The Clinton Global Initiative (CGI) has exposed disagreements amongst leaders about the role of big business in development … and that is ultimately a good thing.
The CGI, a gathering of global leaders to discuss solutions to the world’s most pressing challenges, ran from 23-26 September in New York and benefited from a quite extraordinary cast of speakers. Political, business and civil society luminaries such as Barack Obama, Bill and Hilary Clinton, Bill and Melinda Gates, Christine Lagarde, Tony Blair and Winnie Byanyima all took the stage over the course of the annual meeting as well as celebrities such as Piers Morgan, Sienna Miller, Kate Hudson and Sean Penn. Perhaps Bono, the enigmatic front man of rock band U2 and seasoned campaigner, has earned the right to be in his own category, but that is a debate to be had elsewhere.
Reading accounts of the CGI (full disclosure, I didn’t attend) reveals the extent to which some of the “elephants in the room” in discussions on philanthropy and poverty reduction are beginning to be talked about directly, revealing the uncomfortable differences in perspectives of the disparate global thought leaders. Do corporate have the biggest impact on poverty reduction globally and if so is fiscal liberalism the key to development? Or is philanthropy and international aid a more effective tool?
For his part, Bono offered what to some constitutes a u-turn on previous statements calling for governments to increase international aid “if need be, by paying more taxes” by offering a defense of low tax, pro-corporate policies. Though this change of tact may have roots in revelations about his bands decision to move part of their business to the Netherlands to benefit from its lower tax rates, he does offer an old, but still powerful truism to support his arguments – “that capitalism has been the most effective ideology we have known in taking people out of extreme poverty”.
Other participants at the CGI went further in support of the role big business plays in poverty alleviation. Speaking as part of a panel discussion Goldman Sachs CEO Lloyd Blankfein laid out his belief that with regards to the work done in alleviating poverty, global capitalism is “doing the bulk of it” while the role of philanthropy is “supplementary” adding that “we should educate the public more about how business and its core activities have lifted people out of poverty.”
But amongst the most strident critics of the role that global corporations are playing in development at the CGI was Mo Ibrahim, Founder and Chairman of the Mo Ibrahim Foundation, who chided companies for profiting from the corruption that hampers development in the world’s poorest countries, effectively rewarding leaders for mal-governance. Mr Ibrahim said that “For every corrupt leader, there are 50 corrupt business people,” adding that “half of them are sitting here.”
Despite this apparent rift between pro and anti corporate strategies for development there are signs that the two camps can be reconciled. Earlier this year Peter Buffet, son of billionaire business magnate Warren, articulated the central point of tension between those who see global capitalism as either the solution or the source of the worlds problems and in doing so, he may have found the route to consensus. In an Op-Ed in the New York Times Mr Buffet bemoaned a type of philanthropy he coined “conscience laundering” in which the wealthy give money to charitable causes to redress the damage they cause in their business activities. This, according to Buffet amounts to “searching for answers with their right hand to problems that others in the room have created with their left”.
Here then is a central point on which there is room for consensus; that whether or not you believe that corporations, governments or philanthropists are best placed to tackle the worlds problems, using money generated immorally via the former to be utilised by the latter is certainly not an efficient solution. Indeed, conversion to fiscal liberalism notwithstanding, Bono agrees that “you can’t give alms to the poor on one level and have your hands to their throat on another.” This realisation is perhaps at the heart of growing interest in impact investing and venture philanthropy (see CAF Venturesome) where right and left hand work in tandem. CAFs Future of Philanthropy Series has revealed that younger donors are more impact focused and are willing to experiment with new ideas. The first report of the series, Future Stars of Philanthropy, revealed that 71% of wealthy people under 30 rate social responsibility as an important influence on their investment decisions, compared with 63% of over 45s and that 65% of wealthy people under 30s rated charitable activity as an important part of their wealth creation, compared with 58% of over 45s. Clearly then, the next generation are increasingly likely to see social responsibility as important in how they earn their money as well as how they spend it.
Given the diversity of the audiences that are attracted to events like the CGI there are always going to be areas which make for uncomfortable discussions but the air in the room is much clearer now sans elephant. Ultimately, whether global capitalism helps or hinders socio-economic development is a mute point. Before we attempt to ascribe credit for fixing the worlds problems, we really ought to fix them.