The perceived failure to pay fair taxes, to treat employees of any culture or creed properly or to protect the world we live in needs changing. In many cases these are unfair perceptions, but swathes of industry can do better.
Levels of inequality of income and wealth have been rising for several decades. Encouraged by the free market reforms of the Thatcher and Reagan years, the sense of unfairness was exacerbated by the monetary solutions to the Great Financial Crisis, which have benefited the haves more than the have-nots as asset prices have soared.
This drove the rise of the populist politicians whose rhetoric captured the angry hearts of the dispossessed. But now the populists are faltering. Johnson, Trump and Bolsonaro have simply not led their countries with clarity, conviction or consistency through the Covid crisis. The aforementioned Edelman Trust Barometer also reports a lack of trust in politicians.
Trump has been rejected and Dominic Cummings has been ejected. Brazil’s municipal elections are proceeding currently.
Now is the time to shake hands with neighbours over broken fences. The social agenda has been uppermost throughout the world in 2020. Biden can re-join the signatories of the Paris Agreement, even if he struggles to push all his green agenda through Congress; the EU and China have made huge commitments to investing in “net zero” goals. Trade discussions do not have to focus on rejection.
Economic policy is shifting towards fiscal, for which read social, objectives. This will also deliver more regulation for business to embrace.
Influential global management consultants have for some time been making the case for “stakeholder capitalism”, which is a way of describing many of the attributes of ESG or sustainable investing. They are embracing the opportunity to help senior managers engage with positive change.
In an excellent recent article[ii], McKinsey summarise what corporate executives need to do in 5 Principles:
The free-market economy is one of the most important reasons for the wealth creation and improved quality of life humanity has enjoyed in recent generations.
In 1950, for example, Norway had the world’s highest life expectancy (72.3 years). Now the global average is higher (72.6 years) and in Africa, where it is lowest, it is rising fastest.
In China and India alone, more than 1.2 billion people have lifted themselves out of extreme poverty since their countries began to shift their economic policies toward more market-oriented principles.
None of this could have been done without economic growth. Think of West Germany versus East Germany; South Korea versus North Korea; or Costa Rica versus Cuba. The US versus the USSR.
The success was attributable to attention to the end customer’s interests and flexibility in catering to them. Stakeholder capitalism is the post-GFC, post-Covid expression of this.