ECONOMY AND POVERTY: PEOPLE FIRST Bernardo Kliksberg GLOBAL ALUMNI IE June 21st, 2010.

ECONOMY AND POVERTY:

PEOPLE FIRST

Bernardo Kliksberg

GLOBAL ALUMNI IE

June 21st, 2010

AGENDAAGENDA

I.I. The magnitude of the crisisThe magnitude of the crisis

II.II. The critical agenda of problemsThe critical agenda of problems

III.III. The main causes of the crisis are ethicalThe main causes of the crisis are ethical

IV.IV. The revision of MBAsThe revision of MBAs

V.V. What is corporate social responsibility?What is corporate social responsibility?

VI.VI. Evolution of CSREvolution of CSR

VII.VII. The CSR workThe CSR work

VIII.VIII. Win-win with CSRWin-win with CSR

IX.IX. Social responsibility in spiritual wisdom Social responsibility in spiritual wisdom

EXTENDED BIBLIOGRAPHY EXTENDED BIBLIOGRAPHY

Amartya Sen - Bernardo Kliksberg

“PEOPLE FIRST,

A look from the ethics of development to the major problems of

the globalized world”

(Editions Planeta/DEUSTO, 7th edition, 2010)

I. THE MAGNITUDE OF THE CRISIS

The U.S. GDP fell 2.5% in 2009, and the Euro area 3.9%.

USA produces 28% of global GDP.

Unemployment jumped in US from 4.9% in late 2007 to 9.7%

in April 2010. There are 15 million unemployed.

Adding the involuntary underemployed and discouraged the

total is 30 million.

In youth the rate is 25%.

One of every five americans men aged 25 to 54 do not hold

a job.

For each job there are six candidates.

I. THE MAGNITUDE OF THE CRISIS

The European Youth unemployment: increased from 2007

to 2009 up to 4 million.

Went from 13.2 to 18.4%.

In many countries it exceeds 25%.

In Latin America: 7 million young unemployed.

20% of young people outside the labor market and the

educational system.

II. THE CRITICAL AGENDA OF PROBLEMS

The crisis is exacerbating the serious problems of poverty and

inequality in the world. Among them:

1. Unexplainable Hunger

- In 2009 the effect of the crisis and the rising price of food made

the number of hungry people rose by 100 million. There are

1020 million people starving.

- 1 in 6 people on this planet are hungry, when technological

revolutions can feed a much larger population than today. In

2008 the world had the largest crop in its history. But 5 million

children died from starvation.


1. Unexplainable Hunger (cont.)

- If a child does not eat well in the early years, inter-neuronal

connections in their brains are not set and he will grow with severe

delays for life.

- Latin America produces food for three times its population, but has,

however, 16% of malnourished children.

2. Water supply and sanitation facilities

- A human being needs 20 liters of clean water per day. Europeans

use 200 liters per day and the Americans 400.

- 900 million have no safe drinking water and consume contaminated

water.

- 2.6 billion lack of sanitations facilities.

- 1.8 million children a year die from these shortcomings.


2. Water supply and sanitation facilities(cont.)

- Half the world's hospital beds are occupied by those suffering

from diseases linked to contaminated water. More people die

from it than for all the forms of violence including wars.

- 17% of the world's population lacks toilets and latrines.

- Latin America has 50 million without drinking water, and 119

million without healthcare.

3. Child labor

- 1 in 6 children worldwide are exploited through child labor.

- There are children working in 122 products in 58 countries.

- 14 million children work in Latin America.


4. Deficits in education, the key to XXIst century

With significant progress:

- 121 million children not attending school.

- In the developing world, only 43% of girls go to high school.

- In Latin America:

6 million young people did not finish primary school.

In some countries more than 50% did not finish high school.

- The quality in key areas such as science education is low.


5. Climate change

The rate of vulnerability of the poor is 80 times higher. In rich

countries, only 1 in 1500 people were affected, in developing

countries 1 in 19.

It is causing 300,000 deaths annually.

50 million people were forced to migrate.

6. The sharp inequalities

According to the UN University, the richest 10% has 85% of

global capital, the poorest 50% only 1%.

The New York Times editorialized: "Let's be clear, the crisis caused by

the irresponsibility of the banks cost the country over 120 billion. Any

calculation must also include the most severe recession since the

30’s and the loss of 7 million jobs”. The Financial Times states: "The

crisis arose from the lack of leadership and corporate responsibility."

The President of the Commission established by the U.S. Congress

to investigate the crisis, Phil Angelides talks about the need for

examining “greed, stupidity and pride” in the financial sector”.

III. THE MAIN CAUSES OF THE CRISIS ARE ETHICAL

Central causes of the crisis :

The abandonment of the protection of the collective interest of

public policy

Allan Greenspan: “I'm in a stupor. We believed that financial institutions

were self-regulate to protect their interests, and shareholders, and they

didn’t ... the whole intellectual edifice we were building has collapsed ”.

Failures in corporate ethics

Angel Gurria (Secretary General of the OECD): "We are facing a

systemic failure. The global crisis was not caused by an external

shock like a terrorist attack or manipulation of oil prices by a group of

countries. It was created by the same system, the system we have

created, and by a toxic combination of unethical business behavior,

and faults in the regulation and supervision of their activities.”


Central causes of the crisis (cont.):

The crisis has left a heavy burden on corporate reputation.

According to the Edelman Trust Barometer 2009, 62% of respondents

in 20 countries, say that “they rely on corporations less than a year

ago." Senior executives think the same thing. The McKinsey Quarterly

(March 2009) shows that 85% believe that confidence in business has

deteriorated.

The split between ethics and economics

Adam Smith’s message: Core values for markets :• Prudence• Humanity• Justice• Generosity• Public spirit


Criticism of the MBA

New York Times:

The New York Times raises (Holland, 15/03/2009) "Is not it time to re-

train the schools that make up the MBA's?". Wall Street Journal:

“Many have accused the business education to create minds to

manipulating the financial system ” Cabrera (Dean, MBA, USA):

“Something big has failed. We can not look away and say it is not our

fault when there is a widespread systematic failure of leadership ”. Ellis (Dean, Southern California University)

“We have taught our students to look for cracks in the economy, and

we have prepared them to exploit this. ”

IV. THE REVISION OF MBAs

Khurana (Harvard Business School)

“A kind of market fundamentalism took possession of

entrepreneurship education. The new logic of the primacy of

shareholder management absolved of any responsibility for any other

area, other than financial performance. "

Piper (Harvard)

In the curricula of MBA's emphasis is on "quantification, formal models, and formulas and minimizes the application of trials and the debate about values ..., students assume it does not matter."

Samuelson’s Directions for Aspen Institute:

“The old message of the business school was that ethics and values

are in addition ... is the antithesis of what we need now, and new

deans should understand "


New politics in Harvard

The President of Harvard Drew Faust

“Business education is at a turning point ... The crisis shook the

confidence of society in business, management and education. "

"Students are very concerned about corporate image and its place

in American life and in the world ..."


Good personnel policies

Fairness to consumers

Corporate Reform

Environment

Community Commitment

V. WHAT IS SOCIAL RESPONSIBILITY?

The "narcissistic" company

Philanthropic practices

The CSR- A PricewaterhouseCoopers survey to more than 650 presidents

of boards of directors in 16 European countries showed that

98% felt that business ethics is key in business, and 80%

believe that companies cannot have a restrictive view of their

responsibilities anymore. And 60% of respondents believe that

due to its relevance, it must be handled by the highest level of

the company, the Board of Directors

VI. EVOLUTION OF CSR

The 2009 Sustainability Report Natura was developed based on a participatory

approach in which the company was co-creating the report with its stakeholders.

Thus generated such innovative ideas and discuss the implementation of "gross

happiness index", which highlights "incorporates elements now considered

intangible but are aligned with our essence." GLAXO, leader in rate of access to medicines

(The New York Times). Its CEO Andrew Witty said "I want to be very

successful but not leaving the people of Africa behind." He promised that

Glaxo prices in poor countries would not be greater than 25% of those charged in

rich countries, and to donate 20% of all profits in poor countries for their health

systems. Young executives are being offered to work for the governments of poor

countries. He stressed that if the vaccine against malaria the Gates Foundation is

working on, with GLAXO’s cooperation, pases clinical trials, they would charge

only a 5% increase on the cost, not including the heavy expense of research. PRONIÑO programme of Telefonica, Spain

-Is helping to rescue from child labor more than 200,000 children in 14 countries in

Latin America.

Applies advanced technology.-It is implemented through NGOs of excellence.

VII. THE CSR ON WORK

ACE Award 2009 from the Secretary of State, United States Hillary

Clinton was given to "Toms Shoes". Its young creator Blake Mycoskie

created a shoe company based on the idea that for every pair purchased

by buyers, we provide one for a child in need. In less than three years has

delivered 140 000 pairs of shoes in USA, Argentina, Ethiopia, and South

Africa. This year it expects to reach 300,000. Why shoes?. Because

Mycoskie explains: "Many of the diseases of the foot causing destruction

to lives that are salvageable with shoes and basic hygiene." In Ethiopia is

working to eradicate podoconiosis, deformatoria foot disease, caused by

walking barefoot on soil rich in silica. The Toms Shoes now sold more

than 500 stores in the U.S. and internationally, including major chains

Nordstrom and Whole Foods. Is entering Austria, Japan, Canada, Spain

and France.

Fortune says that is an example of how "the Wall Street crisis may lead

young people to leave traditional firms and work in companies, which

points strongly to do good." A few days ago was delivering Mycoskie 120

000 pairs in Haiti.


The Gates Foundation

Launched a completely innovative vaccination campaign. It will

invest U.S. $ 10,000 million in the next 10 years, on vaccines for

AIDS, tuberculosis, rotavirus and pneumococcal. It can prevent the

deaths of 7.6 million children under 5 years between 2010-2019.

They would add 1.1 million since 2014 by the introduction of the

vaccine against malaria. The Director of the World Health

Organization Margaret Chan believes that it is an unprecedented

initiative and called on governments and private donors to join it.


The Company:

- More competitivity

- More productivity per person

- Better marketing positioning

- More attractive for best candidates

- More Confidence for investors

- More sustainable

The Community

The Business leader:

“The one that help others, also helps himself” (Bible)

VIII. WIN-WIN WITH CSR

• ISAIAS

“Learn to do well; seek justice, relieve the oppressed, uphold the rights of the fatherless, plead for the widow”. (1:15-17)

• PROVERBS

“He who oppresses the poor offends the Lord; but he who is compassionate honors Him”, (24, 1-2)

• SANTO TOMAS DE AQUINO

“The bread which you withhold belong to the hungry: the clothing you shut away, to the naked: and the money you bury in the earth is the redemption and freedom of the penniless”

IX. SOCIAL RESPONSIBILITY IN SPIRITUAL WISDOM

• BUDDA

“Set your heart on doing good. Do it over and over again, and you will

be filled with joy”

• Mencius (Main Disciple of Confucius) (visit the count of King

Hui of Liang)

“There are people dying from famine on the roads, and you do not

issue the stores of your granaries for them. When people die, you

say, “it is not owing to me; it is owing to the year.” In what does this

differ from stabbing a man and killing him, and then saying “it was not

I, it was the weapon?”

• JESUS

“God will save those who have fed the hungry, given drink to the

thirsty and clothed the naked”



• A RECENT SURVEY

“The wisdom of the ancients still holds. A survey of 30,000

American households found that those who gave to charity were

43 percent more likely to say that they were “very happy” about

their lives than those who did not give, and the figure was very

similar for those who did voluntary work for charities as compared

with those who did not.”

ECONOMY AND POVERTY: PEOPLE FIRST Bernardo Kliksberg GLOBAL ALUMNI IE June 21st, 2010.

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