The Second Great Wall of China

Reading Martin Jacques’ “When China Rules the World” during a week when the New York Times’ website was taken offline in China after it published claims about the wealth of Wen Jiabao. News about Mr. Wen’s alleged fortune of £1.7bn was characterized by the Chinese as a “smear” and resulted in news blackout on the subject. The BBC was similarly off air for months after its detailing of the Bo Xilai case.

 

Jacques’ well-documented book shows China as a “civilization state” that the West will not be able to challenge in its essential ideals based on 2,000 years of civilization and then Confucianism. The desire of its people – massed in a vast area with one-third of the world’s population – for solid government and their Confucian appetite for family connections leads many to believe that their form of government and control is the only way for China and that the rest of the world will not be able to change it.

 

The Wall of Legalism

 

Francis Fukuyama in his excellent book “The Origins of Political Order” http://www.amazon.co.uk/The-Origins-Political-Order-Revolution/dp/1846682576/ref=sr_1_1?ie=UTF8&qid=1351345981&sr=8-1on focused how the origins of the rule of law was central to the proper governing of a state. Success, where no government or leader was above the law, is contrasted with such states as China, where, except for brief period, the ruling elite has been above the law.

 

Many believe that a state with Confucianism on the outside and Legalism on the inside is how China is governed today. Legalism, a creed formulated and emerging properly in the Warring States Period up to 221bc, seeks to ensure that strict laws keep dissent down and people equal. The Emperor was in place because of the law and was above it – but had to be flexible in intent to ensure that the leading cliques were satisfied.

 

Coming forward 200 years and the so-called Communist Party has assumed the role of Emperor. A Communist Party that that no longer believes in Communism but in power from the centre; that not just tolerates corruption but uses it throughout China to keep its leading cliques in check; that exports corruption to its supply-chain (its raw materials suppliers) throughout the word in order to keep them sweet; that deals harshly with any dissent and criticism; that only reacts to the worst crimes and then only when it has to (such as with Bo Xilai – who became too much of a burden).

 

Legalism as a creed best describes the current Chinese government style – no longer driven by the equality of Communism – where a ruling elite has taken over the State and drives it according to their own requirements.

 

The post-World War II political and economic direction of the West has been democracy and capitalism. Human rights enshrined in the Universal Declaration of Human Rights http://www.un.org/en/documents/udhr/index.shtml has been a solid framework on which political thought has been based. The development of the European Union (notwithstanding economic upsets through the Euro) was based on this political fulcrum and a liberal economic system.

 

This post-war consensus in the West has also been the basis on which we have tried to hold the rest of the world to account – to develop democracy and capitalism on a worldwide basis.

 

No use for Wallpaper

 

Now, the western consensus is threatened by China. Having taken the economic principle of capitalism and thrown the centralized system of communism into the gutter, the Chinese are rapidly gaining economic muscle. This was not surprising once the shackles of the communist economic model was broken and Deng XiaoPing was able to redirect the Chinese to a better economic future.

 

This had already had enormous impact in China as wealth has increased and will continue to do so. But, a country with huge numbers of people but limited natural resources (apart from their own intelligence and rare earth minerals) has to then engage with the rest of the world in order to maintain that direction of travel.

 

This is now breaking down the political and governance consensus that the West has tried for the last sixty-seven years to impose. What does this mean? It means that the Chinese are overturning the route to democracy and democratic institutions. It means that elites in developing countries now have huge financial backing from the Chinese – through sales of raw materials to China and through the fact that they are witnessing another political model.

 

The West cannot wallpaper over the political cracks in the political wall. While capitalism is clearly now shown to be the best worst system of improving our material wealth, democracy is no longer the only political product on sale. After the bloody years of fighting against communism and fascism, which World War II was supposed to have won, the challenge is not so much religious fundamentalism (which we have been understandably so fearful of) but the enormous influence that China will have on a world where the most serious challenge to democracy is arising.

 

Taking a brick from the Wall

 

The battle for ideas is just starting. China needs a healthy west and a healthy India and Brazil and rest of Asia and it needs the raw materials from across the planet. Apart from the environmental catastrophes that are likely to be exacerbated by the drive for material growth (upon which the Chinese legalist approach relies in order to keep its people happy), the influence of Chinese political thought is likely to grow exponentially.

 

Recent riots in Ningbo –   http://www.bbc.co.uk/news/world-asia-china-20109743 – against a chemical plant expansion and the Chinese authorities’ methods of dealing with it (which includes the hiding of road signs so that journalists won’t find their way to the riots!) are a simple sign that Tiananmen Square was by no means a low point.

 

As the world waits for the US Presidential election, a change of at least equal importance will be taking place in Beijing and no-one will know who has come out on top until the new politburo of the Chinese Communist Party is unveiled around 15 November.

 

Not that this will change anything. In the US, the economics will be substantially changed by the possible election of Romney and (Ayn Rand influenced) Paul Ryan. The political system will not change.

 

In China, nothing will change and the political, legalist system will continue internally and externally. This is a continuing challenge that is currently seen as economic but will eventually be seen as dramatically political and on a world scale. For Chinese economic growth will challenge the democratic ideals built up by the West and hard fought for by millions. It is now ranged against 2,000 years of Chinese centralism legalism.

 

How (or if) the West reacts to this will be a far bigger story than the economics – and arguments over tariffs and who owns Treasury bonds. We need to start taking the brick from the Wall before it is built around us.

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“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”