Yes, that time of the year again for my annual reflective piece for The Edge year-end issue. I can't post the latest just yet although I can say I wrote about the social economy this year. But here's my piece from last December. I think it captured the sense of populist unhappiness and anger that eventually led to this year's seismic shocks with the Brexit vote and Trump presidency. Anyway, here's the 2015 piece on the human economy:
Dec 2015
By Lim Yin Foong
For the longest time, I’ve wanted a Volkswagen Golf.
There’s something about its solid and stable build
quality, as well as the reliability of the Volkswagen (VW) brand, that appealed
to me. So when it was time to change the family car recently, I thought it
would be a no-brainer to convince my husband to go for the Golf, which is very
popular here in the UK as well as Europe for the reasons I had mentioned.
Then of course, VW’s emissions scandal broke, and now my husband is wary about going near one of their cars. He’s not alone; recent trade figures show that VW’s November sales fell 20% in the UK and 25% in the US compared to a year ago. This has been attributed to the scandal, which saw VW admitting that it had cheated/rigged its emissions tests in the US and Europe.
This debacle is just the latest in a long list of
corporate scandals in recent years that have not only tarnished the reputations
of once-venerable corporations like Volkswagen, but has also fuelled increasing
anti-business sentiment in Western economies since the onset of the 2008
financial crisis.
The crisis unveiled an alarming level of malpractice by
big banks, from interest rate and foreign exchange rate rigging and mis-selling
to customers. Add to this excessive executive remuneration, corruption, tax
avoidance, and inhumane working conditions; many of these practices form what
Lloyds of London chairman John Nelson calls a ‘steady diet of negative business behaviours’
that have caused a ‘trust deficit’ in
big businesses, as he said at Lloyd’s annual dinner recently.
And indeed, YouGov/Legatum Institute’s recent
international survey on broader corporate trust found that more than 60% of
respondents in seven countries agreed that most of the world’s biggest
businesses have ‘dodged taxes, damaged the environment or bought special
favours from politicians.’
This public dissatisfaction and disillusionment with
big businesses and governments spurred movements like Occupy in 2011-12. The continued
ill-feeling that’s been further stoked by successive corporate scandals has
also led to a new populism in developed economies that consider capitalism the
root of all recent evils rather than a force for good.
The YouGov/Legatum study found that the three most
advanced markets surveyed – UK, US and Germany – registered a net negative response when asked if what
is good for business is usually good for the rest of society, compared to more
positive responses from India, Thailand and Brazil. And it’s not
just the public or left-leaning activists, but also prominent businesspeople
like Bill Gates, Richard Branson and Warren Buffet, who have been bashing
capitalism for causing the world’s woes instead of redressing them.
Little surprise then, that in their search for
alternatives to capitalism, the populace is drawn to politicians like extreme
left Labour leader Jeremy Corbyn and his shadow chancellor John McDonnell, who
immediately laid out capitalism reforms when he came into his new role, as well
as anti-austerity parties like Spain’s Podemos, which presents itself as a
party of ‘decent ordinary people’.
Even among proponents of capitalism, there is the
sense that the markets have forgotten that they exist for the benefit of all
and not just for an elite and powerful few. Steve Hilton, a former
senior adviser to UK Prime Minister David Cameron, believes that the problem lies not in big business
nor capitalism itself, but in the concentration of economic power in fewer and
fewer hands.
In a similar vein, Evening Standard columnist Anthony Hilton writes about the lack of
a democratic accountability mechanism that can bring businesses ‘back down to
earth’. It’s a scenario where companies have such huge power and influence over
people’s lives, but even shareholders and politicians seem to lack the will or
clout to hold them to account, oftentimes due to self-interest.
The fact is that in many ways, both businesses
and governments seem to have lost sight of what should be at the heart of
everything they do – the people. As entrepreneur Branson noted in 2011, most
businesses have been so focused on the short-term goal of making profits that
they ’forget about the important long-term role they have in taking care of
people and the planet’.
In his book
entitled More Human, Steve Hilton
writes about a business landscape dominated by large institutions driven more
by their ‘own organisational interests rather than those of the people they
touch.’ He argues for a
system change in a big world created by bureaucracy to return to a more human-centred,
human-scaled life where people are prioritized over numbers and processes, to build
what he calls a ‘more human economy’.
A human
economy that values its workers’ humanity as an essential trait is what the
world’s mature economies are shifting to from the current knowledge economy,
says Dov Seidman, author
and founder/CEO of ethics and
compliance management firm LRN. In a June 2015 article in Forbes,
he writes about the need for businesses to adopt a ‘human operating system’ rooted in values and
principles as well as trust, and also calls for businesses to cultivate moral
authority, which he describes as ‘power through people’ rather than formal
authority’s power over people.
The moral authority to do the right thing by one’s customers
and employees and society at large, and the values and principles that support
this; this is what the populace are searching for to restore their sense of
trust and faith in a business world that has seemingly gone mad with their
pursuit of profitable bottomlines and focus on processes and rules rather than
people.
It bears reminding that the word ‘volkswagen’ means
‘people’s car’ in German. If beleaguered
businesses like Volkswagen are serious about finding their way back into the
people’s good books, they would do well to restore them as the focus of all
that they do.
Lim Yin Foong is still
holding out for a Volkswagen Golf, as she has hope and faith that humanity will
one day be restored in big business.
