use London to raise capital on the stock exchange – and who are notorious for their poor business practices in poor health and safety and corruption.

 

The current UK Government has been mute in its delivery on anti-bribery provisions and the FTI survey – which should be a wake-up call – has received scant reaction. Watch Exposure on Wednesday, 10th October at 10.35 (UK) – No Bribery Please, We’re British. One year on from the Bribery Act, we should not be rolling back the legislation by lack of implementation.

 

 

The Financialist-Political Complex

The Military-Industrial Complex is now old news

 

Investment banks ran amok and created financial disaster; Governments bought up the debt and have created sovereign debt bubbles and a crisis in the Eurozone; banks are now found to be rigging LIBOR and potentially costing savers and borrowers billions of dollars; banks are accused of rigging software that would have told regulators they were channeling drug money and terrorist finances through the banking system; small fines are levied which provides a huge rate of return on those “misdemeanors”.

So it goes on and on from when “the tide went out” in 2007 and we have forgotten the ever-depressing news from just a few years ago. Back in 2009, Lloyds TSB (now 43% owned by the British Government) was fined $350m for similar offences to those HSBC are alleged to have committed.

The US Department of Justice alleged that dating back to 1995, Lloyds falsified wire transfers involving countries or individuals on the US sanctions list.

In effect, the bank removed customer information so that transfers would pass undetected through sanction-focused filters at US banks, violating US federal law aimed at starving terrorists of money in certain countries.

Manhattan District Attorney Robert Morgenthau said: “The Iranian banks have money on deposit in London with Lloyds. They were having Lloyds send the money to the US and beyond and stripping the identification.”

In a statement, Lloyds TSB noted that it set aside £180m last year pending the settlement, and said that it “does not anticipate any further enforcement actions.”

Now, HSBC have made a similar settlement and the regulators are lauded for their achievements three years after the almost-forgotten Lloyds TSB case.

Nepotism

Government, politics and financiers have run nations together for hundreds of years. It is unlikely to change anywhere or anytime soon. What properly functioning societies should be able to do is to work to prevent the worst wrongs being committed. We clearly have not managed that in the last five years and our counter-balancing systems are not in place.

Especially in the USA and UK (but the same is true elsewhere as well) Governments and politicians in most major parties have contrived to provide the finance industry with freedom and have reduced the risk of failure to almost zero. This is now a tired story, repeated many times. Yet, five years on from the initial discovery of sub-prime devastation in the USA, has anything changed? Do we even recognize the real problems?

The nepotism within the family of government and finance persists and becomes more insidious. Banks and the finance industry are by far the most favoured by politicians. Bankers and financiers understand what drives the business of politics as well as what drives the engine of business on which they depend. A core problem is the very understandable reluctance of politicians (and in most cases their lack of understanding) to do anything. Democracies have lost the grip over a key element of our societies – and there is little being done to remedy that problem.

The reasons are simple: one the one hand, banking provides the lubrication for economic growth and, during good times, huge tax revenues ; on the other, political parties are funded by those who have made and still make their money in banking and finance. This is especially true in the USA and UK – which are heavily tilted economically towards the finance industry, but it is also true in the EZ land wherever banking exists (internationally, nationally or regionally, politicians are usually in hock to the finance industry). The interlocking of politics and banking is extraordinarily tight – it has been for a long time. We should not be surprised that very little is being done now to change this. Governments bailed out the banks by taking on their debts and continue to supply massive liquidity to the banking system. The combination of economic growth, tax receipts and party donations is too big for them to ignore.

Post-2007

We say the word changed post 9/11, but what changed post-2007, after the banks were shown to have failed our economies. Sure, many people now vilify the banking community as they do wartime con men or spivs. We feel that the banks and the bankers (especially those in investment banking) have taken us all for a ride. This was a ride they could not lose. They made huge money for themselves as individuals on the upside and lost nothing on the downside. True, a few like Fred Goodwin and recently Bob Diamond have lost their jobs – but, they remain seriously wealthy, having never actually paid for mistakes in the way an entrepreneur would have. They haven’t lost their homes whereas many others have. The risk: reward ratio was and remains massively in favour of bankers and the banks. Nothing has changed.

Banks that are too big to fail are still in place and the Vickers Review in the UK envisages nothing more than Chinese walls between the casino elements and the more traditional forms. Chinese Walls in banks (!) – the same banks that have engaged in LIBOR fixing, in sub-prime marketing, in money laundering. The same banks that are deemed to have dubious ethics and poor control systems, where compliance officers resign because of the lousy job they do and are given as good a job elsewhere in the business (just like arms manufacturers did for their staff caught bribing in the 1980’s).

Banks have now taken on the mantle of the defense companies that were ridiculed in the 1970’s and later for corruption on a world-wide scale (and where corruption continues in many, but differing areas). From the introduction of the Foreign Corrupt Practices Act – FCPA – in 1977 in the USA (which is now under sustained attack in the USA by Chambers of Commerce), it took over 30 years for the UK to pass the Bribery Act and it will take many more years to ensure proper implementation. It is a relentless task to keep corruption under control – society has, though, a way of dealing with it, an understanding of it and a willingness to keep at it.

The Military-Industrial complex remains in place but it is no longer the ogre it once was (in the West anyway – even if the corruption engaged in by China, Russia and other newer entrants is destabilizing that market and affecting the resolve). Now, a bigger threat is the Financialist-Political complex (see Forbes July 2012 – Beware the Financial-Political Complex ) that has forever been in place and is now assuredly seen as a major threat. The only benefit of the financial disasters of 2007 is that the Financialist-Political Complex is no longer under cover – it is now there for all to see just as the Military-Industrial Complex was “uncovered” by Eisenhower in the 1950’s. The big question for the rest of society is what to do about it.

Tom Armistead (http://seekingalpha.com/) described Financialism recently:

Financialism is an economic system where the primary activity consists of creating and manipulating financial instruments.  Financial instruments…are in their original form firmly linked to economic reality.  However, when financialism sets in, financial instruments become progressively further removed from their role in supporting commerce in the real world and develop a life of their own.
I would add that Financialism should also include the undue influence that banking and finance have on politics, politicians and governments.

An FCPA for the FPC  (Financialist-Political Complex)

The inherent corruption of the investment banking industry, its progressive drive towards Financialism and its close relationship with Government means that it will take enormous sense of purpose and quite some time to make a change.

What the world needs is an FCPA not just for Financialism but for the Financialist-Political Complex – the FPC – where the world of banking and crazed financial instruments has bank-rolled governments and carries governments and politicians by its supposed economic force.

An FCPA for the FPC would mean that we first have to recognize the problem. It is not just a problem of the banking industry but a recognition that financialism and government are too intertwined and need to be separated – especially in the USA and UK, but, because the world is a global market, world-wide in a way that the OECD convention bribery made the FCPA a world-wide requirement.

  • We need to ensure that tax havens (the spiritual and economic home of financialists) are deprived of their tax haven status.
  • We need to ensure that taxes are paid where profits are made and that the virtual reality world of financialism is not allowed to exploit loopholes in tax regimes.
  • We need to ensure that political parties are not beholden on financialism so that funding for political parties is through contributions limited in size to, say, £10,000 or $15,000 or €11,500 or similar per person or company or association or union.
  • We need to ensure that that the financial instruments of the financialist industry are separated from the rest of the banking industry – not just by Chinese walls but by legal separation into separate entities.
  • We need to ensure that compliance regulation is strong in all countries allowed to carry out international banking and that compliance officers and managers are independently regulated and independent from those who sell financialist products. FATF needs to be given real powers but the OECD and other multi-national organisations should seek to ensure that banking and politics are kept apart and that influences are controlled. This will not inhibit growth – the disasters of the last 5 years have shown the impact of poor banking – its cost is in trillions of dollars.
  • We need to ensure that risk:reward ratios are proper and commensurate with those faced by entrepreneurs – who risk their homes and all their wealth. Managers should not see upward only rewards at the expense of shareholders and society.

The FCPA that led to the OECD anti-bribery convention and later to the Bribery Act in the UK was a forerunner that helped to shape the course  that the western world took in terms of governance and anti-bribery. Its impact, itself, is in danger of being blown off course by the economic problems caused by the financial collapse of 2007 as much as by the new players of China, India, Russia and Brazil. Nevertheless, it shaped a cultural direction that has endured and has done much to re-shape the military-industrial complex.

The financialist-political complex is where the military-industrial complex was before 1977. It needs a massive change in our culture and an understanding that it is not just focused on the banks but also the governments and politicians that depend on them so much that need changing.

Let me finish with another quote from Tom Armistead:

Banks need to be returned to their primary purpose, which is to serve the real economy, as financial intermediaries between those who work, save and invest, and those who need funds to create new means of production, or to buy a home, or a car. 

To go slightly further:

Banks and the whole finance industry need to to be separated from their nepotistic relationship with Governments and politicians so that their interdependence is no longer the massive risk that forces all of us to pay for it. We need an FCPA for the FPC – the financialist-political complex.

Business and bribery – globally speaking

A couple of weeks ago, I posted “Everyone should be allowed to bribe”

https://jeffkaye.wordpress.com/2012/05/27/everyone-should-be-allowed-to-bribe/

and received a lot of good feedback. From business people, from NGO’s, from those in countries where the bribes take place and impact the most, it is clear that this is a major concern.

The NGOs’ position is understood – bribery is bad, it is illegal in most countries, it does irreparable harm, it distorts the market, and it creates poverty in those countries, which cannot afford to exacerbate intolerable economic conditions.

For those in those countries where bribery takes place, the impact is felt acutely. It is not just that money is wasted on bribes that could be spent elsewhere; it is not just that money is wasted on products and services that are bought only because of the bribes. Just as critical is the fact that the country may see bribery and corruption as the norm – nothing is done without a bribe – it is a mafia-type culture where favours and reward for favours are the norm. This is a distortion of the market that leads to those in certain positions benefitting and the rest (those outside the inner circles) are deprived of economic well being (maybe no housing or food) and deprived of being part of a moral centre to their lives.

The Business of Bribery

For large businesses operating out of countries with well-developed legal structures, bribery and corruption is now officially not on the agenda – reputational losses are, in the main, far too severe to allow a short-term gain to be allowed if through bribery. The problems that Wall-Mart is suffering from alleged facilitation payments in Mexico is a case in point – the legal hassles, the continuing publicity, the constant press all drain the company and, overall, question the economic sense of the payments (which may well not be illegal under the Foreign Corrupt Practices Act – FCPA).

For large organisations operating in corruption-endemic parts of the world, the situation is fraught with danger. A business operating in the UK or USA, for example, would be acting illegally if bribing overseas. Yet, there are many instances where it appears that business takes a calculated risk – using money to influence decisions that (even if found out and prosecuted) may well represent a reasonable return on investment overall. These companies may well be in mining or construction, or defence – industries prone to bribery opportunities where the dangers are continuous.

For small to medium-size enterprises (SME’s), the situation is hugely risky. Many complain that meeting the requirements of the UK’s Bribery Act are severe and highly costly. Lawyers require large fees for sifting through the processes of any business to “ensure” that “Adequate Procedures” are in place. Many have gone too far and maybe spending too much in ensuring no bribery takes place.

For others, there remains the feeling that bribery is not a bad thing – it is the norm, they say, for doing business in certain places and British business (or American or whoever) should not be crowded out by parsimonious governments led by the nose by the NGO’s.

For these businesses, they are competing for the survival of the company (in their minds) – why does the UK not “get it” – that “we are not on a level playing field with the Chinese and others who allow their firms to do what they want when overseas?” Arguing that it is unethical produces a wry smile – and a call to deal in the real world where business is tough and economic conditions tougher. A business does whatever it needs to do.

From 19th Century business ethics to 21st Century Globalisation

A parallel with the business of bribery was the rise of industry in the 19th Century and how the demand for health and safety procedures were crowded out and resisted by businesses that saw this as an affront to their rights to do business. The laws allowed child labour and working conditions modeled on workhouses – prison-like conditions.

In 1833, the UK introduced a law that ruled that:

  • Children under nine could not be employed in textile factories.
  • Children aged nine to thirteen could work a maximum of nine hours per day and 48 hours per week.
  • Young persons aged thirteen to eighteen could work a maximum of 12 hours per day and 69 hours per week.
  • Night work for children and young persons was not permitted.
  • Children were to attend school.
  • Four independent factory inspectors were to be appointed.

This was the beginning of a movement that business owners felt would wreck their businesses.

We can now look back on the waves of pressure in both directions that pushed for better working conditions on one side and the status quo on the other.

But, the world changed – developing countries realized that to be prosperous meant developing the so-called middle class and that all parts of society had to be covered – not enslaved by appalling conditions. While risks still persist in many industries in the UK and other developed nations, the focus has moved.

Globalisation has meant that we now source so much of our goods from overseas and this means that Asia, for example (mainly China) now represents our supply base just as the under-9’s did before 1833. Our natural resources (from which the British Empire rose up) are still derived from many of those countries, which were plundered in the 19th Century.

Yet, the norms that we require in our own countries are not the norms in our supplier base – even if we obtain the benefits. When a UK retailer is discovered using child labour in one of its overseas suppliers, there is an outcry and their reputation suffers. Our consumerism does not, in the main, take precedence over what we see as basic ethical norms – which have changed in the last 180 years.

So, bribery and corruption is no different. Early 19th Century England was a place where bribery was endemic. We have, for the most part, cleaned up our act at home. This ethical state was not transposed to the work we do overseas for many years – in 2001, the costs of overseas bribes remained tax deductible in the UK. Now, the situation has changed – the ethical state has changed in law – if not yet in practice. Globalisation does not mean we should hide our eyes from the rest of the world – we are now all part of the same economy (just as the textile workers and their 9 year-old children were in 1833).

Taking business beyond bribery

The laws are in place but business (operating under difficult economic conditions) and business people feel under pressure. Passing a law does not mean that it becomes easy to deal with it. There are a number of changes that we need to see made.

  1. SME’s feel under pressure because they have been scared by the Adequate Procedures requirement in the UK – which means that individual Directors are unlikely to be prosecuted even if someone in their firm is guilty of bribery if there exist processes, which mean that the bribery charge is shown to focus on a rogue element. Lawyers and others have made the most of this – firms are hit by high charges if their risk assessments show them vulnerable. The answers lie in common sense (like all business decisions) but also, for many who think themselves vulnerable, for Chambers of Commerce and other business organisations (CBI, IOD) to go to their aid by working with government and NGO’s (like Transparency International) to educate wherever possible.

I have myself chaired conferences in the Bribery Act – I hesitate to state the percentage of companies that have been to such conferences, but I bet it is a low one.

2. Working for a US corporation for many years, I had to sign-off every three months that I was unaware of any bribery going on in my business. We should have the same in the UK – this should be done for all companies audited, where a document should be signed off every year by the Board. For those companies that are too small for an audit, there should be a statement that is sent in with the Balance Sheet to this effect.

3. For companies that are subject to bribery requests and / or intimidation, there has to be somewhere to go just like the Embassy if an individual is imperiled. Every embassy should have a commercial attaché or equivalent that is trained in the Bribery Act and knows how to deal with the issue. This entails pressure on host governments as well as alerting the issue to UK Authorities – as it is anti-competitive and will hurt British firms in the short-term. It also requires links between the Embassies and industry groups to channel information and to act on it.

4. The Governments that are signed up to the OECD Anti-Bribery Convention have to seriously and continuously pressure those countries that aren’t to enter into a world wide anti-bribery agreement – it should be a WTO requirement for trade that countries make their firms bribe-free and that supplier nations work towards bribe-free regimes. This should also include those regimes that have surpassed bribery and where small groups have taken over the resources completely. Angola comes to mind (Sonangol controls the energy industry and is vitally owned by the governing clique) but South Sudan (one of the poorest nations on earth) is bemoaning the loss of $4 billion through corruption in its oil sector.

Business Ethics good for Business

Business has to deal with many challenges – and external challenges can be the hardest. I have seen businesses in aerospace and defence positively transformed because of the adoption of good ethical practices. CSR has focused many large companies on to going beyond what is legally required to what is right. That usually makes for good business as consumers are far more “savvy” and can change their buying habits very quickly.

For small businesses (maybe part of a supply chain where the end-consumer is not in sight), it is just as important. Large companies are responsible for their supply chain, too under the Bribery Act. There is not much escape.

The Bribery Act took 200 years to get into Law – it is very unlikely to be overturned. The 21st Century world is one economy – each nation and group of nations are linked by trade flows, supply and demand, financial flows, people flows. Just like CO2 emissions, one country impacts another. Bribery may be an unseen crime – it is a crime nonetheless, but, like in regard to health and safety (and child labour laws) we move on.

Should Everything have a Price?

Michael Sandel in his recent book “What Money Can’t Buy: The Moral Limits of Markets” writes excellently on how the market economy has turned into the “market society”. This view echoes Galbraith and “The Affluent Society”. Galbraith’s warning from the 1950’s has not been heeded – we are now subject to the “market” in everything we do – anything and everything has a price.

 

Sandel cites many examples – such as someone selling their organs, someone saving a place in a queue, schools being sponsored by companies and many others.

 

It could be argued that it was always so. Slavery, the selling of humans in the marketplace, was a common market phenomenon and still exists. Bribery and corruption – the selling of favours or ensuring something goes in your favour – remains common and Iraq and Afghanistan are riven by corruption on the grandest scale. Russia and much of Eastern Europe are held to be gangster nations – like much of the USA in the time of prohibition. Somalian pirates resort to kidnapping as an outcome of pure economic theory.

 

Yet, society does, from time to time, attempt to apply limits in a world where it seems that everything has a monetary price.

 

Market domination

 

The libertarian view that the market should be allowed to rule means that we abrogate our responsibilities. It is the role and duty of civil society (usually through Government) to judge where market rules and where other forms of decision-making are paramount.

 

We make those judgments continually. The right to be safe on the streets is, in most developed societies, made possible by laws which are enacted through general agreement by citizens. It is enforced, where needed, by legal systems and enforcement agencies – again, only there by the general agreement of civil society. In those countries where the market and price dominate, then the danger is that laws and police forces can be bought off. This is the case in many eastern European countries and many countries in Africa. Bribery and corruption rule through what may be called the market society – against the agreement of most of its citizens. As Sandel points out, this is against the best outcome for society – and by a long way.

 

Libertarians may argue that a legal system and an “open society” are the foundations for market economies to work, but the world is a global economy and it is no longer possible for one country to be cut off from the rest. The market domination into so many areas of life is a threat if basic norms do not exist.

 

The market versus societal norms

 

Sandel does not go too much into how society develops its norms – where market pricing should not intrude. We are in danger, of course, of taking on pricing into every form of our lives and there are plans to price our natural resources and to ensure that accounting incorporates aspects of social life into accounting rules – for example, through the Prince’s Accounting for Sustainability Project; through the Natural Capital Committee – which will report into the UK Government’s Economic Affairs Committee, chaired by the Chancellor of the Exchequor.

 

While this acknowledges the problem in one respect (i.e. we are not properly accounting for externalities like pollution, the loss of natural capital – our rivers, forests and such) it is perhaps giving up the struggle against the market society. By the very nature of accounting in terms of numbers for such “externalities”, we subscribe to the essential condition for market pricing of everything – the market society is allowed to dominate.

 

Our focus on GDP and numbers betrays a failing of society – our inability to see anything outside of numbers – so-called economic wealth. GDP, which rewards only that which can be measured, has been a poor simulation of real “wealth”. Our drive to economic success (measured by how many unnecessary items we make and buy) takes no account of what is really important. Ability to buy is all that “counts” – literally.

 

Societal norms are now up for sale. Instead of a rearguard action against the market society (as against market economics) where we defend those areas of society against pricing (as they should be beyond price), we succumb to pricing everything. This leads to everything having a price – an accounting-driven doctrine, a market society doctrine.

 

Beyond economics

 

Of course, this may be the price (!) we are paying for economic growth and relative economic success. As we become more economically successful and as the world derives basic economic success, maybe our brains are becoming hard-wired to numbers as the only register of what is successful. The left-hand side of the brain is assuming victory over the right.

 

There is no question that the discovery of numbers has made the human successful and to understand and control large areas of science. We have changed the world entirely. Our ability to count is now dominating our lives. Since the dawn of accounting (when we counted our grain), numbers now “account” for everything.

 

Where has been the debate to question the way we account? If numbers dominate everything we do, what outcomes do we envisage, what changes result? If all our successes depend on numbers, then what lives will we lead?

 

This is now beyond economics – which, as George Soros has recently outlined, http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/

has been shown to be terribly mistaken in its misunderstanding of the world. His analysis, that economics, in trying to copy the rules of science has travelled the wrong path. Economics is a social science and, as such, does not have definitive outcomes. But, the situation is worse than Soros makes out.  Macroeconomics is being subsumed beneath a torrent of numbers so that, worse than following a quasi-scientific path, we are now following an accounting outcome for everything.

 

Where are the norms for society? Who are the guardians?

 

The financial crash of 2008, which is still playing out in 2012, opened up severe cracks in our economic system. It is also opening up divisions in society between the very wealthy and the large swathe of middle-income earners who make up most of civil society. These divisions show how we are valuing society and show clearly that pricing is not working. The value given to bankers and bonuses (no risk activities for the individuals who can only lose their jobs, not their wealth and no risk activities for the banks, who are too big to fail) shows a dramatic failing in pricing – in which we apparently put all our trust.

 

Pricing mechanisms are not working successfully, yet we place more and more of our faith in pricing as the only arbiter of success.

 

We now price (or will soon be attempting to price) everything – from CO2 to education, from healthcare to shoes, from our rivers to our right to pollute – everything with a price.

 

Yet, macro-economics (the economics of society) is a social science – it is not based on rigid rules. It is (as Soros rightly states) bound up in decisions and thoughts of men and women.

 

Pricing is one outcome of a social science that is not unquestionably right in every case – it is actually, mostly wrong and most economists are only good at describing what has passed (i.e. rear view mirror gazers).

 

Accounting was originally a micro-based activity – to help regulate and tax individuals and firms. It is now being used to price everything.

 

Are there any alternatives to pricing everything?

 

Of course there are, but it is becoming tougher. The Bribery Act in the UK (following a mere 34 years after the Foreign Corrupt Practices Act in the US) is an example. Society has (at least in the UK) decided that winning contracts or influencing economic decisions should not be subject to corruption. In China, as Jonathan Fenby’s excellent “Tiger Head Snake Tails” so ably describes, bribery and corruption have existed for many years but (at least at home) it is not considered acceptable. In many other countries in the developing world, it is.

 

But, we know that price is in play throughout society. The best lawyers cost huge sums and only the wealthy can afford them – so, our legal system is subject to pricing. The best education is paid for; the best healthcare is paid for.

 

With wealth divisions becoming wider, pricing is everything. It is time for a real debate in society on how economics needs to be changed to reflect reality and how accounting for everything (and a price for anything) may not be the answer. The invisible hand of the market should not be allowed to grab everything.

“Everyone should be allowed to bribe”

I had an interesting discussion the other day at a Fundraising event. Sitting opposite me was a businessman who also does a tremendous amount of work for charity. We got into a discussion on corruption – specifically, bribery. The discussion centred on how “the Bribery Act was causing business a lot of trouble” and that the UK “as always” was taking it seriously whereas other countries would not. We would therefore be undermined and lose business.

I argued differently. Working for Global Witness since 2007 (I left in late 2011), I had played a small part in working to get the Bill into law, then to ensure the guidelines made sense and have since worked with organizations like the Chartered Institute of Management Accountants (CIMA) to provide guidance (I wrote their guidance on the Act) and chaired their Bribery Act conference at St Paul’s Cathedral in 2011.

The businessman, actually a very interesting, successful and intelligent individual, suggested that, to make it fair, “everyone should be allowed to bribe” as much as they liked.

It was a Fundraising event, so not the time for a row – nevertheless, it reminded me sharply about how the world works and how it is split between those who understand the chaos that endemic bribery causes and those that see only the micro-economy (through the eyes of individual businesses) rather than the macro-economic chaos and individual misery that bribery causes.

We live in a disjointed world

I have recently been involved in the filming of a documentary on corruption that will go out later this year. So, although I have left Global Witness (which campaigns against natural resource-related corruption and conflict), I have stayed in touch with the issue.

It is easy when involved within an NGO to forget how business folk (as I counted myself for many years) can disassociate themselves from wider issues. I spent most of my career in business and those who are very successful are completely focused – like an athlete focused on winning a gold medal at the Olympics. The best are relentlessly single-minded in the pursuit of gold – the best business people are similar. This means that they are completely focused on what benefits their business.

This is why the US Chambers of Commerce have been waging a war on the Foreign Corrupt Practices Act (FCPA) for some time. The USA has, since the FCPA was brought into being in 1977, been way ahead of the field in anti-bribery law. This has heated up recently as the US authorities have piled into those who are believed to have breached the Act and, mainly through out of court settlements, have gained hundreds of millions of $ in fines and caused real change in US companies and how they operate outside the US especially.

But, the Chambers of Commerce believe that this puts the US at a disadvantage as other countries don’t have similar laws, they believe, or flout them.

Of course, this is no longer the case in many parts of the world. The OECD Anti-Bribery Convention was signed up to by 39 countries and the Convention is a tough one. As a result, the UK was eventually shamed into all-party support for anti-bribery legislation and the Bribery Act was the outcome – which came into law in July, 2011. It is actually a tougher law than the FCPA – making facilitation payments illegal, for example, and making the bribery of anyone (including government officials) a criminal act if it affects a decision. However, if a company has good processes and trains its staff well (Adequate Procedures), Directors of the company are unlikely to be prosecuted. Let’s face it, the funding of prosecutions is also likely to mitigate against major cases being developed.

However, the Act has led to a large industry being developed in training and in new processes. I was on the working group in the UK that brought in guidance for the not-for-profits (charities and NGO’s) in the UK (under the auspices of Transparency International and Mango) so saw very clearly how every organization (business or not-for-profit) could be affected by the Act.

This new anti-bribery industry has seen a number of lawyers move from the Serious Fraud Office (SFO) to private industry – confirmation if needed for business people that the whole thing is a cash generator for law firms and those in them and nothing more.

The equivalent of the “revolving door” that has been denigrated for years when politicians or civil servants enact laws or make project decisions and then move to senior positions in companies, is now taken as a serious concern by business people who see the same situation used against them! There is an irony there somewhere.

Corruption hurts

Business people see anti-bribery legislation as a problem. It makes business (in their opinion) more difficult in the same way that early 20th Century business people saw health and safety legislation as a problem. I am sure that many business people in the 19th Century saw government money being used to build the sewer system in London as a huge drain on their wealth and a public use of funds that proved that their wealth creation was being used against them – even if for the public good.

So, it must be galling to see anti-bribery legislation (which is international in concept and which is aimed at benefitting the poor in the poorest countries) put into force. In the USA, business is working to erode the law that has been in place successfully for 35 years – a law that has led the world. In the UK, there is irritation (maybe mounting anger) at the Bribery Act. And its implementation costs.

Business folk (and I was one for many years) see the short term and their bottom line. They find it hard to associate themselves with the wider questions about how corruption transfers wealth from the mass of people to a few – as, say, in Angola; how it ensures that money is spent on items that are not needed – very expensive air traffic control systems  in Tanzania, for example; how it adds to the price that poor nations pay; how nations like Nigeria are completely beholden to corruption as was England in the 18th Century – a nation where every job, every hospital appointment, every legal decision is likely to be subject to payment / bribes. Look at Greece and its current malaise – not paying tax is a symptom of a society corrupted – so much of the economy is bribery-induced – the black market is a corrupt market and leads to short-term benefits and long-term disaster.

Values are not for sale

The Bribery Act is now in place in the UK; the FCPA has been tried and tested in the USA for 35 years; 39 countries have signed up to the OECD convention. Yet, we probably face a bigger problem. The growth of nations such as China, India and Russia face us with enormous challenges as each nation is, in its own way, a centre of corruption.

China has adopted a Confucian posture – hit hard at home to rid itself of the endemic corruption that is at the centre of its totalitarian heart while allowing corruption to exist where it trades – such as in Africa. The Confucian spirit allows it to leave alone the nations with which it does business at the same time as Western nations attempt to apply governance to aid budgets. This is a time of real challenge and western countries should be working more than ever to instill values not just trying to compete for short-term gains. It used to be “if we don’t bribe, the French will”;  now the same phrase is directed at China, Russia and India (the home of www.Ipaidabribe.com).

We should not allow our values to be for sale for short-term benefits even in times of economic stress.

Is Bribery good for Business?

There are examples of businesses that have high values and most do not engage in bribery. Usually, those with the highest values are large businesses that know their CSR will be shaken by reputational problems. It makes business sense not to take the risk – bribery is bad for business.

Medium to small businesses, where the main opportunity for employment growth exists in most countries, are less concerned with CSR – which most think of as meaningless nonsense. Societal issues are way down the list of priorities – international issues are nowhere.

Hemmed in (in their view) by unjust legislation on all sides that seeks to choke off the spirit of enterprise, small businesses fight to survive daily. To them, bribery may be a necessary part of life. So what if people overseas suffer as a result – jobs are created for British firms and if we don’t do it, someone else (like the Chinese) will.

Globalisation in this context means nothing but cheap supply chains, cheap overseas labour and opportunities for exports. Globalisation does not mean we should take account of international problems.

Like 19th mill owners who fought sanitation bills as bad for business, who (in the main) were not interested in the health of their workers, who were only constrained by legal changes, many business people will only react to changes in the law because they are focused on their business and anything that adversely affects that business is bad – by its very nature. Bribery may allow business to take place – if a British company is not allowed to do it, business may well be lost.

Is bribery good for business? Of course not – just like the death of a worker because of shoddy safety systems, just like the gradual reduction in bullying at work because most acknowledge it is not needed – we inherently know that bribery (the corruption of people to make decisions go our way) is abhorrent. The impact is grotesque and cannot be justified even for a few extra short-term jobs.

Relentlessly focused business leaders know that bribery is wrong (at least most do) and, apart from the most extreme libertarians, understand that globalization means that the rules of business engagement are going to be made international. We cannot for long assume that developing countries will, for long, expect to be treated as the working class of 19th Century England. The class structure of international business will, over time, lessen just as we have made changes to our own class structure in Europe and North America and elsewhere.

Good business cannot “allow everyone to be bribed”. It is not just an ethical position, but a business one. Business should be undertaken on a level playing field where no-one bribes – we should be striving to ensure that bribery is minimized not allowed everywhere. Rules or norms are basic for societies to function. In a global society, the norms need to be widely applied. Bribery is bad – we all know it. Business leaders, here and in the USA, should be leading the fight – not over-reacting and running in the opposite direction.

Strangling Inherent Dignity – How we retain (regain) Self-Respect

Orhan Pamuk, today on the BBC, talked about how the military in Turkey have been moved away from the centre of political decision-making. Their threat has been diminished, resulting in a feeling of relief or release. He also remarked on the Arab Spring and how in Tunisia and elsewhere people had regained some dignity – maybe threatened by Islamic re-awakening (but “that would be the people’s decision”).

In China, the escape of Chen Guangcheng from house arrest and his televised pleas to Wen Jiabao to halt the rampant corruption in China points to a state that is gnawing away at its soul.

In the USA, the economy is dangerously tilted towards the highest 1% who now own around 50% of its assets.

In Spain, 24.4% of people who are seeking work are without a job.

Charles Taylor is found guilty of by the International Criminal Court of aiding war crimes – yet, he remains popular in much of Liberia for his ability to dole out cheap bread at the right times to local populations.

Organisations and People – The fight for Dignity

 

Whether as individuals or members of an organization or a region or a nation, the human instinct is to reach for a minimum level of dignity. The need to attain a degree of self-respect is fundamental to the human condition. Whatever our economic attainment (whether we are wealthy or poor) each of us retains the need for self-dignity and the self-respect of those closest to us.

Attainment of dignity is a basic need and we continuously fight for it.

The Universal Declaration of Human Rights starts its preamble with the following:

“Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world”

Yet, across the world, as we grow economically across a wider population, there is little evidence that we understand much more about a central issue that continuously confronts us – the attainment of “inherent dignity”.

If dignity means the attainment of freedom, justice and peace as the most important elements of our civilization (and we should be careful to ensure that our freedom does not blind us to the needs of a wider responsibility – to the planet as a whole), then what do we do daily that reminds us of our need to provide dignity and who is it who has this responsibility?

Responsibility

Leaders – whether of nations, businesses, local authorities , families or whatever – have a responsibility to those that they lead. This responsibility includes the establishment or reinforcement of cultural norms that strengthen the central idea of dignity to all its members.

This central tenet has been forgotten – we hear it infrequently amongst the babble of noise that comes from politicians and economists, business leaders and social leaders.

There is no question that where poverty is extensive, a crucial role for leaders is to ensure that economic growth is secured and poverty is minimized.

There is no question that where health and safety is jeopardized that better ways have to be found to minimize danger and secure life.

There is no question that where housing is poor that people must be housed and clothed.

But, the basic needs of food, shelter, clothing and safety are at one with the need for self-respect or dignity. The drive for better gross domestic product (GDP) has, in our enthusiasm to generate more wealth, left behind the basic understanding of what it is that propels the human spirit.

Setting dignity at the centre

While this is not a simple issue (dignity may be seen have different connotations to different people) the need for self-respect is the driver that propels individuals to fight back in so many cases.

The lack of dignity of those who are deprived of respect range widely. We see it constantly as we mentally note how individuals compare to certain societal norms – those who are poor are given less respect than those who are wealthy; those who have special needs are likely to be given less respect than those who are “OK”; those who are amongst the led are given less respect than those in power; those without the vote are seen as demanding less respect than those commanding political heights; the unwell lose dignity when maltreated; the unemployed lose dignity by the nature of unemployment and an assumption of laziness – the list goes on.

The problem is that self-respect is not normally a subject that is discussed or considered when key decisions are made. We are trampled by the rush to mend economic fences so easily that we ignore the affects. An example is Iraq. Here, not only was the rationale for entering Iraq wrong – there were no weapons of mass destruction – but the dignity of the Iraqis as a nation (or several nations within borders created by Europeans who cared nothing for the self-respect of those within them) was not an issue despite what should have been the lessons of history. Economics (through oil) and maybe the stated threat of terrorism (maybe) dampened the pressure to think through the impact of a complete eradication of self-respect amongst the Iraqi people – a self-respect oddly (to us in the west) retained with a strong man at the helm (Saddam Hussein) and then not replaced. In Afghanistan, self-respect has, through the ages, turned out many who would think to rule the country. It is the demand to self-rule that has been constant.

Corruption tears away at dignity

The danger in China is that corruption (an economic and power game) is tearing away at the nation’s credibility and self-respect. Recently, university students in Beijing were asked by the BBC what careers they wanted and one answered they wanted to be a senior local politician because that is where the money (through corruption) goes. The lack of self-respect that enables this response is intense and is leading to a potential fracture of the system in China as recent events in Chongqing highlight.

In India, one of its best-known websites is www.Ipaidabribe.com . This is a self-understanding of the rampant corruption in the country and mirrors a loss of dignity that brutalizes that society.

As a result of its alleged dealings in Mexico, Wal-Mart is under investigation by the US authorities through the Foreign corrupt practices act (FCPA) over millions of $’s of facilitation payments (not in themselves individually illegal under the FCPA but maybe through the gross flouting of corporate norms will be found to be). Mexico, riven by many drug cartels and corruption, lacks a dignity and self-respect because money is at the centre and seen as the only response. Wal-Mart helps to encourage that loss of self-respect.

National dignity or the dignity and self-respect of any business or individual is destroyed by corruption. When dignity is destroyed, then the basic ability to enjoy a life of “freedom, justice and peace” is also destroyed.

Economics cannot be isolated from self-respect

A cornerstone of self-respect is the ability of individuals to reach a level of basic self-attainment – the ability to feed oneself and one’s family; to house and clothe at least. In the rush towards austerity the macro-economic arguments are destroying the micro-economic disasters that are being generated. Poverty in wealthy nations is on the increase and the unevenness of wealth is growing. This is leading to a loss of self-respect amongst large sections of society. The impact of this change is uncertain – but, we can judge that the effects will not be positive.

John Rawls, one of the best-known and best-respected philosophers of the 20th Century considered self-respect as “perhaps the most important primary good” and how lack of self-respect leads to a growing disenchantment with the society and an estrangement with its ideals.

In the UK, maybe more prosaically, Ian Duncan Smith has highlighted the need for self-esteem amongst those on welfare and why jobs are the answer to bringing them out of the cycle of poverty.  This cycle of poverty is being exacerbated by the sovereign debt crisis which has transferred bank debt to national debt and enabled bankers to reap the rewards.

This crisis is now endemic in Europe and threatens stability and progress. The lack of dignity of nations (Greece, Spain, Portugal) as the Eurozone centre demands they commit to more austerity is misunderstood or ignored at the Eurozone’s peril. It is a fall-off in self-respect that eventually reaches a tipping point. It was a fall-off in national self-respect that catalyzed the German nation towards fascism in the 1930’s – a lack of national dignity that was caused by the war reparations following the 1st World War and heightened by the torments of the depression of the 1930’s. At some point, shattered self-respect will require repair – sometimes in brutal ways.

Democracy, Corruption, transparency and Economics

There are many ways in which dignity is destroyed – through lack of involvement in decisions, through corruption and lack of a chance for basic economic fairness.

There is no single answer but the key problems facing us today should all consider the issue of dignity before the answer comes rattling out. Clearly, real democracy, eradication of corruption, better knowledge of and openness about what is being done (transparency) and a new economics based on an understanding of the economics of self-respect are overall responses to ensure that we enjoy the basic dignities enshrined in the Universal Declaration of Human Rights.

“Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world”