Archive | Creative capitalism

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Designing a Way Forward

Posted on 25 April 2011 by Philip Brookes

The human brain and our society are programmed to build upon our pre-established building blocks. This is very helpful, because we don’t have time to reinvent the wheel for every action or task we’re required to undertake. But it also means we tend not to think creatively and look at the bigger picture.

We map out where we want to go, plan the execution, and progress according to our plan. But when we encounter unforeseen circumstances, how flexible is our thinking in response to this ‘problem’?

In the Philippines they had built a huge hall to house an international film festival. Two days before the event there was a typhoon and the hall was flooded to a depth of about three feet. The engineers said it would take several days to pump the water  out. So they got hundreds of workmen to build a platform over the water. The meeting took place with the water underneath the delegates. This sort of approach may too easily be condemned as ‘papering over the cracks’. In some instances this would indeed be the case and is not to be recommended; find the cause of the cracks or the house may fall down. In other instances, designing a way forward is not only valuable, it is the only way forward.

- Edward de Bono (New Thinking for the New Millennium)

In business and society today, we need to learn how to ‘design a way forward’ – accept the obstacles and faults around us and assess whether we need to ‘fix the faults’, ‘design a way forward’, or perhaps do both in parallel. Only with such progressive, constructive thinking will we maximise possibilities, productivity, and quality of life.

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Tax Breaks to Encourage Individual Poverty-Fighters?

Posted on 15 October 2010 by Philip Brookes

Extreme poverty is, well, an extreme issue – and it requires extreme commitment and creativity to address it. I’m always reading other people’s works, visiting developing countries, and basically trying to soak up and synthesise as much knowledge and experience as I can.

In continuing my reading of Creative Capitalism, edited by Michael Kinsley, I’ve just encountered a fresh idea I hadn’t considered before and I believe it warrants serious consideration – particularly by Government, who would need to get behind this to enact it:

“…domestic tax deductions to generate incentives for new investments in the world’s poorest countries.”

Apparently this concept, mentioned by Nancy Birdsall, was proposed by Eric Werker. It immediately struck me as having great potential.

I’m not sure the scope that Eric envisaged, and I know that risk-averse parliamentarians will immediately raise concerns about how this would be so difficult to monitor and therefore open to abuse, but I believe it’s the type of idea which warrants further efforts to devise an implementation plan that could allay most fears whilst maximising the anticipated benefit.

In fact, if I could push my version of this idea through the ranks of Government, it would extend not just to corporations but also to individuals who chose to volunteer or engage in grassroots level poverty-relief activities in developing countries. There is nothing more powerful than the passion, blood, sweat and tears of individuals dedicated to bettering people’s lives – it will never be matched by the bureaucracy of Government, or dare I say it, even by corporate capitalism – at least, in terms of the ‘output per head’!

 

Picture of siblings living in extreme poverty ...

Image via Wikipedia

 

Essentially, wouldn’t it create more opportunities for an individual or their organisation to get engaged in ‘sacrificial’ poverty relief related activities if they were completely tax exempt?

The arguments that would immediately be presented against such a scheme would no doubt be:

  • loss of revenue – but realistically, even if with such a tax break, the number of people who would give up their typical Western lifestyles to throw themselves into this type of extreme poverty relief-oriented work would be a tiny percentage of our overall population, so that’s really a red herring argument
  • abuse of the system – a valid concern, and I do feel that this system needs to be relatively easy to access, rather than being all tied up in red tape, but with a few sensible checks and measures surely the risk could be kept at such a level as to pale in comparison to the potential benefits

My view has long been that poverty is only going to be addressed by tapping into the everyday purchasing power of the general public, rather than endlessly depending on charitable donations which never seem to fund more than a fraction of the necessary works – this approach releases the resources and passion of individuals who have a heart-felt commitment to assisting humanity with minimal impact on the Government’s bottom line, and in a way which I believe will be highly efficient.

What do you think? I’d love to hear a lot more discussion on this topic! Please do share, either via the comments on this post or by emailing me privately.

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Milton Friedman got corporate Social Responsibility wrong

Posted on 03 August 2010 by Philip Brookes

On my flight back from Kuala Lumpur to Melbourne yesterday, I took the opportunity afforded by flying AirAsiaX (sans onboard entertainment) to read another sizeable chunk of “Creative Capitalism: A Conversation with Bill Gates, Warren Buffet, and other Economic Leaders”. I guess I’m a bit slow in getting to the literature of leading global economists but I can now say I’ve read Milton Friedman’s “The Social Responsibility of Business”, an essay first published in The New York Times Magazine, September 13, 1970 (and included as an Appendix to the Creative Capitalism book).

I hadn’t missed anything significant!

In a nutshell, Friedman’s argument is that the role of business (and it’s executives) is to maximise financial returns for shareholders, and nothing else really matters.

He somehow believes (and managed to attract a number of followers who concur with his belief) that, because a corporation is not a living entity in it’s own right, you can only address the issue of social responsibility to the individuals who are employed in, or shareholders of, that corporation and that this must then, by definition, become an individual rather than a corporate responsibility.

One of my first observations as I read this piece of intellectual contortionism was how Friedman appears unable to understand or accept complexity, ambiguity, uncertainty and subjectivity in business. He seems to live in a black and white world. This is usually a sure sign of a true academic who is determined to make the real world fit into a neatly defined formula or definition.

But the point at which I finally decided Friedman’s article was completely off target was when he stated:

‘What does it mean to say that the corporate executive has a “social responsibility” in his capacity as a businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers. For example … that he is to make expenditures on reducing pollution beyond the amount that is in the best interests of the corporation or that is required by law in order to contribute to the social objective of improving the environment.’

Extrapolated into another scenario, Friedman would no doubt argue that a corporate executive would be duty-bound to offshore their operations to low-cost developing countries wherever it maximised profits, and this should only be done at the very lowest possible labour rates allowed by law so as to maximise corporate profits, even if the developing country has no effective wage protection and it is exploitative of the workers, provided that doesn’t bring financial harm to the company through loss of reputation – indeed, to pay a more ‘humane’ or ‘reasonable’ wage to staff than the absolute minimum that could have been negotiated is a reflection of an executive not performing his duties to the company.

How Friedman’s essay came to be seen as a pivotal exposition on the topic of Social Responsibility in business I really can’t say. I have no doubt Friedman is highly regarded in academic circles for his intellectuality, but what can I say? This piece just confirms my long-held attitude towards academic intellectuality.

If you divorce theory and philosophy sufficiently from the everyday world, you eventually learn how to sound learned. But do you actually address the issues of the real world? And will your theorems and hypotheses stack up in practice?

It’s this kind of indoctrination and thought-deceivership that influences oil company (and many other) executives to take safety short cuts in the hope that their calculated risk will pay off as financial returns for the shareholders. Clearly, that can be a pretty short-sighted approach.

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Whirlwind trip to Philippines is over again…

Posted on 30 July 2010 by Philip Brookes

The past two weeks have flown by, and although I’ve been constantly ‘on the go’ I was still unable to meet with everybody that I would like to have. I missed out on meeting with Mellany Ramos Stametalaky from Kids Hope this time around, and didn’t get to International Needs in Marikina. I didn’t see my friend Raffy Ilano, or Cha Cha del Rosario at Gawad Kalinga (one day I’m going to pick up the sunglasses I left in her car four years ago!!!).

But I’ve also had the opportunity to make some new friends and connections, with a number of possible future initiatives germinating as a result. Meeting with Ben Compton, of WE International Inc., Philippines, was tremendously inspiring and encouraging – although we were fortunate enough to be able to meet in the luxurious surrounds of Greenbelt Makati, our conversation quickly transported us, in spirit at least, to Smokey Mountain (Tondo), regional flood-affected communities, and a variety of urban slums around Manila. Ben’s passion to work cooperatively with other NGOs in delivering holistic solutions that ensure opportunities are provided to the most disadvantaged slum children was refreshing to experience, and as we spoke there were numerous possibilities for future collaboration that began to emerge. We’ll certainly be continuing our dialogue over the coming weeks and months, being a sounding board for each other as we develop workable and sustainable plans for creating income-generating, employment opportunities for the poor. Micro-enterprise, micro-loans, and larger scale production of export-quality goods are all ideas that are starting to take shape, though of course a lot more planning will need to be done to assess feasibility, develop marketing strategies, and source seed funding.

Likewise, my good friend Glen Biggs and I had a great time catching up again in Davao City. Glen and his wife Sarah lead Global Impact in Davao City, and already they’ve been able to seed a variety of businesses which are creating great test cases and learning experiences for future larger-scale operations. These businesses variously have the possibility of creating employment, developing leadership skills, facilitating mentoring and character development, and generating revenue streams for the other ministries of Global Impact which are not self-sustaining.

My trip has again vividly reminded me of the immense need that exists in this amazing country, but there is hope because there are so many passionate people (Filipino and expatriates) sowing into the lives of others and helping to develop the necessary character and capacity to revive this nation.

Over the coming months, initiatives which I’m hoping to get off the ground include

  • custom printed or embroidered corporate apparel that will directly create employment and opportunities for impoverished Filipinos
  • joint venture opportunity with Philippines partner for online business that will ease the difficulty for public finding housing
  • giftwares, crafts and jewellery to be distributed in Australian boutique stores with a concern for social justice and helping the impoverished

If you’re interested in these initiatives, either as a customer or as a contributor, please contact me directly.

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Bill Gates and Creative Capitalism

Posted on 25 January 2008 by Philip Brookes

Okay, it might be almost 3am but I’ve just read an article reporting on Bill Gates’ newly-coined term of “Creative Capitalism” that I finally felt is starting to ‘get it’, so I just HAVE to throw in my 2 cents!

I suspect that Bill Gates and I are still a fair way apart in our thinking on this, but if you put us in a room with 10 other individuals to debate how to “Make Poverty History”, I reckon we might be the two most likely to team up against the rest.

The point that Bill’s starting to articulate is that there’s a crucial role for commercial enterprise to play in turning around the fortunes of the 2 billion poorest people on the planet. We might approach the question of business involvement, or “creative capitalism”, differently but we both recognise that companies play an important role.

Up until recently, I’ve accepted unquestioningly the repeatedly reinforced message that I’ve heard throughout my entire life, that less fortunate people in developing countries need our generous donations (channelled through some fantastic aid and development programs) to help lift them out of their poverty – “a hand up, not a handout”. For many years my thoughts never progressed beyond that, because the work that is done by these awesome aid and development agencies is truly inspirational, effective and worthwhile.

But it’s not enough.

The single biggest shortcoming of this model is that it relies almost entirely on ongoing benevolence from richer countries, and the “average” citizen is so far removed from the realities of extreme poverty that they are very reluctant to be parted from their money – “after all, how much difference could my $20 really make??”

Whether we like it or not, money is what lifts people out of poverty, and therefore to have a truly successful long-term strategy, we need a “money machine” – business.

That might sound simplistic, and people will give me examples of how either (i) locally-owned businesses from developing countries are hugely profitable and yet don’t seem to make a tangible improvement to the local economy, or (ii) NGO development organisations are involved in micro-enterprise and other similiar business initiatives and yet, once again, the country as a whole seems to be permanently bogged down in their poverty. But I believe there’s a key missing element even in these situations.

It’s not enough just to establish enterprise if the profits are pocketed by one wealthy businessman. An increase in employment is helpful, but not enough.

It’s also not enough to just train people with better vocational skills, increased literacy, and greater business skills.

In my opinion, the key is to channel (a portion of) the generous donations from developed countries into establishing viable and competitive export businesses in these poverty-stricken regions, owned and operated by passionate “capitalist” business owners who love running their business – and then to have these owners reinvest from their profits into training, skills development, R&D, and other aspects of their local community.

A commercially-sound model of business which generates revenues from the richer societies to feed into the poorer ones, along with a true heart for the local society, education, training, and eradicating poverty is a sustainable model which creates an ever-increasing stream of earned income (rather than donations) AND betters the community in numerous ways.

It’s my dream (with plans already starting to emerge) to establish a commercially viable business in a developing country (my personal passion is for the Philippines, hence I’d start there) that has as it’s goals to:
(i) establish a strong export trade to developed countries
(ii) reinvest profits into training and employment opportunities, community programs, and growth of the enterprise

This conscious focus on prioritising the needs of the people above my own personal wealth is, in my opinion, the most important factor to rebuild a devastated economy and to present the poorest populations with really opportunity and hope for their futures.

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